SANTA CLARA, Calif.,
Dec. 4, 2018 /PRNewswire/ -- Marvell
Technology Group Ltd. (NASDAQ: MRVL), a leader in infrastructure
semiconductor solutions, today reported financial results for the
third fiscal quarter of fiscal year 2019. Revenue for the third
quarter of fiscal 2019 was $851
million, which exceeded the midpoint of the Company's
guidance provided on September 6,
2018.
GAAP net loss from continuing operations for the third quarter
of fiscal 2019 was $54 million, or
$(0.08) per diluted share. Non-GAAP
net income from continuing operations for the third quarter of
fiscal 2019 was $222 million, or
$0.33 per diluted share. Cash flow
from operations for the third quarter was $299 million.
"In the first full quarter operating as a combined Marvell and
Cavium team, we completed key integration milestones ahead of
schedule, delivered revenue above the midpoint of our guidance, and
generated strong free cash flow at 30 percent of revenue. We also
expect renewed revenue growth from the Cavium business in the
fourth quarter," said Matt Murphy,
Marvell's President and Chief Executive Officer. "Looking ahead, we
expect the deployment of 5G will accelerate our growth over the
next several years as engagements with a growing list of Tier 1
customers continue to build momentum in this major infrastructure
transition."
Fourth Quarter of Fiscal 2019 Financial Outlook
- Revenue is expected to be $790
million to $830 million.
- GAAP gross margin is expected to be approximately 46%.
- Non-GAAP gross margin is expected to be approximately 65%.
- GAAP operating expenses are expected to be $375 million to $385
million.
- Non-GAAP operating expenses are expected to be $285 million to $290
million.
- GAAP diluted loss per share from continuing operations is
expected to be in the range of $(0.05) to $(0.01)
per share.
- Non-GAAP diluted income per share 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 Tuesday, December 4, 2018 at 1:45 p.m. Pacific Time to discuss results for the
third quarter of fiscal 2019. Interested parties may join the
conference call by dialing 1-844-647-5488 or 1-615-247-0258,
pass-code 3069644. The call will be webcast and can be accessed at
the Marvell Investor Relations website at
http://investor.marvell.com/ with a replay available following the
call until Wednesday December 12,
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
third 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 weighted average shares outstanding (diluted).
Historically, Marvell included non-GAAP share adjustments in its
earnings releases. Beginning in the third quarter of fiscal year
2019, Marvell no longer provides this non-GAAP adjustment and will
calculate non-GAAP income (loss) per share using the GAAP weighted
average shares. Marvell is making this change in order to
align with its industry peer companies' non-GAAP income (loss) per
share reporting for comparability purposes.
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.
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 fourth quarter of fiscal 2019 financial outlook,
renewed revenue growth from the Cavium business and 5G product
development growth; 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
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 to define,
design and develop products for the 5G market; Marvell's ability to
