Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-K
_________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: December 4, 2018
(Date of earliest event reported)
_________________________
MARVELL TECHNOLOGY GROUP LTD.
(Exact name of registrant as specified in its charter)
 _________________________

Bermuda
 
0-30877
 
77-0481679
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)

Canon’s Court
22 Victoria Street
Hamilton HM 12
Bermuda
(Address of principal executive offices, including Zip Code)
(441) 296-6395
(Registrant’s telephone number, including area code)
_________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).                    Emerging growth company    ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨
 


Item 2.02 Results of Operations and Financial Condition.

The information in Item 2.02 of this Current Report, including the accompanying Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language contained in such filing.
 
On December 4, 2018, Marvell Technology Group Ltd. (“Marvell”) issued a press release reporting its financial results for the third quarter of fiscal 2019 ended November 3, 2018. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.

Marvell will conduct a conference call on Tuesday, December 4, 2018 at 1:45 p.m. Pacific Time to discuss results for the third quarter of fiscal 2019. Interested parties may join the conference call by dialing 1-844-647-5488 or 1-615-247-0258, pass-code 3069644. The call will be webcast by Thomson Reuters and can be accessed at the Marvell Investor Relations website at http://investor.marvell.com/ with a replay available following the call until Wednesday December 12, 2018.
   

Item 9.01    Financial Statements and Exhibits.
    
(d)    Exhibits.
99.1







SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
MARVELL TECHNOLOGY GROUP LTD.
 
Date: December 4, 2018
By:
/s/ JEAN HU
 
 
Jean Hu
 
 
Chief Financial Officer
 
 
 


Exhibit
Exhibit 99.1
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12580548&doc=3
Marvell Technology Group Ltd. Reports Third Quarter of Fiscal Year 2019
Financial Results
 
Q3 Revenue: $851 million
Q3 Gross Margin: 45.1% GAAP gross margin; 64.6% non-GAAP gross margin
Q3 Diluted income (loss) per share: $(0.08) GAAP diluted loss per share from continuing operations; $0.33 non-GAAP diluted income per share from continuing operations
Cash and short-term investments: $610 million
Santa Clara, Calif. (December 4, 2018) - Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in infrastructure semiconductor solutions, today reported financial results for the third fiscal quarter of fiscal year 2019. Revenue for the third quarter of fiscal 2019 was $851 million, which exceeded the midpoint of the Company’s guidance provided on September 6, 2018.
GAAP net loss from continuing operations for the third quarter of fiscal 2019 was $54 million, or $(0.08) per diluted share. Non-GAAP net income from continuing operations for the third quarter of fiscal 2019 was $222 million, or $0.33 per diluted share. Cash flow from operations for the third quarter was $299 million.

“In the first full quarter operating as a combined Marvell and Cavium team, we completed key integration milestones ahead of schedule, delivered revenue above the midpoint of our guidance, and generated strong free cash flow at 30 percent of revenue. We also expect renewed revenue growth from the Cavium business in the fourth quarter,” said Matt Murphy, Marvell's President and Chief Executive Officer. “Looking ahead, we expect the deployment of 5G will accelerate our growth over the next several years as engagements with a growing list of Tier 1 customers continue to build momentum in this major infrastructure transition.”


Fourth Quarter of Fiscal 2019 Financial Outlook
 
Revenue is expected to be $790 million to $830 million.
GAAP gross margin is expected to be approximately 46%.
Non-GAAP gross margin is expected to be approximately 65%.
GAAP operating expenses are expected to be $375 million to $385 million.
Non-GAAP operating expenses are expected to be $285 million to $290 million.
GAAP diluted loss per share from continuing operations is expected to be $(0.05) to $(0.01) per share.
Non-GAAP diluted income per share from continuing operations is expected to be $0.30 to $0.34 per share.



Conference Call
Marvell will conduct a conference call on Tuesday, December 4, 2018 at 1:45 p.m. Pacific Time to discuss results for the third quarter of fiscal 2019. Interested parties may join the conference call by dialing 1-844-647-5488 or 1-615-247-0258, pass-code 3069644. The call will be webcast and can be accessed at the Marvell Investor Relations website at http://investor.marvell.com/ with a replay available following the call until Wednesday December 12, 2018.

