Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP (Unaudited)

(In thousands, except per share amounts)

Three Months Ended

Nine Months Ended

November 3,
2018

August 4,
 2018

October 28,
2017

November 3,
2018

October 28,
2017

GAAP gross profit:

$

383,587

$

377,110

$

377,769

$

1,136,390

$

1,088,458

Special items:

Share-based compensation

2,429

4,748

1,747

9,082

4,983

Amortization of acquired intangible assets

57,594

18,984

—

76,577

—

Other cost of goods sold (a)

105,841

22,933

—

128,774

3,000

Total special items

165,864

46,665

1,747

214,433

7,983

Non-GAAP gross profit

$

549,451

$

423,775

$

379,516

$

1,350,823

$

1,096,441

GAAP gross margin

45.1

%

56.7

%

61.3

%

53.6

%

60.7

%

Non-GAAP gross margin

64.6

%

63.7

%

61.6

%

63.7

%

61.1

%

Total GAAP operating expenses

$

404,097

$

385,401

$

227,873

$

1,040,112

$

712,774

Special items:

Share-based compensation

(47,811)

(68,675)

(18,892)

(138,433)

(58,762)

Restructuring related charges (b)

(27,031)

(35,415)

(3,284)

(64,013)

(8,455)

Amortization of acquired intangible assets

(21,098)

(6,955)

(1,076)

(28,053)

(3,212)

Other operating expenses (c)

(11,222)

(28,229)

(120)

(54,703)

(4,110)

Total special items

(107,162)

(139,274)

(23,372)

(285,202)

(74,539)

Total non-GAAP operating expenses

$

296,935

$

246,127

$

204,501

$

754,910

$

638,235

GAAP operating margin

(2.4)

%

(1.2)

%

24.3

%

4.5

%

20.9

%

Other cost of goods sold (a)

12.4

%

3.5

%

—

%

6.1

%

0.2

%

Share-based compensation

5.9

%

11.0

%

3.3

%

7.0

%

3.6

%

Restructuring related charges (b)

3.2

%

5.3

%

0.5

%

3.0

%

0.5

%

Amortization and write-off of acquired intangible assets

9.2

%

3.9

%

0.2

%

4.9

%

0.2

%

Other operating expenses (c)

1.4

%

4.2

%

0.1

%

2.6

%

0.1

%

Non-GAAP operating margin

29.7

%

26.7

%

28.4

%

28.1

%

25.5

%

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.