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,
2019

August 3,
2019

November 3,
2018

November 2,
2019

November 3,
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 assets

14.0

%

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.