Marvell Technology Group Ltd. Reports Third 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

Nine Months Ended







October 29,


July 30,


October 31,


October 29,


October 31,







2016


2016(e)


2015


2016


2015
















GAAP gross profit:




$   368,359


$ 338,796


$   295,636


$   988,767


$    917,544

Special items:














Share-based compensation



2,225


2,832


2,495


6,859


6,054


Restructuring and other related charges (a)





-


-


10,285


-


10,285


Amortization of acquired intangible assets





485


485


485


1,455


2,188


Other cost of good sold (b)



-


-


1,158


-


80,848

Total special items




2,710


3,317


14,423


8,314


99,375

Non-GAAP gross profit



$   371,069


$ 342,113


$   310,059


$   997,081


$ 1,016,919
















GAAP gross margin




56.3%


54.1%


43.8%


54.3%


43.5%

Non-GAAP gross margin



56.7%


54.6%


45.9%


54.7%


48.2%
















Total GAAP operating expenses



$   285,406


$ 299,290


$   354,710


$   895,430


$ 1,736,553

Special items:














Share-based compensation



(26,038)


(34,364)


(28,970)


(83,053)


(95,306)


Restructuring and other related charges (a)



(1,164)


(721)


(35,270)


(6,326)


(48,862)


Amortization of and write-off acquired intangible assets


(2,299)


(2,461)


(3,150)


(7,221)


(8,286)


Other operating expenses (c)



-


12


(3,834)


(1,229)


(691,745)

Total special items




(29,501)


(37,534)


(71,224)


(97,829)


(844,199)

Total non-GAAP operating expenses



$   255,905


$ 261,756


$   283,486


$   797,601


$    892,354































GAAP net income (loss)



$     72,616


$   51,305


$    (57,750)


$   101,242


$  (815,600)

Special items:














Share-based compensation



28,263


37,196


31,465


89,912


101,360


Restructuring and other related charges (a)



1,164


721


45,555


6,326


59,147


Amortization of and write-off acquired intangible assets


2,784


2,946


3,635


8,676


10,474


Other operating expenses (c)



-


(12)


4,992


1,229


772,593

Pre-tax total special items



32,211


40,851


85,647


106,143


943,574

Non-GAAP income before income taxes



104,827


92,156


27,897


207,385


127,974

Tax effect of special items (d)



-


-


1,108


(1,071)


11,511

Non-GAAP net income



$   104,827


$   92,156


$     29,005


$   206,314


$    139,485
















Weighted average shares - basic



511,090


511,235


504,831


510,373


512,476

Weighted average shares - diluted



522,091


514,314


504,831


516,476


512,476

Non-GAAP weighted average shares - diluted



531,831


526,453


518,505


526,883


528,869
















GAAP diluted net income per share





$         0.14


$       0.10


$        (0.11)


$         0.20


$        (1.59)

Non-GAAP diluted net income per share





$         0.20


$       0.18


$         0.06


$         0.39


$          0.26



(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. Examples of other incremental charges include impairment of equipment specifically identified as part of the restructuring action and the write down of inventories. 



(b) 

Other COGS include charges recognized for pending and settled litigation proceedings in three and nine months ended October 31, 2015.



(c) 

Other operating expenses include charges recognized for pending and settled litigation proceedings of $747.6 million ($666.7 million of which was reported in operating expenses) in the nine months ended October 31, 2015. Other operating expenses for the nine months ended October 29, 2016, and the three and nine months ended October 31, 2015 also include costs of $0.9 million, $2.9 million and $8.5 million, respectively, for the surety bonds related to the litigation with CMU that was settled in February 2016. Other operating expenses for the nine months ended October 29, 2016, and the three and nine months ended October 31, 2015 also include expenses of $0.3 million, $1.0 million and $1.1 million, respectively, related to retention bonuses offered to employees expected to remain through the ramp down of certain operations related to the mobile business, as well as the closure of certain design center operations in Europe. In addition, other operating expenses for the nine months ended October 31, 2015 include a charge for the payment of $15.4 million due to our former Chief Executive Officer (see "Note 14 – Related Party Transactions" in the Notes to the Consolidated Financial Statements set forth in the Company's Annual Report on Form 10-K for fiscal 2016). 



(d) 

Tax effect of special items includes the related tax effect of the payment to our former Chief Executive Officer in the nine months ended October 29, 2016 and October 31, 2015. Tax effect of special items also includes the tax effect of certain restructuring charges in three and nine months ended October 31, 2015.


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