Discussion of Non-GAAP Financial Measures
Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization of the inventory fair value step up, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other related charges, litigation settlement, and certain expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to Marvell’s core business.
Marvell uses a non-GAAP tax rate to compute the non-GAAP tax provision. This non-GAAP tax rate is based on Marvell's estimated annual GAAP income tax forecast, adjusted to account for items excluded from GAAP income in calculating Marvell's non-GAAP income, as well as the effects of significant non-recurring and period specific tax items which vary in size and frequency. Marvell's non-GAAP tax rate is determined on an annual basis and may be adjusted during the year to take into account events that may materially affect the non-GAAP tax rate such as tax law changes; significant changes in Marvell's geographic mix of revenue and expenses; or changes to Marvell's corporate structure. For the third quarter of fiscal 2019, a non-GAAP tax rate of 4% has been applied to the non-GAAP financial results.
Non-GAAP diluted net income per share from continuing operations is calculated by dividing non-GAAP net income from continuing operations by weighted average shares outstanding (diluted). Historically, Marvell included non-GAAP share adjustments in its earnings releases. Beginning in the third quarter of fiscal year 2019, Marvell no longer provides this non-GAAP adjustment and will calculate non-GAAP income (loss) per share using the GAAP weighted average shares. Marvell is making this change in order to align with its industry peer companies' non-GAAP income (loss) per share reporting for comparability purposes.
Marvell believes that the presentation of non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to Marvell’s financial condition and results of operations. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, financial measures calculated in accordance with GAAP. Consistent with this approach, Marvell believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance.
Externally, management believes that investors may find Marvell’s non-GAAP financial measures useful in their assessment of Marvell’s operating performance and the valuation of Marvell. Internally, Marvell’s non-GAAP financial measures are used in the following areas:

Management’s evaluation of Marvell’s operating performance;
Management’s establishment of internal operating budgets;
Management’s performance comparisons with internal forecasts and targeted business models; and
Management’s determination of the achievement and measurement of certain performance-based equity awards (adjustments may vary from award to award).
 
Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Marvell’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Marvell’s results as reported under GAAP. Marvell expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from Marvell’s non-GAAP net income should not be construed as an inference that these costs are unusual, infrequent or non-recurring.



Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties, including: the impact on future performance of Marvell’s newly announced products; Marvell’s expectations regarding its fourth quarter of fiscal 2019 financial outlook, renewed revenue growth from the Cavium business and 5G product development growth; and Marvell’s use of non-GAAP financial measures as important supplemental information. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “seeks,” “estimates,” “can,” “may,” “will,” “would” and similar expressions identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties, including, but not limited to: the effect of the consummation of our acquisition of Cavium on the combined company's business relationships, operating results, and business generally; potential difficulties in Cavium employee retention as a result of the transaction; the ability of Marvell to successfully integrate Cavium’s operations and product lines; the ability of Marvell to implement its plans, forecasts, and other expectations with respect to Cavium’s business and realize the anticipated synergies and cost savings in the time frame anticipated or at all, and identify and realize additional opportunities; the risk of downturns in the highly cyclical semiconductor industry; Marvell’s dependence upon the storage and networking markets, which are highly cyclical and intensely competitive; the outcome of pending or future litigation and legal and regulatory proceedings; Marvell’s dependence on a small number of customers; severe financial hardship or bankruptcy of one or more of Marvell’s major customers; Marvell's ability to define, design and develop products for the 5G market; Marvell's ability to market its 5G products to Tier 1 infrastructure customers; Marvell’s ability and the ability of its customers to successfully compete in the markets in which it serves; Marvell’s reliance on independent foundries and subcontractors for the manufacture, assembly and testing of its products; Marvell’s ability and its customers’ ability to develop new and enhanced products and the adoption of those products in the market; decreases in gross margin and results of operations in the future due to a number of factors; Marvell’s ability to estimate customer demand and future sales accurately; Marvell’s ability to scale its operations in response to changes in demand for existing or new products and services; the impact of international conflict and continued economic volatility in either domestic or foreign markets; the effects of transitioning to smaller geometry process technologies; the risks associated with manufacturing and selling a majority of products and customers’ products outside of the United States; risks associated with acquisition and consolidation activity in the semiconductor industry; the impact of any change in the income tax laws in jurisdictions where Marvell operates and the loss of any beneficial tax treatment that Marvell currently enjoys; the effects of any potential acquisitions or investments; Marvell’s ability to protect its intellectual property; the impact and costs associated with changes in international financial and regulatory conditions; Marvell’s maintenance of an effective system of internal controls; and other risks detailed in Marvell’s SEC filings from time to time. For other factors that could cause Marvell’s results to vary from expectations, please see the risk factors identified in Marvell’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 4, 2018 as filed with the SEC on September 12, 2018, and other factors detailed from time to time in Marvell’s filings with the SEC. Marvell undertakes no obligation to revise or update publicly any forward-looking statements.





