Marvell Technology Group Ltd. Reports Preliminary Third Quarter Fiscal 2016 Financial Results
Key Third Quarter of Fiscal 2016 Financial Highlights (Preliminary)
- Revenue: Q3 FY 2016,
$674 Million - GAAP Net Loss: Q3 FY 2016,
($62) Million - GAAP Loss Per Share: Q3 FY 2016, (
$0.12 ) - Non-GAAP Net Income: Q3 FY 2016,
$28 Million - Non-GAAP Diluted EPS: Q3 FY 2016, $0.05
- Free Cash Flow: Q3 FY 2016,
$54 Million - Restructuring and other related charges of
$46 Million - Cash and ST Investments:
$2.3 Billion
Third Quarter of Fiscal 2016
Revenues for the third quarter of fiscal 2016 were
In the third quarter of fiscal 2016, storage revenue declined 16% sequentially reflecting lower demand from HDD customers but was offset slightly by better-than-expected SSD controller sales. Networking revenue in the third quarter of fiscal 2016 declined 8% sequentially reflecting continued weak demand for enterprise networking products while mobile and wireless revenue grew 15% sequentially on stronger smartphone demand, particularly in the low-end. We are restructuring the mobile business as it relates to mobile handsets only. The Company anticipates mobile handset platform-related revenue to decline through fiscal year 2017 due to the restructuring actions announced on
The U.S. GAAP net loss for the third quarter of fiscal 2016 was
Non-GAAP net income for the third quarter of fiscal 2016 was
GAAP gross margin percentage for the third quarter of fiscal 2016 was 43.3 percent, compared to (7.3%) for the second quarter of fiscal 2016 and 51.1 percent for the third quarter of fiscal 2015.
Gross margin percentage was impacted in the third and second quarters of fiscal 2016 by restructuring and other related charges of
Operating expenses on a GAAP basis for the third quarter of fiscal 2016 were
Excluding the impact of the restructuring charges of
Shares used to compute GAAP net income per diluted share for the third quarter of fiscal 2016 were 505 million shares, compared with 516 million shares in the second quarter of fiscal 2016 and 520 million shares in the third quarter of fiscal 2015.
Shares used to compute non-GAAP net income per diluted share for the third quarter of fiscal 2016 were 519 million shares, compared with 533 million shares for the second quarter of fiscal 2016 and 533 million shares for the third quarter of fiscal 2015.
Cash flow from operations for the third quarter of fiscal 2016 were
Under the company's authorized share repurchase program,
The payment of future quarterly cash dividends on
Key Second Quarter of Fiscal 2016 Preliminary Financial Highlights (Updated)
- Revenue: Q2 FY 2016,
$711 Million - GAAP Net Loss: Q2 FY 2016,
($403) Million - GAAP Loss Per Share: Q2 FY 2016,
($0.78) - Non-GAAP Net Income: Q2 FY 2016,
$62 Million - Non-GAAP Diluted EPS: Q2 FY 2016, $0.12
- Free Cash Flow: Q2 FY 2016,
$3 Million - Cash and ST Investments:
$2.3 Billion
In the second quarter of fiscal 2016 the Company recorded litigation reserves of
On
Due to the Company's delayed filing of its Form 10-Q, the Company is obligated to continue to adjust its financial results to account for subsequent activities (Type 1 subsequent events) occurring after
Financial Information Is Preliminary and May Be Subject To Change
The unaudited interim financial information presented in this press release is preliminary and has not been reviewed by an independent registered public accounting firm. Due to the Company's delayed filing of its Form 10-Q, the Company is obligated to continue to adjust its financial results for the second and third quarters of fiscal 2016 to account for subsequent activities (Type 1 subsequent events) occurring after the release of this press release. As noted above, the Company's net loss and net loss per share for the second quarter of fiscal 2016 increased as compared to the Company's GAAP net loss and net loss per share announced on
Audit Committee Investigation and Related Matters
NASDAQ Compliance Plan
As previously disclosed, in May of 2014, CMU obtained a judgment against the Company from the
The Company will be seeking review of the Panel Decision by the
No additional reserve has been taken with respect to the issues to be considered in the partial new trial on remand to the
The Company has indemnity obligations to sureties under two surety bonds in connection with the litigation with CMU: (1) one bond which is secured by the Company's campus located in
Other Matters:
The Board of Directors has engaged an international executive search firm to conduct a search for additional independent Board members and with another firm to conduct a search for a permanent Chief Financial Officer. Mr.
