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Cavium Announces Financial Results for Q4 2016

SAN JOSE, Calif., Feb. 1, 2017 — (PRNewswire) —  Cavium, Inc. (NASDAQ: CAVM), a leading provider of semiconductor products that enable intelligent processing for enterprise, data center, cloud, wired and wireless networking, today announced financial results for the fourth quarter ended December 31, 2016.

Net revenue in the fourth quarter of 2016 was $226.2 million, a 34.5% sequential increase from the $168.1 million reported in the third quarter of 2016 and 124.0% from the $100.9 million reported in the fourth quarter of 2015.

Generally Accepted Accounting Principles (GAAP) Results

Net loss for the fourth quarter of 2016 was $121.6 million, or ($1.82) per diluted share, compared to $14.4 million, or ($0.23) per diluted share in the third quarter of 2016. Gross margins were 43.4% in the fourth quarter of 2016 compared to 28.2% in the third quarter of 2016. GAAP operating loss (GAAP loss from operations as a percentage of revenue) was 12.9% in the fourth quarter of 2016 compared to 56.1% in the third quarter of 2016. Total cash and cash equivalents were $221.4 million at December 31, 2016.

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. Cavium believes that these non-GAAP financial measures provide additional insight into Cavium's ongoing performance and core operational activities and has chosen to provide these measures for more consistent and meaningful comparison between periods. 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.

In the fourth quarter of 2016, Non-GAAP net income was $39.8 million, or $0.56 per diluted share. Non-GAAP gross margin was 65.0% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 21.6%.

Recent News Highlights

Cavium will broadcast its fourth quarter of 2016 financial results conference call today, February 1, 2017, 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 offers a broad portfolio of integrated, software compatible processors ranging in performance from 1Gbps to 100Gbp that enable secure, intelligent functionality in Enterprise, Data Center, Broadband, Mobile and Service Provider Equipment, highly programmable switches which scale to 3.2Tbps and Ethernet and Fibre Channel adapters up to 100Gbps. Cavium processors are supported by ecosystem partners that provide operating systems, tools and application support, hardware reference designs and other products. Cavium is headquartered in San Jose, CA with design centers in California, Massachusetts, India, Israel, China and Taiwan. 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, 2016



September 30, 2016


Net revenue

$

226,151



$

168,123


Cost of revenue


127,926




120,709


Gross profit


98,225




47,414


Operating expenses:








     Research and development


87,031




67,752


     Sales, general and administrative


40,340




73,904


        Total operating expenses


127,371




141,656


Loss from operations


(29,146)




(94,242)


Other income (expense), net:








    Interest expense


(8,073)




(4,268)


    Other, net


158




54


Total other expense, net


(7,915)




(4,214)


     Loss before income taxes


(37,061)




(98,456)


     Provision for (benefit from) income taxes


84,539




(84,090)


Net loss

$

(121,600)



$

(14,366)


Net loss per common share, basic and diluted

$

(1.82)



$

(0.23)


Shares used in computing basic and diluted net loss per common share


66,949




62,055


 

CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)





Three Months Ended



December 31, 2016



September 30, 2016


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








Net revenue

$

226,151



$

168,123


GAAP gross profit


98,225




47,414


GAAP gross margin


43.4

%



28.2

%









Stock-based compensation and related payroll taxes from awards granted by the Company


509




274


Stock-based compensation and related payroll taxes from awards assumed from the acquisition


75




134


Purchase accounting effect on inventory


21,015




9,888


Manufacturing rights buy-out


-




37,059


Amortization of acquisition related assets


27,176




12,880


Non-GAAP gross profit

$

147,000



$

107,649


Non-GAAP gross margin


65.0

%



64.0

%









Reconciliation of GAAP operating expenses to non-GAAP:








GAAP research and development expenses

$

87,031



$

67,752


Stock-based compensation and related payroll taxes from awards granted by the Company


(11,030)




(9,644)


Stock-based compensation expense related to employees with change in control provision


-




(956)


Stock-based compensation and related payroll taxes from awards assumed from the acquisition


(2,635)




(1,363)


Amortization of acquisition related assets


(1,507)




(2,643)


IPR&D written-off


(2,000)




-


Non-GAAP research and development expenses


69,859




53,146










GAAP sales, general and administrative expenses


40,340




73,904


Stock-based compensation and related payroll taxes from awards granted by the Company


(7,734)




(7,554)


Stock-based compensation expense related to employees with change in control provision


-




(15,625)


Stock-based compensation and related payroll taxes from awards assumed from the acquisition


(700)




(1,097)


Acquisition and integration related costs


(2,282)




(13,486)


Amortization of acquisition related assets


(1,422)




(524)


Restructuring, severance and other employment charges


-




(13,477)


