Marvell Technology Group Ltd. Reports Third Quarter of Fiscal Year 2020 Financial Results

SANTA CLARA, Calif., Dec. 3, 2019 /PRNewswire/ -- Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in infrastructure semiconductor solutions, today reported financial results for the third quarter of fiscal year 2020.

Marvell completed the acquisition of Aquantia Corp. ("Aquantia") on September 19, 2019 (the "acquisition date"), approximately 6 weeks before the end of the third quarter of fiscal 2020. Marvell's results for the third quarter of fiscal 2020 include the results of Aquantia from the acquisition date, while prior periods presented do not.

Subsequent to Marvell's third quarter end, on November 5, 2019, Marvell completed the acquisition of Avera Semiconductor ("Avera"), the Application Specific Integrated Circuit ("ASIC") business of GlobalFoundries.

Revenue for the third quarter of fiscal 2020 was $662 million, which exceeded the midpoint of the Company's guidance provided on August 29, 2019. GAAP net loss for the third quarter of fiscal 2020 was $(83) million, or $(0.12) per diluted share. Non-GAAP net income for the third quarter of fiscal 2020 was $112 million, or $0.17 per diluted share. Cash flow from operations for the third quarter was $66 million.

"Marvell delivered solid results for the third quarter and I am pleased that our storage business grew sequentially led by a strong performance from our enterprise and datacenter products. In addition, we ramped our first 5G product shipments in volume, successfully responding to our customer's aggressive schedule requests, ahead of the plan we had laid out early this year," said Matt Murphy, Marvell's President and CEO. "We also recently completed the strategic acquisitions of Aquantia, a pioneer in multi-gig ethernet, and Avera, a leader in custom ASICs. These acquisitions broaden our technology portfolio for infrastructure customers and expand our addressable market by approximately $4 billion."

Marvell's fourth quarter guidance includes expected results from the Aquantia and Avera acquisitions for the full quarter. This guidance also includes expected results for the full quarter from the Wi-Fi Connectivity Business. Once the Wi-Fi Connectivity Business is divested to NXP, Marvell will update its revenue guidance for the fourth quarter. Marvell's fourth quarter guidance also takes into account the U.S. Government's export restriction on certain Chinese customers.

Fourth Quarter of Fiscal 2020 Financial Outlook

    --  Revenue is expected to be $750 million +/- 3%.
    --  GAAP gross margin is expected to be approximately 45.5%.
    --  Non-GAAP gross margin is expected to be approximately 62%.
    --  GAAP operating expenses are expected to be $445 million to $455 million.
    --  Non-GAAP operating expenses are expected to be $315 million to $320
        million.
    --  GAAP diluted loss per share is expected to be $(0.23) to $(0.17) per
        share.
    --  Non-GAAP diluted income per share is expected to be $0.15 to $0.19 per
        share.

Conference Call

Marvell will conduct a conference call on Tuesday, December 3, 2019 at 1:45 p.m. Pacific Time to discuss results for the third quarter of fiscal 2020. Interested parties may join the conference call by dialing 1-844-647-5488 or 1-615-247-0258, pass-code 4437138. 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 Tuesday, December 10, 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 adjustment associated with the Aquantia acquisition, amortization of acquired intangible assets, acquisition and divestiture-related costs, restructuring and other related charges, resolution of legal matters, 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 2020, a non-GAAP tax rate of 4.5% 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. 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 risk that the proposed divestiture of Marvell's Wi-Fi Connectivity business to NXP will not be completed; the risk that the company may not realize the anticipated benefits of the acquisitions of Aquantia Corp. and the Application Specific Integrated Circuit (ASIC) business of GLOBALFOUNDRIES and the divestiture to NXP (collectively, the "Transactions"); the effect of the consummation of the Transactions on the company's business relationships, operating results, and business generally; potential difficulties in employee retention as a result of the Transactions; the ability of Marvell to successfully integrate operations and product lines related to the acquisitions; the ability of Marvell to implement its plans, forecasts, and other expectations with respect to the Transactions and realize the anticipated synergies and cost savings in the time frame anticipated or at all; the impact of international conflict and economic volatility in either domestic or foreign markets including risks related to trade conflicts, bans and tariffs; the risks associated with manufacturing and selling products and customers' products outside of the United States; 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; the effects of transitioning to smaller geometry process technologies; 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 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; the impact and costs associated with changes in international financial and regulatory conditions; 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; risks associated with acquisition and consolidation activity in the semiconductor industry; the effects of any other potential acquisitions, divestitures or investments; Marvell's ability to protect its intellectual property; Marvell's maintenance of an effective system of internal controls; severe financial hardship or bankruptcy of one or more of Marvell's major customers; 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 3, 2019 as filed with the SEC on September 4, 2019, and other factors detailed from time to time in Marvell's filings with the SEC. Marvell undertakes no obligation to revise or publicly update 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 2,                   August 3,                                   November 3,                                     November 2,                                November 3,
                                                   2019                         2019                                           2018                                 2019                                    2018




