EXHIBIT 99.1
NEWS RELEASE
MARVELL(R) TECHNOLOGY GROUP LTD. REPORTS
RECORD SECOND QUARTER FISCAL 2005 RESULTS
Q2 NET REVENUES INCREASE 54% FROM PRIOR YEAR TO $297.2 MILLION
Sunnyvale, CA. (August 19, 2004) - Marvell(R)Technology Group Ltd. (NASDAQ:
MRVL), the technology leader in the development of extreme broadband
communications and storage solutions, today reported financial results for its
second fiscal quarter ended July 31, 2004.
Net revenue for the second quarter of fiscal 2005 was a record $297.2 million,
an increase of 54% over net revenue of $192.9 million for the second quarter of
fiscal 2004 and a 10% sequential increase from net revenue of $269.6 million for
the first quarter of fiscal 2005. Net income under generally accepted accounting
principles (GAAP) was $28.6 million, or $0.10 per share (diluted), for the
second quarter of fiscal 2005, compared with a net income under GAAP of $9.4
million, or $0.03 per share (diluted), for the second quarter of fiscal 2004.
Net revenue for the six months ended July 31, 2004 was $566.7 million, an
increase of 57% over net revenue of $361.1 million for the six months ended
August 2, 2003. Net income under GAAP was $43.1 million, or $0.15 per share
(diluted), for the six months ended July 31, 2004, compared with a net income
under GAAP of $13.8 million, or $0.05 per share (diluted), for the six months
ended August 2, 2003.
Marvell reports net income and basic and diluted net income per share in
accordance with GAAP and additionally on a non-GAAP basis, referred to as pro
forma. Pro forma net income, where applicable, excludes the effect of
amortization and write-off of acquired intangible assets and other, and
amortization of stock-based compensation. Pro forma net income was $59.7
million, or $0.20 per share (diluted), for the second quarter of fiscal 2005,
compared with pro forma net income of $30.0 million, or $0.11 per share
(diluted), for the second quarter of fiscal 2004. Shares used in computing pro
forma net income per share for the second quarter of fiscal 2005 increased to
295.8 million, compared with 273.6 million for the second quarter of fiscal
2004.
Pro forma net income was $108.8 million, or $0.37 per share (diluted), for the
six months ended July 31, 2004, compared with pro forma net income of $54.5
million, or $0.20 per share (diluted), for the six months ended August 2, 2003.
Shares used in computing pro forma net income per share for the six months ended
July 31, 2004 increased to 294.0 million, compared with 266.4 million for the
six months ended August 2, 2003.
These non-GAAP measures should be considered in addition to, and not as a
substitute for, the results prepared in accordance with GAAP. A reconciliation
of GAAP net income to pro forma net income is included in the financial
statements portion of this release as well as on our website in the Investors
section at www.marvell.com.
Marvell's management believes the non-GAAP information is useful because it can
enhance the understanding of the Company's ongoing economic performance and
Marvell therefore uses pro forma reporting internally to evaluate and manage the
Company's operations. Marvell has chosen to provide this information to
investors to enable them to perform comparisons of operating results in a manner
similar to how the Company analyzes its operating results.
"Q2 was a very successful quarter for Marvell. Along with another strong quarter
of revenue growth, we also continued to expand our operating margins and further
strengthen our balance sheet," stated Dr. Sehat Sutardja, Marvell's President
and CEO. "We are enjoying strong momentum in both the enterprise and consumer
markets. In particular, we are very excited about the rate of adoption of our
wireless LAN and storage electronics for emerging consumer applications as well
as continued strong design activity for our Linear DSP power management
products."
Revenue for the second quarter was a record for Marvell and represented the 27th
consecutive quarter of sequential revenue growth. Also, the 10% sequential
increase in the second quarter revenue was Marvell's 11th consecutive quarter
where sequential revenue growth was at least 10%. The following is a review of
some of the recent highlights that occurred since last quarter's earnings
release:
o Marvell continues to lead the adoption of WLAN into consumer electronic
devices. During the quarter, Marvell expanded upon its impressive list of
design wins into high volume applications such as cellular handsets, gaming
devices, digital cameras, MP3 players, PDAs and emerging home entertainment
multimedia client devices. Marvell expects to commence volume shipment into
such emerging applications in the third quarter including initial shipments
of its 802.11 solution into a major consumer gaming application. Also, a
number of Marvell's WLAN design wins for cellular handsets have now
commenced the field trial stage this summer.
o Today, Marvell raised the technological bar once again with the
introduction of the World's first 60 Gigabit per second single chip
solution. These new Prestera(TM) devices, which utilize the Marvell
distributed switching architecture, offer true security, advanced QOS and
full integrated support for next generation IPv6 protocols. The complete
Prestera product family continues to enjoy strong revenue growth and design
wins for infrastructure switching applications across all market segments
from the SMB to large scale Enterprise.
