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Cavium Announces Financial Results for Q4 2011

(February 02, 2012)

SAN JOSE, CA -- (Marketwire) -- 02/02/12 -- 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 of 2011 ended December 31, 2011.

Revenue in the fourth quarter of 2011 was $56.3 million, a 16.9% sequential decrease from the $67.7 million reported for the third quarter of 2011.

Generally Accepted Accounting Principles (GAAP) Results

Net loss for the fourth quarter of 2011, on a GAAP basis, was $9.4 million, or $(0.19) per diluted share, compared to net income of $6.0 million, or $0.12 per diluted share in the third quarter of 2011. Gross margins were 58.1% in the fourth quarter of 2011 compared to 59.9% in the third quarter of 2011. Total cash and cash equivalents were $63.2 million at December 31, 2011.


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 the company's financial condition and results of operations. These measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. Non-GAAP financial measures in the fourth quarter of 2011 exclude expenses totaling $18.2 million related to stock-based compensation and related payroll expense, amortization of acquired intangible assets, acquisition related expenses and write-down of intangible assets. 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 2011 was $8.7 million or $0.17 per diluted share, compared with non-GAAP income of $14.4 million, or $0.27 per diluted share in the third quarter of 2011. Gross margins, on a non-GAAP basis, were 63.5% and operating margins (non-GAAP income from operations as a percentage of revenue), on a non-GAAP basis, were 10.5% in the fourth quarter of 2011.

Recent News Highlights

  • January 23, 2012 - Cavium's OCTEON® II Wins The Linley Group "Best Embedded Processor" Award
  • January 18, 2012 - Enea Announces Bare Metal Performance Tools for Cavium OCTEON® Family of Multicore Processors
  • January 11, 2012 - Kontron 10-core "out-of-the-box" DPI AdvancedMC™ module designed for high bandwidth LTE network security applications
  • January 10, 2012 - Cavium to Showcase Industry-Leading Wireless Display and Broadband Gateway Solutions at the 2012 International Consumer Electronic Show
  • January 10, 2012 - Cavium's PureVu™ Media Processors Power Acer's New Line of Wireless Monitors
  • January 10, 2012 - Cavium Collaborates with Qualcomm Atheros on New Small Form-Factor, Portable Wireless Display TV Adapter
  • January 10, 2012 - Cavium's ARM-based ECONA SoC Powers D-Link's Routers
  • January 04, 2012 - Cavium to Collaborate with Intel on Providing Best-in-Class Wireless Display Consumer Experience
  • November 29, 2011 - Cavium's OCTEON® II Achieves World's Highest CoreMark Benchmark Score for an Integrated Communications Processor

