Santa Clara, California (December 2, 2008) – arvell Technology Group Ltd. (NASDAQ: MRVL), a leader in storage, communications and consumer silicon solutions, today reported financial results for the third quarter of fiscal year 2009, ended November 1, 2008.
Net revenue for the third quarter of fiscal 2009 was $791.0 million, an increase of 4 percent over $758.2 million in the third quarter of fiscal 2008, ended October 27, 2007, and a 6 percent sequential decrease from $842.6 million in the second quarter of fiscal 2009, ended August 2, 2008.
“The results for our third quarter were in-line with our revised expectations, however we continue to experience limited visibility into the near-term demand for our products,” said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. “We are taking the appropriate steps to better align our operating expenses to reflect the challenging business environment we face. Our results in our third quarter demonstrate initial progress toward these goals.”
Marvell reports net income (loss), basic and diluted net income (loss) 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 (loss) to non-GAAP net income for the three and nine months ended November 1, 2008 and October 27, 2007 appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation, amortization and write-offs of acquired intangible assets and restructuring costs.
GAAP net income was $70.9 million, or $0.11 per share (diluted), for the third quarter of fiscal 2009, compared with a GAAP net loss of $6.4 million, or a loss of $0.01 per share for the third quarter of fiscal 2008. In the second quarter of fiscal 2009 GAAP net income was $71.4 million, or $0.11 per share (diluted).
Non-GAAP net income increased to $145.3 million, or $0.23 per share (diluted) for the third quarter of fiscal 2009, a 69 percent increase compared with non-GAAP net income of $86.2 million, or $0.14 per share (diluted) for the third quarter of fiscal 2008 and a decrease of 6 percent from non-GAAP net income of $154.0 million, or $0.24 per share (diluted) for the second quarter of fiscal 2009.
Non-GAAP gross margin for the third quarter of fiscal 2009 was 52.3 percent, compared to non-GAAP gross margin of 52.3 percent for the second quarter of fiscal 2009 and non-GAAP gross margin of 48.3 percent for the third quarter of fiscal 2008.
Shares used to compute GAAP net income per diluted share, for the third quarter of fiscal 2009 were 631 million shares, compared with 591 million shares in the third quarter of fiscal 2008 and 638 million shares in the second quarter of fiscal 2009. Shares used to compute non-GAAP net income per diluted share for the third quarter of fiscal 2009 were 633 million shares compared with 631 million shares for the third quarter of fiscal 2008 and 640 million shares for the second quarter of fiscal 2009.
Cash flow from operations for the third quarter of fiscal 2009 was $258.5 million, up 41 percent sequentially from the $182.9 million reported in the second quarter of fiscal 2009. Free cash flow, defined as cash flow from operations, less investments in property, plant and equipment, was $245.7 million, up 47 percent sequentially from the $166.9 million reported in the second quarter of fiscal 2009.
Marvell will be conducting a conference call on December 2, 2008 at 1:45 p.m. PST to discuss results for the third quarter of fiscal 2009. Interested parties may dial-in to the conference call at 1-866-700-7173, pass-code 97916114. The call is being webcast by ThomsonReuters and can be accessed at Marvell’s website under the Investor Events section of the Investor Relations page at http://www.marvell.com/investors/events.jsp. Replay of the call can be accessed by dialing 1-888-286-8010, and referring to conference code 42768501 until midnight December 9, 2008.
Non-GAAP financial measures exclude stock-based compensation expense as well as charges related to acquisitions and other charges and gains that are driven primarily by discrete events that management does not consider to be directly related to Marvell’s core operating performance. Non-GAAP earnings per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP earnings per share, the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the potential benefits of compensation costs 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/antidilutive effects of warrants, common stock options and restricted stock.
Marvell believes that the presentation of non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to Marvell’s financial condition and results of operations. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, Marvell believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. For further information regarding why Marvell believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to Marvell’s Current Report on Form 8-K filed today with the SEC. The Form 8-K is available on the SEC’s website at www.sec.gov as well as on the Marvell website in the Investor Relations section at www.marvell.com.
Marvell Technology (NASDAQ: MRVL) is a global leader in the development of storage, communications and consumer silicon solutions. Marvell’s diverse product portfolio includes switching, transceiver, communications controller, wireless, and storage solutions that power the entire communications infrastructure, including enterprise, metro, home, and storage networking. As used in this release, the terms “Company” and “Marvell” refer to Marvell Technology Group Ltd. and its subsidiaries. For more information visit www.marvell.com.
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the near-term demand for our products and our expected progress toward aligning our operating expenses to the business environment we face and statements concerning the Company’s use of non-GAAP net income and net income per share as important supplemental information. These statements are not guarantees of results and should not be considered as an indication of future performance. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties, including, among others, the Company’s reliance on major customers and suppliers; market acceptance of new products; and other risks detailed in Marvell’s SEC filings. When Marvell files its Form 10-Q for the third quarter of fiscal 2009, 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. The Company's results also remain subject to review by the Company's independent registered public accounting firm. 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 August 2, 2008 and Current Reports on Form 8-K, 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.