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: March 7, 2019
(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.    ¨
 

1


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 March 7, 2019, Marvell Technology Group Ltd. (“Marvell”) issued a press release reporting its financial results for the fourth quarter and fiscal year 2019 ended February 2, 2019. 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 Thursday, March 7, 2019 at 1:45 p.m. Pacific Time to discuss results for the fourth quarter and full year fiscal 2019. Interested parties may join the conference call by dialing 1-844-647-5488 or 1-615-247-0258, passcode 1885417. 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 Friday, March 15, 2019.
   

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


2



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: March 7, 2019
By:
/s/ JEAN HU
 
 
Jean Hu
 
 
Chief Financial Officer
 
 
 



Exhibit
Exhibit 99.1
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12765034&doc=3
Marvell Technology Group Ltd. Reports Fourth Quarter and Fiscal Year 2019
Financial Results
 

Q4 Revenue: $745 million
Q4 Gross Margin: 43.2% GAAP gross margin; 64.5% non-GAAP gross margin
Q4 Diluted loss per share: $(0.40) GAAP diluted loss per share from continuing operations; $0.25 non-GAAP diluted income per share from continuing operations
Cash and short-term investments: $582 million

Santa Clara, Calif. (March 7, 2019) - Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in infrastructure semiconductor solutions, today reported financial results for the fourth fiscal quarter and the full fiscal year, ended February 2, 2019. Revenue for the fourth quarter of fiscal 2019 was $745 million.
GAAP net loss from continuing operations for the fourth quarter of fiscal 2019 was $(261) million, or $(0.40) per diluted share. Non-GAAP net income from continuing operations for the fourth quarter of fiscal 2019 was $168 million, or $0.25 per diluted share. Cash flow from operations for the fourth quarter was $107 million.
Revenue for fiscal 2019 was $2.9 billion. GAAP net loss from continuing operations for fiscal 2019 was $(179) million, or $(0.30) per diluted share. Non-GAAP net income from continuing operations for fiscal 2019 was $716 million, or $1.19 per diluted share. Cash flow from operations for fiscal 2019 was $597 million

“Marvell continued to improve its financial performance in fiscal 2019, while also increasing scale and diversifying its business through the acquisition of Cavium. While macroeconomic conditions are currently impacting our first quarter outlook, we expect growth to resume in the second quarter,” said Matt Murphy, Marvell's President and Chief Executive Officer. “Looking ahead, we are excited about our expanding position in the 5G market, including our recently announced partnership with Samsung, which includes multiple generations of baseband and control plane processors for both LTE and 5G base stations.”
  
First Quarter of Fiscal 2020 Financial Outlook
 
Revenue is expected to be $650 million +/- 3%.
GAAP gross margin is expected to be approximately 55%.
Non-GAAP gross margin is expected to be approximately 64%.
GAAP operating expenses are expected to be $378 million to $388 million.
Non-GAAP operating expenses are expected to be $295 million to $300 million.
GAAP diluted loss per share from continuing operations is expected to be $(0.09) to $(0.05) per share.
Non-GAAP diluted income per share from continuing operations is expected to be $0.12 to $0.16 per share.





Conference Call
Marvell will conduct a conference call on Thursday, March 7, 2019 at 1:45 p.m. Pacific Time to discuss results for the fourth quarter and full fiscal year 2019. Interested parties may join the conference call by dialing 1-844-647-5488 or 1-615-247-0258, passcode 1885417. 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 Friday, March 15, 2019.

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 fourth quarter of fiscal 2019, a non-GAAP tax rate of 4% has been applied to the non-GAAP financial results.
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: Marvell’s expectations regarding its first quarter of fiscal 2020 financial outlook, Marvell's expectations regarding growth in the second quarter of fiscal 2020, Marvell's position in the 5G market 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 November 3, 2018 as filed with the SEC on December 10, 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
 
Year Ended
 
 
February 2,
2019
 
November 3,
2018
 
February 3,
2018
 
February 2,
2019
 
February 3,
2018
Net revenue
 
$
744,799

 
$
851,051

 
$
615,409

 
$
2,865,791

 
$
2,409,170

Cost of goods sold
 
422,797

 
467,464

 
241,927

 
1,407,399

 
947,230

Gross profit
 
322,002

 
383,587

 
373,482

 
1,458,392

 
1,461,940

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development
 
256,102

 
264,888

 
180,000

 
914,009

 
714,444

Selling, general and administrative
 
106,168

 
112,178

 
68,291

 
424,360

 
238,166

Litigation settlement (a)
 

 

 
74,385

 

 
74,385

Restructuring related charges (gain)
 