market its 5G products to Tier 1 infrastructure 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 Quarterly Report on Form 10-Q
for the fiscal quarter ended August 4,
2018 as filed with the SEC on September 12, 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, processing, networking, security 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
|
|
Nine Months
Ended
|
|
|
November 3,
2018
|
|
August 4,
2018
|
|
October 28,
2017
|
|
November 3,
2018
|
|
October 28,
2017
|
|
Net
revenue
|
|
$
|
851,051
|
|
|
$
|
665,310
|
|
|
$
|
616,302
|
|
|
$
|
2,120,992
|
|
|
$
|
1,793,761
|
|
|
Cost of goods
sold
|
|
467,464
|
|
|
288,200
|
|
|
238,533
|
|
|
984,602
|
|
|
705,303
|
|
|
Gross
profit
|
|
383,587
|
|
|
377,110
|
|
|
377,769
|
|
|
1,136,390
|
|
|
1,088,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
264,888
|
|
|
216,285
|
|
|
165,477
|
|
|
657,907
|
|
|
534,444
|
|
|
Selling, general and
administrative
|
|
112,178
|
|
|
133,701
|
|
|
59,112
|
|
|
318,192
|
|
|
169,875
|
|
|
Restructuring related
charges
|
|
27,031
|
|
|
35,415
|
|
|
3,284
|
|
|
64,013
|
|
|
8,455
|
|
|
Total operating
expenses
|
|
404,097
|
|
|
385,401
|
|
|
227,873
|
|
|
1,040,112
|
|
|
712,774
|
|
|
Operating income
(loss) from continuing operations
|
|
(20,510)
|
|
|
(8,291)
|
|
|
149,896
|
|
|
96,278
|
|
|
375,684
|
|
|
Interest
income
|
|
1,046
|
|
|
3,575
|
|
|
4,301
|
|
|
10,690
|
|
|
11,643
|
|
|
Interest
expense
|
|
(22,370)
|
|
|
(15,795)
|
|
|
(262)
|
|
|
(38,409)
|
|
|
(393)
|
|
|
Other income (loss),
net
|
|
(2,628)
|
|
|
(2,701)
|
|
|
2,161
|
|
|
(3,858)
|
|
|
5,471
|
|
|
Interest and other
income (loss), net
|
|
(23,952)
|
|
|
(14,921)
|
|
|
6,200
|
|
|
(31,577)
|
|
|
16,721
|
|
|
Income (loss) from
continuing operations before income taxes
|
|
(44,462)
|
|
|
(23,212)
|
|
|
156,096
|
|
|
64,701
|
|
|
392,405
|
|
|
Provision (benefit)
for income taxes
|
|
9,305
|
|
|
(29,971)
|
|
|
6,759
|
|
|
(16,903)
|
|
|
8,026
|
|
|
Income (loss) from
continuing operations, net of tax
|
|
(53,767)
|
|
|
6,759
|
|
|
149,337
|
|
|
81,604
|
|
|
384,379
|
|
|
Income from
discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
50,851
|
|
|
—
|
|
|
87,689
|
|
|
Net income
(loss)
|
|
$
|
(53,767)
|
|
|
$
|
6,759
|
|
|
$
|
200,188
|
|
|
$
|
81,604
|
|
|
$
|
472,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share — Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.08)
|
|
|
$
|
0.01
|
|
|
$
|
0.30
|
|
|
$
|
0.14
|
|
|
$
|
0.77
|
|
|
Discontinued
operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.11
|
|
|
$
|
—
|
|
|
$
|
0.17
|
|
|
Net income (loss) per
share - Basic
|
|
$
|
(0.08)
|
|
|
$
|
0.01
|
|
|
$
|
0.41
|
|
|
$
|
0.14
|
|
|
$
|
0.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share — Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.08)
|
|
|
$
|
0.01
|
|
|
$
|
0.30
|
|
|
$
|
0.14
|
|
|
$
|
0.75
|
|
|
Discontinued
operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.10
|
|
|
$
|
—
|
|
|
$
|
0.17
|
|
|
Net income (loss) per
share - Diluted
|
|
$
|
(0.08)
|
|
|
$
|
0.01
|
|
|
$
|
0.40
|
|
|
$
|
0.14
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
657,519
|
|
|
552,238
|
|
|
494,096
|
|
|
569,031
|
|
|
499,568
|
|
|
Diluted
|
|
657,519
|
|
|
562,149
|
|
|
504,903
|
|
|
578,872
|
|
|
510,935
|
|
|
Marvell Technology
Group Ltd.