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 one-time expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to
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: 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: the timing and outcome of the Audit Committee's investigation and the findings and recommendations of the Audit Committee, actions that may be taken by
About Marvell
As used in this release, the term "
For further information, contact: |
|
John Spencer Ahn |
Sue Kim |
Investor Relations |
Media Relations |
408-222-7544 |
408-222-1942 |
Marvell Technology Group Ltd. |
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Condensed Consolidated Statements of Operations |
||||||||||||||
(Unaudited) |
||||||||||||||
(In thousands, except per share amounts) |
||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||
October 31, |
August 1, |
November 1, |
October 31, |
November 1, |
||||||||||
2015(a) |
2015(a)(b) |
2014 |
2015(a) |
2014 |
||||||||||
(Preliminary) |
(Preliminary) |
|||||||||||||
Net revenue |
$ 674,056 |
$ 711,326 |
$ 930,136 |
$ 2,109,670 |
$ 2,849,511 |
|||||||||
Cost of goods sold |
382,386 |
763,370 |
454,974 |
1,496,909 |
1,426,575 |
|||||||||
Gross profit (loss) |
291,670 |
(52,044) |
475,162 |
612,761 |
1,422,936 |
|||||||||
Operating expenses: |
||||||||||||||
Research and development |
284,309 |
296,160 |
288,435 |
860,583 |
878,562 |
|||||||||
Selling and marketing |
32,481 |
30,841 |
34,410 |
99,496 |
106,717 |
|||||||||
General and administrative |
34,731 |
36,033 |
33,473 |
111,791 |
95,379 |
|||||||||
Amortization and write-off of acquired intangible assets |
2,848 |
2,568 |
3,304 |
7,984 |
13,297 |
|||||||||
Total operating expenses |
354,369 |
365,602 |
359,622 |
1,079,854 |
1,093,955 |
|||||||||
Operating income (loss) |
(62,699) |
(417,646) |
115,540 |
(467,093) |
328,981 |
|||||||||
Interest and other income, net |
4,645 |
6,790 |
4,764 |
16,602 |
18,952 |
|||||||||
Income (loss) before income taxes |
(58,054) |
(410,856) |
120,304 |
(450,491) |
347,933 |
|||||||||
Provision (benefit) for income taxes |
3,684 |
(7,817) |
5,000 |
196 |
(5,720) |
|||||||||
Net income (loss) |
$ (61,738) |
$ (403,039) |
$ 115,304 |
$ (450,687) |
$ 353,653 |
|||||||||
Basic net income (loss) per share |
$ (0.12) |
$ (0.78) |
$ 0.22 |
$ (0.88) |
$ 0.69 |
|||||||||
Diluted net income (loss) per share |
$ (0.12) |
$ (0.78) |
$ 0.22 |
$ (0.88) |
$ 0.68 |
|||||||||
Shares used in computing basic earnings (loss) per share |
504,831 |
516,368 |
513,859 |
512,476 |
510,261 |
|||||||||
Shares used in computing diluted earnings (loss) per share |
504,831 |
516,368 |
519,907 |
512,476 |
520,309 |
(a) |
The condensed consolidated financial statements for the three and nine months ended October 31, 2015, and the three months ended August 1, 2015 are preliminary and therefore, subject to adjustments in connection with subsequent events arising through the date of the Company's filing of its Quarterly Reports on Form 10-Q for the corresponding periods. The filing of each respective Form 10-Q will be completed as soon as practicable after the completion of the independent investigation by the Audit Committee of certain accounting and internal control matters in the second quarter of fiscal 2016, the appointment of an independent registered public accounting firm and the completion of review procedures by such firm. The final financial results reported for these periods may differ from the results reported in this release as a result of the Audit Committee's ongoing investigation described under the heading "Audit Committee Investigation and Related Matters" and review procedures to be performed by an independent registered public accounting firm. |
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(b) |
