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Marvell Technology Group Ltd. Reconciliations from GAAP to Non-GAAP (Unaudited) (In thousands, except per share amounts) | ||||||||||||||||||||
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Three Months Ended |
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Six Months Ended | ||||||||||||||||
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July 29, 2017 |
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April 29, 2017 |
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July 30, 2016 |
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July 29, 2017 |
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July 30, 2016 | ||||||||||
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GAAP gross profit: |
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$ |
365,178 |
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$ |
345,511 |
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$ |
326,919 |
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$ |
710,689 |
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$ |
600,619 |
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Special items: |
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Share-based compensation |
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1,810 |
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1,426 |
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2,720 |
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3,236 |
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4,504 |
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Other cost of goods sold (a) |
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3,000 |
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— |
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— |
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3,000 |
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— |
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Total special items |
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4,810 |
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1,426 |
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2,720 |
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6,236 |
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4,504 |
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Non-GAAP gross profit |
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$ |
369,988 |
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$ |
346,937 |
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$ |
329,639 |
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$ |
716,925 |
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$ |
605,123 |
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GAAP gross margin |
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60.4 |
% |
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60.3 |
% |
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54.7 |
% |
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60.4 |
% |
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54.1 |
% | |||||
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Non-GAAP gross margin |
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61.2 |
% |
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60.6 |
% |
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55.2 |
% |
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60.9 |
% |
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54.5 |
% | |||||
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Total GAAP operating expenses |
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$ |
240,815 |
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$ |
244,086 |
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$ |
276,560 |
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$ |
484,901 |
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$ |
564,477 |
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Special items: |
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Share-based compensation |
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(19,557) |
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(20,313) |
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(30,359) |
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(39,870) |
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(50,003) |
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Restructuring related charges (b) |
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(4,285) |
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(886) |
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(721) |
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(5,171) |
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(5,162) |
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Amortization of and write-off acquired intangible assets |
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(1,065) |
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(1,071) |
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(2,299) |
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(2,136) |
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(4,597) |
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Other operating expenses (c) |
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(1,687) |
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(2,303) |
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13 |
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(3,990) |
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(1,229) |
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Total special items |
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(26,594) |
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(24,573) |
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(33,366) |
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(51,167) |
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(60,991) |
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Total non-GAAP operating expenses |
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$ |
214,221 |
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$ |
219,513 |
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$ |
243,194 |
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$ |
433,734 |
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$ |
503,486 |
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GAAP operating margin |
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20.6 |
% |
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17.7 |
% |
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8.4 |
% |
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19.2 |
% |
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3.3 |
% | |||||
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Other cost of goods sold (a) |
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0.5 |
% |
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— |
% |
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— |
% |
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0.3 |
% |
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— |
% | |||||
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Share-based compensation |
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3.5 |
% |
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3.8 |
% |
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5.5 |
% |
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3.7 |
% |
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4.9 |
% | |||||
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Restructuring related charges (b) |
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0.7 |
% |
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0.2 |
% |
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0.1 |
% |
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0.4 |
% |
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0.5 |
% | |||||
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Amortization and write-off of acquired intangible assets |
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0.2 |
% |
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0.2 |
% |
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0.5 |
% |
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0.2 |
% |
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0.3 |
% | |||||
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Other operating expenses (c) |
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0.3 |
% |
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0.3 |
% |
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— |
% |
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0.3 |
% |
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0.1 |
% | |||||
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Non-GAAP operating margin |
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25.8 |
% |
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22.2 |
% |
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14.5 |
% |
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24.1 |
% |
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9.1 |
% | |||||
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GAAP interest and other income, net |
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$ |
7,188 |
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$ |
3,333 |
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$ |
6,284 |
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$ |
10,521 |
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$ |
7,772 |
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Special items: |
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Restructuring related items (d) |
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(3,085) |
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— |
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— |
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(3,085) |
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— |
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Total special items |
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(3,085) |
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— |
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— |
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(3,085) |
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— |
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Total non-GAAP interest and other income, net |
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$ |
4,103 |
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$ |
3,333 |
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$ |
6,284 |
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$ |
7,436 |
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$ |
7,772 |
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GAAP net income |
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$ |
165,259 |
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$ |
106,621 |
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$ |
51,305 |
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$ |
271,880 |
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$ |
28,626 |
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Loss (income) from discontinued operations, net of tax |
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(29,809) |
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(7,029) |
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11,161 |
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(36,838) |
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26,548 |
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GAAP net income from continuing operations |
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135,450 |
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99,592 |
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62,466 |
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235,042 |
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55,174 |
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Special items: |
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Other cost of goods sold ( a ) |
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3,000 |
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— |
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— |
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3,000 |
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— |
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Share-based compensation |
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21,367 |
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21,739 |
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33,079 |
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43,106 |
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54,507 |
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Restructuring related charges (b) |
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1,200 |
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886 |
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721 |
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2,086 |
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5,162 |
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Amortization of and write-off acquired intangible assets |
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1,065 |
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1,071 |
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2,299 |
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2,136 |
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4,597 |
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Other operating expenses (c) |
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1,687 |
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2,303 |
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(13) |
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3,990 |
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1,229 |
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Pre-tax total special items |
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28,319 |
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25,999 |
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36,086 |
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54,318 |
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65,495 |
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Other income tax effects and adjustments (e) |
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(10,298) |
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(64) |
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— |
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(10,362) |
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(1,071) |
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Non-GAAP net income from continuing operations |
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$ |
153,471 |
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$ |
125,527 |
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$ |
98,552 |
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$ |
278,998 |
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$ |
119,598 |
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Weighted average shares — basic |
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500,817 |
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503,790 |
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511,235 |
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502,303 |
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510,014 |
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Weighted average shares — diluted |
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510,309 |
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517,592 |
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514,314 |
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513,951 |
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513,669 |
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Non-GAAP weighted average shares — diluted (f) |
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519,438 |
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523,154 |
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526,453 |
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521,296 |
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524,408 |
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GAAP diluted net income (loss) per share from continuing operations |
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$ |
0.26 |
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$ |
0.19 |
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$ |
0.12 |
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$ |
0.46 |
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$ |
0.11 |
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Non-GAAP diluted net income per share from continuing operations |
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$ |
0.30 |
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$ |
0.24 |
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$ |
0.19 |
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$ |
0.54 |
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$ |
0.23 |
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(a) |
Other costs of goods sold in the three and six months ended July 29, 2017 include charges for past intellectual property licensing matters. |
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(b) |
Restructuring related charges include costs that are a direct result of restructuring. Such charges include employee severance, facilities related costs, contract cancellation charges and impairment of equipment. |
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(c) |
Other operating expenses in the three and six months ended July 29, 2017 include costs of retention bonuses offered to employees who remained through the ramp down of certain operations due to the restructuring actions. |
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(d) |
Interest and other income, net includes restructuring related items such as gain on sale of a business and foreign currency losses related to restructuring related accruals. |
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(e) |
Other income tax effects and adjustments in the three months ended July 29, 2017 and April 29, 2017 includes adjustment to the tax provision based on a non-GAAP tax rate of 4%. Other income tax effects and adjustments in the six months ended July 29, 2017 includes adjustment to the tax provision based on a non-GAAP tax rate of 4%. |
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(f) |
Non-GAAP diluted share count excludes the impact of share-based compensation expense expected to be incurred in future periods and not yet recognized in the Company's financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method. |