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(In
thousands)
|
|
|
|
November 3,
2018
|
|
February 3,
2018
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
610,261
|
|
$
|
888,482
|
|
Short-term
investments
|
|
—
|
|
952,790
|
|
Accounts receivable,
net
|
|
453,775
|
|
280,395
|
|
Inventories
|
|
376,210
|
|
170,039
|
|
Prepaid expenses and
other current assets
|
|
49,230
|
|
41,482
|
|
Assets held for
sale
|
|
30,745
|
|
30,767
|
|
Total current
assets
|
|
1,520,221
|
|
2,363,955
|
|
Property and
equipment, net
|
|
313,113
|
|
202,222
|
|
Goodwill
|
|
5,499,145
|
|
1,993,310
|
|
Acquired intangible
assets, net
|
|
2,639,370
|
|
—
|
|
Other non-current
assets
|
|
260,176
|
|
148,800
|
|
Total
assets
|
|
$
|
10,232,025
|
|
$
|
4,708,287
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
209,562
|
|
$
|
145,236
|
|
Accrued
liabilities
|
|
302,095
|
|
86,958
|
|
Accrued employee
compensation
|
|
141,602
|
|
127,711
|
|
Deferred
income
|
|
2,947
|
|
61,237
|
|
Total current
liabilities
|
|
656,206
|
|
421,142
|
|
Long-term
debt
|
|
1,805,734
|
|
—
|
|
Non-current income
taxes payable
|
|
53,862
|
|
56,976
|
|
Deferred tax
liabilities
|
|
108,016
|
|
52,204
|
|
Other non-current
liabilities
|
|
32,928
|
|
36,552
|
|
Total
liabilities
|
|
2,656,746
|
|
566,874
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common
stock
|
|
1,314
|
|
991
|
|
Additional paid-in
capital
|
|
6,157,283
|
|
2,733,292
|
|
Accumulated other
comprehensive loss
|
|
—
|
|
(2,322)
|
|
Retained
earnings
|
|
1,416,682
|
|
1,409,452
|
|
Total shareholders'
equity
|
|
7,575,279
|
|
4,141,413
|
|
Total liabilities and
shareholders' equity
|
|
$
|
10,232,025
|
|
$
|
4,708,287
|
|
Marvell Technology
Group Ltd.
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
November 3,
2018
|
|
October 28,
2017
|
|
November 3,
2018
|
|
October 28,
2017
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(53,767)
|
|
|
$
|
200,188
|
|
|
$
|
81,604
|
|
|
$
|
472,068
|
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
39,259
|
|
|
21,383
|
|
|
86,356
|
|
|
62,569
|
|
|
Share-based
compensation
|
|
50,240
|
|
|
18,873
|
|
|
133,484
|
|
|
65,312
|
|
|
Amortization of
acquired intangible assets
|
|
78,691
|
|
|
1,076
|
|
|
104,630
|
|
|
3,212
|
|
|
Amortization of
inventory fair value adjustment associated with acquisition of
Cavium
|
|
102,842
|
|
|
—
|
|
|
125,775
|
|
|
—
|
|
|
Amortization of
deferred debt issuance costs and debt discounts
|
|
2,217
|
|
|
—
|
|
|
9,290
|
|
|
—
|
|
|
Restructuring related
impairment charges (gain)
|
|
9,888
|
|
|
44
|
|
|
11,881
|
|
|
(402)
|
|
|
Gain from investments
in privately-held companies
|
|
—
|
|
|
(1,751)
|
|
|
(1,100)
|
|
|
(2,501)
|
|
|
Amortization
(accretion) of premium/discount on available-for-sale
securities
|
|
—
|
|
|
(200)
|
|
|
624
|
|
|
603
|
|
|
Other non-cash expense
(income), net
|
|
—
|
|
|
2,755
|
|
|
4,227
|
|
|
1,331
|
|
|
Deferred income
taxes
|
|
(6,261)
|
|
|
7
|
|
|
(27,675)
|
|
|
2,797
|
|
|
Loss (gain) on sale of
property and equipment
|
|
179
|
|
|
(190)
|
|
|
59
|
|
|
(473)
|
|
|
Gain on sale of
discontinued operations
|
|
—
|
|
|
(46,219)
|
|
|
—
|
|
|
(88,406)
|
|
|
Loss (gain) on sale of
business
|
|
1,592
|
|
|
—
|
|
|
1,592
|
|
|
(5,254)
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(10,948)