The condensed consolidated financial statements for the three months ended August 1, 2015, for which the Company previously reported preliminary financial results on September 11, 2015, have been adjusted due to the delayed filing of its Form 10-Q for the second quarter. These adjustments were made to account for subsequent activities associated with conditions that existed as of August 1, 2015 (Type I Subsequent Events) and are not related to the Audit Committee's investigation of certain accounting and internal control matters. Adjustments that have been recorded to the Company's preliminary financial results after September 11, 2015 include a $13.9 million write down of inventory primarily associated with certain products for the mobile platform business that the Company announced it was restructuring, a $1.2 million charge related to litigation, a $0.9 million impairment on equipment held for sale, an adjustment of $1.1 million to cost of goods sold and corresponding change to the income tax benefit from $11.4 million to $7.8 million. Due to the delayed filing and as a result of future subsequent events, there may be additional adjustments to these preliminary financial results through the date of the Company's filing of its Forms 10-Q. The final financial results reported for these periods may differ from the results reported in this release as a result of the Audit Committee's ongoing investigation described under the heading "Audit Committee Investigation and Related Matters" and review procedures to be performed by an independent registered public accounting firm. |
Marvell Technology Group Ltd. |
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Condensed Consolidated Balance Sheets |
||||||||||
(Unaudited) |
||||||||||
(In thousands) |
||||||||||
October 31, |
January 31, |
|||||||||
Assets |
2015(a) |
2015 |
||||||||
(Preliminary) |
||||||||||
Current assets: |
||||||||||
Cash, cash equivalents and short-term investments |
$ 2,303,752 |
$ 2,529,555 |
||||||||
Accounts receivable, net |
380,928 |
420,955 |
||||||||
Inventories |
279,359 |
308,162 |
||||||||
Prepaid expenses and other current assets |
71,454 |
85,368 |
||||||||
Total current assets |
3,035,493 |
3,344,040 |
||||||||
Property and equipment, net |
310,869 |
340,639 |
||||||||
Long-term investments |
10,182 |
10,226 |
||||||||
Goodwill and acquired intangible assets, net |
2,051,204 |
2,060,643 |
||||||||
Other non-current assets |
103,262 |
128,839 |
||||||||
Total assets |
$ 5,511,010 |
$ 5,884,387 |
||||||||
Liabilities and Shareholders' Equity |
||||||||||
Current liabilities: |
||||||||||
Accounts payable |
$ 236,675 |
$ 282,899 |
||||||||
Accrued liabilities |
663,573 |
286,357 |
||||||||
Deferred income |
58,086 |
68,120 |
||||||||
Total current liabilities |
958,334 |
637,376 |
||||||||
Other non-current liabilities |
76,280 |
100,922 |
||||||||
Total liabilities |
1,034,614 |
738,298 |
||||||||
Shareholders' equity: |
||||||||||
Common stock |
1,010 |
1,030 |
||||||||
Additional paid-in capital |
2,975,426 |
3,099,548 |
||||||||
Accumulated other comprehensive income (loss) |
(2,182) |
308 |
||||||||
Retained earnings |
1,502,142 |
2,045,203 |
||||||||
Total shareholders' equity |
4,476,396 |
5,146,089 |
||||||||
Total liabilities and shareholders' equity |
$ 5,511,010 |
$ 5,884,387 |
(a) |
The condensed consolidated balance sheet at October 31, 2015 is preliminary and therefore, subject to adjustments in connection with subsequent events arising through the date of the Company's filing of its Quarterly Reports on Form 10-Q for the corresponding period. The filing of the respective Form 10-Q will be completed as soon as practicable after the completion of the independent investigation by the Audit Committee of certain accounting and internal control matters in the second quarter of fiscal 2016, the appointment of an independent registered public accounting firm and the completion of review procedures by such firm. The final financial results reported for these periods may differ from the results reported in this release as a result of the Audit Committee's ongoing investigation described under the heading "Audit Committee Investigation and Related Matters" and review procedures to be performed by an independent registered public accounting firm. |