     Net revenue                                       $
      662,470                                                                  $
            656,568                                   $
            851,051                                $
     1,981,490 $
      2,120,992



     Cost of goods sold                        322,403                                  305,866                                                           467,464                                  929,293                       984,602




     Gross profit                              340,067                                  350,702                                                           383,587                                1,052,197                     1,136,390






     Operating expenses:



     Research and development                  267,781                                  266,354                                                           264,888                                  801,002                       657,907



     Selling, general and administrative       118,993                                  113,990                                                           112,178                                  342,988                       318,192



     Restructuring related charges              14,802                                   16,586                                                            27,031                                   37,070                        64,013




     Total operating expenses                  401,576                                  396,930                                                           404,097                                1,181,060                     1,040,112




     Operating income (loss)                  (61,509)                                (46,228)                                                         (20,510)                               (128,863)                       96,278



     Interest income                             1,092                                    1,077                                                             1,046                                    3,437                        10,690



     Interest expense                         (21,241)                                (20,531)                                                         (22,370)                                (62,975)                     (38,409)



     Other income (loss), net                      689                                  (2,197)                                                          (2,628)                                 (1,624)                      (3,858)



      Interest and other income (loss), net    (19,460)                                (21,651)                                                         (23,952)                                (61,162)                     (31,577)




     Income (loss) before income taxes        (80,969)                                (67,879)                                                         (44,462)                               (190,025)                       64,701



     Provision (benefit) for income taxes        1,532                                 (10,548)                                                            9,305                                  (1,743)                     (16,903)




     Net income (loss)                        (82,501)                                (57,331)                                                         (53,767)                               (188,282)                       81,604






     Net income (loss) per share - Basic:               $
      (0.12)                                                                  $
            (0.09)                                   $
            (0.08)                                  $
     (0.28)     $
      0.14





      Net income (loss) per share -Diluted:              $
      (0.12)                                                                  $
            (0.09)                                   $
            (0.08)                                  $
     (0.28)     $
      0.14






     Weighted average shares:



     Basic                                     668,178                                  663,603                                                           657,519                                  667,184                       569,031



     Diluted                                   668,178                                  663,603                                                           657,519                                  667,184                       578,872


                                                         
        
               Marvell Technology Group Ltd.


                                               
              
         Condensed Consolidated Balance Sheets (Unaudited)


                                                            
           
                (In thousands)




                                                                                   November 2,                                    February 2,
                                                                                          2019                             2019




     
                Assets



     Current assets:



     Cash and cash equivalents                                                                     $
              438,369                        $
        582,410



     Accounts receivable, net                                                         495,216                            493,122



     Inventories                                                                      308,299                            276,005



     Prepaid expenses and other current assets                                         43,789                             43,721



     Assets held for sale                                                             600,893




     Total current assets                                                           1,886,566                          1,395,258



     Property and equipment, net                                                      316,214                            318,978



     Goodwill                                                                       5,161,312                          5,494,505



     Acquired intangible assets, net                                                2,500,215                          2,560,682



     Other non-current assets                                                         438,955                            247,329



     Total assets                                                                               $
              10,303,262                     $
        10,016,752





                   Liabilities and Shareholders' Equity



     Current liabilities:



     Accounts payable                                                                              $
              212,955                        $
        185,362



