SANTA CLARA, Calif.,
Aug. 24, 2017 /PRNewswire/
-- Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in
storage, networking and connectivity semiconductor solutions, today
reported financial results for the second fiscal quarter of fiscal
year 2018. Revenue for the second quarter of fiscal 2018 was
$605 million, which exceeded the
midpoint of the Company's guidance provided on May 25, 2017.
GAAP net income from continuing operations for the second
quarter of fiscal 2018 was $135
million, or $0.26 per share.
Non-GAAP net income from continuing operations for the second
quarter of fiscal 2018 was $153
million, or $0.30 per diluted
share. Cash flow from operations for the second quarter was
$101 million.
"I am pleased to report that our second quarter results
demonstrated Marvell's continued transformation as a company,
achieving revenue above the midpoint of our guidance, improved
profitability and continued return of capital to shareholders,"
said Matt Murphy, Marvell's
President and CEO. "I'm proud of our team -- in a competitive
environment, we are delivering innovative solutions that our
customers clearly value."
Third Quarter of Fiscal 2018 Financial Outlook
- Revenue is expected to be $595 million
to $625 million.
- GAAP and non-GAAP gross margins are expected to be
approximately 61% to 62%.
- GAAP operating expenses are expected to be $230 million to $240 million.
- Non-GAAP operating expenses are expected to be $205 million to $210 million.
- GAAP diluted EPS from continuing operations is expected to be
in the range of $0.25 to $0.31 per
share.
- Non-GAAP diluted EPS from continuing operations is expected to
be in the range of $0.30 to $0.34 per
share.
Discontinued Operations
The Company's financial results for prior periods presented
herein have been recast to reflect certain businesses that were
classified as discontinued operations during the fourth quarter of
fiscal year 2017 and second quarter of fiscal year 2018.
Conference Call
Marvell will conduct a conference call on Thursday, August 24, 2017 at 1:45 p.m. Pacific Time to discuss results for the
second quarter of fiscal 2018. Interested parties may join the
conference call by dialing 1-844-647-5488 or 1-615-247-0258,
pass-code 57564938. 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 September 1, 2017.
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 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 operating performance.
In fiscal 2018, Marvell began using 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 2018, 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.
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 regarding its
third quarter of fiscal 2018 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:
Marvell's ability to successfully restructure its operations
within its anticipated timeframe announced in November 2016 and with the anticipated amounts of
costs and savings; Marvell's dependence upon the storage,
networking and connectivity 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 Quarterly Report on Form 10-Q for the fiscal quarter
ended April 29, 2017 as filed with
the SEC on June 5, 2017, 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
|
|
|
July 29,
2017
|
|
April 29,
2017
|
|
July 30,
2016
|
|
July 29,
2017
|
|
July 30,
2016
|
|
Net
revenue
|
|
$
|
604,750
|
|
$
|
572,709
|
|
$
|
597,346
|
|
$
|
1,177,459
|
|
$
|
1,110,979
|
|
Cost of goods
sold
|
|
239,572
|
|
227,198
|
|
270,427
|
|
466,770
|
|
510,360
|
|
Gross
profit
|
|
365,178
|
|
345,511
|
|
326,919
|
|
710,689
|
|
600,619
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