12,740

 
27,031

 
(3,205
)
 
76,753

 
5,250

Total operating expenses
 
375,010

 
404,097

 
319,471

 
1,415,122

 
1,032,245

Operating income (loss) from continuing operations
 
(53,008
)
 
(20,510
)
 
54,011

 
43,270

 
429,695

Interest income
 
1,236

 
1,046

 
5,738

 
11,926

 
17,381

Interest expense
 
(21,953
)
 
(22,370
)
 
(292
)
 
(60,362
)
 
(685
)
Other income (loss), net
 
4,377

 
(2,628
)
 
(658
)
 
519

 
4,813

Interest and other income (loss), net
 
(16,340
)
 
(23,952
)
 
4,788

 
(47,917
)
 
21,509

Income (loss) from continuing operations before income taxes
 
(69,348
)
 
(44,462
)
 
58,799

 
(4,647
)
 
451,204

Provision for income taxes
 
191,350

 
9,305

 
10,036

 
174,447

 
18,062

Income (loss) from continuing operations, net of tax
 
(260,698
)
 
(53,767
)
 
48,763

 
(179,094
)
 
433,142

Income from discontinued operations, net of tax
 

 

 

 

 
87,689

Net income (loss)
 
$
(260,698
)
 
$
(53,767
)
 
$
48,763

 
$
(179,094
)
 
$
520,831

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share — Basic:
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.40
)
 
$
(0.08
)
 
$
0.10

 
$
(0.30
)
 
$
0.87

Discontinued operations
 
$

 
$

 
$

 
$

 
$
0.18

Net income (loss) per share - Basic
 
$
(0.40
)
 
$
(0.08
)
 
$
0.10

 
$
(0.30
)
 
$
1.05

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share — Diluted:
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.40
)
 
$
(0.08
)
 
$
0.10

 
$
(0.30
)
 
$
0.85

Discontinued operations
 
$

 
$

 
$

 
$

 
$
0.17

Net income (loss) per share - Diluted
 
$
(0.40
)
 
$
(0.08
)
 
$
0.10

 
$
(0.30
)
 
$
1.02

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
657,835

 
657,519

 
493,663

 
591,232

 
498,008

Diluted
 
657,835

 
657,519

 
506,197

 
591,232

 
509,667


(a)
Represents legal settlement and associated costs related to Luna shareholder litigation matter.



Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
 
 
February 2,
2019
 
February 3,
2018
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
582,410

 
$
888,482

Short-term investments
 

 
952,790

Accounts receivable, net
 
493,122

 
280,395

Inventories
 
276,005

 
170,039

Prepaid expenses and other current assets
 
43,721

 
41,482

Assets held for sale
 

 
30,767

Total current assets
 
1,395,258

 
2,363,955

Property and equipment, net
 
318,978

 
202,222

Goodwill
 
5,494,505

 
1,993,310

Acquired intangible assets, net
 
2,560,682

 

Other non-current assets
 
247,329

 
148,800

Total assets
 
$
10,016,752

 
$
4,708,287

 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
185,362

 
$
145,236

Accrued liabilities
 
330,594

 
86,958

Accrued employee compensation
 
115,925

 
127,711

Deferred income
 
4,915

 
61,237

Total current liabilities
 
636,796

 
421,142

Long-term debt
 
1,732,699

 

Non-current income taxes payable
 
59,221

 
56,976

Deferred tax liabilities
 
246,252

 
52,204

Other non-current liabilities
 
35,374

 
36,552

Total liabilities
 
2,710,342

 
566,874

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common stock
 
1,317

 
991

Additional paid-in capital
 
6,188,598

 
2,733,292

Accumulated other comprehensive loss
 

 
(2,322
)
Retained earnings
 
1,116,495

 
1,409,452

Total shareholders’ equity
 
7,306,410

 
4,141,413

Total liabilities and shareholders’ equity
 
$
10,016,752

 
$
4,708,287






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


 
Three Months Ended
 
Year Ended

 
February 2,
2019
 
February 3,
2018
 
February 2,
2019
 
February 3,
2018
Cash flows from operating activities:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(260,698
)
 
$
48,763

 
$
(179,094
)
 
$
520,831

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
37,627

 
20,918

 
123,983

 
83,487

Share-based compensation
 
50,580

 
21,377

 
184,064

 
86,689

Amortization of acquired intangible assets
 
78,688

 
358

 
183,318

 
3,570

Amortization of inventory fair value adjustment associated with acquisition of Cavium
 
97,597

 

 
223,372

 

Amortization of deferred debt issuance costs and debt discounts
 
2,064

 

 
11,354

 