o Q2 was another outstanding quarter for Marvell's storage electronics for
the hard disk drive market. During the quarter, Marvell enjoyed continued
solid revenue growth from market share gains in the traditional hard disk
drive market. Additionally, the emerging consumer small form factor drive
market continues to grow as these exciting drives are designed into a
variety of consumer electronic devices. Marvell expects further strong
market adoption of consumer hard disk drives as even smaller form factor
drives and increased storage capacities begin to be introduced into the
marketplace.
o During the quarter, Marvell also commenced volume shipments of its
All-into-1 and LiveAP(TM)WLAN solutions that were just introduced earlier
this year. Marvell's All-into-1 technology for the first time allows the
integration of many WLAN functions into a single device that were
previously separate functions handled by multiple devices. Now, in just a
size of a credit card, one can add wireless capability to Ethernet enabled
devices, extend the range of any 802.11 g/b Access Point or wireless
router, provide easier setup for broadband wireless gaming over the
Internet, allow personal 54Mbps `hot-spot' connectivity and much more.
Marvell is also now shipping LiveAP(TM)into volume PC desktop motherboards
as an embedded access point product. LiveAP utilizes Marvell's extreme low
power and integrated processor technology to offer "on-demand" access to
the wireless network and Internet even when the host device is turned off.
Marvell will be conducting a conference call today at 1:45 p.m. PT to discuss
its second quarter financial results. To listen to the conference call,
investors can dial (706) 679-0800 approximately ten minutes prior to the
initiation of the teleconference and refer to conference code 9073056. Replay of
the conference call will be available until August 26, 2004 at midnight PDT by
dialing (706) 645-9291. The conference call will also be available via the web
at www.marvell.com. Please visit the Investor Events section. Replay on the
Internet will be available until August 19, 2005.
ABOUT MARVELL
Marvell (NASDAQ: MRVL) is the leading global semiconductor provider of complete
broadband communications and storage solutions. The Company'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, including Marvell Semiconductor, Inc. (MSI), Marvell
Asia Pte Ltd. (MAPL), Marvell Japan K.K., Marvell Taiwan Ltd., Marvell
International Ltd. (MIL), Marvell U.K. Limited, Marvell Semiconductor Israel
Ltd. (MSIL), RADLAN Computer Communications Ltd., and SysKonnect GmbH. MSI is
headquartered in Sunnyvale, Calif., and designs, develops and markets products
on behalf of MIL and MAPL. MSI may be contacted at (408) 222-2500 or at
www.marvell.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
This release contains forward-looking statements based on projections and
assumptions about our products and our markets. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will,"
"should," and their variations identify forward-looking statements. These
statements include those relating to the rate of our customers' adoption of our
wireless LAN and storage electronics, continued strong design activity for
identified power management products, the commencement of volume shipments of
WLAN products for consumer applications and the anticipated benefits of and the
continued strong revenue growth and design win activity for our Prestera product
family and hard disk drive products, including small form factor drives, and
anticipated benefits of our All-into-1 and LiveAP WLAN solutions. Statements
that refer to, or are based on projections, uncertain events or assumptions also
identify forward-looking statements. These statements are not guarantees of
results and are subject to risks and uncertainties. Some risks and uncertainties
that may adversely impact the statements in this release include, but are not
limited to, the timing, cost and successful completion of development and volume
production, end-customer qualification and adoption, and the timing, pricing,
rescheduling, or cancellation of orders. For other factors that could cause
Marvell's results to vary from expectations, please see the sections titled
"Additional Factors That May Affect Future Results" in Marvell's annual report
on Form 10-K for the fiscal year ended January 31, 2004 and Marvell's subsequent
reports on Form 10-Q. We undertake no obligation to revise or update publicly
any forward-looking statements.
MARVELL(R) AND THE MARVELL LOGO ARE TRADEMARKS OF MARVELL. ALL OTHER TRADEMARKS
ARE THE PROPERTY OF THEIR RESPECTIVE OWNERS.
