EX-99.1 2 q3208k11022019ex-991.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
 
ex9918k_image1a07.jpg


Marvell Technology Group Ltd. Reports Third Quarter of Fiscal Year 2020
Financial Results
 
•
Q3 Revenue: $662 million
•
Q3 Gross Margin: 51.3% GAAP gross margin; 63.5% non-GAAP gross margin
•
Q3 Diluted income (loss) per share: $(0.12) GAAP diluted loss per share; $0.17 non-GAAP diluted income per share
•
Cash and short-term investments: $438 million
Santa Clara, Calif. (December 3, 2019) - Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in infrastructure semiconductor solutions, today reported financial results for the third quarter of fiscal year 2020.
Marvell completed the acquisition of Aquantia Corp. (“Aquantia”) on September 19, 2019 (the “acquisition date”), approximately 6 weeks before the end of the third quarter of fiscal 2020. Marvell's results for the third quarter of fiscal 2020 include the results of Aquantia from the acquisition date, while prior periods presented do not.
Subsequent to Marvell's third quarter end, on November 5, 2019, Marvell completed the acquisition of Avera Semiconductor (“Avera”), the Application Specific Integrated Circuit (“ASIC”) business of GlobalFoundries.
Revenue for the third quarter of fiscal 2020 was $662 million, which exceeded the midpoint of the Company's guidance provided on August 29, 2019. GAAP net loss for the third quarter of fiscal 2020 was $(83) million, or $(0.12) per diluted share. Non-GAAP net income for the third quarter of fiscal 2020 was $112 million, or $0.17 per diluted share. Cash flow from operations for the third quarter was $66 million.

“Marvell delivered solid results for the third quarter and I am pleased that our storage business grew sequentially led by a strong performance from our enterprise and datacenter products. In addition, we ramped our first 5G product shipments in volume, successfully responding to our customer’s aggressive schedule requests, ahead of the plan we had laid out early this year,” said Matt Murphy, Marvell’s President and CEO. “We also recently completed the strategic acquisitions of Aquantia, a pioneer in multi-gig ethernet, and Avera, a leader in custom ASICs. These acquisitions broaden our technology portfolio for infrastructure customers and expand our addressable market by approximately $4 billion.”

Marvell's fourth quarter guidance includes expected results from the Aquantia and Avera acquisitions for the full quarter. This guidance also includes expected results for the full quarter from the Wi-Fi Connectivity Business. Once the Wi-Fi Connectivity Business is divested to NXP, Marvell will update its revenue guidance for the fourth quarter. Marvell's fourth quarter guidance also takes into account the U.S. Government's export restriction on certain Chinese customers.

Fourth Quarter of Fiscal 2020 Financial Outlook
 
•
Revenue is expected to be $750 million +/- 3%.
•
GAAP gross margin is expected to be approximately 45.5%.
•
Non-GAAP gross margin is expected to be approximately 62%.
•
GAAP operating expenses are expected to be $445 million to $455 million.
•
Non-GAAP operating expenses are expected to be $315 million to $320 million.
•
GAAP diluted loss per share is expected to be $(0.23) to $(0.17) per share.
•
Non-GAAP diluted income per share is expected to be $0.15 to $0.19 per share.




Conference Call
Marvell will conduct a conference call on Tuesday, December 3, 2019 at 1:45 p.m. Pacific Time to discuss results for the third quarter of fiscal 2020. Interested parties may join the conference call by dialing 1-844-647-5488 or 1-615-247-0258, pass-code 4437138. The call will be webcast and can be accessed at the Marvell Investor Relations website at http://investor.marvell.com/ with a replay available following the call until Tuesday, December 10, 2019.