     Accrued liabilities                                                              305,827                            335,509



     Accrued employee compensation                                                    130,062                            115,925



     Liabilities held for sale                                                          5,610




     Total current liabilities                                                        654,454                            636,796



     Long-term debt                                                                 2,036,441                          1,732,699



     Non-current income taxes payable                                                  48,136                             59,221



     Deferred tax liabilities                                                         214,492                            246,252



     Other non-current liabilities                                                    183,921                             35,374




     Total liabilities                                                              3,137,444                          2,710,342





     Shareholders' equity:



     Common shares                                                                      1,341                              1,317



     Additional paid-in capital                                                     6,355,723                          6,188,598


                   Accumulated other comprehensive income                                   37



     Retained earnings                                                                808,717                          1,116,495




     Total shareholders' equity                                                     7,165,818                          7,306,410



      Total liabilities and shareholders' equity                                                 $
              10,303,262                     $
        10,016,752


                                                                                                           
          
                Marvell Technology Group Ltd.

                                                                                               
             
          Condensed Consolidated Statements of Cash Flows (Unaudited)

                                                                                                              
              
                (In thousands)




                                                                                      Three Months Ended                                                                                    Nine Months Ended


                                                                 November 2,                                 November 3,                                       November 2,                             November 3,
                                                                        2019                                         2018                                               2019                                     2018



                   Cash flows from operating activities:



     Net income (loss)                                                      $
      (82,501)                                                                                    $
       (53,767)                            $
          (188,282)    $
       81,604


      Adjustments to reconcile net income (loss) to net cash
       provided by operating activities:



     Depreciation and amortization                                   40,508                                                   39,259                                                                        126,747                86,356



     Share-based compensation                                        66,762                                                   50,240                                                                        189,036               133,484


      Amortization and write off of acquired intangible assets        92,760                                                   78,691                                                                        253,467               104,630


      Amortization of inventory fair value adjustment associated
       with acquisition                                                3,316                                                  102,842                                                                          3,316               125,775


      Amortization of deferred debt issuance costs and debt
       discounts                                                       1,181                                                    2,217                                                                          4,040                 9,290



     Restructuring related impairment charges                         6,146                                                    9,888                                                                         16,243                11,881



     Other expense, net                                               2,574                                                    1,771                                                                          4,590                 5,402



     Deferred income taxes                                         (10,275)                                                 (6,261)                                                                       (7,901)             (27,675)



     Changes in assets and liabilities:



     Accounts receivable                                           (32,002)                                                (10,948)                                                                         8,374              (59,697)



     Inventories                                                   (39,276)                                                 (5,007)                                                                      (30,602)                1,859



     Prepaid expenses and other assets                              (3,046)                                                   7,630                                                                       (11,039)             (11,874)



     Accounts payable                                                 8,304                                                   22,531                                                                         30,801                22,260


      Accrued liabilities and other non-current liabilities         (26,141)                                                  39,691                                                                      (106,258)               27,730



     Accrued employee compensation                                   37,193                                                   20,617                                                                         11,927              (20,922)



     Net cash provided by operating activities                       65,503                                                  299,394                                                                        304,459               490,103



                   Cash flows from investing activities:



     Purchases of available-for-sale securities                                                                                                                                                                               (14,956)



     Sales of available-for-sale securities                          18,832                                                                                                                                 18,832               623,896



     Maturities of available-for-sale securities                                                                                                                                                                               187,985



     Purchases of time deposits                                                                                                                                                                                               (25,000)



     Maturities of time deposits                                                                                             25,000                                                                                             175,000



     Purchases of technology licenses                                 (414)                                                 (9,918)                                                                       (1,936)             (11,181)



     Purchases of property and equipment                           (20,742)                                                (12,646)                                                                      (62,935)             (47,035)


      Cash payment for acquisition, net of cash and cash
       equivalents acquired                                        (477,579)                                                                                                                             (477,579)          (2,649,465)



     Other, net                                                     (1,404)                                                 (4,007)                                                                       (1,793)              (7,534)




     Net cash used in investing activities                        (481,307)                                                 (1,571)                                                                     (525,411)          (1,768,290)



