Marvell Technology Group Ltd. Reports First Quarter of Fiscal Year 2020 Financial Results

 

Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP (Unaudited)

(In thousands, except per share amounts)

 
             
   

Three Months Ended

   

May 4,
 2019

 

February 2,
 2019

 

May 5,
 2018

GAAP gross profit:

 

$

361,428

   

$

322,002

   

$

375,693

 

Special items:

           

Share-based compensation

 

2,926

   

2,942

   

1,905

 

Amortization of acquired intangible assets

 

59,906

   

57,591

   

 

Other cost of goods sold (a)

 

450

   

97,598

   

 

Total special items

 

63,282

   

158,131

   

1,905

 

Non-GAAP gross profit

 

$

424,710

   

$

480,133

   

$

377,598

 
             

GAAP gross margin

 

54.6

%

 

43.2

%

 

62.1

%

Non-GAAP gross margin

 

64.1

%

 

64.5

%

 

62.5

%

             
             
             

Total GAAP operating expenses

 

$

382,554

   

$

375,010

   

$

250,614

 

Special items:

           

Share-based compensation

 

(55,672)

   

(47,638)

   

(21,947)

 

Restructuring related charges (b)

 

(5,682)

   

(12,740)

   

(1,567)

 

Amortization of acquired intangible assets

 

(19,834)

   

(21,097)

   

 

Other operating expenses (c)

 

(6,569)

   

(7,392)

   

(15,252)

 

Total special items

 

(87,757)

   

(88,867)

   

(38,766)

 

Total non-GAAP operating expenses

 

$

294,797

   

$

286,143

   

$

211,848

 
             
             
             

GAAP operating margin

 

(3.2)

%

 

(7.1)

%

 

20.7

%

Other cost of goods sold (a)

 

0.1

%

 

13.1

%

 

%

Share-based compensation

 

8.8

%

 

6.8

%

 

3.9

%

Restructuring related charges (b)

 

0.9

%

 

1.7

%

 

0.3

%

Amortization of acquired intangible assets

 

12.0

%

 

10.6

%

 

%

Other operating expenses (c)

 

1.0

%

 

0.9

%

 

2.5

%

Non-GAAP operating margin

 

19.6

%

 

26.0

%

 

27.4

%

                   
                   
                   

GAAP interest and other income (loss), net

 

$

(20,051)

   

$

(16,340)

   

$

7,296

 

Special items:

           

Restructuring related items (d)

 

(338)

   

157

   

(1,512)

 

Write-off of debt issuance costs (e)

 

458

   

782

   

 

Gain on sale of intellectual property

 

   

(3,500)

   

 

Total special items

 

120

   

(2,561)

   

(1,512)

 

Total non-GAAP interest and other income (loss), net

 

$

(19,931)

   

$

(18,901)

   

$

5,784

 
             
             
             

GAAP net income (loss)

 

$

(48,450)

   

$

(260,698)

   

$

128,612

 

Special items:

           

Other cost of goods sold (a)

 

450

   

97,598

   

 

Share-based compensation

 

58,598

   

50,580

   

23,852

 

Restructuring related charges in operating expenses (b)

 

5,682

   

12,740

   

1,567

 

Restructuring related items in interest and other income, net (d)

 

(338)

   

157

   

(1,512)

 

Amortization of acquired intangible assets

 

79,740

   

78,688

   

 

Gain on sale of intellectual property

 

   

(3,500)

   

 

Write-off of debt issuance costs (e)

 

458

   

782

   

 

Other operating expenses (c)

 

6,569

   

7,392

   

15,252

 

Pre-tax total special items

 

151,159

   

244,437

   

39,159

 

Other income tax effects and adjustments (f)

 

2,324

   

184,348

   

(3,098)

 

Non-GAAP net income

 

$

105,033

   

$

168,087

   

$

164,673

 
             
             
             

Weighted average shares — basic

 

658,963

   

657,835

   

497,335

 

Weighted average shares — diluted

 

658,963

   

657,835

   

508,716

 
             

GAAP diluted net income (loss) per share

 

$

(0.07)

   

$

(0.40)

   

$

0.25

 

Non-GAAP diluted net income per share (g)

 

$

0.16

   

$

0.25

   

$

0.32

 
   

(a)

Other costs of goods sold for the quarter ended May 4, 2019 includes charges for legal claim settlement. Other costs of goods sold for the quarter ended February 2, 2019 includes amortization of the Cavium inventory fair value step up and charges for past intellectual property licensing matters.

   

(b)

Restructuring related charges include employee severance, facilities related costs, and impairment of equipment and other assets. Restructuring related charges in the three months ended February 2, 2019 include gain on sale of a building that was a direct result of restructuring.

   

(c)

Other operating expenses include Cavium and Aquantia merger costs.

   

(d)

Interest and other income, net, includes restructuring related items such as foreign currency remeasurement associated with restructuring related accruals.

   

(e)

Write-off of debt issuance costs is associated with the partial term loan repayment during the three months ended May 4, 2019 and February 2, 2019.

   

(f)

Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 4.5% for the three months ended May 4, 2019 and based on a non-GAAP income tax rate of 4% for the three months ended February 2, 2019 and three months ended May 5, 2018.

   

(g)

Non-GAAP diluted net income per share for the three months ended May 4, 2019 and February 2, 2019 was calculated by dividing non-GAAP net income by weighted average shares outstanding (diluted) of 671,048 shares and 663,580 shares, respectively, due to the non-GAAP net income reported in the respective period.


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