180,871
|
|
188,096
|
|
207,943
|
|
368,967
|
|
427,351
|
|
Selling, general and
administrative
|
|
55,659
|
|
55,104
|
|
67,896
|
|
110,763
|
|
131,964
|
|
Restructuring related
charges
|
|
4,285
|
|
886
|
|
721
|
|
5,171
|
|
5,162
|
|
Total operating
expenses
|
|
240,815
|
|
244,086
|
|
276,560
|
|
484,901
|
|
564,477
|
|
Operating
income
|
|
124,363
|
|
101,425
|
|
50,359
|
|
225,788
|
|
36,142
|
|
Interest and other
income, net
|
|
7,188
|
|
3,333
|
|
6,284
|
|
10,521
|
|
7,772
|
|
Income from
continuing operations before income taxes
|
|
131,551
|
|
104,758
|
|
56,643
|
|
236,309
|
|
43,914
|
|
Provision (benefit)
for income taxes
|
|
(3,899)
|
|
5,166
|
|
(5,823)
|
|
1,267
|
|
(11,260)
|
|
Income from
continuing operations
|
|
135,450
|
|
99,592
|
|
62,466
|
|
235,042
|
|
55,174
|
|
Income (loss) from
discontinued operations, net of tax
|
|
29,809
|
|
7,029
|
|
(11,161)
|
|
36,838
|
|
(26,548)
|
|
Net income
|
|
$
|
165,259
|
|
$
|
106,621
|
|
$
|
51,305
|
|
$
|
271,880
|
|
$
|
28,626
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share — Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.27
|
|
$
|
0.20
|
|
$
|
0.12
|
|
$
|
0.47
|
|
$
|
0.11
|
|
Discontinued
operations
|
|
$
|
0.06
|
|
$
|
0.01
|
|
$
|
(0.02)
|
|
$
|
0.07
|
|
$
|
(0.05)
|
|
Net income per share
- basic
|
|
$
|
0.33
|
|
$
|
0.21
|
|
$
|
0.10
|
|
$
|
0.54
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share — Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.26
|
|
$
|
0.19
|
|
$
|
0.12
|
|
$
|
0.46
|
|
$
|
0.11
|
|
Discontinued
operations
|
|
$
|
0.06
|
|
$
|
0.02
|
|
$
|
(0.02)
|
|
$
|
0.07
|
|
$
|
(0.05)
|
|
Net income per share
- diluted
|
|
$
|
0.32
|
|
$
|
0.21
|
|
$
|
0.10
|
|
$
|
0.53
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
500,817
|
|
503,790
|
|
511,235
|
|
502,303
|
|
510,014
|
|
Diluted
|
|
510,309
|
|
517,592
|
|
514,314
|
|
513,951
|
|
513,669
|
|
Marvell Technology
Group Ltd.
|
|
Condensed
Consolidated Balance Sheets
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
July 29,
2017
|
|
January 28,
2017
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
630,501
|
|
$
|
814,092
|
|
Short-term
investments
|
|
943,006
|
|
854,268
|
|
Accounts receivable,
net
|
|
371,697
|
|
335,384
|
|
Inventories
|
|
175,355
|
|
170,842
|
|
Prepaid expenses and
other current assets
|
|
46,491
|
|
58,771
|
|
Assets held for
sale
|
|
41,896
|
|
57,077
|
|
Total current
assets
|
|
2,208,946
|
|
2,290,434
|
|
Property and
equipment, net
|
|
235,354
|
|
243,397
|
|
Goodwill and acquired
intangible assets, net
|
|
1,994,743
|
|
1,996,880
|
|
Other non-current
assets
|
|
148,407
|
|
117,939
|
|
Total
assets
|
|
$
|
4,587,450
|
|
$
|
4,648,650
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
153,862
|
|
$
|
143,484
|
|
Accrued
liabilities
|
|
106,351
|
|
143,491
|
|
Accrued employee
compensation
|
|
131,272
|
|
139,647
|
|
Deferred
income
|
|
70,063
|
|
63,976
|
|
Liabilities held for
sale
|
|
1,015
|
|
5,818
|
|
Total current
liabilities
|
|
462,563
|
|
496,416
|
|
Non-current income
taxes payable
|
|
55,714
|
|
60,646
|
|
Other non-current
liabilities
|
|
95,076
|
|
63,937
|
|
Total
liabilities
|
|
613,353
|
|
620,999
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common
stock
|
|
991
|
|
1,012
|
|
Additional paid-in
capital
|
|
2,752,541
|
|
3,016,775
|
|
Accumulated other
comprehensive income
|
|
899
|
|
23
|
|
Retained
earnings
|
|
1,219,666
|
|
1,009,841
|
|
Total shareholders'
equity
|
|
3,974,097
|
|
4,027,651
|
|
Total liabilities and
shareholders' equity
|
|
$
|
4,587,450
|
|
$
|
4,648,650
|
|
Marvell Technology
Group Ltd.
