Marvell Technology Group Ltd. Reports Record Third Quarter Revenue

Marvell Technology Group Ltd. Reports Record Third Quarter Revenue

Business Editors

SUNNYVALE, Calif.–(BUSINESS WIRE)–Nov. 16, 2000

Marvell Technology Group Ltd. (NASDAQ: MRVL) today reported record revenues for its third fiscal quarter ended October 28, 2000.

Net sales for the third quarter of fiscal 2001 were a record $36.2 million, an increase of 54% over the $23.5 million for the comparable quarter in fiscal 2000. Net income before non-cash charges for amortization of stock compensation for the quarter was $3.4 million, or $0.04 per share (diluted), compared with net income before non-cash charges for amortization of stock compensation of $5.5 million, or $0.07 per share (diluted), for the comparable quarter in fiscal 2000. Shares used in computing earnings per share for the third quarter of fiscal 2001 were 97.2 million, compared to 82.1 million shares for the third quarter of fiscal 2000.

Net sales for the first nine months of fiscal 2001 totaled $98.1 million, an increase of 80% over the $54.4 million for the first nine months of fiscal 2000. Net income before non-cash charges for amortization of stock compensation for the first nine months of fiscal 2001 totaled $9.5 million, or $0.10 per share (diluted), compared with $10.3 million, or $0.13 per share (diluted), for the first nine months of fiscal 2000. Shares used in computing earnings per share for the first nine months of fiscal 2001 were 90.7 million, compared with 80.4 million for the first nine months of fiscal 2000.

Net income including the non-cash charges for amortization of stock compensation for the third quarter of fiscal 2001 totaled $1.8 million, or $0.02 per share (diluted), compared with $5.3 million, or $0.06 per share (diluted), for the third quarter of fiscal 2000.

Commenting on the quarter’s results, Dr. Sehat Sutardja, president and CEO of Marvell Technology Group Ltd., stated, “We are pleased to announce our eighth consecutive quarter of profitability and our second profitable quarter as a public company. Our data storage business continues to grow, with revenue coming in slightly above our expectations, and our data communications revenues increased 118% sequentially.”

“We continued to demonstrate our technology leadership in the third quarter,” Sutardja added. “In our data storage business, we announced the first fully complete system-on-chip platform for next-generation data storage devices. In our data communications business, we announced the world’s first multiple port Gigabit Ethernet over copper transceiver with high-speed optical interface, the world’s only 0.18 micron Gigabit Ethernet over copper devices in volume production, and the first “plug and play,” DSP-based, fully integrated five-port 10/100BASE-T Ethernet Switch for the small office/home office market. These technological achievements, as well as the announcement of our acquisition of Galileo Technology, position Marvell as a leading communications-IC powerhouse.”

In the third quarter, Marvell announced plans to acquire Galileo Technology Ltd., a market leader in digital communications systems on silicon for the LAN (local area network), MAN (metropolitan area network) and WAN (wide area network). The acquisition is expected to be completed by the end of February 2001.

About Marvell

Marvell comprises Marvell Technology Group Ltd. (MTGL) and its subsidiaries, Marvell Semiconductor Inc. (MSI), Marvell Asia Pte Ltd. (MAPL) and Marvell Japan K.K. (MJKK). On behalf of MTGL, MSI designs, develops and markets integrated circuits utilizing proprietary Communications Mixed-Signal Processing (CMSP) and digital signal processing technologies for broadband communications-related and data storage markets. MAPL is headquartered in Singapore and is responsible for Marvell’s production and distribution operations. As used in this release, the terms “Company” and “Marvell” refer to the entire group of companies. The Company’s proprietary CMSP technology combines custom digital signal processing algorithms to allow technology customers to store and move digital data on demand at high data access rates. The Company initially focused its core technology on the data storage market. The Company more recently applied its technology to the high speed, or broadband, data communications market by introducing products that are used in network access equipment to provide the interface between communications systems and data transmission media. MSI is headquartered at 645 Almanor Ave., Sunnyvale, Calif., 94085; phone: (408) 222-2500, fax: (408) 328-0120. MAPL is located at 151 Lorong Chuan No. 02-05, New Tech Park, Singapore 556741.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This release may contain projections or other forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” and “continue,” and other similar words. You should read statements that contain these words carefully because they discuss Marvell’s future expectations, make projections of its future results of operations or of its financial condition, or state other “forward-looking” information. The Company believes that it is important to communicate its future expectations to the Company’s investors. However, there may be events in the future that Marvell is not able to accurately predict or control.