Non-GAAP sales, general and administrative expenses


28,202




22,141


Total Non-GAAP operating expenses

$

98,061



$

75,287










Reconciliation of GAAP non-operating expenses to non-GAAP:








GAAP other expense, net

$

(7,915)



$

(4,214)


Interest expense and amortization of debt financing cost associated with interim term loan facility


164




522


Non-GAAP other expense, net

$

(7,751)



$

(3,692)










Reconciliation of GAAP Income tax to non-GAAP:








GAAP provision for (benefit from) income tax

$

84,539



$

(84,090)


Acquisition related tax adjustments


(83,174)




84,792


Non-GAAP provision for income tax

$

1,365



$

702


 

 

CAVIUM, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(in thousands, except per share data and percentages)





Three Months Ended



December 31, 2016



September 30, 2016


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








GAAP loss from operations

$

(29,146)



$

(94,242)


Stock-based compensation and related payroll taxes from awards granted by the Company


19,273




17,472


Stock-based compensation expense related to employees with change in control provision


-




16,581


Stock-based compensation and related payroll taxes from awards assumed from the acquisition


3,410




2,594


Purchase accounting effect on inventory


21,015




9,888


Amortization of acquisition related assets


30,105




16,047


Acquisition and integration related costs


2,282




13,486


Manufacturing rights buy-out


-




37,059


Restructuring, severance and other employment charges


-




13,477


IPR&D written-off


2,000




-


Non-GAAP income from operations

$

48,939



$

32,362


Non-GAAP income from operations as a percentage of revenue


21.6

%



19.2

%









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








GAAP net loss

$

(121,600)



$

(14,366)


Non-GAAP adjustments:








Stock-based compensation and related payroll taxes from awards granted by the Company


19,273




17,472


Stock-based compensation expense related to employees with change in control provision


-




16,581


Stock-based compensation and related payroll taxes from awards assumed from the acquisition


3,410




2,594


Purchase accounting effect on inventory


21,015




9,888


Amortization of acquisition related assets


30,105




16,047


Acquisition and integration related costs


2,282




13,486


Manufacturing rights buy-out


-




37,059


Restructuring, severance and other employment charges


-




13,477


IPR&D written-off


2,000




-


Interest expense and amortization of debt financing cost associated with interim term loan facility


164




522


Acquisition related tax adjustments


83,174




(84,792)


Total of non-GAAP adjustments


161,423




42,334


Non-GAAP net income

$

39,823



$

27,968










GAAP net loss per share, diluted

$

(1.82)



$

(0.23)


Non-GAAP adjustments detailed above


2.38




0.66


Non-GAAP net income per share, diluted

$

0.56



$

0.43










GAAP weighted average shares, diluted


66,949




62,055


Non-GAAP share adjustment


4,365




3,062


Non-GAAP weighted average shares, diluted


71,314




65,117


 

 

 

CAVIUM, INC.

Unaudited GAAP Condensed Consolidated Balance Sheets

(in thousands)





As of



December 31, 2016



September 30, 2016


Assets








Current assets








Cash and cash equivalents

$

221,439



$

192,378


Accounts receivable, net


125,728




144,902


Inventories


119,692




118,936


Prepaid expenses and other current assets


22,259




20,556


Asset held for sale


-




38,511


Total current assets


489,118




515,283


Property and equipment, net


150,862




122,114


Intangible assets, net


764,885




790,368


Goodwill


241,067




319,021


Other assets


4,599




3,922


Total assets

$

1,650,531



$

1,750,708










Liabilities and Stockholders' Equity








Current liabilities








Accounts payable

$

65,456



$

55,009


Accrued expenses and other current liabilities


64,967




43,163


Deferred revenue


8,412




9,399


Current portion of long-term debt


3,865




53,774


Capital lease and technology license obligations


25,535




27,747


Total current liabilities


168,235




189,092


Long-term debt


675,414




676,372


Capital lease and technology license obligations, net of current


27,878




11,780


Deferred tax liability


18,774




17,270


Other non-current liabilities


18,386




18,266


Total liabilities


908,687




912,780










Stockholders' equity








Common stock


67




66


Additional paid-in capital


1,079,043




1,052,840


Accumulated deficit


(336,621)




(215,021)


Accumulated other comprehensive loss


(645)




43


Total stockholders' equity


741,844




837,928


Total liabilities and stockholders' equity

$

1,650,531



$

1,750,708


 

 

To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/cavium-announces-financial-results-for-q4-2016-300400626.html

SOURCE Cavium, Inc.

Contact:
Cavium, Inc.
Art Chadwick, Vice President of Finance and Administration and Chief Financial Officer, Tel: (408) 943-7104, Email: Email Contact Angel Atondo, Senior Marketing Communications Manager, Tel: (408) 943-7417, Email: Email Contact
Web: http://www.cavium.com