|
|
|
5,583
|
|
|
(59,697)
|
|
|
(30,730)
|
|
|
Inventories
|
|
(5,007)
|
|
|
(1,327)
|
|
|
1,859
|
|
|
(16,039)
|
|
|
Prepaid expenses and
other assets
|
|
7,630
|
|
|
5,268
|
|
|
(11,874)
|
|
|
13,122
|
|
|
Accounts
payable
|
|
22,531
|
|
|
16,119
|
|
|
22,260
|
|
|
20,087
|
|
|
Accrued liabilities
and other non-current liabilities
|
|
40,255
|
|
|
(7,046)
|
|
|
29,023
|
|
|
(40,462)
|
|
|
Accrued employee
compensation
|
|
20,617
|
|
|
(2,237)
|
|
|
(20,922)
|
|
|
(10,612)
|
|
|
Deferred
income
|
|
(564)
|
|
|
3,865
|
|
|
(1,293)
|
|
|
5,149
|
|
|
Net cash provided by
operating activities
|
|
299,394
|
|
|
216,191
|
|
|
490,103
|
|
|
451,371
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of
available-for-sale securities
|
|
—
|
|
|
(296,659)
|
|
|
(14,956)
|
|
|
(672,887)
|
|
|
Sales of
available-for-sale securities
|
|
—
|
|
|
167,451
|
|
|
623,896
|
|
|
284,151
|
|
|
Maturities of
available-for-sale securities
|
|
—
|
|
|
136,090
|
|
|
187,985
|
|
|
305,702
|
|
|
Return of investment
from privately-held companies
|
|
—
|
|
|
3,701
|
|
|
—
|
|
|
6,089
|
|
|
Purchases of time
deposits
|
|
—
|
|
|
(75,000)
|
|
|
(25,000)
|
|
|
(225,000)
|
|
|
Maturities of time
deposits
|
|
25,000
|
|
|
75,000
|
|
|
175,000
|
|
|
225,000
|
|
|
Purchases of
technology licenses
|
|
(9,918)
|
|
|
(3,555)
|
|
|
(11,181)
|
|
|
(5,256)
|
|
|
Purchases of property
and equipment
|
|
(12,646)
|
|
|
(10,613)
|
|
|
(47,035)
|
|
|
(25,156)
|
|
|
Proceeds from sales of
property and equipment
|
|
595
|
|
|
249
|
|
|
818
|
|
|
1,988
|
|
|
Cash payment for
acquisition of Cavium, net of cash and cash equivalents
acquired
|
|
—
|
|
|
—
|
|
|
(2,649,465)
|
|
|
—
|
|
|
Net proceeds from sale
of discontinued operations
|
|
—
|
|
|
93,735
|
|
|
—
|
|
|
165,940
|
|
|
Net proceeds
(payments) from sale of business
|
|
(4,602)
|
|
|
2,402
|
|
|
(3,352)
|
|
|
2,402
|
|
|
Other
|
|
—
|
|
|
—
|
|
|
(5,000)
|
|
|
—
|
|
|
Net cash provided by
(used in) investing activities
|
|
(1,571)
|
|
|
92,801
|
|
|
(1,768,290)
|
|
|
62,973
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
(53,969)
|
|
|
(140,017)
|
|
|
(53,969)
|
|
|
(527,574)
|
|
|
Proceeds from employee
stock plans
|
|
16,192
|
|
|
39,614
|
|
|
60,772
|
|
|
137,424
|
|
|
Tax withholding paid
on behalf of employees for net share settlement
|
|
(8,915)
|
|
|
(1,120)
|
|
|
(45,691)
|
|
|
(25,934)
|
|
|
Dividend payments to
shareholders
|
|
(39,411)
|
|
|
(29,470)
|
|
|
(108,592)
|
|
|
(89,556)
|
|
|
Payments on technology
license obligations
|
|
(23,003)
|
|
|
(8,401)
|
|
|
(52,481)
|
|
|
(22,697)
|
|
|
Proceeds from
issuance of debt
|
|
—
|
|
|
—
|
|
|
1,892,605
|
|
|
—
|
|
|
Principal payments of
debt
|
|
(75,000)
|
|
|
—
|
|
|
(681,128)
|
|
|
—
|
|
|
Payment of equity and
debt financing costs
|
|
(2,115)
|
|
|
—
|
|
|
(11,550)
|
|
|
—
|
|
|
Net cash provided by
(used in) financing activities
|
|
(186,221)
|
|
|
(139,394)
|
|
|
999,966
|
|
|
(528,337)
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
111,602
|
|
|
169,598
|
|
|
(278,221)
|
|
|
(13,993)
|
|
|
Cash and cash
equivalents at beginning of period
|
|
498,659
|
|
|
630,501
|
|
|
888,482
|
|
|
814,092
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
610,261
|
|
|
$
|
800,099
|
|
|
$
|
610,261
|
|
|
$
|
800,099
|
|
|
Marvell Technology
Group Ltd.