Marvell Technology Group Ltd. |
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Condensed Consolidated Statements of Cash Flows |
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(Unaudited) |
|||||||||||||||
(in thousands) |
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Three Months Ended |
Nine Months Ended |
||||||||||||||
October 31, |
November 1, |
October 31, |
November 1, |
||||||||||||
2015(b) |
2014 |
2015(b) |
2014 |
||||||||||||
(Preliminary) |
(Preliminary) |
||||||||||||||
Cash flows from operating activities: |
|||||||||||||||
Net income (loss) |
$ (61,738) |
$ 115,304 |
$ (450,687) |
$ 353,653 |
|||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
25,565 |
26,515 |
77,376 |
79,784 |
|||||||||||
Share-based compensation |
31,465 |
34,294 |
101,360 |
99,283 |
|||||||||||
Amortization and write-off of acquired intangible assets |
3,333 |
3,789 |
9,439 |
14,752 |
|||||||||||
Other non-cash expense (income), net |
2,983 |
(6,034) |
7,081 |
(12,160) |
|||||||||||
Non-cash restructuring and other related charges |
14,270 |
— |
28,167 |
— |
|||||||||||
Excess tax benefits from share-based compensation |
(2) |
(2) |
(27) |
(78) |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
36,793 |
40,214 |
40,027 |
10,055 |
|||||||||||
Inventories |
39,457 |
37,506 |
7,145 |
(8,793) |
|||||||||||
Prepaid expenses and other assets |
6,303 |
18,536 |
14,266 |
(8,621) |
|||||||||||
Accounts payable |
(55,693) |
(70,749) |
(43,735) |
16,937 |
|||||||||||
Accrued liabilities and other non-current liabilities |
11,129 |
(24,997) |
386,304 |
(22,035) |
|||||||||||
Accrued employee compensation |
14,295 |
19,101 |
(14,636) |
41,651 |
|||||||||||
Deferred income |
(1,566) |
(12,053) |
(10,034) |
9,087 |
|||||||||||
Net cash provided by operating activities |
66,594 |
181,424 |
152,046 |
573,515 |
|||||||||||
Cash flows from investing activities: |
|||||||||||||||
Purchases of available-for-sale securities |
(353,465) |
(448,526) |
(919,830) |
(784,296) |
|||||||||||
Sales and maturities of available-for-sale securities |
356,409 |
205,685 |
826,199 |
578,095 |
|||||||||||
Distribution from (investments in) privately-held companies |
(130) |
(260) |
78 |
(701) |
|||||||||||
Proceeds from sale of an investment in a privately-held company |
— |
13,220 |
— |
13,220 |
|||||||||||
Purchases of technology licenses |
(980) |
(5,105) |
(6,657) |
(14,514) |
|||||||||||
Purchases of property and equipment |
(9,041) |
(16,661) |
(33,361) |
(48,615) |
|||||||||||
Purchase of equipment previously leased |
— |
— |
(10,240) |
— |
|||||||||||
Net proceeds from sale of equipment held for sale |
10,007 |
— |
10,007 |
— |
|||||||||||
Net cash provided by (used in) investing activities |
2,800 |
(251,647) |
(133,804) |
(256,811) |
|||||||||||
Cash flows from financing activities: |
|||||||||||||||
Repurchase of common stock (a) |
(65,291) |
(43,774) |
(260,875) |
(43,774) |
|||||||||||
Proceeds from employee stock plans |
2,174 |
2,934 |
59,348 |
71,308 |
|||||||||||
Minimum tax withholding paid on behalf of employees for net share settlement |
(869) |
(663) |
(23,876) |
(25,586) |
|||||||||||
Dividend payments to shareholders |
(30,270) |
(30,867) |
(92,374) |
(91,859) |
|||||||||||
Payments on technology license obligations |
(2,617) |
(5,951) |
(11,416) |
(8,628) |
|||||||||||
Excess tax benefits from share-based compensation |
2 |
2 |
27 |
78 |
|||||||||||
Net cash used in financing activities |
(96,871) |
(78,319) |
(329,166) |
(98,461) |
|||||||||||
Net increase (decrease) in cash and cash equivalents |
(27,477) |
(148,542) |
(310,924) |
218,243 |
|||||||||||
Cash and cash equivalents at beginning of period |
927,530 |
1,332,535 |
1,210,977 |
