Marvell Technology Group Ltd. Reports First Quarter of Fiscal 2017 Financial Results

 


Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP

(Unaudited)

(In thousands, except per share amounts)















Three Months Ended





April 30,


January 30,


May 2,






2016


2016


2015






(Preliminary)
















GAAP net income (loss)


$      (22,679)


$        4,200


$   14,090


Share-based compensation


24,453


32,419


33,221


Restructuring and other related charges (a)




4,441


4,396


592


Amortization and write-off of acquired intangible assets

2,946


2,947


3,493


Litigation matters (b)



100


3,791


(1,700)


Other (c)



(2,743)


6,754


21,382


Non-GAAP net income


$          6,518


$      54,507


$   71,078













GAAP weighted average shares - diluted


508,794


508,590


527,167



Non-GAAP adjustment


13,569


9,978


7,993


Non-GAAP weighted average shares diluted (d)

522,363


518,568


535,160













GAAP diluted net income per share


$          (0.04)


$          0.01


$       0.03


Non-GAAP diluted net income per share 


$            0.01


$          0.11


$       0.13












GAAP gross profit:



$      281,612


$    313,548


$ 373,135



Share-based compensation


1,802


1,862


1,547



Restructuring and other related charges (a)




-


7


-



Amortization of acquired intangible assets


485


485


925



Litigation matters (b)


-


3,711


(1,700)


Non-GAAP gross profit


$      283,899


$    319,613


$ 373,907












GAAP gross margin



52.1%


50.9%


51.5%



Share-based compensation


0.3%


0.3%


0.2%



Restructuring and other related charges (a)




0.0%


0.0%


0.0%



Amortization of acquired intangible assets


0.1%


0.1%


0.1%



Litigation matters (b)


0.0%


0.6%


-0.2%


Non-GAAP gross margin


52.5%


51.9%


51.6%












GAAP research and development:


$      241,271


$    239,703


$ 280,114



Share-based compensation


(24,396)


(23,630)


(24,781)



Restructuring and other related charges (a)




(813)


(3,703)


-



Other (c)



49


(3,485)


-


Non-GAAP research and development


$      216,111


$    208,885


$ 255,333












GAAP selling and marketing:


$        31,379


$      31,301


$   36,174



Share-based compensation


(2,942)


(3,214)


(2,577)



Restructuring and other related charges (a)




1


(118)


-



Other (c)



(304)


(393)


-


Non-GAAP selling and marketing


$        28,134


$      27,576


$   33,597












GAAP general and administrative:


$        35,623


$      37,812


$   41,027



Share-based compensation


4,687


(3,713)


(4,316)



Restructuring and other related charges (a)




(3,629)


(568)


(592)



Litigation matters (b)


(100)


(80)


-



Other (c)



(886)


(2,876)


(18,302)


Non-GAAP general and administrative


$        35,695


$      30,575


$   17,817












GAAP provision (benefit) for income taxes


$        (4,955)


$         (846)


$     4,329



Other (c)



3,884


-


(3,080)


Non-GAAP provision (benefit) for income taxes

$        (1,071)


$         (846)


$     1,249



(a) 

Restructuring and other related charges include costs that qualify under U.S. GAAP as restructuring costs and other incremental charges that are a direct result of restructuring. For the three months ended April 30, 2016, such charges include $3.5 million for a remaining lease obligation and $0.9 million for the impairment of certain mobile-related equipment. For the three months ended January 30, 2016,  such other related charges include $0.4 million for the impairment of certain leasehold improvements due to the restructuring of the mobile platform business, in addition to $4.0 million of restructuring charges, primarily for severance and facility-related costs. For the three months ended May 2, 2015, such charges includes $0.6 million for the impairment of equipment held for sale.



(b) 

The amounts recorded represent charges recognized for pending litigation proceedings.



(c) 

Other costs include a $3.9 million tax effect from restructuring charges within the income tax provision for the three months ended April 30, 2016. Other costs for each of the three months ended April 30, 2016 and January 30, 2016 include expenses related to retention bonuses offered to mobile employees expected to remain through the ramp down of certain operations. Other costs for the three months ended May 2, 2015 include a payment of $15.4 million to Dr. Sehat Surtardja, the Company's former Chief Executive Officer, and its related tax effect on the income tax provision.



(d) 

For purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the potential benefits of share-based compensation costs expected to be incurred in future periods but not yet recognized in the financial statements.


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