Restructuring related impairment charges (gain)
 
(12,081
)
 
(4,159
)
 
(200
)
 
(4,561
)
Amortization of premium /discount on available-for-sale securities
 

 
392

 
624

 
995

Deferred income taxes
 
146,322

 
17,027

 
118,647

 
19,825

Gain on sale of discontinued operations
 

 

 

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

 

 
1,592

 
(5,254
)
Other expense (income), net
 
344

 
(277
)
 
3,530

 
(1,920
)
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
Accounts receivable
 
(39,347
)
 
85,719

 
(99,044
)
 
54,989

Inventories
 
2,489

 
3,878

 
4,348

 
(12,160
)
Prepaid expenses and other assets
 
189

 
(627
)
 
(11,685
)
 
12,494

Accounts payable
 
(28,753
)
 
(36,700
)
 
(6,493
)
 
(16,613
)
Accrued liabilities and other non-current liabilities
 
55,329

 
(21,898
)
 
84,352

 
(62,360
)
Accrued employee compensation
 
(25,677
)
 
(1,324
)
 
(46,599
)
 
(11,936
)
Deferred income
 
1,968

 
(13,706
)
 
675

 
(8,557
)
Net cash provided by operating activities
 
106,641

 
119,741

 
596,744

 
571,113

Cash flows from investing activities:
 
 
 
 
 
 
 
 
Purchases of available-for-sale securities
 

 
(162,607
)
 
(14,956
)
 
(835,494
)
Sales of available-for-sale securities
 

 
22,671

 
623,896

 
306,822

Maturities of available-for-sale securities
 

 
120,639

 
187,985

 
426,341

Purchases of time deposits
 

 
(75,000
)
 
(25,000
)
 
(300,000
)
Maturities of time deposits
 

 
75,000

 
175,000

 
300,000

Purchases of technology licenses
 
(359
)
 
(1,331
)
 
(11,540
)
 
(6,587
)
Purchases of property and equipment
 
(28,886
)
 
(13,395
)
 
(75,921
)
 
(38,551
)
Proceeds from sales of property and equipment
 
42,707

 
10,571

 
43,525

 
12,559

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

 

 
(2,649,465
)
 

Net proceeds from sale of discontinued operations
 

 

 

 
165,940

Net proceeds (payments) from sale of business
 

 

 
(3,352
)
 
2,402

Other
 
2,275

 

 
(2,725
)
 
6,089

Net cash provided by (used in) investing activities
 
15,737

 
(23,452
)
 
(1,752,553
)
 
39,521

Cash flows from financing activities:
 
 
 
 
 
 
 
 
Repurchases of common stock
 
(50,005
)
 

 
(103,974
)
 
(527,574
)
Proceeds from employee stock plans
 
40,189

 
42,878

 
100,961

 
180,302

Tax withholding paid on behalf of employees for net share settlement
 
(9,248
)
 
(905
)
 
(54,939
)
 
(26,840
)
Dividend payments to shareholders
 
(39,489
)
 
(29,695
)
 
(148,081
)
 
(119,251
)
Payments on technology license obligations
 
(16,676
)
 
(5,806
)
 
(69,157
)
 
(28,503
)
Proceeds from issuance of debt
 

 

 
1,892,605

 

Principal payments of debt
 
(75,000
)
 

 
(756,128
)
 

Payment of equity and debt financing costs
 

 
(14,378
)
 
(11,550
)
 
(14,378
)
Net cash provided by (used in) financing activities
 
(150,229
)
 
(7,906
)
 
849,737

 
(536,244
)
Net increase (decrease) in cash and cash equivalents
 
(27,851
)
 
88,383

 
(306,072
)
 
74,390

Cash and cash equivalents at beginning of period
 
610,261

 
800,099

 
888,482

 
814,092

Cash and cash equivalents at end of period
 
$
582,410

 
$
888,482

 
$
582,410

 
$
888,482

 





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








 
 
 
 
 

Three Months Ended
 
Year Ended
 

February 2,
2019
 
November 3,
2018
 
February 3,
2018
 
February 2,
2019
 
February 3,
2018
GAAP gross profit:

$
322,002

 
$
383,587

 
$
373,482

 
$
1,458,392

 
$
1,461,940

Special items:

 
 
 
 
 
 
 
 
 
Share-based compensation

2,942

 
2,429

 
1,662

 
12,024

 
6,645

Amortization of acquired intangible assets

57,591

 
57,594

 

 
134,169

 

Other cost of goods sold (a)

