Marvell Technology Group Ltd. Reports Third 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

 

Nine Months Ended

   

November 2,
2019

 

August 3,
2019

 

November 3,
2018

 

November 2,
2019

 

November 3,
2018

GAAP gross profit:

 

$

340,067

   

$

350,702

   

$

383,587

   

$

1,052,197

   

$

1,136,390

 

Special items:

                   

Share-based compensation

 

3,990

   

3,662

   

2,429

   

10,578

   

9,082

 

Amortization of acquired intangible assets

 

72,146

   

61,132

   

57,594

   

193,184

   

76,577

 

Other cost of goods sold (a)

 

4,758

   

   

105,841

   

5,208

   

128,774

 

Total special items

 

80,894

   

64,794

   

165,864

   

208,970

   

214,433

 

Non-GAAP gross profit

 

$

420,961

   

$

415,496

   

$

549,451

   

$

1,261,167

   

$

1,350,823

 
                     

GAAP gross margin

 

51.3

%

 

53.4

%

 

45.1

%

 

53.1

%

 

53.6

%

Non-GAAP gross margin

 

63.5

%

 

63.3

%

 

64.6

%

 

63.6

%

 

63.7

%

                     
                     
                     

Total GAAP operating expenses

 

$

401,576

   

$

396,930

   

$

404,097

   

$

1,181,060

   

$

1,040,112

 

Special items:

                   

Share-based compensation

 

(63,375)

   

(60,014)

   

(47,811)

   

(179,061)

   

(138,433)

 

Restructuring related charges (b)

 

(14,802)

   

(16,585)

   

(27,031)

   

(37,070)

   

(64,013)

 

Amortization of acquired intangible assets

 

(20,614)

   

(19,835)

   

(21,098)

   

(60,283)

   

(28,053)

 

Other operating expenses (c)

 

(19,495)

   

(20,676)

   

(11,222)

   

(46,740)

   

(54,703)

 

Total special items

 

(118,286)

   

(117,110)

   

(107,162)

   

(323,154)

   

(285,202)

 

Total non-GAAP operating expenses

 

$

283,290

   

$

279,820

   

$

296,935

   

$

857,906

   

$

754,910

 
                     
                     
                     

GAAP operating margin

 

(9.3)

%

 

(7.0)

%

 

(2.4)

%

 

(6.5)

%

 

4.5

%

Other cost of goods sold (a)

 

0.7

%

 

%

 

12.4

%

 

0.3

%

 

6.1

%

Share-based compensation

 

10.2

%

 

9.7

%

 

5.9

%

 

9.6

%

 

7.0

%

Restructuring related charges (b)

 

2.2

%

 

2.5

%

 

3.2

%

 

1.9

%

 

3.0

%

Amortization of acquired intangible assets

 

14.0

%

 

12.3

%

 

9.2

%

 

12.8

%

 

4.9

%

Other operating expenses (c)

 

3.0

%

 

3.2

%

 

1.4

%

 

2.3

%

 

2.6

%

Non-GAAP operating margin

 

20.8

%

 

20.7

%

 

29.7

%

 

20.4

%

 

28.1

%

                                         
                                         
                                         
                                         
                                         

GAAP interest and other income (loss), net

 

$

(19,460)

   

$

(21,651)

   

$

(23,952)

   

$

(61,162)

   

$

(31,577)

 

Special items:

                   

Restructuring related items (d)

 

(946)

   

75

   

1,491

   

(1,209)

   

(142)

 

Write-off of debt issuance costs (e)

 

   

   

850

   

458

   

6,954

 

Deal costs (f)

 

496

   

1,009

   

   

1,505

   

 

Total special items

 

(450)

   

1,084

   

2,341

   

754

   

6,812

 

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

 

$

(19,910)

   

$

(20,567)

   

$

(21,611)

   

$

(60,408)

   

$

(24,765)

 
                     
                     
                     

GAAP net income (loss)

 

$

(82,501)

   

$

(57,331)

   

$

(53,767)

   

$

(188,282)

   

$

81,604

 

Special items:

                   

Other cost of goods sold (a)

 

4,758

   

   

105,841

   

5,208

   

128,774

 

Share-based compensation

 

67,365

   

63,676

   

50,240

   

189,639

   

147,515

 

Restructuring related charges in operating expenses (b)

 

14,802

   

16,585

   

27,031

   

37,070

   

64,013

 

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

 

(946)

   

75

   

1,491

   

(1,209)

   

(142)

 

Amortization of acquired intangible assets

 

92,760

   

80,967

   

78,692

   

253,467

   

104,630

 

Write-off of debt issuance costs (e)

 

   

   

850

   

458

   

6,954

 

Transaction costs included in interest and other income, net (f)

 

496

   

1,009

   

   

1,505

   

 

Other operating expenses (c)

 

19,495

   

20,676

   

11,222

   

46,740

   

54,703

 

Pre-tax total special items

 

198,730

   

182,988

   

275,367

   

532,878

   

506,447

 

Other income tax effects and adjustments (g)

 

(3,773)

   

(15,728)

   

55

   

(17,177)

   

(39,763)

 

Non-GAAP net income

 

$

112,456

   

$

109,929

   

$

221,655

   

$

327,419

   

$

548,288

 
                     
                     
                     

Weighted average shares — basic

 

668,178

   

663,603

   

657,519

   

667,184

   

569,031

 

Weighted average shares — diluted

 

668,178

   

663,603

   

657,519

   

667,184

   

578,872

 
                     

GAAP diluted net income (loss) per share

 

$

(0.12)

   

$

(0.09)

   

$

(0.08)

   

$

(0.28)

   

$

0.14

 

Non-GAAP diluted net income per share (h)

 

$

0.17

   

$

0.16

   

$

0.33

   

$

0.48

   

$

0.95

 
   

(a)

Other costs of goods sold includes amortization of the Aquantia inventory fair value adjustment in 2019, amortization of the Cavium inventory fair value adjustment in 2018, as well as charges for past intellectual property licensing matters.

(b)

Restructuring related charges include employee severance, facilities related costs, and impairment of equipment and other assets.

(c)

Other operating expenses include Cavium, Aquantia, and Avera 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.

(f)

Costs incurred in connection with preparation of the impending divestiture of the Wi-Fi Connectivity business.

(g)

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 August 3, 2019 and the three and nine months ended November 2, 2019, and based on a non-GAAP income tax rate of 4% for the three and nine months ended November 3, 2018.

(h)

Non-GAAP diluted net income per share for the three months ended November 2, 2019, August 3, 2019 and November 3, 2018 was calculated by dividing non-GAAP net income by weighted average shares outstanding (diluted) of 679,345, 675,755 shares and 665,752 shares, respectively, due to the non-GAAP net income reported in the respective period. Non-GAAP diluted net income per share for the nine months ended November 2, 2019 was calculated by dividing non-GAAP net income by weighted average shares outstanding (diluted) of 678,986 shares due to the non-GAAP net income reported in the period.


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