                   Cash flows from financing activities:



     Repurchases of common stock                                                                                           (53,969)                                                                      (64,272)             (53,969)



     Proceeds from employee stock plans                              21,795                                                   16,192                                                                        103,109                60,772


      Tax withholding paid on behalf of employees for net share
       settlement                                                   (19,220)                                                 (8,915)                                                                      (80,862)             (45,691)



     Dividend payments to shareholders                             (40,140)                                                (39,411)                                                                     (119,496)            (108,592)



     Payments on technology license obligations                    (28,889)                                                (23,003)                                                                      (57,213)             (52,481)



     Proceeds from issuance of debt                                 350,000                                                                                                                                350,000             1,892,605



     Principal payments of debt                                                                                            (75,000)                                                                      (50,000)            (681,128)



     Payment of equity and debt financing costs                                                                             (2,115)                                                                                           (11,550)



     Other, net                                                     (2,869)                                                                                                                               (4,355)



      Net cash provided by (used in) in financing activities         280,677                                                (186,221)                                                                         76,911               999,966



      Net increase (decrease) in cash and cash equivalents         (135,127)                                                 111,602                                                                      (144,041)            (278,221)


      Cash and cash equivalents at beginning of period               573,496                                                  498,659                                                                        582,410               888,482



     Cash and cash equivalents at end of period                              $
      438,369                                                                                      $
       610,261                              $
           438,369    $
       610,261


                                                                                                                  
           
                Marvell Technology Group Ltd.

                                                                                                             
         
             Reconciliations from GAAP to Non-GAAP (Unaudited)

                                                                                                                
        
                (In thousands, except per share amounts)




                                                                             
     
     Three Months Ended                                                                                              
     
     Nine Months Ended


                                                 November 2,                     August 3,                            November 3,                                                 November 2,           November 3,
                                                        2019                           2019                                    2018                                                         2019                   2018




     GAAP gross profit:                                      $
         340,067                                                          $
              350,702                                                                $
              383,587                      $
             1,052,197    $
             1,136,390



     Special items:



     Share-based compensation                         3,990                                           3,662                                                                              2,429                                        10,578              9,082


      Amortization of acquired intangible
       assets                                         72,146                                          61,132                                                                             57,594                                       193,184             76,577



     Other cost of goods sold (a)                     4,758                                                                                                                           105,841                                         5,208            128,774




     Total special items                             80,894                                          64,794                                                                            165,864                                       208,970            214,433




     Non-GAAP gross profit                                   $
         420,961                                                          $
              415,496                                                                $
              549,451                      $
             1,261,167    $
             1,350,823






     GAAP gross margin                                 51.3
                                                           %                                 53.4
            %                                                                    45.1
            %                               53.1
            %    53.6
            %




     Non-GAAP gross margin                             63.5
                                                           %                                 63.3
            %                                                                    64.6
            %                               63.6
            %    63.7
            %










     Total GAAP operating expenses                           $
         401,576                                                          $
              396,930                                                                $
              404,097                      $
             1,181,060    $
             1,040,112



     Special items:



     Share-based compensation                      (63,375)                                       (60,014)                                                                          (47,811)                                    (179,061)         (138,433)


      Restructuring related charges (b)             (14,802)                                       (16,585)                                                                          (27,031)                                     (37,070)          (64,013)


      Amortization of acquired intangible
       assets                                       (20,614)                                       (19,835)                                                                          (21,098)                                     (60,283)          (28,053)



     Other operating expenses (c)                  (19,495)                                       (20,676)                                                                          (11,222)                                     (46,740)          (54,703)




     Total special items                          (118,286)                                      (117,110)                                                                         (107,162)                                    (323,154)         (285,202)



      Total non-GAAP operating expenses                       $
         283,290                                                          $
              279,820                                                                $
              296,935                        $
             857,906      $
             754,910










     GAAP operating margin                            (9.3)                                          (7.0)                                                                             (2.4)
                                                           %                                              %                                                                                 %                              (6.5)
            %     4.5
            %



     Other cost of goods sold (a)             0.7
            %                                                   %                                                               12.4
            %                                0.3
            %     6.1
            %