|
|
Reconciliations
from GAAP to Non-GAAP (Unaudited)
|
|
(In thousands,
except per share amounts)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
November 3,
2018
|
|
August 4,
2018
|
|
October 28,
2017
|
|
November 3,
2018
|
|
October 28,
2017
|
|
GAAP gross
profit:
|
|
$
|
383,587
|
|
|
$
|
377,110
|
|
|
$
|
377,769
|
|
|
$
|
1,136,390
|
|
|
$
|
1,088,458
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
2,429
|
|
|
4,748
|
|
|
1,747
|
|
|
9,082
|
|
|
4,983
|
|
|
Amortization of
acquired intangible assets
|
|
57,594
|
|
|
18,984
|
|
|
—
|
|
|
76,577
|
|
|
—
|
|
|
Other cost of goods
sold (a)
|
|
105,841
|
|
|
22,933
|
|
|
—
|
|
|
128,774
|
|
|
3,000
|
|
|
Total special
items
|
|
165,864
|
|
|
46,665
|
|
|
1,747
|
|
|
214,433
|
|
|
7,983
|
|
|
Non-GAAP gross
profit
|
|
$
|
549,451
|
|
|
$
|
423,775
|
|
|
$
|
379,516
|
|
|
$
|
1,350,823
|
|
|
$
|
1,096,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
|
45.1
|
%
|
|
56.7
|
%
|
|
61.3
|
%
|
|
53.6
|
%
|
|
60.7
|
%
|
|
Non-GAAP gross
margin
|
|
64.6
|
%
|
|
63.7
|
%
|
|
61.6
|
%
|
|
63.7
|
%
|
|
61.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total GAAP operating
expenses
|
|
$
|
404,097
|
|
|
$
|
385,401
|
|
|
$
|
227,873
|
|
|
$
|
1,040,112
|
|
|
$
|
712,774
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
(47,811)
|
|
|
(68,675)
|
|
|
(18,892)
|
|
|
(138,433)
|
|
|
(58,762)
|
|
|
Restructuring related
charges (b)
|
|
(27,031)
|
|
|
(35,415)
|
|
|
(3,284)
|
|
|
(64,013)
|
|
|
(8,455)
|
|
|
Amortization of
acquired intangible assets
|
|
(21,098)
|
|
|
(6,955)
|
|
|
(1,076)
|
|
|
(28,053)
|
|
|
(3,212)
|
|
|
Other operating
expenses (c)
|
|
(11,222)
|
|
|
(28,229)
|
|
|
(120)
|
|
|
(54,703)
|
|
|
(4,110)
|
|
|
Total special
items
|
|
(107,162)
|
|
|
(139,274)
|
|
|
(23,372)
|
|
|
(285,202)
|
|
|
(74,539)
|
|
|
Total non-GAAP
operating expenses
|
|
$
|
296,935
|
|
|
$
|
246,127
|
|
|
$
|
204,501
|
|
|
$
|
754,910
|
|
|
$
|
638,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
(2.4)
|
%
|
|
(1.2)
|
%
|
|
24.3
|
%
|
|
4.5
|
%
|
|
20.9
|
%
|
|
Other cost of goods
sold (a)
|
|
12.4
|
%
|
|
3.5
|
%
|
|
—
|
%
|
|
6.1
|
%
|
|
0.2
|
%
|
|
Share-based
compensation
|
|
5.9
|
%
|
|
11.0
|
%
|
|
3.3
|
%
|
|
7.0
|
%
|
|
3.6
|
%
|
|
Restructuring related
charges (b)
|
|
3.2
|
%
|
|
5.3
|
%
|
|
0.5
|
%
|
|
3.0
|
%
|
|
0.5
|
%
|
|
Amortization and
write-off of acquired intangible assets
|
|
9.2
|
%
|
|
3.9
|
%
|
|
0.2
|
%
|
|
4.9
|
%
|
|
0.2
|
%
|
|
Other operating
expenses (c)
|
|
1.4
|
%
|
|
4.2
|
%
|
|
0.1
|
%
|
|
2.6
|
%
|
|
0.1
|
%
|
|
Non-GAAP operating
margin
|
|
29.7
|
%
|
|
26.7
|
%
|
|
28.4
|
%
|
|
28.1
|
%
|
|
25.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP interest and
other income (loss), net
|
|
$
|
(23,952)
|
|
|
$
|
(14,921)