965,750 |
|||||||||||
Cash and cash equivalents at end of period |
$ 900,053 |
$ 1,183,993 |
$ 900,053 |
$ 1,183,993 |
(a) |
Marvell records all repurchases as well as investment purchases and sales, based on trade date in accordance with U.S. GAAP. Cash paid for repurchase of Marvell common shares includes a total of 3.7 million shares repurchased for $45.6million in the third quarter of fiscal 2016, adjusted for the change in repurchases made within the final three days of the current and previous quarters that are accrued but not yet paid due to the standard settlement period that normally takes up to three days. |
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(b) |
The condensed consolidated statement of cash flows for the three and nine months ended October 31, 2015 is preliminary and therefore, subject to adjustments in connection with subsequent events arising through the date of the Company's filing of its Quarterly Reports on Form 10-Q for the corresponding periods. The filing of the respective Form 10-Q will be completed as soon as practicable after the completion of the independent investigation by the Audit Committee of certain accounting and internal control matters in the second quarter of fiscal 2016, the appointment of an independent registered public accounting firm and the completion of review procedures by such firm. The final financial results reported for these periods may differ from the results reported in this release as a result of the Audit Committee's ongoing investigation described under the heading "Audit Committee Investigation and Related Matters" and review procedures to be performed by an independent registered public accounting firm. |
Marvell Technology Group Ltd. |
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Reconciliations from GAAP to Non-GAAP |
|||||||||||||
(Unaudited) |
|||||||||||||
(In thousands, except per share amounts) |
|||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||
October 31, |
August 1, |
November 1, |
October 31, |
November 1, |
|||||||||
2015(e) |
2015(e)(f) |
2014 |
2015(e) |
2014 |
|||||||||
(Preliminary) |
(Preliminary) |
||||||||||||
GAAP net income (loss) |
$ (61,738) |
$ (403,039) |
$ 115,304 |
$ (450,687) |
$ 353,653 |
||||||||
Share-based compensation |
31,465 |
36,674 |
34,294 |
101,360 |
99,283 |
||||||||
Restructuring and other related charges (a) |
45,555 |
26,898 |
1,203 |
73,045 |
7,026 |
||||||||
Amortization and write-off of acquired intangible assets |
3,333 |
3,347 |
4,229 |
10,173 |
16,072 |
||||||||
Litigation matters (b) |
5,513 |
395,100 |
(2,398) |
398,913 |
77 |
||||||||
Other (c) |
3,834 |
3,472 |
2,318 |
28,688 |
4,473 |
||||||||
Non-GAAP net income |
$ 27,962 |
$ 62,452 |
$ 154,950 |
$ 161,492 |
$ 480,584 |
||||||||
GAAP weighted average shares - diluted |
504,831 |
516,368 |
519,907 |
512,476 |
520,309 |
||||||||
Non-GAAP adjustment |
13,674 |
16,574 |
12,905 |
16,393 |
11,910 |
||||||||
Non-GAAP weighted average shares diluted (d) |
518,505 |
532,942 |
532,812 |
528,869 |
532,219 |
||||||||
GAAP diluted net income (loss) per share |
$ (0.12) |
$ (0.78) |
$ 0.22 |
$ (0.88) |
$ 0.68 |
||||||||
Non-GAAP diluted net income per share |
$ 0.05 |
$ 0.12 |
$ 0.29 |
$ 0.31 |
$ 0.90 |
||||||||
GAAP gross profit (loss): |
$ 291,670 |
$ (52,044) |
$ 475,162 |
$ 612,761 |
$ 1,422,936 |
||||||||
Share-based compensation |
2,495 |
2,012 |
1,934 |
6,054 |
5,966 |
||||||||
Restructuring and other related charges (a) |
10,285 |
13,898 |
- |
24,183 |
- |
||||||||
Amortization of acquired intangible assets |
485 |
779 |
925 |
2,189 |
2,775 |
||||||||
Litigation matters (b) |
5,513 |
383,040 |
(3,998) |
386,853 |
(3,998) |
||||||||
Non-GAAP gross profit |
$ 310,448 |
$ 347,685 |
$ 474,023 |
$ 1,032,040 |
$ 1,427,679 |
||||||||
GAAP gross margin |
43.3% |
-7.3% |
51.1% |
29.0% |
49.9% |
||||||||
Share-based compensation |
0.4% |
0.3% |
0.2% |
0.3% |
0.2% |
||||||||