About Marvell
Marvell first revolutionized the digital storage industry by moving information at speeds never thought possible. Today, that same breakthrough innovation remains at the heart of the Company’s storage, processing, networking, security and connectivity solutions. With leading intellectual property and deep system-level knowledge, Marvell’s semiconductor solutions continue to transform the enterprise, cloud, automotive, industrial, and consumer markets. To learn more, visit: www.marvell.com.
Marvell® and the Marvell logo are registered trademarks of Marvell and/or its affiliates.




Marvell Technology Group Ltd.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
November 3, 2018
 
August 4, 2018
 
October 28, 2017
 
November 3, 2018
 
October 28, 2017
Net revenue
 
$
851,051

 
$
665,310

 
$
616,302

 
$
2,120,992

 
$
1,793,761

Cost of goods sold
 
467,464

 
288,200

 
238,533

 
984,602

 
705,303

Gross profit
 
383,587

 
377,110

 
377,769

 
1,136,390

 
1,088,458

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
264,888

 
216,285

 
165,477

 
657,907

 
534,444

Selling, general and administrative
 
112,178

 
133,701

 
59,112

 
318,192

 
169,875

Restructuring related charges
 
27,031

 
35,415

 
3,284

 
64,013

 
8,455

Total operating expenses
 
404,097

 
385,401

 
227,873

 
1,040,112

 
712,774

Operating income (loss) from continuing operations
 
(20,510
)
 
(8,291
)
 
149,896

 
96,278

 
375,684

Interest income
 
1,046

 
3,575

 
4,301

 
10,690

 
11,643

Interest expense
 
(22,370
)
 
(15,795
)
 
(262
)
 
(38,409
)
 
(393
)
Other income (loss), net
 
(2,628
)
 
(2,701
)
 
2,161

 
(3,858
)
 
5,471

Interest and other income (loss), net
 
(23,952
)
 
(14,921
)
 
6,200

 
(31,577
)
 
16,721

Income (loss) from continuing operations before income taxes
 
(44,462
)
 
(23,212
)
 
156,096

 
64,701

 
392,405

Provision (benefit) for income taxes
 
9,305

 
(29,971
)
 
6,759

 
(16,903
)
 
8,026

Income (loss) from continuing operations, net of tax
 
(53,767
)
 
6,759

 
149,337

 
81,604

 
384,379

Income from discontinued operations, net of tax
 

 

 
50,851

 

 
87,689

Net income (loss)
 
$
(53,767
)
 
$
6,759

 
$
200,188

 
$
81,604

 
$
472,068

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share — Basic:
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.08
)
 
$
0.01

 
$
0.30

 
$
0.14

 
$
0.77

Discontinued operations
 
$

 
$

 
$
0.11

 
$

 
$
0.17

Net income (loss) per share - Basic
 
$
(0.08
)
 
$
0.01

 
$
0.41

 
$
0.14

 
$
0.94

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share — Diluted:
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.08
)
 
$
0.01

 
$
0.30

 
$
0.14

 
$
0.75

Discontinued operations
 
$

 
$

 
$
0.10

 
$

 
$
0.17

Net income (loss) per share - Diluted
 
$
(0.08
)
 