|
|
|
$
|
6,200
|
|
|
$
|
(31,577)
|
|
|
$
|
16,721
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring related
items (d)
|
|
1,491
|
|
|
(121)
|
|
|
(2,286)
|
|
|
(142)
|
|
|
(5,371)
|
|
|
Write-off of debt
issuance costs (e)
|
|
850
|
|
|
6,104
|
|
|
—
|
|
|
6,954
|
|
|
—
|
|
|
Total special
items
|
|
2,341
|
|
|
5,983
|
|
|
(2,286)
|
|
|
6,812
|
|
|
(5,371)
|
|
|
Total non-GAAP
interest and other income (loss), net
|
|
$
|
(21,611)
|
|
|
$
|
(8,938)
|
|
|
$
|
3,914
|
|
|
$
|
(24,765)
|
|
|
$
|
11,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
|
(53,767)
|
|
|
$
|
6,759
|
|
|
$
|
200,188
|
|
|
$
|
81,604
|
|
|
$
|
472,068
|
|
|
Less: Income from
discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
50,851
|
|
|
—
|
|
|
87,689
|
|
|
GAAP net income
(loss) from continuing operations
|
|
(53,767)
|
|
|
6,759
|
|
|
149,337
|
|
|
81,604
|
|
|
384,379
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Other cost of goods
sold (a)
|
|
105,841
|
|
|
22,933
|
|
|
—
|
|
|
128,774
|
|
|
3,000
|
|
|
Share-based
compensation
|
|
50,240
|
|
|
73,423
|
|
|
20,639
|
|
|
147,515
|
|
|
63,745
|
|
|
Restructuring related
charges in operating expenses (b)
|
|
27,031
|
|
|
35,415
|
|
|
3,284
|
|
|
64,013
|
|
|
8,455
|
|
|
Restructuring related
items in interest and other income, net (d)
|
|
1,491
|
|
|
(121)
|
|
|
(2,286)
|
|
|
(142)
|
|
|
(5,371)
|
|
|
Amortization of
acquired intangible assets
|
|
78,692
|
|
|
25,939
|
|
|
1,076
|
|
|
104,630
|
|
|
3,212
|
|
|
Write-off of debt
issuance costs (e)
|
|
850
|
|
|
6,104
|
|
|
—
|
|
|
6,954
|
|
|
—
|
|
|
Other operating
expenses (c)
|
|
11,222
|
|
|
28,229
|
|
|
120
|
|
|
54,703
|
|
|
4,110
|
|
|
Pre-tax total special
items
|
|
275,367
|
|
|
191,922
|
|
|
22,833
|
|
|
506,447
|
|
|
77,151
|
|
|
Other income tax
effects and adjustments (f)
|
|
55
|
|
|
(36,720)
|
|
|
(398)
|
|
|
(39,763)
|
|
|
(10,760)
|
|
|
Non-GAAP net income
from continuing operations
|
|
$
|
221,655
|
|
|
$
|
161,961
|
|
|
$
|
171,772
|
|
|
$
|
548,288
|
|
|
$
|
450,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares — basic
|
|
657,519
|
|
|
552,238
|
|
|
494,096
|
|
|
569,031
|
|
|
499,568
|
|
|
Weighted average
shares — diluted
|
|
657,519
|
|
|
562,149
|
|
|
504,903
|
|
|
578,872
|
|
|
510,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net
income (loss) per share from continuing operations
|
|
$
|
(0.08)
|
|
|
$
|
0.01
|
|
|
$
|
0.30
|
|
|
$
|
0.14
|
|
|
$
|
0.75
|
|
|
Non-GAAP diluted net
income per share from continuing operations (g)
|
|
$
|
0.33
|
|
|
$
|
0.28
|
|
|
$
|
0.34
|
|
|
$
|
0.95
|
|
|
$
|
0.87
|
|
|
|
|
(a)
|
Other costs of goods
sold includes amortization of the Cavium inventory fair value step
up and charges for past intellectual property licensing
matters.
