EX-99.1 2 d840367dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Marvell Technology Group LTD.

Unaudited Pro Forma Condensed Consolidated Financial Statements

On May 29, 2019, the Company announced its intent to sell its Wi-Fi connectivity business to NXP USA, Inc. for $1.76 billion in cash. At this time, the Company determined that the Wi-Fi Connectivity business met the held for sale criteria, as prescribed by FASB ASC 360-10-45-9, but did not meet the criteria to qualify as a discontinued operation. As such, the assets and liabilities of the Wi-Fi Connectivity business were presented as "Assets held for sale" and "Liabilities held for sale" in the Company's condensed consolidated balance sheet as of November 2, 2019, as filed within the Form 10-Q filed with the SEC on December 4, 2019.

On December 6, 2019, the Company completed the disposition. The disposition constituted a significant disposition for purposes of Item 2.01 of Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X.

The accompanying unaudited pro forma condensed consolidated balance sheet as of November 2, 2019, gives effect to the disposition as if the transaction occurred on November 2, 2019. The accompanying unaudited condensed consolidated statements of income for the year ended February 2, 2019 and for the nine months ended November 2, 2019, give effect to the disposition as if the transaction had occurred on February 4, 2018. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K.

The unaudited pro forma financial information is based on financial statements prepared in accordance with U.S. generally accepted accounting principles, which are subject to change and interpretation. The unaudited pro forma condensed consolidated financial statements were based on and derived from our historical consolidated financial statements, adjusted for those amounts which were determined to be directly attributable to the disposition, factually supportable, and with respect to the unaudited pro forma condensed consolidated statements of income, expected to have a continuing impact on our consolidated results. Actual adjustments, however, may differ materially from the information presented. In addition, the unaudited pro forma financial information is based upon available information and assumptions that management considers to be reasonable, and such assumptions have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the SEC. The unaudited pro forma financial information is not necessarily indicative of what the financial position or income statement results would have actually been had the disposition occurred on the dates indicated. In addition, these unaudited pro forma condensed consolidated financial statements should not be considered to be indicative of our future consolidated financial performance and income statement results.

The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with the Company’s historical audited consolidated financial statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for its fiscal year ended February 2, 2019, and Quarterly Report on Form 10-Q as of and for the nine months ended November 2, 2019.

Marvell Technology Group LTD.

Pro Forma Condensed Consolidated Balance Sheet

(in thousands)

(unaudited)

     November 2, 2019  
     Historical
Results		      Pro Forma
Adjustments		     Pro Forma
Results		  
Assets      (a)       

Current assets:

        

Cash and cash equivalents

    $ 438,369      $ 1,672,222  (e)    $ 2,110,591  

Accounts receivable, net

      495,216        —         495,216  

Inventories

      308,299        —         308,299  

Prepaid expenses and other current assets

      43,789        —         43,789  

Assets held for sale

      600,893        (600,893 )(c)      —    
  

 

 

     

 

 

    

 

 

  

Total current assets

      1,886,566        1,071,329       2,957,895  

Property and equipment, net

      316,214        —         316,214  

Goodwill

      5,161,312        41,263  (g)      5,202,575  

Acquired intangible assets, net

      2,500,215        —         2,500,215  

Other non-current assets

      438,955        —         438,955  
  

 

 

     

 

 

    

 

 

  

Total assets

    $ 10,303,262      $ 1,112,592     $ 11,415,854  
  

 

 

     

 

 

    

 

 

  
Liabilities and Shareholders’ Equity        

Current liabilities:

        

Accounts payable

    $ 212,955      $ —       $ 212,955  

Accrued liabilities

      305,827        —         305,827  

Accrued employee compensation

      130,062        —         130,062  

Liabilities held for sale

      5,610        (5,610 )(c)      —    
  

 

 

     

 

 

    

 

 

  

Total current liabilities

      654,454        (5,610 )      648,844  

Long-term debt

      2,036,441        —         2,036,441  

Non-current income taxes payable

      48,136        —         48,136  

Deferred tax liabilities

      214,492        —         214,492  

Other non-current liabilities

      183,921        —         183,921  
  

 

 

     

 

 

    

 

 

  

Total liabilities

      3,137,444        (5,610 )      3,131,834  

Total shareholders’ equity

      7,165,818        1,118,202  (f)      8,284,020  
  

 

 

     

 

 

    

 

 

  

Total liabilities and shareholders’ equity

    $ 10,303,262      $ 1,112,592     $ 11,415,854  
  

 

 

     

 

 

    

 

 

  

Marvell Technology Group LTD.