Restructuring and other related charges (a) |
1.5% |
2.0% |
0.0% |
1.2% |
0.0% |
||||||||
Amortization of acquired intangible assets |
0.1% |
0.1% |
0.1% |
0.1% |
0.1% |
||||||||
Litigation matters (b) |
0.8% |
53.8% |
-0.4% |
18.3% |
-0.1% |
||||||||
Non-GAAP gross margin |
46.1% |
48.9% |
51.0% |
48.9% |
50.1% |
||||||||
GAAP research and development: |
$ 284,309 |
$ 296,160 |
$ 288,435 |
$ 860,583 |
$ 878,562 |
||||||||
Share-based compensation |
(22,573) |
(27,808) |
(24,198) |
(75,162) |
(68,842) |
||||||||
Restructuring and other related charges (a) |
(31,806) |
(11,680) |
(88) |
(43,486) |
(5,182) |
||||||||
Litigation matters (b) |
- |
(5,000) |
- |
(5,000) |
- |
||||||||
Other (c) |
(894) |
(132) |
- |
(1,026) |
- |
||||||||
Non-GAAP research and development |
$ 229,036 |
$ 251,540 |
$ 264,149 |
$ 735,909 |
$ 804,538 |
||||||||
GAAP selling and marketing: |
$ 32,481 |
$ 30,841 |
$ 34,410 |
$ 99,496 |
$ 106,717 |
||||||||
Share-based compensation |
(2,608) |
(2,707) |
(2,855) |
(7,892) |
(8,400) |
||||||||
Restructuring and other related charges (a) |
(1,899) |
- |
- |
(1,899) |
- |
||||||||
Litigation matters (b) |
- |
- |
(1,600) |
- |
(1,600) |
||||||||
Other (c) |
(39) |
- |
- |
(39) |
- |
||||||||
Non-GAAP selling and marketing |
$ 27,935 |
$ 28,134 |
$ 29,955 |
$ 89,666 |
$ 96,717 |
||||||||
GAAP general and administrative: |
$ 34,731 |
$ 36,033 |
$ 33,473 |
$ 111,791 |
$ 95,379 |
||||||||
Share-based compensation |
(3,789) |
(4,147) |
(5,307) |
(12,252) |
(16,075) |
||||||||
Restructuring and other related charges (a) |
(1,565) |
(1,320) |
(1,115) |
(3,477) |
(1,844) |
||||||||
Litigation matters (b) |
- |
(7,060) |
- |
(7,060) |
(2,475) |
||||||||
Other (c) |
(2,901) |
(2,749) |
(2,318) |
(23,952) |
(4,473) |
||||||||
Non-GAAP general and administrative |
$ 26,476 |
$ 20,757 |
$ 24,733 |
$ 65,050 |
$ 70,512 |
||||||||
GAAP provision (benefit) for income taxes |
$ 3,684 |
$ (7,817) |
$ 5,000 |
$ 196 |
$ (5,720) |
||||||||
Other (c) |
- |
(591) |
- |
(3,671) |
- |
||||||||
Non-GAAP provision (benefit) for income taxes |
$ 3,684 |
$ (8,408) |
$ 5,000 |
$ (3,475) |
$ (5,720) |
||||||||
(a) |
Restructuring and other related charges include costs that qualify under U.S. GAAP as restructuring costs and other incremental charges that are a direct result of restructuring. For the three months ended October 31, 2015, such other related charges include $6.2 million for the impairment of certain equipment (of which $2.2 million is in cost of goods sold) and an $8.1 million write down of inventory (in cost of goods sold) due to the restructuring of the mobile platform business. For the three months ended August 1, 2015, such other related charges included a $0.9 million impairment of equipment held for sale (in general and administrative) and a $13.9 million write down of inventory (in cost of goods sold) related to the restructuring of the mobile platform business. In addition, other related charges for all periods reported include operating expenses incurred for the maintenance of equipment held for sale. |
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(b) |
Litigation matters represent accruals recognized by the Company under ASC Topic 450, "Contingencies," in connection with the Carnegie Mellon University and certain other pending litigation. |
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(c) |
Other costs included in general and administrative expenses for the nine months ended October 31, 2015 include authorization of a cash payment by the Board of Directors of $15.4 million to Dr. Sehat Sutardja, the Company's Chief Executive Officer ("CEO") (see "Note 15 - Subsequent Events" in the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of the Company's Annual Report on Form 10-K for fiscal 2015). Other costs for all periods presented also includes costs primarily associated with the surety bond to appeal the Carnegie Mellon University judgment. Other costs included in the provision for income taxes for the nine ended October 31, 2015 include the corporate income tax effect of the $15.4 million cash payment to the Company's CEO. Other costs included in the provision for income taxes also reflects the tax effect of restructuring costs in the three and six months ended August 1, 2015. |