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
July 29,
2017
|
|
July 30,
2016
|
|
July 29,
2017
|
|
July 30,
2016
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
165,259
|
|
|
$
|
51,305
|
|
|
$
|
271,880
|
|
|
$
|
28,626
|
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
20,444
|
|
|
26,866
|
|
|
41,186
|
|
|
53,980
|
|
|
Share-based
compensation
|
|
22,422
|
|
|
37,196
|
|
|
46,439
|
|
|
61,649
|
|
|
Amortization and
write-off of acquired intangible assets
|
|
1,065
|
|
|
2,946
|
|
|
2,136
|
|
|
5,892
|
|
|
Deferred income
taxes
|
|
2,008
|
|
|
53
|
|
|
2,791
|
|
|
(2,423)
|
|
|
Excess tax benefits
from share-based compensation
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(5)
|
|
|
Gain on sale of
businesses
|
|
(39,309)
|
|
|
—
|
|
|
(47,464)
|
|
|
—
|
|
|
Other
|
|
(1,551)
|
|
|
718
|
|
|
(1,886)
|
|
|
2,975
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(14,550)
|
|
|
(68,025)
|
|
|
(36,313)
|
|
|
(25,383)
|
|
|
Inventories
|
|
(3,170)
|
|
|
(6,364)
|
|
|
(14,712)
|
|
|
7,234
|
|
|
Prepaid expenses and
other assets
|
|
2,460
|
|
|
6,605
|
|
|
8,882
|
|
|
(6,612)
|
|
|
Accounts
payable
|
|
(27,455)
|
|
|
20,437
|
|
|
3,968
|
|
|
40,359
|
|
|
Accrued liabilities
and other non-current liabilities
|
|
(21,793)
|
|
|
(7,741)
|
|
|
(33,418)
|
|
|
(30,243)
|
|
|
Carnegie Mellon
University accrued litigation settlement (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(736,000)
|
|
|
Accrued employee
compensation
|
|
(846)
|
|
|
(22,270)
|
|
|
(8,375)
|
|
|
(15,118)
|
|
|
Deferred
income
|
|
(3,732)
|
|
|
17,561
|
|
|
1,284
|
|
|
16,327
|
|
|
Net cash provided by
(used in) operating activities
|
|
101,252
|
|
|
59,282
|
|
|
236,398
|
|
|
(598,742)
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of
available-for-sale securities
|
|
(177,811)
|
|
|
(110,358)
|
|
|
(376,227)
|
|
|
(203,723)
|
|
|
Sales of
available-for-sale securities
|
|
37,936
|
|
|
67,824
|
|
|
116,700
|
|
|
340,095
|
|
|
Maturities of
available-for-sale securities
|
|
87,376
|
|
|
48,682
|
|
|
169,611
|
|
|
146,470
|
|
|
Purchase of time
deposits
|
|
(75,000)
|
|
|
(75,000)
|
|
|
(150,000)
|
|
|
(125,000)
|
|
|
Maturities of time
deposits
|
|
75,000
|
|
|
—
|
|
|
150,000
|
|
|
—
|
|
|
Return of investment
from privately-held companies
|
|
2,388
|
|
|
—
|
|
|
2,388
|
|
|
—
|
|
|
Purchases of
technology licenses
|
|
(608)
|
|
|
(3,995)
|
|
|
(1,701)
|
|
|
(8,045)
|
|
|
Purchases of property
and equipment
|
|
(4,020)
|
|
|
(12,509)
|
|
|
(14,046)
|
|
|
(24,377)
|
|
|
Net proceeds from sale
of businesses
|
|
42,000
|
|
|
—
|
|
|
72,229
|
|
|
—
|
|
|
Net cash provided by
(used in) investing activities
|
|
(12,739)
|
|
|
(85,356)
|
|
|
(31,046)
|
|
|
125,420
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
(221,265)
|
|
|
—
|
|
|
(387,558)
|
|
|
—
|
|
|
Proceeds from employee
stock plans
|
|
77,872
|
|
|
244
|
|
|
97,811
|
|
|
559
|
|
|
Minimum tax
withholding paid on behalf of employees for net share
settlement
|
|
(3,005)
|
|
|
(112)
|
|
|
(24,814)
