Marvell Technology Group Ltd. Reports Fourth Quarter and Fiscal Year 2020 Financial Results

 

Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP (Unaudited)

(In thousands, except per share amounts)

                     
   

Three Months Ended

 

Year Ended

   

February 1,
2020

 

November 2,
2019

 

February 2,
2019

 

February 1,
2020

 

February 2,
2019

GAAP gross profit:

 

$

304,744

   

$

340,067

   

$

322,002

   

$

1,356,941

   

$

1,458,392

 

Special items:

                   

Share-based compensation

 

3,181

   

3,990

   

2,942

   

13,759

   

12,024

 

Amortization of acquired intangible assets

 

86,383

   

72,146

   

57,591

   

279,567

   

134,169

 

Other cost of goods sold (a)

 

52,510

   

4,758

   

97,598

   

57,718

   

226,372

 

Total special items

 

142,074

   

80,894

   

158,131

   

351,044

   

372,565

 

Non-GAAP gross profit

 

$

446,818

   

$

420,961

   

$

480,133

   

$

1,707,985

   

$

1,830,957

 
                     

GAAP gross margin

 

42.5

%

 

51.3

%

 

43.2

%

 

50.3

%

 

50.9

%

Non-GAAP gross margin

 

62.3

%

 

63.5

%

 

64.5

%

 

63.3

%

 

63.9

%

                     
                     
                     

Total GAAP operating expenses

 

$

419,239

   

$

401,576

   

$

375,010

   

$

1,600,299

   

$

1,415,122

 

Special items:

                   

Share-based compensation

 

(49,989)

   

(63,375)

   

(47,638)

   

(229,050)

   

(186,071)

 

Restructuring related charges (b)

 

(18,258)

   

(14,802)

   

(12,740)

   

(55,328)

   

(76,753)

 

Amortization of acquired intangible assets

 

(28,232)

   

(20,614)

   

(21,097)

   

(88,515)

   

(49,150)

 

Other operating expenses (c)

 

(16,621)

   

(19,495)

   

(7,392)

   

(63,361)

   

(62,095)

 

Total special items

 

(113,100)

   

(118,286)

   

(88,867)

   

(436,254)

   

(374,069)

 

Total non-GAAP operating expenses

 

$

306,139

   

$

283,290

   

$

286,143

   

$

1,164,045

   

$

1,041,053

 
                     
                     
                     

GAAP operating margin

 

(16.0)

%

 

(9.3)

%

 

(7.1)

%

 

(9.0)

%

 

1.5

%

Other cost of goods sold (a)

 

7.3

%

 

0.7

%

 

13.1

%

 

2.1

%

 

7.9

%

Share-based compensation

 

7.4

%

 

10.2

%

 

6.8

%

 

9.0

%

 

6.9

%

Restructuring related charges (b)

 

2.5

%

 

2.2

%

 

1.7

%

 

2.0

%

 

2.7

%

Amortization of acquired intangible assets

 

16.0

%

 

14.0

%

 

10.6

%

 

13.6

%

 

6.4

%

Other operating expenses (c)

 

2.4

%

 

3.0

%

 

0.9

%

 

2.5

%

 

2.2

%

Non-GAAP operating margin 

 

19.6

%

 

20.8

%

 

26.0

%

 

20.2

%

 

27.6

%

                     
                     
                     

GAAP interest and other income (loss), net

 

$

1,102,902

   

$

(19,460)

   

$

(16,340)

   

$

1,041,740

   

$

(47,917)

 

Special items:

                   

      Gain on sale of intellectual property

 

   

   

(3,500)

   

   

(3,500)

 

       Restructuring related items (d)

 

(1,122,988)

   

(946)

   

157

   

(1,124,197)

   

15

 

       Write-off of debt issuance costs (e)

 

1,621

   

   

782

   

2,079

   

7,736

 

       Deal costs (f)

 

   

496

   

   

1,505

   

 

Total special items

 

(1,121,367)

   

(450)

   

(2,561)

   

(1,120,613)

   

4,251

 

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

 

$

(18,465)

   

$

(19,910)

   

$

(18,901)

   

$

(78,873)

   

$

(43,666)

 
                     
                     
                     

GAAP net income (loss)

 

$

1,772,673

   

$

(82,501)

   

$

(260,698)

   

$

1,584,391

   

$

(179,094)

 

Special items:

                   

Other cost of goods sold (a)

 

52,510

   

4,758

   

97,598

   

57,718

   

226,372

 

Share-based compensation

 

53,170

   

67,365

   

50,580

   

242,809

   

198,095

 

Restructuring related charges (gain) in operating expenses (b)

 

18,258

   

14,802

   

12,740

   

55,328

   

76,753

 

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

 

(1,122,988)

   

(946)

   

157

   

(1,124,197)

   

15

 

Amortization of acquired intangible assets

 

114,615

   

92,760

   

78,688

   

368,082

   

183,319

 

Gain on sale of intellectual property

 

   

   

(3,500)

   

   

(3,500)

 

Write-off of debt issuance costs (e)

 

1,621

   

   

782

   

2,079

   

7,736

 

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

 

   

496

   

   

1,505

   

 

Other operating expenses (c)

 

16,621

   

19,495

   

7,392

   

63,361

   

62,095

 

Pre-tax total special items

 

(866,193)

   

198,730

   

244,437

   

(333,315)

   

750,885

 

Other income tax effects and adjustments (g)

 

(789,761)

   

(3,773)

   

184,348

   

(806,938)

   

144,585

 

Non-GAAP net income

 

$

116,719

   

$

112,456

   

$

168,087

   

$

444,138

   

$

716,376

 
                     
                     
                     

Weighted average shares — basic

 

665,562

   

668,178

   

657,835

   

664,709

   

591,232

 

Weighted average shares — diluted

 

675,700

   

668,178

   

657,835

   

676,094

   

591,232

 
                     

GAAP diluted net income (loss) per share

 

$

2.62

   

$

(0.12)

   

$

(0.40)

   

$

2.34

   

$

(0.30)

 

Non-GAAP diluted net income per share (h)

 

$

0.17

   

$

0.17

   

$

0.25

   

$

0.66

   

$

1.19

 
   

(a)

Other costs of goods sold includes amortization of the Avera and Aquantia inventory fair value adjustment in fiscal 2020, amortization of the Cavium inventory fair value adjustment in fiscal 2019, as well as charges for past intellectual property licensing matters.

   

(b)

Restructuring related charges include employee severance, facilities related costs, and impairment of equipment and other assets.  Restructuring related charges in the three months and twelve months ended February 2, 2019 include gain on sale of a building that was a direct result of restructuring.

   

(c)

Other operating expenses primarily include Cavium, Aquantia and Avera merger costs. 

   

(d)

Interest and other income (loss), net includes restructuring related items such as gain on sale of a business and foreign currency remeasurement associated with restructuring related accruals.

   

(e)

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

   

(f)

Costs incurred in connection with preparation of the 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 4.5% for the three months ended November 2, 2019 and the three and twelve months ended February 1, 2020, and based on a non-GAAP income tax rate of 4% for the three and twelve months ended February 2, 2019.

   

(h)

Non-GAAP diluted net income per share for the three months ended November 2, 2019 and February 2, 2019 was calculated by dividing non-GAAP net income by weighted average shares outstanding (diluted) of 679,345 and 663,580 shares, respectively, due to the non-GAAP net income reported in the respective period. Non-GAAP diluted net income per share for the year ended February 2, 2019 was calculated by dividing non-GAAP net income by weighted average shares outstanding (diluted) of 600,049, due to the non-GAAP net income reported in the period.


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