Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP (Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Nine Months Ended

October 31,
2020

August 1,
2020

November 2,
2019

October 31,
2020

November 2,
2019

GAAP gross profit:

$

381,060

$

359,256

$

340,067

$

1,067,218

$

1,052,197

Special items:

Share-based compensation

4,435

4,082

3,990

12,055

10,578

Amortization of acquired intangible assets

83,078

85,225

72,146

254,870

193,184

Other cost of goods sold (a)

4,296

11,630

4,758

34,488

5,208

Total special items

91,809

100,937

80,894

301,413

208,970

Non-GAAP gross profit

$

472,869

$

460,193

$

420,961

$

1,368,631

$

1,261,167

GAAP gross margin

50.8

%

49.4

%

51.3

%

49.2

%

53.1

%

Non-GAAP gross margin

63.0

%

63.3

%

63.5

%

63.0

%

63.6

%

Total GAAP operating expenses

$

390,450

$

510,523

$

401,576

$

1,323,871

$

1,181,060

Special items:

Share-based compensation

(55,352)

(58,504)

(63,375)

(170,005)

(179,061)

Restructuring related charges (b)

(19,312)

(120,590)

(14,802)

(161,189)

(37,070)

Amortization of acquired intangible assets

(26,355)

(26,354)

(20,614)

(79,064)

(60,283)

Other operating expenses (c)

(9,490)

(8,125)

(19,495)

(37,018)

(46,740)

Total special items

(110,509)

(213,573)

(118,286)

(447,276)

(323,154)

Total non-GAAP operating expenses

$

279,941

$

296,950

$

283,290

$

876,595

$

857,906

GAAP operating margin

(1.3)

%

(20.8)

%

(9.3)

%

(11.8)

%

(6.5)

%

Other cost of goods sold (a)

0.6

%

1.6

%

0.7

%

1.6

%

0.3

%

Share-based compensation

8.0

%

8.6

%

10.2

%

8.4

%

9.6

%

Restructuring related charges (b)

2.6

%

16.6

%

2.2

%

7.4

%

1.9

%

Amortization of acquired intangible assets

14.6

%

15.3

%

14.0

%

15.4

%

12.8

%

Other operating expenses (c)

1.2

%

1.1

%

3.0

%

1.7

%

2.3

%

Non-GAAP operating margin 

25.7

%

22.4

%

20.8

%

22.7

%

20.4

%

GAAP interest and other income (loss), net

$

(15,159)

$

(15,498)

$

(19,460)

$

(42,675)

$

(61,162)

Special items:

Restructuring and other related items (d)

(1,002)

—

(946)

(568)

(1,209)

Write-off of debt issuance costs (e)

453

—

—

453

458

Deal costs (f)

—

—

496

—

1,505

Total special items

(549)

—

(450)

(115)

754

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

$

(15,708)

$

(15,498)

$

(19,910)

$

(42,790)

$

(60,408)

GAAP net loss

$

(22,908)

$

(157,893)

$

(82,501)

$

(293,834)

$

(188,282)

Special items:

Other cost of goods sold (a)

4,296

11,630

4,758

34,488

5,208

Share-based compensation

59,787

62,586

67,365

182,060

189,639

Restructuring related charges in operating expenses (b)

19,312

120,590

14,802

161,189

37,070

Other operating expenses (c)

9,490

8,125

19,495

37,018

46,740

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

(1,002)

—

(946)

(568)

(1,209)

Amortization of acquired intangible assets

109,433

111,579

92,760

333,934

253,467

Write-off of debt issuance costs (e)

453

—

—

453

458

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

—

—

496

—

1,505

Pre-tax total special items

201,769

314,510

198,730

748,574

532,878

Other income tax effects and adjustments (g)

(10,502)

(16,226)

(3,773)

(27,957)

(17,177)

Non-GAAP net income

$

168,359

$

140,391

$

112,456

$

426,783

$

327,419

GAAP weighted average shares — basic

670,487

667,574

668,178

667,186

667,184

GAAP weighted average shares — diluted

670,487

667,574

668,178

667,186

667,184

Non-GAAP weighted average shares — diluted (h)

682,724

678,304

679,345

677,273

678,986

GAAP diluted net loss per share

$

(0.03)

$

(0.24)

$

(0.12)

$

(0.44)

$

(0.28)

Non-GAAP diluted net income per share

$

0.25

$

0.21

$

0.17

$

0.63

$

0.48

(a)

Other costs of goods sold includes inventory write-downs and amortization of acquired inventory fair value adjustments.

(b)

Restructuring related charges include asset impairment charges (including asset impairment charges due to changes to the scope of the server processor product line), employee severance costs, facilities related charges, and other.

(c)

Other operating expenses include integration and merger costs associated with acquisitions.

(d)

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

(e)

Write-off of debt issuance costs is associated with partial term loan repayment.

(f)

Deal costs include transaction costs incurred in connection with 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 5.0% for the three and nine months ended October 31, 2020 and three months ended August 1, 2020. Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 4.5% for the three and nine months ended November 2, 2019.

(h)

Non-GAAP diluted weighted average shares differs from GAAP diluted weighted average shares due to the non-GAAP net income reported.