$
0.01

 
$
0.40

 
$
0.14

 
$
0.92

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
657,519

 
552,238

 
494,096

 
569,031

 
499,568

Diluted
 
657,519

 
562,149

 
504,903

 
578,872

 
510,935




Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
 
 
November 3, 2018
 
February 3, 2018
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
610,261

 
$
888,482

Short-term investments
 

 
952,790

Accounts receivable, net
 
453,775

 
280,395

Inventories
 
376,210

 
170,039

Prepaid expenses and other current assets
 
49,230

 
41,482

Assets held for sale
 
30,745

 
30,767

Total current assets
 
1,520,221

 
2,363,955

Property and equipment, net
 
313,113

 
202,222

Goodwill
 
5,499,145

 
1,993,310

Acquired intangible assets, net
 
2,639,370

 

Other non-current assets
 
260,176

 
148,800

Total assets
 
$
10,232,025

 
$
4,708,287

 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
209,562

 
$
145,236

Accrued liabilities
 
302,095

 
86,958

Accrued employee compensation
 
141,602

 
127,711

Deferred income
 
2,947

 
61,237

Total current liabilities
 
656,206

 
421,142

Long-term debt
 
1,805,734

 

Non-current income taxes payable
 
53,862

 
56,976

Deferred tax liabilities
 
108,016

 
52,204

Other non-current liabilities
 
32,928

 
36,552

Total liabilities
 
2,656,746

 
566,874

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common stock
 
1,314

 
991

Additional paid-in capital
 
6,157,283

 
2,733,292

Accumulated other comprehensive loss
 

 
(2,322
)
Retained earnings
 
1,416,682

 
1,409,452

Total shareholders’ equity
 
7,575,279

 
4,141,413

Total liabilities and shareholders’ equity
 
$
10,232,025

 
$
4,708,287






Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)


 
Three Months Ended
 
Nine Months Ended

 
November 3, 2018
 
October 28,
2017
 
November 3, 2018
 
October 28,
2017
Cash flows from operating activities:
 



 
 
 
 
Net income (loss)
 
$
(53,767
)
 
$
200,188

 
$
81,604

 
$
472,068

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
39,259

 
21,383

 
86,356

 
62,569

Share-based compensation
 
50,240

 
18,873

 
133,484

 
65,312

Amortization of acquired intangible assets
 
78,691

 
1,076

 
104,630

 
3,212

Amortization of inventory fair value adjustment associated with acquisition of Cavium
 
102,842

 

 
125,775

 

Amortization of deferred debt issuance costs and debt discounts
 
2,217

 

 
9,290

 

Restructuring related impairment charges (gain)
 
9,888

 
44

 
11,881

 
(402
)
Gain from investments in privately-held companies
 

 
(1,751
)
 
(1,100
)
 
(2,501
)
Amortization (accretion) of premium/discount on available-for-sale securities
 

 
(200
)
 
624

 
603

Other non-cash expense (income), net
 

 
2,755

 
4,227

 
1,331

Deferred income taxes
 
(6,261
)
 
7

 
(27,675
)
 
2,797

Loss (gain) on sale of property and equipment
 
179

 
(190
)
 
59

 
(473
)
Gain on sale of discontinued operations
 

 
(46,219
)
 

 
(88,406
)
Loss (gain) on sale of business
 
1,592

 

 
1,592

 
(5,254
)
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
Accounts receivable
 
(10,948
)
 
5,583

 
(59,697
)
 
(30,730
)
Inventories
 
(5,007
)
 
(1,327
)
 
1,859

 
(16,039
)
Prepaid expenses and other assets
 
7,630

 
5,268

 
(11,874
)
 
13,122

Accounts payable
 
22,531

 
16,119

 
22,260

 
20,087

Accrued liabilities and other non-current liabilities
 
40,255

 
(7,046
)
 
29,023

 
(40,462
)
Accrued employee compensation
 
20,617

 
(2,237
)
 
(20,922
)
 
(10,612
)
Deferred income
 
(564
)
 
3,865

 
(1,293
)
 
5,149

Net cash provided by operating activities
 
299,394

 
216,191

 
490,103

 
451,371

Cash flows from investing activities:
 
 

 
 
 
 
 
Purchases of available-for-sale securities
 

 
(296,659
)
 
(14,956
)
 
(672,887
)
Sales of available-for-sale securities
 

 
167,451

 
623,896

 
284,151

Maturities of available-for-sale securities
 

 
136,090

 
187,985

 
305,702

Return of investment from privately-held companies
 

 
3,701

 