Discussion of Non-GAAP Financial Measures
Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization of the inventory fair value adjustment associated with the Aquantia acquisition, amortization of acquired intangible assets, acquisition and divestiture-related costs, restructuring and other related charges, resolution of legal matters, and certain expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to Marvell’s core business.
Marvell uses a non-GAAP tax rate to compute the non-GAAP tax provision. This non-GAAP tax rate is based on Marvell's estimated annual GAAP income tax forecast, adjusted to account for items excluded from GAAP income in calculating Marvell's non-GAAP income, as well as the effects of significant non-recurring and period specific tax items which vary in size and frequency. Marvell's non-GAAP tax rate is determined on an annual basis and may be adjusted during the year to take into account events that may materially affect the non-GAAP tax rate such as tax law changes; significant changes in Marvell's geographic mix of revenue and expenses; or changes to Marvell's corporate structure. For the third quarter of fiscal 2020, a non-GAAP tax rate of 4.5% has been applied to the non-GAAP financial results.
Marvell believes that the presentation of non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to Marvell’s financial condition and results of operations. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, financial measures calculated in accordance with GAAP. Consistent with this approach, Marvell believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance.
Externally, management believes that investors may find Marvell’s non-GAAP financial measures useful in their assessment of Marvell’s operating performance and the valuation of Marvell. Internally, Marvell’s non-GAAP financial measures are used in the following areas:

•
Management’s evaluation of Marvell’s operating performance;
•
Management’s establishment of internal operating budgets;
•
Management’s performance comparisons with internal forecasts and targeted business models; and
•
Management’s determination of the achievement and measurement of certain performance-based equity awards (adjustments may vary from award to award).
 
Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Marvell’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Marvell’s results as reported under GAAP. Marvell expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from Marvell’s non-GAAP net income should not be construed as an inference that these costs are unusual, infrequent or non-recurring.



Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “seeks,” “estimates,” “can,” “may,” “will,” “would” and similar expressions identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties, including, but not limited to: the risk that the proposed divestiture of Marvell's Wi-Fi Connectivity business to NXP will not be completed; the risk that the company may not realize the anticipated benefits of the acquisitions of Aquantia Corp. and the Application Specific Integrated Circuit (ASIC) business of GLOBALFOUNDRIES and the divestiture to NXP (collectively, the “Transactions”); the effect of the consummation of the Transactions on the company's business relationships, operating results, and business generally; potential difficulties in employee retention as a result of the Transactions; the ability of Marvell to successfully integrate operations and product lines related to the acquisitions; the ability of Marvell to implement its plans, forecasts, and other expectations with respect to the Transactions and realize the anticipated synergies and cost savings in the time frame anticipated or at all; the impact of international conflict and economic volatility in either domestic or foreign markets including risks related to trade conflicts, bans and tariffs; the risks associated with manufacturing and selling products and customers’ products outside of the United States; Marvell's ability to define, design and develop products for the 5G market; Marvell's ability to market its 5G products to Tier 1 infrastructure customers; the effects of transitioning to smaller geometry process technologies; the impact of any change in the income tax laws in jurisdictions where Marvell operates and the loss of any beneficial tax treatment that Marvell currently enjoys; the risk of downturns in the highly cyclical semiconductor industry; Marvell’s dependence upon the storage and networking markets, which are highly cyclical and intensely competitive; the outcome of pending or future litigation and legal and regulatory proceedings; Marvell’s dependence on a small number of customers; the impact and costs associated with changes in international financial and regulatory conditions; Marvell’s ability and the ability of its customers to successfully compete in the markets in which it serves; Marvell’s reliance on independent foundries and subcontractors for the manufacture, assembly and testing of its products; Marvell’s ability and its customers’ ability to develop new and enhanced products and the adoption of those products in the market; decreases in gross margin and results of operations in the future due to a number of factors; Marvell’s ability to estimate customer demand and future sales accurately; Marvell’s ability to scale its operations in response to changes in demand for existing or new products and services; risks associated with acquisition and consolidation activity in the semiconductor industry; the effects of any other potential acquisitions, divestitures or investments; Marvell’s ability to protect its intellectual property; Marvell’s maintenance of an effective system of internal controls; severe financial hardship or bankruptcy of one or more of Marvell’s major customers; and other risks detailed in Marvell’s SEC filings from time to time. For other factors that could cause Marvell’s results to vary from expectations, please see the risk factors identified in Marvell’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 2019 as filed with the SEC on September 4, 2019, and other factors detailed from time to time in Marvell’s filings with the SEC. Marvell undertakes no obligation to revise or publicly update any forward-looking statements.





