What changed in this filing

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Item 1. Financial Statements

2021-08-27 compared with 2021-06-09 · 214 added, 181 removed, 640 unchanged (38% of the section changed)

21 unchanged sentences

Accrued employee compensation 153,327 189,421

Short-term convertible debt 193,269 —

Short-term debt 41,390 199,641

Total current liabilities 1,084,433 1,077,097

Long-term convertible debt 1,146 —

Long-term debt 4,662,844 993,170

3 unchanged sentences

Stockholders’ equity:

Common shares, $ 0.002 par value

Common stock, $ 0.002 par value

Additional paid-in capital 13,090,669 6,331,013

6 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended

Three Months Ended Six Months Ended

2021 August 1,

2020 July 31,

2021 August 1,

Net revenue $ 1,075,881 $ 727,297 $ 1,908,160 $ 1,420,938

9 unchanged sentences

Interest expense ( 33,814 ) ( 15,635 ) ( 68,955 ) ( 32,465 )

Other income, net 1,223 3,754

Other income (loss), net ( 1,654 ) ( 440 ) ( 431 ) 3,314

Interest and other income (loss), net ( 35,318 ) ( 15,498 ) ( 69,014 ) ( 27,516 )

Loss before income taxes ( 301,986 ) ( 166,765 ) ( 417,993 ) ( 274,779 )

Provision (benefit) for income taxes ( 27,765 ) 5,019

Benefit for income taxes ( 25,558 ) ( 8,872 ) ( 53,323 ) ( 3,853 )

Net loss $ ( 276,428 ) $ ( 157,893 ) $ ( 364,670 ) $ ( 270,926 )

8 unchanged sentences

(In thousands)

Three Months Ended

Three Months Ended Six Months Ended

2021 August 1,

2020 July 31,

2021 August 1,

Net loss $ ( 276,428 ) $ ( 157,893 ) $ ( 364,670 ) $ ( 270,926 )

10 unchanged sentences

Balance at January 30, 2021 675,402 $ 1,350 $ 6,331,013 $ 2,103,441 $ 8,435,804

Issuance of common shares in connection with equity incentive plans 2,179 5 505 — 510

Issuance of common stock in connection with equity incentive plans 2,179 5 505 — 510

Tax withholdings related to net share settlement of restricted stock units — — ( 68,416 ) — ( 68,416 )

11 unchanged sentences

Balance at May 1, 2021 816,420 1,633 12,879,095 1,974,642 14,855,370

Issuance of common stock in connection with equity incentive plans 2,947 5 40,168 — 40,173

Tax withholdings related to net share settlement of restricted stock units — — ( 41,928 ) — ( 41,928 )

Share-based compensation — — 122,322 — 122,322

Common stock issued to Inphi common stockholders 145 — 6,625 — 6,625

Conversion of convertible notes to common stock 3,865 8 84,387 — 84,395

Cash dividends declared and paid ($ 0.06 per share)

— — — ( 49,332 ) ( 49,332 )

Net loss — — — ( 276,428 ) ( 276,428 )

Balance at July 31, 2021 823,377 $ 1,646 $ 13,090,669 $ 1,648,882 $ 14,741,197

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss)

1 unchanged sentence

Balance at February 1, 2020 663,481 $ 1,328 $ 6,135,939 $ — $ 2,541,313 $ 8,678,580

Issuance of common shares in connection with equity incentive plans 2,993 5 5,466 — — 5,471

Issuance of common stock in connection with equity incentive plans 2,993 5 5,466 — — 5,471

Tax withholdings related to net share settlement of restricted stock units — — ( 31,498 ) — — ( 31,498 )

6 unchanged sentences

Balance at May 2, 2020 665,223 $ 1,330 $ 6,144,907 $ 868 $ 2,388,517 $ 8,535,622

Issuance of common stock in connection with equity incentive plans 4,794 10 42,763 — — 42,773

Tax withholdings related to net share settlement of restricted stock units — — ( 25,212 ) — — ( 25,212 )

Share-based compensation — — 62,784 — — 62,784

Cash dividends declared and paid ($ 0.06 per share)

— — — — ( 40,119 ) ( 40,119 )

Net loss — — — — ( 157,893 ) ( 157,893 )

Other comprehensive loss — — — ( 418 ) — ( 418 )

Balance at August 1, 2020 670,017 $ 1,340 $ 6,225,242 $ 450 $ 2,190,505 $ 8,417,537

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

2021 August 1,

Cash flows from operating activities:

5 unchanged sentences

Amortization of inventory fair value adjustment associated with acquisitions 169,560 17,284

Restructuring related impairment charges 4,156 117,546

Other expense, net 61,870 14,910

7 unchanged sentences

Accrued liabilities and other non-current liabilities ( 7,765 ) 21,528

Net cash provided by (used in) operating activities ( 13,727 ) 175,628

Net cash provided by operating activities 208,380 401,458

Cash flows from investing activities:

25 unchanged sentences

The unaudited condensed consolidated financial statements of Marvell Technology, Inc.

(“MTI”), a Delaware corporation, and its wholly owned subsidiaries (the “Company”), as of and for the three months ended May 1, 2021, have been prepared as required by the U.S.

(“MTI”), a Delaware corporation, and its wholly owned subsidiaries (the “Company”), as of and for the three and six months ended July 31, 2021, have been prepared as required by the U.S.

