Marvell Technology Group Ltd. Reports Fourth Fiscal Quarter and Fiscal Year 2015 Financial Results

Santa Clara, California (February 19, 2015) – Marvell Technology Group Ltd. (NASDAQ: MRVL), a global leader in integrated silicon solutions, today reported financial results for the fourth fiscal quarter and fiscal year 2015, ended January 31, 2015.

Key Fourth Quarter of Fiscal 2015 and Fiscal Year 2015 Financial Highlights

• Revenue: Q4 FY 2015, $857 Million; FY 2015, $3.7 Billion
• GAAP Net Income: Q4 FY 2015, $82 Million; FY 2015, $435 Million
• GAAP Diluted EPS: Q4 FY 2015, $0.16; FY 2015, $0.84
• Non-GAAP Net Income: Q4 FY 2015, $131 Million; FY 2015, $611 Million
• Non-GAAP Diluted EPS: Q4 FY 2015, $0.25; FY2015, $1.15
• Free Cash Flow: Q4 FY 2015, $135 Million; FY 2015, $650 Million

First Quarter of Fiscal 2016 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 February 18, 2015.

• Revenue is expected to be in the range of $810 Million to $830 Million.
• GAAP Gross Margin is expected to be in the range of 50.1% +/- 100 bps. Non-GAAP Gross Margin is expected to be in the range of 50.5% +/- 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 $320 Million +/- $10 Million.
• GAAP Diluted EPS expected to be in the range of $0.09 +/- $0.01. Non-GAAP Diluted EPS expected to be in the range of $0.18 +/- $0.01.

Fourth Quarter of Fiscal 2015 and Fiscal Year 2015 Summary

Revenue for the fourth quarter of fiscal 2015 was $857 million, down approximately 8 percent from $930 million in the third quarter of fiscal 2015, ended November 1, 2014, and down approximately 8 percent from $932 million in the fourth quarter of fiscal 2014, ended February 1, 2014.

For the fiscal year ended January 31, 2015, revenue was $3.7 billion, an increase of 9 percent from revenue of $3.4 billion for the fiscal year ended February 1, 2014.

GAAP net income for the fourth quarter of fiscal 2015 was $82 million, or $0.16 per share (diluted), compared with GAAP net income of $115 million, or $0.22 per share (diluted), for the third quarter of fiscal 2015, and $97 million, or $0.19 per share (diluted), for the fourth quarter of fiscal 2014.

For the fiscal year ended January 31, 2015, GAAP net income was $435 million, or $0.84 per share (diluted), compared with GAAP net income of $315 million, or $0.63 per share (diluted), for the fiscal year ended February 1, 2014.

Non-GAAP net income was $131 million, or $0.25 per share (diluted), for the fourth quarter of fiscal 2015, compared with non-GAAP net income of $155 million, or $0.29 per share (diluted), for the third quarter of fiscal 2015 and $151 million, or $0.29 per share (diluted), for the fourth quarter of fiscal 2014.

For the fiscal year ended January 31, 2015, non-GAAP net income was $611 million, or $1.15 per share (diluted), compared with non-GAAP net income of $530 million, or $1.02 per share (diluted) for the fiscal year ended February 1, 2014.

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 January 31, 2015, November 1, 2014 and February 1, 2014 appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of share-based compensation, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other exit related costs, litigation settlement, and certain one-time expenses and benefits.

GAAP gross margin for the fourth quarter of fiscal 2015 was 51.4 percent, compared to 51.1 percent for the third quarter of fiscal 2015 and 48.8 percent for the fourth quarter of fiscal 2014. GAAP gross margin for fiscal year 2015 was 50.3 percent as compared to 51.1 percent in fiscal year 2014.

Non-GAAP gross margin for the fourth quarter of fiscal 2015 was 51.8 percent, compared to 51.0 percent for the third quarter of fiscal 2015 and 50.1 percent for the fourth quarter of fiscal 2014. Non-GAAP gross margin for fiscal year 2015 was as 50.5 percent compared to 51.8 percent in fiscal year 2014.

Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2015 were 522 million shares, compared with 520 million shares in the third quarter of fiscal 2015 and 510 million shares in the fourth quarter of fiscal 2014. Shares used to compute GAAP net income per diluted share for fiscal year 2015 were 521 million shares as compared to 504 million shares for fiscal year 2014.

Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2015 were 533 million shares, compared with 533 million shares for the third quarter of fiscal 2015 and 523 million shares for the fourth quarter of fiscal 2014. Shares used to compute non-GAAP net income per share diluted share for fiscal year 2015 was 532 million shares as compared with 519 million shares for fiscal year 2014.