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(d) |
For purposes of calculating non-GAAP diluted net income per share in all periods presented, the GAAP diluted weighted average shares outstanding is adjusted to exclude the potential benefits of share-based compensation costs expected to be incurred in future periods but not yet recognized in the financial statements. The non-GAAP diluted weighted average shares outstanding for the three and nine months ended October 31, 2015, and the three months ended August 1, 2015 also include the effects from dilutive securities which were excluded from the GAAP diluted weighted average shares outstanding since their effect was antidilutive due to the GAAP net loss reported in each of the corresponding periods. |
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(e) |
The condensed consolidated financial statements for the three and nine months ended October 31, 2015, and the three months ended August 1, 2015 are preliminary and therefore, subject to adjustments in connection with subsequent events arising through the date of the Company's filing of its Quarterly Reports on Form 10-Q for the corresponding periods. The filing of each respective Form 10-Q will be completed as soon as practicable after the completion of the independent investigation by the Audit Committee of certain accounting and internal control matters in the second quarter of fiscal 2016, the appointment of an independent registered public accounting firm and the completion of review procedures by such firm. The final financial results reported for these periods may differ from the results reported in this release as a result of the Audit Committee's ongoing investigation described under the heading "Audit Committee Investigation and Related Matters" and review procedures to be performed by an independent registered public accounting firm. |
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(f) |
The condensed consolidated financial statements for the three months ended August 1, 2015, for which the Company previously reported preliminary financial results on September 11, 2015, have been adjusted due to the delayed filing of its Form 10-Q for the second quarter. These adjustments were made to account for subsequent activities associated with conditions that existed as of August 1, 2015 (Type I Subsequent Events) and are not related to the Audit Committee's investigation of certain accounting and internal control matters. Adjustments that have been recorded to the Company's preliminary financial results after September 11, 2015 include a $13.9 million write down of inventory primarily associated with certain products for the mobile platform business that the Company announced it was restructuring, a $1.2 million charge related to litigation, a $0.9 million impairment on equipment held for sale, an adjustment of $1.1 million to cost of goods sold and corresponding change to the income tax benefit from $11.4 million to $7.8 million. Due to the delayed filing and as a result of future subsequent events, there may be additional adjustments to these preliminary financial results through the date of the Company's filing of its Form 10-Q. The final financial results reported for these periods may differ from the results reported in this release as a result of the Audit Committee's ongoing investigation described under the heading "Audit Committee Investigation and Related Matters" and review procedures to be performed by an independent registered public accounting firm. |
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