     Share-based compensation                          10.2
                                                           %                                  9.7
            %                                                                     5.9
            %                                9.6
            %     7.0
            %


      Restructuring related charges (b)        2.2
            %                                  2.5
            %                                                                     3.2
            %                                1.9
            %     3.0
            %


      Amortization of acquired intangible               14.0
       assets                                              %                                 12.3
            %                                                                     9.2
            %                               12.8
            %     4.9
            %



     Other operating expenses (c)             3.0
            %                                  3.2
            %                                                                     1.4
            %                                2.3
            %     2.6
            %




     Non-GAAP operating margin                         20.8
                                                           %                                 20.7
            %                                                                    29.7
            %                               20.4
            %    28.1
            %













      GAAP interest and other income (loss),
       net                                                   $
         (19,460)                                                        $
              (21,651)                                                              $
              (23,952)                      $
             (61,162)    $
             (31,577)



     Special items:


      Restructuring related items (d)                  (946)                                             75                                                                              1,491                                       (1,209)             (142)


      Write-off of debt issuance costs (e)                                                                                                                                                850                                           458              6,954



     Deal costs (f)                                     496                                           1,009                                                                                                                           1,505




     Total special items                              (450)                                          1,084                                                                              2,341                                           754              6,812



      Total non-GAAP interest and other income
       (loss), net                                           $
         (19,910)                                                        $
              (20,567)                                                              $
              (21,611)                      $
             (60,408)    $
             (24,765)










     GAAP net income (loss)                                 $
         (82,501)                                                        $
              (57,331)                                                              $
              (53,767)                     $
             (188,282)      $
             81,604



     Special items:



     Other cost of goods sold (a)                     4,758                                                                                                                           105,841                                         5,208            128,774



     Share-based compensation                        67,365                                          63,676                                                                             50,240                                       189,639            147,515


      Restructuring related charges in
       operating expenses (b)                         14,802                                          16,585                                                                             27,031                                        37,070             64,013


      Restructuring related items in interest
       and other income, net (d)                       (946)                                             75                                                                              1,491                                       (1,209)             (142)


      Amortization of acquired intangible
       assets                                         92,760                                          80,967                                                                             78,692                                       253,467            104,630


      Write-off of debt issuance costs (e)                                                                                                                                                850                                           458              6,954


      Transaction costs included in interest
       and other income, net (f)                         496                                           1,009                                                                                                                           1,505



     Other operating expenses (c)                    19,495                                          20,676                                                                             11,222                                        46,740             54,703




     Pre-tax total special items                    198,730                                         182,988                                                                            275,367                                       532,878            506,447



      Other income tax effects and adjustments
       (g)                                           (3,773)                                       (15,728)                                                                                55                                      (17,177)          (39,763)




     Non-GAAP net income                                     $
         112,456                                                          $
              109,929                                                                $
              221,655                        $
             327,419      $
             548,288









      Weighted average shares -basic                 668,178                                         663,603                                                                            657,519                                       667,184            569,031



      Weighted average shares -diluted               668,178                                         663,603                                                                            657,519                                       667,184            578,872





      GAAP diluted net income (loss) per share                 $
         (0.12)                                                          $
              (0.09)                                                                $
              (0.08)                        $
             (0.28)        $
             0.14



      Non-GAAP diluted net income per share
       (h)                                                       $
         0.17                                                             $
              0.16                                                                   $
              0.33                           $
             0.48         $
             0.95



     (a) Other costs of goods sold includes
          amortization of the Aquantia
          inventory fair value adjustment in
          2019, amortization of the Cavium
          inventory fair value adjustment in
          2018, as well as charges for past
          intellectual property licensing
          matters.


     (b) Restructuring related charges include
          employee severance, facilities
          related costs, and impairment of
          equipment and other assets.


     (c) Other operating expenses include
          Cavium, Aquantia, and Avera merger
          costs.


     (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.


     (f) Costs incurred in connection with
          preparation of the impending
          divestiture of the Wi-Fi
          Connectivity business.