|
|
|
|
(b)
|
Restructuring related
charges include employee severance, facilities related costs, and
impairment of equipment and other assets.
|
|
|
|
(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)
|
Write-off of debt
issuance costs is associated with the partial term loan repayment
during the three months ended November 3, 2018 and the terminated
bridge loan commitment during the three months ended August 4,
2018.
|
|
|
|
(f)
|
Other income tax
effects and adjustments relate to tax provision based on a non-GAAP
income tax rate of 4%.
|
|
|
|
(g)
|
Non-GAAP diluted net
income per share from continuing operations for the three months
ended November 3, 2018 was calculated by dividing non-GAAP net
income from continuing operations by weighted average shares
outstanding (diluted) of 665,752 shares due to the non-GAAP net
income reported in that period.
|
|
Marvell Technology
Group Ltd.
|
|
Outlook for the
Fourth Quarter of Fiscal Year 2019
|
|
Reconciliations
from GAAP to Non-GAAP (Unaudited)
|
|
(In millions,
except per share amounts)
|
|
|
|
|
|
Outlook for Three
Months Ended
February 2,
2019
|
|
GAAP
revenue
|
$790 -
$830
|
|
Special
items:
|
—
|
|
Non-GAAP
revenue
|
$790 -
$830
|
|
|
|
GAAP gross
margin
|
46%
|
|
Special
items:
|
|
|
Share-based
compensation
|
0.2%
|
|
Amortization of
acquired intangible assets
|
7%
|
|
Other costs of goods
sold
|
12%
|
|
Non-GAAP gross
margin
|
65%
|
|
|
|
Total GAAP
operating expenses
|
$375 -
$385
|
|
Special
items:
|
|
|
Share-based
compensation
|
55
|
|
Restructuring related
charges
|
15
|
|
Amortization of
acquired intangible assets
|
21
|
|
Other operating
expenses
|
2
|
|
Total non-GAAP
operating expenses
|
$285 -
$290
|
|
|
|
|
|
GAAP diluted net
income per share from continuing operations
|
$(0.05) -
$(0.01)
|
|
Special
items:
|
|
|
Other costs of goods
sold
|
0.15
|
|
Share-based
compensation
|
0.09
|
|
Restructuring related
charges in operating expenses
|
0.02
|
|
Amortization of
acquired intangible assets
|
0.12
|
|
Other (gains) and
losses in interest and other income, net
|
(0.01)
|
|
Other income tax
effects and adjustments
|
(0.02)
|
|
Non-GAAP diluted net
income per share from continuing operations
|
$0.30 -
$0.34
|
|
Quarterly Revenue
Trend (Unaudited)
|
|
(In
thousands)
|
|
|
|
|
Three Months
Ended
|
|
%
Change
|
|
November 3,
2018
|
|
August
4,
2018*
|
|
October 28,
2017
|
|
YoY
|
|
QoQ
|
|
Storage
(1)
|
$
|
406,822
|
|
|
$
|
335,764
|
|
|
$
|
315,338
|
|
|
29
|
%
|
|
21
|
%
|
|
Networking
(2)
|
398,424
|
|
|
283,330
|
|
|
253,159
|
|
|
57
|
%
|
|
41
|
%
|
|
Total
Core
|
805,246
|
|
|
619,094
|
|
|
568,497
|
|
|
42
|
%
|
|
30
|
%
|
|
Other
(3)
|
45,805
|
|
|
46,216
|
|
|
47,805
|
|
|
(4)
|
%
|
|
(1)
|
%
|
|
Total
Revenue
|
$
|
851,051
|
|
|
$
|
665,310
|
|
|
$
|
616,302
|
|
|
38
|
%
|
|
28
|
%
|
|
|
* 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
|
November 3,
2018
|
|
August 4,
2018
|
|
October 28,
2017
|
|
Storage
(1)
|
48
|
%
|
|
50
|
%
|
|
51
|
%
|
|
Networking
(2)
|
47
|
%
|
|
43
|
%
|
|
41
|
%
|
|
Total
Core
|
95
|
%
|
|
93
|
%
|
|
92
|
%
|
|
Other
(3)
|
5
|
%
|
|
7
|
%
|
|
8
|
%
|
|
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.