Marvell Reports Sales Gain in Q3

Santa Clara, Calif. -- Marvell, a global leader in integrated silicon solutions, today reported financial results for the third quarter of fiscal year 2014, ended November 2, 2013.

Key 3Q FY2014 Financial Highlights

Revenue: $931 Million
GAAP Net Income: $103 Million
GAAP EPS (diluted): $0.21
Non-GAAP Net Income: $163 Million
Non-GAAP EPS (diluted): $0.32
Free Cash Flow: $157 Million

4Q FY2014 Financial Outlook

Marvell's financial outlook does not include the potential impact of future share repurchases, pending litigation matters, business combinations, asset acquisitions or other investments that may be completed after November 21, 2013.

Revenue is expected to be in the range of $880 to $920 Million.
GAAP Gross Margin is expected to be in the range of 49.7% +/- 100 bps. Non-GAAP Gross Margin is expected to be in the range of 50% +/- 100 bps.
GAAP Operating Expenses are expected to be in the range of $360 Million +/- $10 Million. Non-GAAP Operating Expenses to be in the range of $315 Million +/- $10 Million.
GAAP EPS (diluted) expected to be in the range of $0.16 +/- $0.02. Non-GAAP EPS (diluted) expected to be in the range of $0.25 +/- $0.02.

3Q FY2014 Summary

Revenue for the third quarter of fiscal 2014 was $931 million, a 15 percent sequential increase from $807 million in the second quarter of fiscal 2014, ended August 3, 2013, and a 19 percent increase from revenue of $781 million in the third quarter of fiscal 2013, ended October 27, 2012.

GAAP net income for the third quarter of fiscal 2014 was $103 million, or $0.21 per share (diluted), compared with GAAP net income of $62 million, or $0.12 per share (diluted), for the second quarter of fiscal 2014, and $69 million, or $0.12 per share (diluted), for the third quarter of fiscal 2013.

Non-GAAP net income was $163 million, or $0.32 per share (diluted), for the third quarter of fiscal 2014, compared with non-GAAP net income of $118 million, or $0.23 per share (diluted), for the second quarter of fiscal 2014, and $113 million, or $0.20 per share (diluted), for the third quarter of fiscal 2013.

"Our results in the third quarter were above the high-end of our guidance mainly due to better demand from our mobile, wireless and storage customers," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer. "We continue to make excellent progress in our end markets with new innovative products and remain committed to delivering above industry revenue and profit growth as we head into next year."

Marvell reports net income, basic and diluted net income per share, in accordance with U.S. generally accepted accounting principles (GAAP) and on a non-GAAP basis as outlined below. Reconciliations of GAAP net income to non-GAAP net income for the three months ended November 2, 2013, August 3, 2013 and October 27, 2012 appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related costs, restructuring and other exit-related costs, and certain one-time expenses and benefits.

GAAP gross margin for the third quarter of fiscal 2014 was 50.1 percent, compared to 52.2 percent for the second quarter of fiscal 2014 and 52 percent for the third quarter of fiscal 2013.

Non-GAAP gross margin for the third quarter of fiscal 2014 was 50.3 percent, compared to 53.0 percent for the second quarter of fiscal 2014 and 52.3 percent for the third quarter of fiscal 2013.

Shares used to compute GAAP net income per diluted share for the third quarter of fiscal 2014 were 501 million shares, compared with 501 million shares in the second quarter of fiscal 2014 and 559 million shares in the third quarter of fiscal 2013. Shares used to compute non-GAAP net income per diluted share for the third quarter of fiscal 2014 were 514 million shares, compared with 516 million shares for the second quarter of fiscal 2014 and 578 million shares for the third quarter of fiscal 2013. The decrease in shares used to compute both Marvell's GAAP and non-GAAP net income per diluted share was primarily due to Marvell's share repurchase program.

Cash flow from operations for the third quarter of fiscal 2014 was $177 million, compared to the $86 million reported in the second quarter of fiscal 2014 and the $137 million reported in the third quarter of fiscal 2013. Free cash flow for the third quarter of fiscal 2014 was $157 million, compared to the $65 million reported in the second quarter of fiscal 2014 and the $113 million reported in the third quarter of fiscal 2013. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of technology licenses reported under investing and financing activities in the consolidated statement of cash flows.

Under the share repurchase program, Marvell repurchased approximately 6.1 million shares for a total of $71 million in the third quarter of fiscal 2014. Over the past 13 quarters, Marvell has repurchased and retired approximately 217 million shares, or about 31 percent of its outstanding shares.

Marvell also paid a quarterly dividend of $0.06 per share on October 3, 2013 to all shareholders of record as of September 12, 2013. Marvell intends to pay its next quarterly dividend of $0.06 per share on December 23, 2013 to all shareholders of record as of December 12, 2013. Developments in on-going litigation could affect Marvell's ability to pay the dividend on December 23, 2013 under Bermuda law, where Marvell is incorporated. In such an event, the dividend payment could be delayed until such time as Marvell can meet statutory requirements under Bermuda law.

The payment of future quarterly cash dividends on Marvell's common shares is subject to, among other things, the best interests of its shareholders, its results of operations, cash balances and future cash requirements, financial condition, statutory requirements under Bermuda law, and other factors that the board of directors may deem relevant.

Conference Call
Marvell will be conducting a conference call on Thursday, November 21, 2013 at 1:45 p.m. Pacific Time to discuss results for the third quarter of fiscal 2014. Interested parties may join the conference call by dialing 1-866-515-2912 or 1-617-399-5126, pass-code 84616401. 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 December 19, 2013.