Pro Forma Condensed Consolidated Statement of Income

(in thousands, except per share amounts)

(unaudited)

 

     Nine Months Ended November 2, 2019  
     Historical
Results		     Pro Forma
Adjustments		     Pro Forma
Results		  
     (a)     (d)        

Net revenue

    $ 1,981,490     $ (214,840 )    $ 1,766,650  

Cost of goods sold

      929,293       (102,951 )      826,342  
  

 

 

    

 

 

    

 

 

  

Gross profit

      1,052,197       (111,889 )      940,308  
  

 

 

    

 

 

    

 

 

  

Operating expenses:

       

Research and development

      801,002       (83,358 )      717,644  

Selling, general and administrative

      342,988       (13,208 )      329,780  

Restructuring related charges

      37,070       —         37,070  
  

 

 

    

 

 

    

 

 

  

Total operating expenses

      1,181,060       (96,566 )      1,084,494  
  

 

 

    

 

 

    

 

 

  

Operating loss

      (128,863 )      (15,323 )      (144,186 ) 

Interest income

      3,437       —         3,437  

Interest expense

      (62,975 )      —         (62,975 ) 

Other loss, net

      (1,624 )      —         (1,624 ) 
  

 

 

    

 

 

    

 

 

  

Interest and other loss, net

      (61,162 )      —         (61,162 ) 
  

 

 

    

 

 

    

 

 

  

Loss before income taxes

      (190,025 )      (15,323 )      (205,348 ) 

Provision for income taxes

      (1,743 )      (1,209 )      (2,952 ) 
  

 

 

    

 

 

    

 

 

  

Net Loss

    $ (188,282 )    $ (14,114 )    $ (202,396 ) 
  

 

 

    

 

 

    

 

 

  

Net Loss per share - Basic

    $ (0.28 )      $ (0.30 ) 
  

 

 

      

 

 

  

Net Loss per share - Diluted

    $ (0.28 )      $ (0.30 ) 
  

 

 

      

 

 

  

Weighted average shares used in the calculation of net loss per share

       

Basic

      667,184         667,184  
  

 

 

      

 

 

  

Diluted

      667,184         667,184  
  

 

 

      

 

 

  

Marvell Technology Group LTD.

Pro Forma Condensed Consolidated Statement of Income

(in thousands, except per share amounts)

(unaudited)

 

     Year Ended February 2, 2019  
     Historical
Results		     Pro Forma
Adjustments		     Pro Forma
Results		  
     (b)     (d)        

Net revenue

    $ 2,865,791     $ (307,712 )    $ 2,558,079  

Cost of goods sold

      1,407,399       (157,026 )      1,250,373  
  

 

 

    

 

 

    

 

 

  

Gross profit

      1,458,392       (150,686 )      1,307,706  
  

 

 

    

 

 

    

 

 

  

Operating expenses:

       

Research and development

      914,009       (113,726 )      800,283  

Selling, general and administrative

      424,360       (16,440 )      407,920  

Restructuring related charges

      76,753       —         76,753  
  

 

 

    

 

 

    

 

 

  

Total operating expenses

      1,415,122       (130,166 )      1,284,956  
  

 

 

    

 

 

    

 

 

  

Operating income

      43,270       (20,520 )      22,750  

Interest income

      11,926       —         11,926  

Interest expense

      (60,362 )      —         (60,362 ) 

Other income, net

      519       —         519  
  

 

 

    

 

 

    

 

 

  

Interest and other income, net

      (47,917 )      —         (47,917 ) 
  

 

 

    

 

 

    

 

 

  

Loss before income taxes

      (4,647 )      (20,520 )      (25,167 ) 

Provision for income taxes

      174,447       (1,844 )      172,603  
  

 

 

    

 

 

    

 

 

  

Net Loss

    $ (179,094 )    $ (18,676 )    $ (197,770 ) 
  

 

 

    

 

 

    

 

 

  

Net Loss per share - Basic

    $ (0.30 )      $ (0.33 ) 
  

 

 

      

 

 

  

Net Loss per share - Diluted

    $ (0.30 )      $ (0.33 ) 
  

 

 

      

 

 

  

Weighted average shares used in the calculation of net loss per share

       

Basic

      591,232         591,232  
  

 

 

      

 

 

  

Diluted

      591,232         591,232  
  

 

 

      

 

 

  

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements

(unaudited)

1. Pro Forma Adjustments

The following is a summary of the pro forma adjustments reflected in the unaudited pro forma condensed consolidated financial statements based on preliminary estimates, which may change as additional information is obtained:

 

(a)

Reflects the Company's condensed consolidated balance sheet and statement of income as of and for the nine months ended November 2, 2019, as contained in the financial statements presented in the Company's Quarterly Report on Form 10-Q, as filed with the SEC on December 4, 2019.

 

(b)

Reflects the Company's consolidated statement of income for the year ended February 2, 2019, as contained in the financial statements presented in the Company's Annual Report on Form 10-K, as filed with the SEC on March 28, 2019.

 

(c)

Represents the elimination of the assets and liabilities associated with the Wireless Connectivity Business as of November 2, 2019.

 

(d)

Represents the elimination of revenues and expenses associated with the Wireless Connectivity Business for the nine months ended November 2, 2019 and for the year ended February 2, 2019.

 

(e)

Represents the estimated cash received by the Company, net of closing costs and working capital adjustments.

 

(f)

Represents the estimated gain on sale, net of closing costs and working capital adjustments. As the gain is directly attributable to the sale and is not expected to have a continuing impact on the Company’s operations, it is only reflected in retained earnings on the unaudited pro forma condensed consolidated balance sheet.

 

(g)

Represents adjustment of goodwill allocation at close based on the relative fair value of the Wireless Connectivity Business.