97,598

 
105,841

 
8,000

 
226,372

 
11,000

Total special items

158,131

 
165,864

 
9,662

 
372,565

 
17,645

Non-GAAP gross profit

$
480,133

 
$
549,451

 
$
383,144

 
$
1,830,957

 
$
1,479,585



 
 
 
 
 
 
 
 
 
GAAP gross margin

43.2
 %
 
45.1
 %
 
60.7
 %
 
50.9
%
 
60.7
%
Non-GAAP gross margin

64.5
 %
 
64.6
 %
 
62.3
 %
 
63.9
%
 
61.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
Total GAAP operating expenses

$
375,010

 
$
404,097

 
$
319,471

 
$
1,415,122

 
$
1,032,245

Special items:

 
 
 
 
 
 
 
 
 
Share-based compensation

(47,638
)
 
(47,811
)
 
(19,715
)
 
(186,071
)
 
(78,477
)
Restructuring related charges (gain) (b)

(12,740
)
 
(27,031
)
 
3,205

 
(76,753
)
 
(5,250
)
Amortization of acquired intangible assets

(21,097
)
 
(21,098
)
 
(358
)
 
(49,150
)
 
(3,570
)
Litigation settlement (c)
 

 

 
(74,385
)
 

 
(74,385
)
Other operating expenses (d)

(7,392
)
 
(11,222
)
 
(10,579
)
 
(62,095
)
 
(14,689
)
Total special items

(88,867
)
 
(107,162
)
 
(101,832
)
 
(374,069
)
 
(176,371
)
Total non-GAAP operating expenses

$
286,143

 
$
296,935

 
$
217,639

 
$
1,041,053

 
$
855,874



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating margin

(7.1
)%
 
(2.4
)%
 
8.8
 %
 
1.5
%
 
17.8
%
Other cost of goods sold (a)
 
13.1
 %
 
12.4
 %
 
1.3
 %
 
7.9
%
 
0.5
%
Share-based compensation
 
6.8
 %
 
5.9
 %
 
3.5
 %
 
6.9
%
 
3.5
%
Restructuring related charges (gain) (b)
 
1.7
 %
 
3.2
 %
 
(0.5
)%
 
2.7
%
 
0.2
%
Amortization of acquired intangible assets
 
10.6
 %
 
9.2
 %
 
0.1
 %
 
6.4
%
 
0.1
%
Litigation settlement (c)
 
 %
 
 %
 
12.1
 %
 
%
 
3.1
%
Other operating expenses (d)
 
0.9
 %
 
1.4
 %
 
1.6
 %
 
2.2
%
 
0.7
%
Non-GAAP operating margin 

26.0
 %
 
29.7
 %
 
26.9
 %
 
27.6
%
 
25.9
%


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



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








 
 
 
 
 

Three Months Ended
 
Year Ended
 

February 2,
2019
 
November 3,
2018
 
February 3,
2018
 
February 2,
2019
 
February 3,
2018
GAAP interest and other income (loss), net
 
$
(16,340
)
 
$
(23,952
)
 
$
4,788

 
$
(47,917
)
 
$
21,509

Special items:
 
 
 
 
 
 
 
 
 
 
      Gain on sale of intellectual property
 
(3,500
)
 

 

 
(3,500
)
 

       Restructuring related items (e)
 
157

 
1,491

 
1,355

 
15

 
(4,016
)
       Write-off of debt issuance costs (f)
 
782

 
850

 

 
7,736

 

Total special items
 
(2,561
)
 
2,341

 
1,355

 
4,251

 
(4,016
)
Total non-GAAP interest and other income (loss), net
 
$
(18,901
)
 
$
(21,611
)
 
$
6,143

 
$
(43,666
)
 
$
17,493

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss)

$
(260,698
)
 
$
(53,767
)
 
$
48,763

 
$
(179,094
)
 
$
520,831

Less: Income (loss) from discontinued operations, net of tax


 

 

 

 
87,689

GAAP net income (loss) from continuing operations

(260,698
)
 
(53,767
)
 
48,763

 
(179,094
)
 
433,142

Special items:

 
 
 
 
 
 
 
 
 
Other cost of goods sold (a)
 
97,598

 
105,841

 
8,000

 
226,372

 
11,000

Share-based compensation

50,580

 
50,240

 
21,377

 
198,095

 
85,122

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

12,740

 
27,031

 
(3,205
)
 
76,753

 
5,250

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

157

 
1,491

 
1,355

 
15

 
(4,016
)
Amortization of acquired intangible assets
 
78,688

 
78,692

 
358

 
183,319

 
3,570

Litigation settlement (c)
 

 

 
74,385

 

 
74,385

Gain on sale of intellectual property
 
(3,500
)
 

 

 
(3,500
)
 

