Marvell Technology Group Ltd. Reports Third Quarter of Fiscal Year 2019 Financial Results

SANTA CLARA, Calif., Dec. 4, 2018 /PRNewswire/ -- 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
        in the range of $(0.05) to $(0.01) per share.
    --  Non-GAAP diluted income per share from continuing operations is expected
        to be in the range of $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,                     August 4,                                   October 28,                                   November 3,                                October 28,
                                                             2018                           2018                                           2017                               2018                                    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,                          February 3,
                                                                                            2018                                  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,                                October 28,                                       November 3,                          October 28,
                                                                          2018                                        2017                                               2018                                  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,                     August 4,                           October 28,                                                  November 3,                October 28,
                                                          2018                           2018                                   2017                                                          2018                        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
            %







      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,                  August 4,                        October 28,                          YoY            QoQ
                           2018                                                           2017
                                                 2018*

                                                                                                                                      ---

     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,                      August 4,      October 28,
                               2018                            2018              2017



      Storage                    48                                  50                  51
      (1)                        %                                  %                  %


      Networking                 47                                  43                  41
      (2)                        %                                  %                  %



        Total                    95                                  93                  92
         Core                     %                                  %                  %


     Other                        5                                   7                   8
      (3)                        %                                  %                  %


     Total                      100                                 100
      Revenue                     %                                                     %
                                                                     %                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

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SOURCE Marvell Technology Group Ltd.