 
6,089

Purchases of time deposits
 

 
(75,000
)
 
(25,000
)
 
(225,000
)
Maturities of time deposits
 
25,000

 
75,000

 
175,000

 
225,000

Purchases of technology licenses
 
(9,918
)
 
(3,555
)
 
(11,181
)
 
(5,256
)
Purchases of property and equipment
 
(12,646
)
 
(10,613
)
 
(47,035
)
 
(25,156
)
Proceeds from sales of property and equipment
 
595

 
249

 
818

 
1,988

Cash payment for acquisition of Cavium, net of cash and cash equivalents acquired
 

 

 
(2,649,465
)
 

Net proceeds from sale of discontinued operations
 

 
93,735

 

 
165,940

Net proceeds (payments) from sale of business
 
(4,602
)
 
2,402

 
(3,352
)
 
2,402

Other
 

 

 
(5,000
)
 

Net cash provided by (used in) investing activities
 
(1,571
)
 
92,801

 
(1,768,290
)
 
62,973

Cash flows from financing activities:
 
 

 
 
 
 
 
Repurchases of common stock
 
(53,969
)
 
(140,017
)
 
(53,969
)
 
(527,574
)
Proceeds from employee stock plans
 
16,192

 
39,614

 
60,772

 
137,424

Tax withholding paid on behalf of employees for net share settlement
 
(8,915
)
 
(1,120
)
 
(45,691
)
 
(25,934
)
Dividend payments to shareholders
 
(39,411
)
 
(29,470
)
 
(108,592
)
 
(89,556
)
Payments on technology license obligations
 
(23,003
)
 
(8,401
)
 
(52,481
)
 
(22,697
)
Proceeds from issuance of debt
 

 

 
1,892,605

 

Principal payments of debt
 
(75,000
)
 

 
(681,128
)
 

Payment of equity and debt financing costs
 
(2,115
)
 

 
(11,550
)
 

Net cash provided by (used in) financing activities
 
(186,221
)
 
(139,394
)
 
999,966

 
(528,337
)
Net increase (decrease) in cash and cash equivalents
 
111,602

 
169,598

 
(278,221
)
 
(13,993
)
Cash and cash equivalents at beginning of period
 
498,659

 
630,501

 
888,482

 
814,092

Cash and cash equivalents at end of period
 
$
610,261

 
$
800,099

 
$
610,261

 
$
800,099

 






Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP (Unaudited)
(In thousands, except per share amounts)








 
 
 
 
 

Three Months Ended
 
Nine Months Ended
 

November 3, 2018
 
August 4,
2018
 
October 28, 2017
 
November 3, 2018
 
October 28, 2017
GAAP gross profit:

$
383,587

 
$
377,110

 
$
377,769

 
$
1,136,390

 
$
1,088,458

Special items:

 
 
 
 
 
 
 
 
 
Share-based compensation

2,429

 
4,748

 
1,747

 
9,082

 
4,983

Amortization of acquired intangible assets
 
57,594

 
18,984

 

 
76,577

 

Other cost of goods sold (a)

105,841

 
22,933

 

 
128,774

 
3,000

Total special items

165,864

 
46,665

 
1,747

 
214,433

 
7,983

Non-GAAP gross profit

$
549,451

 
$
423,775

 
$
379,516

 
$
1,350,823

 
$
1,096,441



 
 
 
 
 
 
 
 
 
GAAP gross margin

45.1
 %
 
56.7
 %
 
61.3
%
 
53.6
%
 
60.7
%
Non-GAAP gross margin

64.6
 %
 
63.7
 %
 
61.6
%
 
63.7
%
 
61.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
Total GAAP operating expenses

$
404,097

 
$
385,401

 
$
227,873

 
$
1,040,112

 
$
712,774

Special items:

 
 
 
 
 
 
 
 
 
Share-based compensation

(47,811
)
 
(68,675
)
 
(18,892
)
 
(138,433
)
 
(58,762
)
Restructuring related charges (b)

(27,031
)
 
(35,415
)
 
(3,284
)
 
(64,013
)
 
(8,455
)
Amortization of acquired intangible assets

(21,098
)
 
(6,955
)
 
(1,076
)
 
(28,053
)
 
(3,212
)
Other operating expenses (c)