MARVELL TECHNOLOGY GROUP LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ ------------------------
JULY 31, AUGUST 2, JULY 31, AUGUST 2,
2004 2003 2004 2003
-------- --------- -------- ---------
Net revenue $297,154 $192,854 $566,731 $361,137
Cost of goods sold 140,905 88,944 268,741 165,057
-------- -------- -------- --------
Gross profit 156,249 103,910 297,990 196,080
Operating expenses:
Research and development 64,036 52,252 127,308 98,891
Selling and marketing 19,884 14,783 38,585 30,246
General and administrative 7,662 4,351 14,499 7,931
Amortization of stock-based compensation 1,272 1,020 2,660 1,678
Amortization/write-off of acquired intangible
assets and other 29,759 19,560 63,017 39,008
-------- -------- -------- --------
Total operating expenses 122,613 91,966 246,069 177,754
-------- -------- -------- --------
Operating income 33,636 11,944 51,921 18,326
Interest and other income, net 1,616 1,569 3,288 2,880
-------- -------- -------- --------
Income before income taxes 35,252 13,513 55,209 21,206
Provision for income taxes 6,628 4,091 12,088 7,427
-------- -------- -------- --------
Net income $ 28,624 $ 9,422 $ 43,121 $ 13,779
======== ======== ======== ========
Basic net income per share $ 0.11 $ 0.04 $ 0.16 $ 0.06
======== ======== ======== ========
Diluted net income per share $ 0.10 $ 0.03 $ 0.15 $ 0.05
======== ======== ======== ========
Weighted average shares-- basic 267,940 247,334 266,209 245,004
-------- -------- -------- --------
Weighted average shares-- diluted 295,769 273,608 293,977 266,377
-------- -------- -------- --------
MARVELL TECHNOLOGY GROUP LTD.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ ------------------------
JULY 31, AUGUST 2, JULY 31, AUGUST 2,
2004 2003 2004 2003
-------- --------- -------- ---------
Net revenue $297,154 $192,854 $566,731 $361,137
Cost of goods sold 140,905 88,944 268,741 165,057
-------- -------- -------- --------
Gross profit 156,249 103,910 297,990 196,080
Operating expenses:
Research and development 64,036 52,252 127,308 98,891
Selling and marketing 19,884 14,783 38,585 30,246
General and administrative 7,662 4,351 14,499 7,931
-------- -------- -------- --------
Total operating expenses 91,582 71,386 180,392 137,068
-------- -------- -------- --------
Operating income 64,667 32,524 117,598 59,012
Interest and other income, net 1,616 1,569 3,288 2,880
-------- -------- -------- --------
Income before income taxes 66,283 34,093 120,886 61,892
Provision for income taxes 6,628 4,091 12,088 7,427
-------- -------- -------- --------
Pro forma net income $ 59,655 $ 30,002 $108,798 $ 54,465
======== ======== ======== ========
Basic pro forma net income per share $ 0.22 $ 0.12 $ 0.41 $ 0.22
======== ======== ======== ========
Diluted pro forma net income per share $ 0.20 $ 0.11 $ 0.37 $ 0.20
======== ======== ======== ========
Weighted average shares-- basic 267,940 247,334 266,209 245,004
-------- -------- -------- --------
Weighted average shares-- diluted 295,769 273,608 293,977 266,377
-------- -------- -------- --------
RECONCILIATION OF GAAP NET INCOME
TO PRO FORMA NET INCOME:
GAAP net income $ 28,624 $ 9,422 $ 43,121 $ 13,779
Amortization of stock-based compensation 1,272 1,020 2,660 1,678
Amortization/write-off of acquired intangible
assets and other 29,759 19,560 63,017 39,008
-------- -------- -------- --------
Pro forma net income $ 59,655 $ 30,002 $108,798 $ 54,465
======== ======== ======== ========
The above pro forma statements of operations are for informational purposes only
and are provided for understanding our operating results. The pro forma
statements of operations have not been prepared in accordance with GAAP, should
not be considered a substitute for our historical financial information prepared
in accordance with GAAP and may be different from pro forma measures used by
other companies. The pro forma income has been derived by adjusting the net
income under generally accepted accounting principles for the impact of non cash
stock-based compensation charges, non-cash charges associated with purchase
accounting and other write-off related expenses.
MARVELL TECHNOLOGY GROUP LTD.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
JULY 31, JANUARY 31,
ASSETS 2004 2004
----------- -----------
Current assets:
Cash and cash equivalents $ 298,141 $ 224,399
Short-term investments 184,277 161,872
Accounts receivable, net 161,107 136,513
Inventory, net 97,107 91,785
Prepaid expenses and other current assets 17,691 18,713
----------- -----------
Total current assets 758,323 633,282
Property and equipment, net 148,498 149,705
Goodwill and acquired intangible assets 1,588,736 1,615,084
Other noncurrent assets 49,890 37,394
----------- -----------
Total assets $ 2,545,447 $ 2,435,465
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 97,658 $ 121,190
Accrued liabilities 51,870 36,823
Income taxes payable 6,180 2,155
Deferred income 14,618 12,996
Current portion of capital lease obligations 11,795 10,747
----------- -----------
Total current liabilities 182,121 183,911
Capital lease obligations 15,973 19,944
Other long-term liabilities 47,602 40,769
----------- -----------
Total liabilities 245,696 244,624
----------- -----------
Shareholders' equity:
Common stock 540 526
Additional paid-in capital 2,937,409 2,872,282
Deferred stock-based compensation (4,976) (7,945)
Accumulated other comprehensive income (loss) (1,564) 757
Accumulated deficit (631,658) (674,779)
----------- -----------
Total shareholders' equity 2,299,751 2,190,841
----------- -----------
Total liabilities and shareholders' equity $ 2,545,447 $ 2,435,465
=========== ===========