|
|
|
(15,382)
|
|
|
Dividend payments to
shareholders
|
|
(30,095)
|
|
|
(30,675)
|
|
|
(60,086)
|
|
|
(61,136)
|
|
|
Payments on technology
license obligations
|
|
(7,481)
|
|
|
(4,858)
|
|
|
(14,296)
|
|
|
(10,152)
|
|
|
Excess tax benefits
from share-based compensation
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
Net cash used in
financing activities
|
|
(183,974)
|
|
|
(35,396)
|
|
|
(388,943)
|
|
|
(86,106)
|
|
|
Net decrease in cash
and cash equivalents
|
|
(95,461)
|
|
|
(61,470)
|
|
|
(183,591)
|
|
|
(559,428)
|
|
|
Cash and cash
equivalents at beginning of period
|
|
725,962
|
|
|
780,222
|
|
|
814,092
|
|
|
1,278,180
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
630,501
|
|
|
$
|
718,752
|
|
|
$
|
630,501
|
|
|
$
|
718,752
|
|
|
|
|
(a)
|
The Company paid
$750.0 million to Carnegie Mellon University in connection
with a litigation settlement agreement reached in February
2016.
|
|
Marvell Technology
Group Ltd.
Reconciliations
from GAAP to Non-GAAP
(Unaudited)
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
July 29,
2017
|
|
April 29,
2017
|
|
July 30,
2016
|
|
July 29,
2017
|
|
July 30,
2016
|
|
GAAP gross
profit:
|
|
$
|
365,178
|
|
|
$
|
345,511
|
|
|
$
|
326,919
|
|
|
$
|
710,689
|
|
|
$
|
600,619
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
1,810
|
|
|
1,426
|
|
|
2,720
|
|
|
3,236
|
|
|
4,504
|
|
|
Other cost of goods
sold (a)
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|
Total special
items
|
|
4,810
|
|
|
1,426
|
|
|
2,720
|
|
|
6,236
|
|
|
4,504
|
|
|
Non-GAAP gross
profit
|
|
$
|
369,988
|
|
|
$
|
346,937
|
|
|
$
|
329,639
|
|
|
$
|
716,925
|
|
|
$
|
605,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
|
60.4
|
%
|
|
60.3
|
%
|
|
54.7
|
%
|
|
60.4
|
%
|
|
54.1
|
%
|
|
Non-GAAP gross
margin
|
|
61.2
|
%
|
|
60.6
|
%
|
|
55.2
|
%
|
|
60.9
|
%
|
|
54.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total GAAP operating
expenses
|
|
$
|
240,815
|
|
|
$
|
244,086
|
|
|
$
|
276,560
|
|
|
$
|
484,901
|
|
|
$
|
564,477
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
(19,557)
|
|
|
(20,313)
|
|
|
(30,359)
|
|
|
(39,870)
|
|
|
(50,003)
|
|
|
Restructuring related
charges (b)
|
|
(4,285)
|
|
|
(886)
|
|
|
(721)
|
|
|
(5,171)
|
|
|
(5,162)
|
|
|
Amortization of and
write-off acquired intangible assets
|
|
(1,065)
|
|
|
(1,071)
|
|
|
(2,299)
|
|
|
(2,136)
|
|
|
(4,597)
|
|
|
Other operating
expenses (c)
|
|
(1,687)
|
|
|
(2,303)
|
|
|
13
|
|
|
(3,990)
|
|
|
(1,229)
|
|
|
Total special
items
|
|
(26,594)
|
|
|
(24,573)
|
|
|
(33,366)
|
|
|
(51,167)
|
|
|
(60,991)
|
|
|
Total non-GAAP
operating expenses
|
|
$
|
214,221
|
|
|
$
|
219,513
|
|
|
$
|
243,194
|
|
|
$
|
433,734
|
|
|
$
|
503,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
20.6
|
%
|
|
17.7
|
%
|
|
8.4
|
%
|
|
19.2
|
%
|
|
3.3
|
%
|
|
Other cost of goods
sold (a)
|
|
0.5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.3
|
%
|
|
—
|
%
|
|
Share-based
compensation
|
|
3.5
|
%
|
|
3.8
|
%
|
|
5.5
|
%
|
|
3.7
|
%
|
|
4.9
|
%
|
|