About Marvell
Marvell first revolutionized the digital storage industry by moving information at speeds never thought possible. Today, that same breakthrough innovation remains at the heart of the Company’s storage, processing, networking, security and connectivity solutions. With leading intellectual property and deep system-level knowledge, Marvell’s semiconductor solutions continue to transform the enterprise, cloud, automotive, industrial, and consumer markets. To learn more, visit: www.marvell.com.
Marvell® and the Marvell logo are registered trademarks of Marvell and/or its affiliates.



Marvell Technology Group Ltd.
Condensed Consolidated Statements of Operations (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
Net revenue
 
$
662,470

 
$
656,568

 
$
851,051

 
$
1,981,490

 
$
2,120,992

Cost of goods sold
 
322,403

 
305,866

 
467,464

 
929,293

 
984,602

Gross profit
 
340,067

 
350,702

 
383,587

 
1,052,197

 
1,136,390

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
267,781

 
266,354

 
264,888

 
801,002

 
657,907

Selling, general and administrative
 
118,993

 
113,990

 
112,178

 
342,988

 
318,192

Restructuring related charges
 
14,802

 
16,586

 
27,031

 
37,070

 
64,013

Total operating expenses
 
401,576

 
396,930

 
404,097

 
1,181,060

 
1,040,112

Operating income (loss)
 
(61,509
)
 
(46,228
)
 
(20,510
)
 
(128,863
)
 
96,278

Interest income
 
1,092

 
1,077

 
1,046

 
3,437

 
10,690

Interest expense
 
(21,241
)
 
(20,531
)
 
(22,370
)
 
(62,975
)
 
(38,409
)
Other income (loss), net
 
689

 
(2,197
)
 
(2,628
)
 
(1,624
)
 
(3,858)

Interest and other income (loss), net
 
(19,460
)
 
(21,651
)
 
(23,952
)
 
(61,162
)
 
(31,577
)
Income (loss) before income taxes
 
(80,969
)
 
(67,879
)
 
(44,462
)
 
(190,025
)
 
64,701

Provision (benefit) for income taxes
 
1,532

 
(10,548
)
 
9,305

 
(1,743
)
 
(16,903
)
Net income (loss)
 
(82,501
)
 
(57,331
)
 
(53,767
)
 
(188,282
)
 
81,604

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share — Basic:
 
$
(0.12
)
 
$
(0.09
)
 
$
(0.08
)
 
$
(0.28
)
 
$
0.14

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share — Diluted:
 
$
(0.12
)
 
$
(0.09
)
 
$
(0.08
)
 
$
(0.28
)
 
