(a)

The Company paid $750.0 million to Carnegie Mellon University in connection with a litigation settlement agreement reached in February 2016.

Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP
(Unaudited)
(In thousands, except per share amounts)

Three Months Ended

April 29,
2017

January 28,
2017

April 30,
2016

GAAP gross profit:

$

348,631

$

327,517

$

275,029

Special items:

Share-based compensation

1,426

1,641

1,784

Non-GAAP gross profit

$

350,057

$

329,158

$

276,813

GAAP gross margin

60.2

%

57.3

%

53.0

%

Non-GAAP gross margin

60.4

%

57.6

%

53.3

%

Total GAAP operating expenses

$

249,743

$

339,650

$

295,145

Special items:

Share-based compensation

(20,941)

(20,764)

(20,396)

Restructuring related charges (a)

(1,505)

(98,860)

(4,441)

Amortization of and write-off acquired intangible assets

(1,071)

(1,480)

(2,298)

Other operating expenses (b)

(2,304)

(315)

(1,242)

Total special items

(25,821)

(121,419)

(28,377)

Total non-GAAP operating expenses

$

223,922

$

218,231

$

266,768

GAAP operating margin

17.1

%

(2.1)%

(3.9)%

Share-based compensation

3.9

%

3.9

%

4.3

%

Restructuring related charges (a)

0.3

%

17.3

%

0.9

%

Amortization of and write-off acquired intangible assets

0.2

%

0.3

%

0.4

%

Other operating expenses (b)

0.3

%

—

%

0.2

%

Non-GAAP operating margin

21.8

%

19.4

%

1.9

%

GAAP net income (loss)

$

106,621

$

(80,091)

$

(22,679)

        Loss (income) from discontinued operations, net of tax

(9,651)

3,214

9,408

GAAP net income (loss) from continuing operations

96,970

(76,877)

(13,271)

Special items:

Share-based compensation

22,367

22,405

22,180

Restructuring related charges (a)

1,505

98,860

4,441

Amortization of and write-off acquired intangible assets

1,071

1,480

2,298

Other operating expenses (b)

2,304

315

1,242

Pre-tax total special items

27,247

123,060

30,161

Non-GAAP income before income taxes

124,217

46,183

16,890

        Other income tax effects and adjustments (c)

72

67,989

(1,071)

Non-GAAP net income from continuing operations

$

124,289

$

114,172

$

15,819

Weighted average shares — basic

503,790

507,834

508,794

Weighted average shares — diluted

517,592

507,834

508,794

Non-GAAP weighted average shares — diluted (d)

523,154

528,141

522,363

GAAP diluted net income (loss) per share from continuing operations

$

0.19

$

(0.15)

$

(0.03)

Non-GAAP diluted net income per share from continuing operations

$

0.24

$

0.22

$

0.03

(a)

Restructuring related charges include costs that qualify under U.S. GAAP as restructuring costs and other incremental charges that are a direct result of restructuring. Examples of other incremental charges include impairment of equipment specifically identified as part of the restructuring action.

(b)

Other operating expenses in the three months ended April 29, 2017 include costs of retention bonuses offered to employees who remained through the ramp down of certain operations due to the restructuring action announced in November 2016.

(c)

Other income tax effects and adjustments in the three months ended April 29, 2017 includes adjustment to the tax provision based on a non-GAAP tax rate of 4%. Other income tax effects and adjustments in the three months ended January 28, 2017 included $68.0 million of tax expense related to restructuring actions.

(d)

Non-GAAP diluted share count excludes the impact of share-based compensation expense expected to be incurred in future periods and not yet recognized in the Company's financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.