Restructuring related
charges (b)
|
|
0.7
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
|
0.4
|
%
|
|
0.5
|
%
|
|
Amortization and
write-off of acquired intangible assets
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.5
|
%
|
|
0.2
|
%
|
|
0.3
|
%
|
|
Other operating
expenses (c)
|
|
0.3
|
%
|
|
0.3
|
%
|
|
—
|
%
|
|
0.3
|
%
|
|
0.1
|
%
|
|
Non-GAAP operating
margin
|
|
25.8
|
%
|
|
22.2
|
%
|
|
14.5
|
%
|
|
24.1
|
%
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP interest and
other income, net
|
|
$
|
7,188
|
|
|
$
|
3,333
|
|
|
$
|
6,284
|
|
|
$
|
10,521
|
|
|
$
|
7,772
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring related
items (d)
|
|
(3,085)
|
|
|
—
|
|
|
—
|
|
|
(3,085)
|
|
|
—
|
|
|
Total special
items
|
|
(3,085)
|
|
|
—
|
|
|
—
|
|
|
(3,085)
|
|
|
—
|
|
|
Total non-GAAP
interest and other income, net
|
|
$
|
4,103
|
|
|
$
|
3,333
|
|
|
$
|
6,284
|
|
|
$
|
7,436
|
|
|
$
|
7,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
|
$
|
165,259
|
|
|
$
|
106,621
|
|
|
$
|
51,305
|
|
|
$
|
271,880
|
|
|
$
|
28,626
|
|
|
Loss (income) from
discontinued operations, net of tax
|
|
(29,809)
|
|
|
(7,029)
|
|
|
11,161
|
|
|
(36,838)
|
|
|
26,548
|
|
|
GAAP net income from
continuing operations
|
|
135,450
|
|
|
99,592
|
|
|
62,466
|
|
|
235,042
|
|
|
55,174
|
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
|
|
Other cost of goods
sold (a)
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|
Share-based
compensation
|
|
21,367
|
|
|
21,739
|
|
|
33,079
|
|
|
43,106
|
|
|
54,507
|
|
|
Restructuring related
charges (b)
|
|
1,200
|
|
|
886
|
|
|
721
|
|
|
2,086
|
|
|
5,162
|
|
|
Amortization of and
write-off acquired intangible assets
|
|
1,065
|
|
|
1,071
|
|
|
2,299
|
|
|
2,136
|
|
|
4,597
|
|
|
Other operating
expenses (c)
|
|
1,687
|
|
|
2,303
|
|
|
(13)
|
|
|
3,990
|
|
|
1,229
|
|
|
Pre-tax total special
items
|
|
28,319
|
|
|
25,999
|
|
|
36,086
|
|
|
54,318
|
|
|
65,495
|
|
|
Other income tax
effects and
adjustments (e)
|
|
(10,298)
|
|
|
(64)
|
|
|
—
|
|
|
(10,362)
|
|
|
(1,071)
|
|
|
Non-GAAP net income
from continuing operations
|
|
$
|
153,471
|
|
|
$
|
125,527
|
|
|
$
|
98,552
|
|
|
$
|
278,998
|
|
|
$
|
119,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares — basic
|
|
500,817
|
|
|
503,790
|
|
|
511,235
|
|
|
502,303
|
|
|
510,014
|
|
|
Weighted average
shares — diluted
|
|
510,309
|
|
|
517,592
|
|
|
514,314
|
|
|
513,951
|
|
|
513,669
|
|
|
Non-GAAP weighted
average shares — diluted (f)
|
|
519,438
|
|
|
523,154
|
|
|
526,453
|
|
|
521,296
|
|
|
524,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net
income (loss) per share from continuing operations
|
|
$
|
0.26
|
|
|
$
|
0.19
|
|
|
$
|
0.12
|
|
|
$
|
0.46
|
|
|
$
|
0.11
|
|
|
Non-GAAP diluted net
income per share from continuing operations
|
|
$
|
0.30
|
|
|
$
|
0.24
|
|
|
$
|
0.19
|
|
|
$
|
0.54
|
|
|
$
|
0.23
|
|
|
|
|
(a)
|
Other costs 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 costs that are a direct result of restructuring.
