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Cavium Announces Financial Results for Q4 2013

SAN JOSE, Calif., Jan. 29, 2014 /PRNewswire/ -- Cavium, Inc. (NASDAQ: CAVM), a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications, and the digital home, today announced financial results for the fourth quarter ended December 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20120604/LA18845LOGO)

Revenue in the fourth quarter of 2013 was $81.1 million, a 2.5% sequential increase from the $79.1 million reported in the third quarter of 2013. Total revenue for the fiscal year ended December 31, 2013 was $304.0 million, a 29.1% year-over-year increase from the $235.5 million reported for the fiscal year ended December 31, 2012.

Generally Accepted Accounting Principles (GAAP) Results

Net income attributable to the Company for the fourth quarter of 2013 on GAAP basis was $0.2 million, or $0.00 per diluted share compared to $4.3 million, or $0.08 per diluted share in the third quarter of 2013. Gross margins were 64.2% in the fourth quarter of 2013 compared to 64.0% in the third quarter of 2013. Total cash and cash equivalents were $127.8 million at December 31, 2013 compared to $113.0 million at end of September 30, 2013.

Non-GAAP Results

Cavium believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Cavium's financial condition and results of operations. These measures should only be used to evaluate Cavium's results of operations in conjunction with the corresponding GAAP measures. The reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this release.

Non-GAAP net income for the fourth quarter of 2013 was $17.4 million, or $0.31 per diluted share, compared to $16.0 million, or $0.29 per diluted share in the third quarter of 2013. Gross margin, on a non-GAAP basis, was 66.3% in the fourth quarter of 2013, compared to 66.0% in the third quarter of 2013. Operating margin (non-GAAP income from operations as a percentage of revenue), on a non-GAAP basis was 21.9% in the fourth quarter of 2013 compared to 21.6% in the third quarter of 2013.

Recent News Highlights

  • November 14, 2013 - Cavium Ranked Amongst Fastest Growing Companies in North America on Deloitte's 2013 Technology Fast 500™ for 6th Consecutive Year
  • January 6, 2014 - Cavium Demonstrated Complete Cloud to Home Solutions at International CES 2014
  • January 21, 2014 - Cavium Joins Network Intelligence Alliance to Drive Innovation and Leadership for Next-Generation Network Solutions

Cavium, Inc. will broadcast its fourth quarter 2013 financial results conference call today, January 29, 2014, at 2 p.m. Pacific time (5 p.m. Eastern time).  The conference call will be available via a live web cast on the investor relations section of the Cavium website at http://www.cavium.com.  Please access the website at least a few minutes prior to the start of the call in order to download and install any necessary audio software. An archived web cast replay of the call will be available on the web site for a limited period of time.

About Cavium
Cavium is a leading provider of highly integrated semiconductor products that enable intelligent processing for networking, communications and the digital home. Cavium offers a broad portfolio of integrated, software-compatible processors ranging in performance from 10 Mbps to 100 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer and access and service provider equipment. Cavium processors are supported by ecosystem partners that provide operating systems, tool support, reference designs and other services. Cavium's principal office is in San Jose, CA with design team locations in California, Massachusetts, India and China. For more information, please visit: http://www.cavium.com.

 

CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)


Three Months Ended 


December 31, 2013


September 30, 2013

Net revenue

$                81,135


$                79,124

Cost of revenue 

29,059


28,516

Gross profit 

52,076


50,608

Operating expenses:




     Research and development 

36,127


33,630

     Sales, general and administrative 

17,871


14,833

        Total operating expenses 

53,998


48,463

Income (loss) from operations 

(1,922)


2,145

Other expense, net:




    Interest expense

(395)


(390)

    Other, net

(74)


(126)

Total other expense, net

(469)


(516)

     Income (loss) before income taxes 

(2,391)


1,629

     Provision for income taxes

120


714

Net income (loss) 

(2,511)


915

Net loss attributable to non-controlling interest

(2,698)


(3,421)

Net income attributable to the Company

$                    187


$                  4,336

Net income attributable to the Company per common share, basic

$                   0.00


$                    0.08

Shares used in computing basic net income per common share

52,104


51,772

Net income attributable to the Company per common share, diluted

$                   0.00


$                    0.08

Shares used in computing diluted net income per common share

53,772


53,492









CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands)


Three Months Ended 


December 31, 2013


September 30, 2013

Reconciliation of GAAP research and development expenses to non-GAAP:




    GAAP research and development expenses

$                36,127


$                33,630

          Stock-based compensation and related payroll taxes

(5,022)


(5,056)

          Net restructuring related expenses 

(74)


(38)