Cavium, Inc. will broadcast its fourth quarter 2011 financial results conference call today, February 2, 2012, 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 40 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 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, September 30, 2011 2011 ---------------- ---------------- Net revenue $ 56,291 $ 67,729 Cost of revenue 23,586 27,172 ---------------- ---------------- Gross profit 32,705 40,557 ---------------- ---------------- Operating expenses: Research and development 24,244 23,571 Sales, general and administrative 20,715 11,599 ---------------- ---------------- Total operating expenses 44,959 35,170 ---------------- ---------------- Income (loss) from operations (12,254) 5,387 ---------------- ---------------- Other income (expense), net: Interest expense (38) (55) Other, net (137) (53) ---------------- ---------------- Total other expense, net (175) (108) ---------------- ---------------- Income (loss) before income taxes (12,429) 5,279 Benefit from income taxes (3,017) (752) ---------------- ---------------- Net income (loss) $ (9,412) $ 6,031 ================ ================ Net income (loss) per common share, basic $ (0.19) $ 0.12 Shares used in computing basic net income (loss) per common share 49,005 48,739 Net income (loss) per common share, diluted $ (0.19) $ 0.12 Shares used in computing diluted net income (loss) per common share 49,005 50,751 CAVIUM, INC. Unaudited Reconciliation of Non-GAAP Adjustments (in thousands) Three Months Ended ---------------------------------- December 31, September 30, 2011 2011 ---------------- ---------------- Reconciliation of GAAP research and development expenses to non-GAAP: GAAP research and development expenses $ 24,244 $ 23,571 Stock-based compensation and related payroll taxes (3,842) (3,787) Acquisition-related expenses (744) (631) Acquisition-related compensation expenses (1,398) - ---------------- ---------------- Non-GAAP research and development expenses $ 18,260 $ 19,153 ================ ================ Reconciliation of GAAP sales, general and administrative expenses to non-GAAP GAAP sales, general and administrative expenses $ 20,715 $ 11,599 Stock-based compensation and related payroll taxes (4,562) (4,084) Amortization of acquired intangibles (347) (347) Acquisition-related expenses/adjustments (686) (114) Acquisition-related compensation expenses (66) (500) Write-down of intangible assets (3,480) - Change in earn-out liability - 4,564 ---------------- ---------------- Non-GAAP sales, general and administrative expenses $ 11,574 $ 11,118 ================ ================ CAVIUM, INC. Unaudited Reconciliation of Non-GAAP Adjustments (In thousands, except per share data and percentages) Three Months Ended ---------------------------------- December 31, September 30, 2011 2011 ---------------- ---------------- Reconciliation of GAAP gross profit & margin to non-GAAP: Net revenue $ 56,291 $ 67,729 GAAP gross profit 32,705 40,557 GAAP gross margin 58.1% 59.9% Acquisition-related expenses: Cost of revenue 240 619 Amortization of acquired intangibles: Cost of revenue 2,291 2,309 Stock-based compensation and related payroll taxes: Cost of revenue 502 511 ---------------- ---------------- Non-GAAP gross profit $ 35,738 $ 43,996 ================ ================ Non-GAAP gross margin 63.5% 65.0% ================ ================ Three Months Ended ---------------------------------- December 31, September 30, 2011 2011 ---------------- ---------------- Reconciliation of GAAP income from operations to non-GAAP: GAAP income (loss) from operations $ (12,254) $ 5,387 Amortization of acquired intangibles 2,638 2,656 Stock-based compensation and related payroll taxes 8,906 8,382 Acquisition-related expenses/adjustments 1,670 1,364 Acquisition-related compensation expenses 1,464 500 Write-down of intangible assets 3,480 - Change in earn-out liability - (4,564) ---------------- ---------------- Non-GAAP income from operations $ 5,904 $ 13,725 ================ ================ Non-GAAP income from operations as a percentage of revenue 10.5% 20.3% ================ ================ Three Months Ended ---------------------------------- December 31, September 30, 2011 2011 ---------------- ---------------- Reconciliation of GAAP net income to non-GAAP: GAAP net income (loss) $ (9,412) $ 6,031 Non-GAAP adjustments: Stock-based compensation and related payroll taxes: Cost of revenue 502 511 Research and development 3,842 3,787 Sales, general and administrative 4,562 4,084 Amortization of acquired intangibles: Cost of revenue 2,291 2,309 Sales, general and administrative 347 347 Acquisition-related expenses 1,670 1,364 Acquisition-related compensation expenses 1,464 500 Write-down of intangible assets 3,480 - Change in earn-out liability - (4,564) ---------------- ---------------- Total of non-GAAP adjustments 18,158 8,338 ---------------- ---------------- Non-GAAP net income $ 8,746 $ 14,369 ================ ================ GAAP net income (loss) per share, diluted $ (0.19) $ 0.12 ================ ================ Non-GAAP adjustments detailed above 0.36 0.15 Non-GAAP net income per share, diluted $ 0.17 $ 0.27 ================ ================ GAAP weighted average shares, diluted 49,005 50,751 Non-GAAP share adjustment 3,622 1,951 ---------------- ---------------- Non-GAAP weighted average shares, diluted 52,627 52,702 CAVIUM, INC. Unaudited GAAP Condensed Consolidated Balance Sheets (in thousands) As of As of ------------------ ------------------ December 31, 2011 September 30, 2011 ------------------ ------------------ Assets Current assets: Cash and cash equivalents $ 63,225 $ 74,582 Accounts receivable, net 37,839 47,496 Inventories 41,719 33,353 Prepaid expenses and other current assets 3,177 3,205 Deferred income taxes 5,604 9,025 ------------------ ------------------ Total current assets 151,564 167,661 Property and equipment, net 17,027 17,997 Intangible assets, net 54,215 58,496 Goodwill 101,402 101,402 Deferred income taxes 34,490 27,243 Other non-current assets 1,559 1,537 ------------------ ------------------ Total assets $ 360,257 $ 374,336 ================== ================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 13,528 $ 24,738 Accrued expenses and other current liabilities 9,022 9,719 Deferred revenue 11,202 14,322 Capital lease and technology license obligations, current 6,385 6,396 ------------------ ------------------ Total current liabilities 40,137 55,175 Capital lease and technology license obligations, net of current 719 917 Deferred tax liability 5,946 5,917 Other non-current liabilities 2,762 1,778 ------------------ ------------------ Total liabilities 49,564 63,787 ------------------ ------------------ Stockholders' equity Common stock 49 49 Additional paid-in capital 352,104 342,548 Accumulated deficit (41,460) (32,048) ------------------ ------------------ Total stockholders' equity 310,693 310,549 ------------------ ------------------ Total liabilities and stockholders' equity $ 360,257 $ 374,336 ================== ==================

Cavium Contact:

Art Chadwick
Vice President of Finance and Administration
and Chief Financial Officer
Tel: (408) 943-7104
Email: art.chadwick@cavium.com

Angel Atondo
Senior Marketing Communications Manager
Tel: (408) 943-7417
Email: angel.atondo@cavium.com


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