     (g) Other income tax effects and
          adjustments relate to tax provision
          based on a non-GAAP income tax rate
          of 4.5% for the three months ended
          August 3, 2019 and the three and nine
          months ended November 2, 2019, and
          based on a non-GAAP income tax rate
          of 4% for the three and nine months
          ended November 3, 2018.


     (h) Non-GAAP diluted net income per share
          for the three months ended November
          2, 2019, August 3, 2019 and November
          3, 2018 was calculated by dividing
          non-GAAP net income by weighted
          average shares outstanding (diluted)
          of 679,345, 675,755 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 for the
          nine months ended November 2, 2019
          was calculated by dividing non-GAAP
          net income by weighted average shares
          outstanding (diluted) of 678,986
          shares due to the non-GAAP net
          income reported in the period.


                                  
              
                 Marvell Technology Group Ltd.


                        
              
                 Outlook for the Fourth Quarter of Fiscal Year 2020


                         
              
                Reconciliations from GAAP to Non-GAAP (Unaudited)


                             
              
                 (In millions, except per share amounts)






                                                                
              
                Outlook for Three Months Ended

                                                                       
              
                February 1, 2020



                   GAAP revenue                                                                                       $750 +/- 3%



     Special items:                                                                                                            -




     Non-GAAP revenue                                                                                                $750 +/- 3%




                   GAAP gross margin                                                                                        45.5%



     Special items:


      Share-based compensation                                                                                               0.3%


      Amortization of acquired
       intangible assets                                                                                                    16.2%



      Non-GAAP gross margin                                                                                                   62%




                   Total GAAP operating expenses                                                          
               $445 - $455



     Special items:


      Share-based compensation                                                                                                 65


      Restructuring related charges                                                                                            23


      Amortization of acquired
       intangible assets                                                                                                       23


      Other operating expenses                                                                                                 22



      Total non-GAAP operating
       expenses                                                                                            
              $315 - $320






                   GAAP diluted net loss per
                    share                                                                           
               $(0.23) - $(0.17)



     Special items:


      Share-based compensation                                                                                               0.10


      Amortization of acquired
       intangible assets                                                                                                     0.21


      Restructuring related charges
       in operating expenses                                                                                                 0.04


      Other operating expenses                                                                                               0.03


      Other income tax effects and
       adjustments                                                                                                         (0.01)


      Non-GAAP diluted net income
       per share                                                                                         
              $0.15 - $0.19


                                                            
            
        Quarterly Revenue Trend (Unaudited)

                                                                    
       
               (In thousands)




                                 
     
           Three Months Ended                                                      % Change


                    November 2,                               August 3,                                November 3,          YoY             QoQ
                           2019                       2019                                      2018

                                                                                                                                   ---

     Networking (1)             $
     329,962                                        $
              329,605                           $
     398,424      (17)

                                                                                                                                                %              %


     Storage (2)        287,708                      274,905                                             406,822                       (29)        5

                                                                                                                                       %        %

                                                                                                                                                     ---

        Total Core      617,670                      604,510                                             805,246                       (23)        2

                                                                                                                                       %        %


     Other (3)           44,800                       52,058                                              45,805                        (2)     (14)

                                                                                                                                       %        %



     Total Revenue              $
     662,470                                        $
              656,568                           $
     851,051      (22)       1

                                                                                                                                                %        %

                                                                                                                                                             ===


                         
              
     Three Months Ended


                 % of
                  Total November 2,                      August 3,      November 3,
                               2019                            2019              2018



      Networking                 50                                  50                  47
      (1)                        %                                  %                  %


      Storage                    43                                  42                  48
      (2)                        %                                  %                  %



        Total                    93                                  92                  95
         Core                     %                                  %                  %


     Other                        7                                   8                   5
      (3)                        %                                  %                  %



     Total                      100                                 100
      Revenue                     %                                                     %
                                                                     %                100




     
     (1) 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 Connectivity products.  In
              addition, this grouping includes a
              few legacy product lines in which we
              no longer invest, but will generate
              revenue for several years.



     
     (2) Storage products are comprised
              primarily of HDD and SSD Controllers,
              Fibre Channel Adapters and Data
              Center Storage Solutions.



     
     (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