Write-off of debt issuance costs (f)
 
782

 
850

 

 
7,736

 

Other operating expenses (d)

7,392

 
11,222

 
10,579

 
62,095

 
14,689

Pre-tax total special items

244,437

 
275,367

 
112,849

 
750,885

 
190,000

Other income tax effects and adjustments (g)

184,348

 
55

 
3,170

 
144,585

 
(7,590
)
Non-GAAP net income from continuing operations

$
168,087

 
$
221,655

 
$
164,782

 
$
716,376

 
$
615,552



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



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








 
 
 
 
 

Three Months Ended
 
Year Ended
 

February 2,
2019
 
November 3,
2018
 
February 3,
2018
 
February 2,
2019
 
February 3,
2018
Weighted average shares — basic

657,835

 
657,519

 
493,663

 
591,232

 
498,008

Weighted average shares — diluted

657,835

 
657,519

 
506,197

 
591,232

 
509,667



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

$
(0.40
)
 
$
(0.08
)
 
$
0.10

 
$
(0.30
)
 
$
0.85

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

$
0.25

 
$
0.33

 
$
0.32

 
$
1.19

 
$
1.19

 
(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. Restructuring related charges in the three months ended February 2, 2019 and February 3, 2018 and the year ended February 2, 2019 and February 3, 2018 include gain on sale of a building that was a direct result of restructuring.
(c)
Represents legal settlement and associated costs related to shareholder litigation matter.
(d)
Other operating expenses primarily include Cavium merger costs, costs related to royalty matters, and costs of retention bonuses offered to employees who remained through the ramp down of certain operations due to restructuring actions.
(e)
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.
(f)
Write-off of debt issuance costs is associated with the partial term loan repayment and the terminated bridge loan commitment.
(g)
Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 4%.
(h)
Non-GAAP diluted net income per share from continuing operations for the three months ended February 2, 2019 and November 3, 2018 was calculated by dividing non-GAAP net income from continuing operations by weighted average shares outstanding (diluted) of 663,580 shares and 665,752 shares, respectively, due to the non-GAAP net income reported in the respective period. Non-GAAP diluted net income per share from continuing operations for the year ended February 2, 2019 was calculated by dividing non-GAAP net income from continuing operations by weighted average shares outstanding (diluted) of 600,049, due to the non-GAAP net income reported in the period.





 Marvell Technology Group Ltd.
 Outlook for the First Quarter of Fiscal Year 2020
Reconciliations from GAAP to Non-GAAP (Unaudited)
 (In millions, except per share amounts)
 
 
 
 
 
Outlook for Three Months Ended
May 4, 2019
GAAP revenue
 $650 +/- 3%
Special items:
Non-GAAP revenue
$650 +/- 3%
 
 
GAAP gross margin
55%
Special items:
 
Share-based compensation
0.3%
Amortization of acquired intangible assets
8.9%
Non-GAAP gross margin
64%
 
 
Total GAAP operating expenses
 $378 - $388
Special items:
 
Share-based compensation
54
Restructuring related charges
4
Amortization of acquired intangible assets
20
Other operating expenses
7
Total non-GAAP operating expenses
$295 - $300
 
 
 
 
GAAP diluted net income per share from continuing operations
 $(0.09) - $(0.05)
Special items:
 
Share-based compensation
0.08
Amortization of acquired intangible assets
0.12
Restructuring related charges in operating expenses
0.01
Other operating expenses
0.01
Other income tax effects and adjustments
(0.01)
Non-GAAP diluted net income per share from continuing operations
$0.12 - $0.16





Quarterly Revenue Trend (Unaudited)
(In thousands)
 
 
 
 
Three Months Ended
 
% Change
 
February 2,
2019
 
November 3,
2018
 
February 3,
2018
 
YoY
 
QoQ
Storage (1)
$
317,042

 
$
406,822

 
$
323,718

 
(2
)%
 
(22
)%
Networking (2)
387,457

 
398,424

 
241,611

 
60
 %
 
(3
)%
   Total Core
704,499

 
805,246

 
565,329

 
25
 %
 
(13
)%
Other (3)
40,300

 
45,805

 
50,080

 
(20
)%
 
(12
)%
Total Revenue
$
744,799

 
$
851,051

 
$
615,409

 
21
 %
 
(12
)%


 
Three Months Ended
% of Total
February 2,
2019
 
November 3,
2018
 
February 3,
2018
Storage (1)
43
%
 
48
%
 
53
%
Networking (2)
52
%
 
47
%
 
39
%
   Total Core
95
%
 
95
%
 
92
%
Other (3)
5
%
 
5
%
 
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