$
0.14

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
668,178

 
663,603

 
657,519

 
667,184

 
569,031

Diluted
 
668,178

 
663,603

 
657,519

 
667,184

 
578,872



Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
 
 
November 2,
2019
 
February 2,
2019
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
438,369

 
$
582,410

Accounts receivable, net
 
495,216

 
493,122

Inventories
 
308,299

 
276,005

Prepaid expenses and other current assets
 
43,789

 
43,721

Assets held for sale
 
600,893

 
—

Total current assets
 
1,886,566

 
1,395,258

Property and equipment, net
 
316,214

 
318,978

Goodwill
 
5,161,312

 
5,494,505

Acquired intangible assets, net
 
2,500,215

 
2,560,682

Other non-current assets
 
438,955

 
247,329

Total assets
 
$
10,303,262

 
$
10,016,752

 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
212,955

 
$
185,362

Accrued liabilities
 
305,827

 
335,509

Accrued employee compensation
 
130,062

 
115,925

Liabilities held for sale
 
5,610

 
—

Total current liabilities
 
654,454

 
636,796

Long-term debt
 
2,036,441

 
1,732,699

Non-current income taxes payable
 
48,136

 
59,221

Deferred tax liabilities
 
214,492

 
246,252

Other non-current liabilities
 
183,921

 
35,374

Total liabilities
 
3,137,444

 
2,710,342

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common shares
 
1,341

 
1,317

Additional paid-in capital
 
6,355,723

 
6,188,598

Accumulated other comprehensive income
 
37

 
—

Retained earnings
 
808,717

 
1,116,495

Total shareholders’ equity
 
7,165,818

 
7,306,410

Total liabilities and shareholders’ equity
 
$
10,303,262

 
$
10,016,752





Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)


 
Three Months Ended
 
Nine Months Ended

 
November 2,
2019
 
November 3,
2018
 
November 2,
2019
 
November 3,
2018
Cash flows from operating activities:
 



 
 
 
 
Net income (loss)
 
$
(82,501
)
 
$
(53,767
)
 
$
(188,282
)
 
$
81,604

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
40,508

 
39,259

 
126,747

 
86,356

Share-based compensation
 
66,762

 
50,240

 
189,036

 
133,484

Amortization and write off of acquired intangible assets
 
92,760

 
78,691

 
253,467

 
104,630

Amortization of inventory fair value adjustment associated with acquisition
 
3,316

 
102,842

 
3,316

 
125,775

Amortization of deferred debt issuance costs and debt discounts
 
1,181

 
2,217

 
4,040

 
9,290

Restructuring related impairment charges
 
6,146

 
9,888

 
16,243

 
11,881

Other expense, net
 
2,574

 
1,771

 
4,590

 
5,402

Deferred income taxes
 
(10,275
)
 
(6,261
)
 
(7,901
)
 
(27,675
)
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
Accounts receivable
 
(32,002
)
 
(10,948
)
 
8,374

 
(59,697
)
Inventories
 
(39,276
)
 
(5,007
)
 
(30,602
)
 
1,859

Prepaid expenses and other assets
 
(3,046
)
 
7,630

 
(11,039
)
 
(11,874
)
Accounts payable
 
8,304

 
22,531

 
30,801

 
22,260

Accrued liabilities and other non-current liabilities
 
(26,141
)
 
39,691

 
(106,258
)
 
27,730

Accrued employee compensation
 
37,193

 
20,617

 
11,927

 
(20,922
)
Net cash provided by operating activities
 
65,503

 
299,394

 
304,459

 
490,103

Cash flows from investing activities:
 
 

 
 
 
 
 
Purchases of available-for-sale securities
 
—

 
—

 
—

 
(14,956
)
Sales of available-for-sale securities
 
18,832

 
—

 
18,832

 
623,896

Maturities of available-for-sale securities
 
—

 
—

 
—

 
187,985

Purchases of time deposits
 
—

 
—

 
—

 
(25,000
)
Maturities of time deposits
 
—

 
25,000

 
—

 
175,000

Purchases of technology licenses
 
(414
)
 
(9,918
)
 
(1,936
)
 
(11,181
)
Purchases of property and equipment
 
(20,742
)
 
(12,646
)
 
(62,935
)
 
(47,035
)
Cash payment for acquisition, net of cash and cash equivalents acquired
 
(477,579
)
 
—

 
(477,579
)
 
(2,649,465
)
Other, net
 
(1,404
)
 
(4,007
)
 
(1,793
)
 
(7,534
)
Net cash used in investing activities
 
(481,307
)
 
(1,571
)
 
(525,411
)
 
(1,768,290
)
Cash flows from financing activities:
 
 

 
 
 
 
 
Repurchases of common stock
 
—

 
(53,969
)
 
(64,272
)
 
(53,969
)
Proceeds from employee stock plans
 
21,795

 
16,192

 
103,109

 
60,772

Tax withholding paid on behalf of employees for net share settlement
 
(19,220
)
 
(8,915
)
 
(80,862
)
 
(45,691
)
Dividend payments to shareholders
 
(40,140
)
 
(39,411
)
 
(119,496
)
 