(11,222
)
 
(28,229
)
 
(120
)
 
(54,703
)
 
(4,110
)
Total special items

(107,162
)
 
(139,274
)
 
(23,372
)
 
(285,202
)
 
(74,539
)
Total non-GAAP operating expenses

$
296,935

 
$
246,127

 
$
204,501

 
$
754,910

 
$
638,235



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating margin

(2.4
)%
 
(1.2
)%
 
24.3
%
 
4.5
%
 
20.9
%
Other cost of goods sold (a)
 
12.4
 %
 
3.5
 %
 
%
 
6.1
%
 
0.2
%
Share-based compensation
 
5.9
 %
 
11.0
 %
 
3.3
%
 
7.0
%
 
3.6
%
Restructuring related charges (b)
 
3.2
 %
 
5.3
 %
 
0.5
%
 
3.0
%
 
0.5
%
Amortization and write-off of acquired intangible assets
 
9.2
 %
 
3.9
 %
 
0.2
%
 
4.9
%
 
0.2
%
Other operating expenses (c)
 
1.4
 %
 
4.2
 %
 
0.1
%
 
2.6
%
 
0.1
%
Non-GAAP operating margin 

29.7
 %
 
26.7
 %
 
28.4
%
 
28.1
%
 
25.5
%



Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP (Unaudited)
(In thousands, except per share amounts)








 
 
 
 
 

Three Months Ended
 
Nine Months Ended
 

November 3, 2018
 
August 4,
2018
 
October 28, 2017
 
November 3, 2018
 
October 28, 2017
GAAP interest and other income (loss), net
 
$
(23,952
)
 
$
(14,921
)
 
$
6,200

 
$
(31,577
)
 
$
16,721

Special items:
 
 
 
 
 
 
 
 
 
 
Restructuring related items (d)
 
1,491

 
(121
)
 
(2,286
)
 
(142
)
 
(5,371
)
Write-off of debt issuance costs (e)
 
850

 
6,104

 

 
6,954

 

Total special items
 
2,341

 
5,983

 
(2,286
)
 
6,812

 
(5,371
)
Total non-GAAP interest and other income (loss), net
 
$
(21,611
)
 
$
(8,938
)
 
$
3,914

 
$
(24,765
)
 
$
11,350

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss)

$
(53,767
)
 
$
6,759

 
$
200,188

 
$
81,604

 
$
472,068

Less: Income from discontinued operations, net of tax


 

 
50,851

 

 
87,689

GAAP net income (loss) from continuing operations

(53,767
)
 
6,759

 
149,337

 
81,604

 
384,379

Special items:

 
 
 
 
 
 
 
 
 
Other cost of goods sold (a)
 
105,841

 
22,933

 

 
128,774

 
3,000

Share-based compensation

50,240

 
73,423

 
20,639

 
147,515

 
63,745

Restructuring related charges in operating expenses (b)

27,031

 
35,415

 
3,284

 
64,013

 
8,455

Restructuring related items in interest and other income, net (d)
 
1,491

 
(121
)
 
(2,286
)
 
(142
)
 
(5,371
)
Amortization of acquired intangible assets

78,692

 
25,939

 
1,076

 
104,630

 
3,212

Write-off of debt issuance costs (e)
 
850

 
6,104

 

 
6,954

 

Other operating expenses (c)

11,222

 
28,229

 
120

 
54,703

 
4,110

Pre-tax total special items

275,367

 
191,922

 
22,833

 
506,447

 
77,151

Other income tax effects and adjustments (f)

55

 
(36,720
)
 
(398
)
 
(39,763
)
 
(10,760
)
Non-GAAP net income from continuing operations

$
221,655

 
$
161,961

 
$
171,772

 
$
548,288

 
$
450,770



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares — basic

657,519

 
552,238

 
494,096

 
569,031

 
499,568

Weighted average shares — diluted

657,519

 
562,149

 
504,903

 
578,872

 
510,935



 
 

 

 
 
 

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

$
(0.08
)
 
$
0.01

 
$
0.30

 
$
0.14

 
$
0.75

Non-GAAP diluted net income per share from continuing operations (g)