Cash flow from operations for the fourth quarter of fiscal 2015 was $155 million, compared to the $195 million reported in the third quarter of fiscal 2015 and the $100 million reported in the fourth quarter of fiscal 2014. Cash flow from operations for fiscal year 2015 was $742 million, compared to $448 million in fiscal year 2014. Free cash flow for the fourth quarter of fiscal 2015 was $135 million, compared to the $167 million reported in the third quarter of fiscal 2015 and the $82 million reported in the fourth quarter of fiscal 2014. Free cash flow for fiscal year 2015 was $650 million, compared to $356 million in fiscal year 2014. 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 company’s authorized share repurchase program, Marvell repurchased approximately 1.4 million shares for a total of $20 million in the fourth quarter of fiscal 2015. Marvell paid a quarterly dividend of $0.06 per share on December 29, 2014 to all shareholders of record as of December 11, 2014. Marvell intends to pay its next quarterly dividend of $0.06 per share on April 2, 2015 to all shareholders of record as of March 12, 2015.

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, developments in ongoing litigation, statutory requirements of Bermuda law, and other factors that the board of directors may deem relevant.

Key Fourth Quarter of Fiscal 2015 Product Announcements

• Marvell Launches Octa-Core 64-bit 5-Mode 4G LTE ARMADA Mobile PXA1936 System-on-Chip for High Performance Smartphones and Tablets Globally
• Marvell Launches Highly Integrated Quad-Core 64-bit ARMADA Mobile PXA1908 Platform for the Fast Growing 5-Mode 4G LTE Worldwide Mass Market
• Meizu Launches its Flagship MX4 Pro Premium 4G LTE Smartphone for China Mobile and China Unicom Powered by Marvell’s ARMADA Mobile 5-mode 4G LTE Solution
• Marvell Extends SSD Leadership by Delivering the World’s First DRAM-less NVMe SSD Controller for Mass Market Mobile Computing Solutions with Industry-Leading NANDEdge LDPC Technology Supporting TLC and 3D NAND
• Marvell Launches the World’s First Highly Integrated and Scalable Smart Home Cloud Center for Mobile Internet and Internet of Things
• Skyworth and China Telecom Launch the World’s First Smart TV with Embedded G.hn Powerline Connectivity Powered by Marvell
• Marvell Launches Industry’s First 802.11ac Wave-2 4x4 Processor Featuring 160 MHz Mode and MU-MIMO Extending Its Leadership in Carrier, Enterprise and Residential Wi-Fi Solutions

Conference Call

Marvell will be conducting a conference call on Thursday, February 19, 2015 at 1:45 p.m. Pacific Time to discuss results for the fourth fiscal quarter and fiscal year 2015. Interested parties may join the conference call by dialing 1-866-318-8614 or 1-617-399-5133, pass-code 39424623. 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 March 19, 2015.

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 exit-related costs, litigation settlement, and certain one-time 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. Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP 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 proceeds assumed to be used to repurchase shares under the GAAP treasury stock method and also include the dilutive/anti-dilutive effects of common stock options and restricted stock units.

Marvell believes that the presentation of non-GAAP financial measures provides 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.

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 and statements regarding its financial outlook for the first quarter of fiscal 2016; its dividend program including the declaration of, timing of, funding of, payment of and quarterly amount of dividends; and its use of non-GAAP financial measures as important supplemental information. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “can,” “will” 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, among others: Marvell’s ability to compete in products and prices in an intensely competitive industry; Marvell’s reliance on the hard disk drive and mobile and wireless markets, which are highly cyclical and intensely competitive; costs and liabilities relating to current and future litigation; Marvell’s reliance on a few customers for a significant portion of its revenue; Marvell’s ability to develop and introduce new and enhanced products in a timely and cost effective manner and the adoption of those products in the market; seasonality in sales of consumer devices in which Marvell’s products are incorporated; uncertainty in the worldwide economic conditions; risks associated with manufacturing and selling a majority of Marvell’s products and Marvell’s customers’ products outside of the United States; and other risks detailed in Marvell’s SEC filings from time to time. When Marvell files its Annual Report on Form 10-K for the fiscal year ended January 31, 2015, 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. 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 November 1, 2014 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.

About Marvell

Marvell (NASDAQ: MRVL) is a global leader in providing complete silicon solutions and Kinoma® software enabling the “Smart Life and Smart Lifestyle.” From mobile communications to storage, Internet of Things (IoT), cloud infrastructure, digital entertainment and in-home content delivery, Marvell’s diverse product portfolio aligns complete platform designs with industry-leading performance, security, reliability and efficiency. At the core of the world’s most powerful consumer, network and enterprise systems, Marvell empowers partners and their customers to always stand at the forefront of innovation, performance and mass appeal. By providing people around the world with mobility and ease of access to services adding value to their social, private and work lives, Marvell is committed to enhancing the human experience.

As used in this release, the term "Marvell" refers to Marvell Technology Group Ltd. and its subsidiaries. For more information, please visit www.Marvell.com.

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