Such charges include employee severance, facilities related costs,
contract cancellation charges and impairment of
equipment.
|
|
|
|
(c)
|
Other operating
expenses in the three and six months ended July 29, 2017 include
costs of retention bonuses offered to employees who remained
through the ramp down of certain operations due to the
restructuring actions.
|
|
|
|
(d)
|
Interest and other
income, net includes restructuring related items such as gain on
sale of a business and foreign currency losses related to
restructuring related accruals.
|
|
|
|
(e)
|
Other income tax
effects and adjustments in the three months ended July 29, 2017 and
April 29, 2017 includes adjustment to the tax provision based on a
non-GAAP tax rate of 4%. Other income tax effects and adjustments
in the six months ended July 29, 2017 includes adjustment to the
tax provision based on a non-GAAP 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.
|
|
Quarterly Revenue
Trend
|
|
(In
thousands)
|
|
|
Three Months
Ended
|
|
%
Change
|
|
July 29,
2017
|
|
April 29,
2017
|
|
July 30,
2016
|
|
YoY
|
|
QoQ
|
|
Storage
(1)
|
$
|
311,501
|
|
|
$
|
303,808
|
|
|
$
|
275,343
|
|
|
13
|
%
|
|
3
|
%
|
|
Networking
(2)
|
147,250
|
|
|
144,815
|
|
|
156,614
|
|
|
(6)
|
%
|
|
2
|
%
|
|
Connectivity
(3)
|
98,571
|
|
|
76,091
|
|
|
92,689
|
|
|
6
|
%
|
|
30
|
%
|
|
Total
Core
|
557,322
|
|
|
524,714
|
|
|
524,646
|
|
|
6
|
%
|
|
6
|
%
|
|
Other
(4)
|
47,428
|
|
|
47,995
|
|
|
72,700
|
|
|
(35)
|
%
|
|
(1)
|
%
|
|
Total Revenue
(5)
|
$
|
604,750
|
|
|
$
|
572,709
|
|
|
$
|
597,346
|
|
|
1
|
%
|
|
6
|
%
|
|
Three Months
Ended
|
|
% of
Total
|
July 29,
2017
|
|
April 29,
2017
|
|
July 30,
2016
|
|
Storage
(1)
|
52
|
%
|
|
53
|
%
|
|
46
|
%
|
|
Networking
(2)
|
24
|
%
|
|
25
|
%
|
|
26
|
%
|
|
Connectivity
(3)
|
16
|
%
|
|
13
|
%
|
|
16
|
%
|
|
Total
Core
|
92
|
%
|
|
91
|
%
|
|
88
|
%
|
|
Other
(4)
|
8
|
%
|
|
9
|
%
|
|
12
|
%
|
|
Total
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
(1) Storage
products are comprised primarily of HDD, SSD Controllers and
Enterprise Storage Solutions.
|
|
|
(2) Networking
products are comprised primarily of Ethernet Switches, Ethernet
Transceivers, Embedded ARM Processors and Automotive Ethernet, as
well as a few legacy product lines in which we no longer invest,
but will generate revenue for several years.
|
|
|
(3)
Connectivity products are comprised primarily of WiFi solutions
including WiFi only, WiFi/Bluetooth combos and WiFi Microcontroller
combos.
|
|
|
(4) Other
products are comprised primarily of Printer Solutions, Application
Processors and others.
|
|
|
(5) Excludes
the revenue of certain non-strategic businesses that were
classified as discontinued operations.
|
For further information, contact:
T. Peter Andrew
Vice President, Investor Relations
408-222-0777
ir@marvell.com
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SOURCE Marvell Technology Group Ltd.