Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP (Unaudited)

(In thousands, except per share amounts)

Three Months Ended

May 4,
 2019

February 2,
 2019

May 5,
 2018

GAAP gross profit:

$

361,428

$

322,002

$

375,693

Special items:

Share-based compensation

2,926

2,942

1,905

Amortization of acquired intangible assets

59,906

57,591

—

Other cost of goods sold (a)

450

97,598

—

Total special items

63,282

158,131

1,905

Non-GAAP gross profit

$

424,710

$

480,133

$

377,598

GAAP gross margin

54.6

%

43.2

%

62.1

%

Non-GAAP gross margin

64.1

%

64.5

%

62.5

%

Total GAAP operating expenses

$

382,554

$

375,010

$

250,614

Special items:

Share-based compensation

(55,672)

(47,638)

(21,947)

Restructuring related charges (b)

(5,682)

(12,740)

(1,567)

Amortization of acquired intangible assets

(19,834)

(21,097)

—

Other operating expenses (c)

(6,569)

(7,392)

(15,252)

Total special items

(87,757)

(88,867)

(38,766)

Total non-GAAP operating expenses

$

294,797

$

286,143

$

211,848

GAAP operating margin

(3.2)

%

(7.1)

%

20.7

%

Other cost of goods sold (a)

0.1

%

13.1

%

—

%

Share-based compensation

8.8

%

6.8

%

3.9

%

Restructuring related charges (b)

0.9

%

1.7

%

0.3

%

Amortization of acquired intangible assets

12.0

%

10.6

%

—

%

Other operating expenses (c)

1.0

%

0.9

%

2.5

%

Non-GAAP operating margin

19.6

%

26.0

%

27.4

%

GAAP interest and other income (loss), net

$

(20,051)

$

(16,340)

$

7,296

Special items:

Restructuring related items (d)

(338)

157

(1,512)

Write-off of debt issuance costs (e)

458

782

—

Gain on sale of intellectual property

—

(3,500)

—

Total special items

120

(2,561)

(1,512)

Total non-GAAP interest and other income (loss), net

$

(19,931)

$

(18,901)

$

5,784

GAAP net income (loss)

$

(48,450)

$

(260,698)

$

128,612

Special items:

Other cost of goods sold (a)

450

97,598

—

Share-based compensation

58,598

50,580

23,852

Restructuring related charges in operating expenses (b)

5,682

12,740

1,567

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

(338)

157

(1,512)

Amortization of acquired intangible assets

79,740

78,688

—

Gain on sale of intellectual property

—

(3,500)

—

Write-off of debt issuance costs (e)

458

782

—

Other operating expenses (c)

6,569

7,392

15,252

Pre-tax total special items

151,159

244,437

39,159

Other income tax effects and adjustments (f)

2,324

184,348

(3,098)

Non-GAAP net income

$

105,033

$

168,087

$

164,673

Weighted average shares — basic

658,963

657,835

497,335

Weighted average shares — diluted

658,963

657,835

508,716

GAAP diluted net income (loss) per share

$

(0.07)

$

(0.40)

$

0.25

Non-GAAP diluted net income per share (g)

$

0.16

$

0.25

$

0.32

(a)

Other costs of goods sold for the quarter ended May 4, 2019 includes charges for legal claim settlement. Other costs of goods sold for the quarter ended February 2, 2019 includes amortization of the Cavium inventory fair value step up and charges for past intellectual property licensing matters.

(b)

Restructuring related charges include employee severance, facilities related costs, and impairment of equipment and other assets. Restructuring related charges in the three months ended February 2, 2019 include gain on sale of a building that was a direct result of restructuring.

(c)

Other operating expenses include Cavium and Aquantia 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 during the three months ended May 4, 2019 and February 2, 2019.

(f)

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 May 4, 2019 and based on a non-GAAP income tax rate of 4% for the three months ended February 2, 2019 and three months ended May 5, 2018.

(g)

Non-GAAP diluted net income per share for the three months ended May 4, 2019 and February 2, 2019 was calculated by dividing non-GAAP net income by weighted average shares outstanding (diluted) of 671,048 shares and 663,580 shares, respectively, due to the non-GAAP net income reported in the respective period.