          Change in estimated useful lives of certain consumer product related intangible assets

(2,928)


-

          Expenses associated from a variable interest entity

(3,522)


(4,510)

     Non-GAAP research and development expenses

$                24,581


$                24,026

Reconciliation of GAAP sales, general and administrative expenses to non-GAAP 




    GAAP sales, general and administrative expenses

$                17,871


$                14,833

          Stock-based compensation and related payroll taxes

(3,683)


(3,740)

          Amortization of acquired intangible assets

(2,938)


(200)

          Net restructuring related expenses

250


239

     Non-GAAP sales, general and administrative expenses

$                11,500


$                11,132

 

CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)






Three Months Ended 


December 31, 2013


September 30, 2013

Reconciliation of GAAP gross profit & margin to non-GAAP:




Net revenue

$                  81,135


$                   79,124

GAAP gross profit

52,076


50,608

GAAP gross margin

64.2%


64.0%





          Stock-based compensation and related payroll taxes

311


226

          Amortization of acquired intangible assets

1,548


1,579

          Net restructuring related expenses

(110)


(193)

Non-GAAP gross profit

$                  53,825


$                   52,220

Non-GAAP gross margin

66.3%


66.0%






Three Months Ended 


December 31, 2013


September 30, 2013

Reconciliation of GAAP income (loss) from operations to non-GAAP income from operations:




GAAP income (loss) from operations

$                   (1,922)


$                     2,145

          Stock-based compensation and related payroll taxes

9,016


9,022

          Amortization of acquired intangible assets

4,486


1,779

          Net restructuring related expenses

(286)


(394)

          Change in estimated useful lives of certain consumer product related intangible assets

2,928


-

          Loss from operations of a variable interest entity

3,522


4,510

Non-GAAP income from operations

$                  17,744


$                   17,062

Non-GAAP income from operations as a percentage of revenue

21.9%


21.6%






Three Months Ended 


December 31, 2013


September 30, 2013

Reconciliation of GAAP net income to non-GAAP net income:




GAAP net income attributable to the Company

$                       187


$                     4,336

Non-GAAP adjustments:




      Stock-based compensation and related payroll taxes:




          Cost of revenue

311


226

          Research and development 

5,022


5,056

          Sales, general and administrative 

3,683


3,740

      Amortization of acquired intangible assets:




          Cost of revenue

1,548


1,579

          Sales, general and administrative 

2,938


200

      Net restructuring related expenses

(286)


(394)

      Change in estimated useful lives of certain consumer product related intangible assets

2,928


-

      Net loss of a variable interest entity attributable to the Company

1,064


1,304

     Total of non-GAAP adjustments

17,208


11,711

Non-GAAP net income 

$                  17,395


$                   16,047





GAAP net income attributable to the Company per share, diluted

$                      0.00


$                       0.08

   Non-GAAP adjustments detailed above

0.31


0.21

Non-GAAP net income attributable to the Company per share, diluted

$                      0.31


$                       0.29





GAAP weighted average shares, diluted

53,772


53,492

   Non-GAAP share adjustment

2,038


2,202

Non-GAAP weighted average shares, diluted

55,810


55,694

 


CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Balance Sheets

(in thousands)










As of
December 31, 2013


As of
September 30, 2013

Assets





Current assets:





Cash and cash equivalents

$                127,763


$              112,960


Accounts receivable, net 

43,636


46,504


Inventories

45,768


42,455


Prepaid expenses and other current assets

6,491


4,255


Deferred tax assets

212


112



Total current assets

223,870


206,286

Property and equipment, net

28,494


25,776

Intangible assets, net

43,240


53,003

Goodwill


71,478


71,478

Deferred tax assets, net of current 

61


60

Other assets

1,054


1,044



Total assets

$               368,197


$              357,647







Liabilities and Equity 




Current liabilities:





Accounts payable

$                 23,467


$                23,992


Other accrued expenses and other current liabilities

9,559


9,754


Deferred revenue

8,669


10,689


Notes payable

13,512


11,012


Capital lease and technology license obligations

17,103


11,755



Total current liabilities

72,310


67,202

Capital lease and technology license obligations, net of current 

16,292


18,268

Deferred tax liability

2,420


2,128

Other non-current liabilities

2,344


2,789



Total liabilities

93,366


90,387







Equity 






Common stock

53


52


Additional paid-in capital

443,588


433,507


Accumulated deficit

(157,057)


(157,244)



Total stockholders' equity attributable to the Company

286,584


276,315


Non-controlling interest

(11,753)


(9,055)



Total equity

274,831


267,260



Total liabilities and equity 

$               368,197


$               357,647







 

SOURCE Cavium, Inc.

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