Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Year Ended

January 28,

October 29,

January 30,

January 28,

January 30,

2017

2016

2016

2017

2016

GAAP gross profit from continuing operations:

$       327,517

$    357,779

$      310,225

$     1,288,147

$     1,206,699

Special items:

Share-based compensation

1,641

2,189

1,826

8,334

7,787

Restructuring and other related charges (a)

-

-

7

-

10,292

Amortization of and write-off acquired intangible assets

-

-

-

-

733

Other cost of good sold (b)

-

-

3,710

-

84,558

Total special items

1,641

2,189

5,543

8,334

103,370

Non-GAAP gross profit

$       329,158

$    359,968

$      315,768

$     1,296,481

$     1,310,069

GAAP gross margin from continuing operations

57.3%

57.1%

51.5%

55.6%

45.5%

Non-GAAP gross margin 

57.6%

57.5%

52.4%

55.9%

49.5%

Total GAAP operating expenses from continuing operations

$       339,650

$    270,195

$      295,292

$     1,188,153

$     1,982,204

Special items:

Share-based compensation

(20,764)

(23,826)

(28,365)

(96,426)

(118,174)

Restructuring and other related charges (a)

(98,860)

(1,164)

(4,389)

(105,186)

(53,251)

Amortization of and write-off acquired intangible assets

(1,480)

(2,299)

(2,300)

(8,376)

(10,098)

CMU Litigation settlement

-

-

-

-

(654,667)

Other operating expenses (c)

(315)

-

(6,836)

(1,544)

(43,914)

Total special items

(121,419)

(27,289)

(41,890)

(211,532)

(880,104)

Total non-GAAP operating expenses

$        218,231

$    242,906

$      253,402

$        976,621

$     1,102,100

GAAP net income (loss)

$        (80,091)

$      72,616

$          4,200

$          21,151

$      (811,400)

Net loss from discontinued operations

3,214

4,838

12,973

22,843

42,245

GAAP net income (loss) from continuing operations

(76,877)

77,454

17,173

43,994

(769,155)

Special items:

Share-based compensation

22,405

26,015

30,191

104,760

125,961

Restructuring and other related charges (a)

98,860

1,164

4,396

105,186

63,543

Amortization of and write-off acquired intangible assets

1,480

2,299

2,300

8,376

10,831

CMU Litigation settlement

-

-

-

-

654,667

Other operating expenses (c)

315

-

10,546

1,544

128,472

Pre-tax total special items

123,060

29,478

47,433

219,866

983,474

Non-GAAP income before income taxes

46,183

106,932

64,606

263,860

214,319

Tax effect of special items (d)

67,989

-

-

66,918

11,511

Non-GAAP net income from continuing operations

$       114,172

$    106,932

$        64,606

$        330,778

$        225,830

Weighted average shares - basic

507,834

511,090

506,352

509,738

510,945

Weighted average shares - diluted

507,834

522,091

508,590

517,513

510,945

Non-GAAP weighted average shares - diluted

528,141

531,831

518,568

527,197

526,294

GAAP diluted net income (loss) per share from continuing operations

$            (0.15)

$          0.15

$            0.03

$              0.09

$            (1.51)

Non-GAAP diluted net income per share from continuing operations

$              0.22

$          0.20

$            0.12

$              0.63

$              0.43

(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 twelve months ended January 30, 2016.

(c) 

Other operating expenses in the three and twelve months ended January 30, 2016 include costs of $2.9 million and $11.4 million, respectively, for the surety bonds related to the litigation with CMU, and expenses of $3.9 million and $5.0 million, respectively, related to retention bonuses offered to employees who remained through the ramp down of certain operations due to the restructuring action announced in September 2015. Other operating expenses for the twelve months ended January 30, 2016 include charges recognized for pending and settled litigation proceedings of $12.1 million, and for a payment of $15.4 million due to our former Chief Executive Officer. 

(d) 

Tax effect of special items in the three and twelve months ended January 28, 2017 include $68.0 million of tax expense related to restructuring actions taken, which was offset in the twelve months ended January 28, 2017 by $1.1 million related tax effect of the payment to our former Chief Executive Officer. For the twelve months ended January 30, 2016, tax effect of special items included $8.4 million of tax expense related to the restructuring actions in fiscal 2016 and $3.1 million related to the payment to our former Chief Executive Officer.