(108,592
)
Payments on technology license obligations
 
(28,889
)
 
(23,003
)
 
(57,213
)
 
(52,481
)
Proceeds from issuance of debt
 
350,000

 
—

 
350,000

 
1,892,605

Principal payments of debt
 
—

 
(75,000
)
 
(50,000
)
 
(681,128
)
Payment of equity and debt financing costs
 
—

 
(2,115
)
 
—

 
(11,550
)
Other, net
 
(2,869
)
 
—

 
(4,355
)
 
—

Net cash provided by (used in) in financing activities
 
280,677

 
(186,221
)
 
76,911

 
999,966

Net increase (decrease) in cash and cash equivalents
 
(135,127
)
 
111,602

 
(144,041
)
 
(278,221
)
Cash and cash equivalents at beginning of period
 
573,496

 
498,659

 
582,410

 
888,482

Cash and cash equivalents at end of period
 
$
438,369

 
$
610,261

 
$
438,369

 
$
610,261

 





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
%


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 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.




 Marvell Technology Group Ltd.
 Outlook for the Fourth Quarter of Fiscal Year 2020
Reconciliations from GAAP to Non-GAAP (Unaudited)
 (In millions, except per share amounts)
 
 
 
 
 
Outlook for Three Months Ended
February 1, 2020
GAAP revenue
$750 +/- 3%
Special items:
—
Non-GAAP revenue
$750 +/- 3%
 
 
GAAP gross margin
45.5%
Special items:
 
Share-based compensation
0.3%
Amortization of acquired intangible assets
16.2%
Non-GAAP gross margin
62%
 
 
Total GAAP operating expenses
 $445 - $455
Special items:
 
Share-based compensation
65
Restructuring related charges
23
Amortization of acquired intangible assets
23
Other operating expenses
22
Total non-GAAP operating expenses
$315 - $320
 
 
 
 
GAAP diluted net loss per share
 $(0.23) - $(0.17)
Special items:
 
Share-based compensation
0.10
Amortization of acquired intangible assets
0.21
Restructuring related charges in operating expenses
0.04
Other operating expenses
0.03
Other income tax effects and adjustments
(0.01)
Non-GAAP diluted net income per share
$0.15 - $0.19




Quarterly Revenue Trend (Unaudited)
(In thousands)
 
 
 
 
Three Months Ended
 
% Change
 
November 2,
2019
 
August 3,
2019
 
November 3,
2018
 
YoY
 
QoQ
Networking (1)
$
329,962

 
$
329,605

 
$
398,424

 
(17
)%
 
—
 %
Storage (2)
287,708

 
274,905

 
406,822

 
(29
)%
 
5
 %
   Total Core
617,670

 
604,510

 
805,246

 
(23
)%
 
2
 %
Other (3)
44,800

 
52,058

 
45,805

 
(2
)%
 
(14
)%
Total Revenue
$
662,470

 
$
656,568

 
$
851,051

 
(22
)%
 
1
 %

 
Three Months Ended
% of Total
November 2,
2019
 
August 3,
2019
 
November 3,
2018
Networking (1)
50
%
 
50
%
 
47
%
Storage (2)
43
%
 
42
%
 
48
%
   Total Core
93
%
 
92
%
 
95
%
Other (3)
7
%
 
8
%
 
5
%
Total Revenue
100
%
 
100
%
 
100
%

(1) Networking products are comprised primarily of Ethernet Switches, Ethernet Transceivers, Ethernet NICs, Embedded Communication Processors, Automotive Ethernet, Security Adapters and Processors as well as WiFi Connectivity products. In addition, this grouping includes a few legacy product lines in which we no longer invest, but will generate revenue for several years.
(2) Storage products are comprised primarily of HDD and SSD Controllers, Fibre Channel Adapters and Data Center Storage Solutions.
(3) Other products are comprised primarily of Printer Solutions, Application Processors and others.

For further information, contact:
Ashish Saran
Vice President, Investor Relations
408-222-0777
ir@marvell.com