$
0.33

 
$
0.28

 
$
0.34

 
$
0.95

 
$
0.87




 
(a)
Other costs of goods sold includes amortization of the Cavium inventory fair value step up and charges for past intellectual property licensing matters.
(b)
Restructuring related charges include employee severance, facilities related costs, and impairment of equipment and other assets.
(c)
Other operating expenses primarily include Cavium merger costs and costs of retention bonuses offered to employees who remained through the ramp down of certain operations due to restructuring actions.
(d)
Interest and other income, net, includes restructuring related items such as foreign currency remeasurement associated with restructuring related accruals.
(e)
Write-off of debt issuance costs is associated with the partial term loan repayment during the three months ended November 3, 2018 and the terminated bridge loan commitment during the three months ended August 4, 2018.
(f)
Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 4%.
(g)
Non-GAAP diluted net income per share from continuing operations for the three months ended November 3, 2018 was calculated by dividing non-GAAP net income from continuing operations by weighted average shares outstanding (diluted) of 665,752 shares due to the non-GAAP net income reported in that period.





 Marvell Technology Group Ltd.
 Outlook for the Fourth Quarter of Fiscal Year 2019
Reconciliations from GAAP to Non-GAAP (Unaudited)
 (In millions, except per share amounts)
 
 
 
 
 
Outlook for Three Months Ended
February 2, 2019
GAAP revenue
 $790 - $830
Special items:
Non-GAAP revenue
$790 - $830
 
 
GAAP gross margin
46%
Special items:
 
Share-based compensation
0.2%
Amortization of acquired intangible assets
7%
Other costs of goods sold
12%
Non-GAAP gross margin
65%
 
 
Total GAAP operating expenses
 $375 - $385
Special items:
 
Share-based compensation
55
Restructuring related charges
15
Amortization of acquired intangible assets
21
Other operating expenses
2
Total non-GAAP operating expenses
$285 - $290
 
 
 
 
GAAP diluted net income per share from continuing operations
 $(0.05) - $(0.01)
Special items:
 
Other costs of goods sold
0.15
Share-based compensation
0.09
Restructuring related charges in operating expenses
0.02
Amortization of acquired intangible assets
0.12
Other (gains) and losses in interest and other income, net
(0.01)
Other income tax effects and adjustments
(0.02)
Non-GAAP diluted net income per share from continuing operations
$0.30 - $0.34





Quarterly Revenue Trend (Unaudited)
(In thousands)
 
 
 
 
Three Months Ended
 
% Change
 
November 3,
2018
 
August 4,
2018*
 
October 28,
2017
 
YoY
 
QoQ
Storage (1)
$
406,822

 
$
335,764

 
$
315,338

 
29
 %
 
21
 %
Networking (2)
398,424

 
283,330

 
253,159

 
57
 %
 
41
 %
   Total Core
805,246

 
619,094

 
568,497

 
42
 %
 
30
 %
Other (3)
45,805

 
46,216

 
47,805

 
(4
)%
 
(1
)%
Total Revenue
$
851,051

 
$
665,310

 
$
616,302

 
38
 %
 
28
 %
* Results for the three months ended August 4, 2018 include total Cavium revenue from the period July 6, 2018 to August 4, 2018.

 
Three Months Ended
% of Total
November 3,
2018
 
August 4,
2018
 
October 28,
2017
Storage (1)
48
%
 
50
%
 
51
%
Networking (2)
47
%
 
43
%
 
41
%
   Total Core
95
%
 
93
%
 
92
%
Other (3)
5
%
 
7
%
 
8
%
Total Revenue
100
%
 
100
%
 
100
%

(1) Storage products are comprised primarily of HDD and SSD Controllers, Fibre Channel Adapters and Data Center Storage Solutions.
(2) Networking products are comprised primarily of Ethernet Switches, Ethernet Transceivers, Ethernet NICs, Embedded Communication Processors, Automotive Ethernet, Security Adapters and Processors as well as WiFi solutions including WiFi only, WiFi/Bluetooth combos and WiFi Microcontroller combos. In addition, this grouping includes a few legacy product lines in which we no longer invest, but will generate revenue for several years.
(3) Other products are comprised primarily of Printer Solutions, Application Processors and others.

For further information, contact:
Ashish Saran
Vice President, Investor Relations
408-222-0777
ir@marvell.com