This release may also contain forward-looking statements based on the current expectations or beliefs of Marvell’s management and the management of Galileo Technology Ltd. and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this release address the strategic business combination of Marvell and Galileo. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the risk that the Marvell and Galileo businesses will not be integrated successfully; costs related to the business combination; failure of the Marvell or Galileo shareholders to approve the business combination; inability to obtain or meet conditions imposed for governmental approvals for the merger, inability to further identify, develop and achieve success for new products, services and technologies; increased competition and its effect on pricing, spending, third-party relationships and revenues; as well as the inability to establish and maintain relationships with commerce, advertising, marketing, and technology providers.

For other factors that could cause Marvell’s or Galileo’s results to vary from expectations, please see the “Risk Factors” section of Marvell’s Registration Statement on Form S-1 relating to Marvell’s initial public offering, Marvell’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2000, and Galileo’s most recent report on Form 20-F filed with the SEC.

Marvell Technology Group Ltd.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

Three Months Ended Nine Months Ended

Oct. 28, Oct. 31, Oct. 28, Oct. 31,

2000 1999 2000 1999

——– ——– ——– ——–

Net revenue $ 36,212 $ 23,463 $ 98,051 $ 54,379

Cost of goods sold 16,999 8,874 45,259 22,189

——– ——– ——– ——–

Gross profit 19,213 14,589 52,792 32,190

Operating expenses:

Research and

development 9,436 3,716 23,366 9,084

Marketing and selling 5,702 2,784 15,381 7,256

General and

administrative 1,346 793 4,277 2,228

Amortization of

stock compensation 2,143 329 6,627 565

——– ——– ——– ——–

Total operating

expenses 18,627 7,622 49,651 19,133

——– ——– ——– ——–

Operating income 586 6,967 3,141 13,057

Interest income, net 1,811 88 2,845 124

——– ——– ——– ——–

Income before income

taxes 2,397 7,055 5,986 13,181

Provision for income

taxes 599 1,764 1,496 3,295

——– ——– ——– ——–

Net income $ 1,798 $ 5,291 $ 4,490 $ 9,886

======== ======== ======== ========

Net income per share:

Basic $ 0.02 $ 0.13 $ 0.07 $ 0.25

======== ======== ======== ========

Diluted $ 0.02 $ 0.06 $ 0.05 $ 0.12

======== ======== ======== ========

Weighted average

common shares

outstanding:

Basic 79,625 41,278 60,343 39,188

======== ======== ======== ========

Diluted 97,150 82,073 90,667 80,413

======== ======== ======== ========

Marvell Technology Group Ltd.

Supplemental Disclosure

Adjusted Net Income / EPS Calculation

(Unaudited)

(in thousands, except per share data)

Three Months Ended Nine Months Ended

Oct. 28, Oct. 31, Oct. 28, Oct. 31,

2000 1999 2000 1999

——– ——– ——– ——–

Net income $ 1,798 $ 5,291 $ 4,490 $ 9,886

Non-cash Pro

forma adjustment:

Amortization of

stock compensation 2,143 329 6,627 565

Tax effect (25%) (536) (82) (1,657) (141)

——– ——– ——– ——–

Adjusted net income $ 3,405 $ 5,538 $ 9,460 $ 10,310

======== ======== ======== ========

Shares used

in computing

diluted net

income per share 97,150 82,073 90,667 80,413

======== ======== ======== ========

Adjusted diluted

net income per share $ 0.04 $ 0.07 $ 0.10 $ 0.13

======== ======== ======== ========

Marvell Technology Group Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

October 28, January 29,

2000 2000

——— ———

Assets

Current assets:

Cash and cash equivalents $ 115,824 $ 16,600

Accounts receivable,

net of allowance

for doubtful accounts of $100 23,150 14,701

Inventory, net 9,753 4,830

Prepaid expenses and

other current assets 4,374 1,195

Deferred income taxes 1,456 1,456

——— ———

Total current assets 154,557 38,782

Property and equipment, net 12,571 7,413

Other noncurrent assets 3,668 305

——— ———

Total assets $ 170,796 $ 46,500

========= =========

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable $ 14,949 $ 5,698

Accrued liabilities 9,627 4,524

Income taxes payable 6,780 5,875

Deferred revenue 646 —

Capital lease obligations 53 74

——— ———

Total current liabilities 32,055 16,171

Capital lease obligations,

less current portion — 36

——— ———

Total liabilities 32,055 16,207

Commitments

Mandatorily redeemable

convertible preferred stock — 22,353

Shareholders’ equity:

Common stock, $0.002 par

value; 242,000,000 shares

authorized; 85,477,766 and

48,931,560 shares issued and

outstanding at

October 28, 2000 and

January 29, 2000, respectively 171 98

Additional paid-in capital 142,409 17,580

Deferred stock-based compensation (10,488) (11,897)

Retained earnings 6,649 2,159

——— ———

Total shareholders’ equity 138,741 7,940

——— ———

Total liabilities and

shareholders’ equity $ 170,796 $ 46,500

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