Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP (Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Year Ended

January 30,
2021

October 31,
2020

February 1,
2020

January 30,
2021

February 1,
2020

GAAP gross profit:

$

421,132

$

381,060

$

304,744

$

1,488,350

$

1,356,941

Special items:

Share-based compensation

4,265

4,435

3,181

16,320

13,759

Amortization of acquired intangible assets

83,327

83,078

86,383

338,197

279,567

Other cost of goods sold (a)

796

4,296

52,510

35,284

57,718

Total special items

88,388

91,809

142,074

389,801

351,044

Non-GAAP gross profit

$

509,520

$

472,869

$

446,818

$

1,878,151

$

1,707,985

GAAP gross margin

52.8

%

50.8

%

42.5

%

50.1

%

50.3

%

Non-GAAP gross margin

63.9

%

63.0

%

62.3

%

63.3

%

63.3

%

Total GAAP operating expenses

$

422,868

$

390,450

$

419,239

$

1,746,739

$

1,600,299

Special items:

Share-based compensation

(55,214)

(55,352)

(49,989)

(225,219)

(229,050)

Restructuring related charges (b)

(9,570)

(19,312)

(18,258)

(170,759)

(55,328)

Amortization of acquired intangible assets

(26,355)

(26,355)

(28,232)

(105,419)

(88,515)

Legal settlement (c)

(36,000)

—

—

(36,000)

—

Other operating expenses (d)

(12,480)

(9,490)

(16,621)

(49,498)

(63,361)

Total special items

(139,619)

(110,509)

(113,100)

(586,895)

(436,254)

Total non-GAAP operating expenses

$

283,249

$

279,941

$

306,139

$

1,159,844

$

1,164,045

GAAP operating margin

(0.2)

%

(1.3)

%

(16.0)

%

(8.7)

%

(9.0)

%

Other cost of goods sold (a)

0.1

%

0.6

%

7.3

%

1.2

%

2.1

%

Share-based compensation

7.5

%

8.0

%

7.4

%

8.1

%

9.0

%

Restructuring related charges (b)

1.2

%

2.6

%

2.5

%

5.8

%

2.0

%

Amortization of acquired intangible assets

13.7

%

14.6

%

16.0

%

14.9

%

13.6

%

Legal settlement (c)

4.5

%

—

%

—

%

1.2

%

—

%

Other operating expenses (d)

1.6

%

1.2

%

2.4

%

1.7

%

2.5

%

Non-GAAP operating margin 

28.4

%

25.7

%

19.6

%

24.2

%

20.2

%

GAAP interest and other income (loss), net

$

(21,104)

$

(15,159)

$

1,102,902

$

(63,779)

$

1,041,740

Special items:

       Restructuring related items (e)

(28)

(1,002)

(1,122,988)

(596)

(1,124,197)

      Write-off of debt issuance costs (f)

6,045

453

1,621

6,498

2,079

       Deal costs (g)

—

—

—

—

1,505

Total special items

6,017

(549)

(1,121,367)

5,902

(1,120,613)

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

$

(15,087)

$

(15,708)

$

(18,465)

$

(57,877)

$

(78,873)

GAAP net income (loss)

$

16,536

$

(22,908)

$

1,772,673

$

(277,298)

$

1,584,391

Special items:

Other cost of goods sold (a)

796

4,296

52,510

35,284

57,718

Share-based compensation

59,479

59,787

53,170

241,539

242,809

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

9,570

19,312

18,258

170,759

55,328

Legal settlement (c)

36,000

—

—

36,000

—

Other operating expenses (d)

12,480

9,490

16,621

49,498

63,361

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

(28)

(1,002)

(1,122,988)

(596)

(1,124,197)

Amortization of acquired intangible assets

109,682

109,433

114,615

443,616

368,082

Write-off of debt issuance costs (f)

6,045

453

1,621

6,498

2,079

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

—

—

—

—

1,505

Pre-tax total special items

234,024

201,769

(866,193)

982,598

(333,315)

Other income tax effects and adjustments (h)

(49,936)

(10,502)

(789,761)

(77,893)

(806,938)

Non-GAAP net income

$

200,624

$

168,359

$

116,719

$

627,407

$

444,138

Weighted-average shares — basic

673,529

670,487

665,562

668,772

664,709

Weighted-average shares — diluted

687,959

670,487

675,700

668,772

676,094

Non-GAAP weighted average shares — diluted (i)

687,959

682,724

675,700

679,944

676,094

GAAP diluted net income (loss) per share

$

0.02

$

(0.03)

$

2.62

$

(0.41)

$

2.34

Non-GAAP diluted net income per share

$

0.29

$

0.25

$

0.17

$

0.92

$

0.66

(a)

Other costs of goods sold includes inventory write-downs and amortization of acquired inventory fair value adjustments.

(b)

Restructuring related charges include asset impairment charges (i.e. due to changes to the scope of the server processor product line), employee severance costs, facilities related charges, and other.

(c)

Represents a legal settlement relating to a commercial agreement.

(d)

Other operating expenses include integration and merger costs associated with acquisitions.

(e)

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

(f)

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

(g)

Deal costs include transaction costs incurred in connection with divestiture of the Wi-Fi Connectivity business.

(h)

Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 5.0% for the three and twelve months ended January 30, 2021 and three months ended October 31, 2020. Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 4.5% for the three and twelve months ended February 1, 2020.

(i)

Non-GAAP diluted weighted average shares differs from GAAP diluted weighted average shares due to the non-GAAP net income reported.