Securities and Exchange Commission (the “SEC”).

14 unchanged sentences

Inphi is a global leader in high-speed data movement enabled by optical interconnects.

The unaudited condensed consolidated financial statements include the operating results of Inphi for the period from the date of acquisition to the Company’s first quarter ended May 1, 2021.

See “Note 3 - Business Combinations”, “Note 4 - Goodwill and Acquired Intangible Assets, Net” and “Note 5 - Debt” for more information.

In conjunction with the acquisition transaction, Marvell and Inphi became wholly owned subsidiaries of the new parent company, MTI, on April 20, 2021.

The unaudited condensed consolidated financial statements include the operating results of Inphi for the period from the date of acquisition through the Company’s second quarter ended July 31, 2021.

See “Note 3 - Business Combination” for more information.

In conjunction with the acquisition transaction, Marvell Technology Group Ltd and Inphi became wholly owned subsidiaries of the new parent company, MTI, on April 20, 2021.

The parent company is domiciled in and subject to taxation in the United States.

See “Note 11 - Income Taxes” for more information.

Subsequent to quarter end, on August 3, 2021, the Company announced its intent to acquire Innovium, Inc.

(“Innovium”), a leading provider of networking solutions for cloud and edge data centers, in an all-stock transaction.

The estimated acquisition price of $ 1.1 billion consists of approximately 19.05 million shares of the Company's common stock and is based on the Company's 10-day volume weighted average price as of July 30, 2021.

The acquisition price includes Innovium cash and exercise proceeds expected at closing of approximately $ 145 million, resulting in an estimated net cost to the Company of $ 955 million.

The transaction is expected to close by the end of calendar year 2021, subject to the satisfaction of customary closing conditions, including approval by Innovium’s stockholders and applicable regulatory approvals.

Use of Estimates

5 unchanged sentences

As events continue to evolve and additional information becomes available, these estimates may change materially in future periods.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Recent Accounting Pronouncements

4 unchanged sentences

The new standard was adopted by the Company on January 31, 2021 on a prospective basis and did not have a material effect on the Company’s consolidated financial statements.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Accounting Pronouncements Not Yet Effective

4 unchanged sentences

The Company is evaluating the impact that this new standard will have on the Company’s consolidated financial statements.

Business Combinations

Business Combination

On April 20, 2021, the Company completed the acquisition of Inphi (the “Inphi acquisition”).

4 unchanged sentences

See “Note 5 - Debt” for additional information.

The factors contributing to the recognition of goodwill were based upon the Company's conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition.

Goodwill recorded for the Inphi acquisition is not expected to be deductible for tax purposes.

The following table summarized the total merger consideration (in thousands):

8 unchanged sentences

Any such revisions or changes may be material.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

In accordance with U.S.

6 unchanged sentences

See “Note 4 - Goodwill and Acquired Intangible Assets, Net” for additional information.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The purchase price allocation is as follows (in thousands):

Previously Reported

(Provisional) Measurement Period Adjustment July 31, 2021

Cash and cash equivalents $ 72,251 $ — $ 72,251

11 unchanged sentences

Total merger consideration $ 9,917,529 $ — $ 9,917,529

During the three months ended May 1, 2021, the Company incurred $ 45.8 million in acquisition related costs which were recorded in selling, general and administrative expense in the unaudited condensed consolidated statements of operations.

The Company also incurred $ 39.8 million of debt financing costs.

As of May 1, 2021, $ 2.5 million is included in short-term debt, and $ 37.3 million is included in long-term debt on the accompanying unaudited condensed consolidated balance sheets.

The provisional amounts presented in the table above pertained to the preliminary purchase price allocation reported in the Company’s Form 10-Q for the first quarter ended May 1, 2021.

The measurement period adjustment was associated with deferred tax liabilities on certain purchased intangible assets.

The Company does not believe that the measurement period adjustment had a material impact on its consolidated statements of operations, balance sheets, or cash flows in any periods previously reported.

The Company incurred $ 5.0 million and $ 50.8 million in acquisition related costs which were recorded in selling, general and administrative expense in the unaudited condensed consolidated statements of operations for the three and six months ended July 31, 2021, respectively.

The Company also incurred $ 39.8 million of aggregate debt financing costs.

As of July 31, 2021, $ 2.5 million is included in short-term debt, and $ 35.1 million is included in long-term debt on the accompanying unaudited condensed consolidated balance sheets.

See “Note 5 - Debt” for additional information.

Additionally, the Company incurred $ 8.2 million of equity issuance costs, which were recorded in additional paid-in capital in the unaudited condensed consolidated balance sheets.

Since the date of the acquisition, Inphi contributed $ 21.8 million of the consolidated net revenue for the three months ended May 1, 2021.

Inphi net loss incurred in the period ended May 1, 2021 was $ 13.9 million, which included restructuring costs of $ 9.8 million.

Post acquisition revenue and income (loss) on a standalone basis is impracticable to determine as the Company integrated Inphi into its existing systems and operations in the second quarter ended July 31, 2021.

Unaudited Supplemental Pro Forma Information

1 unchanged sentence

The pro forma adjustments are based upon currently available information and certain assumptions the Company believes are reasonable under the circumstances.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The following unaudited supplemental pro forma information presents the combined results of operations for each of the periods presented, as if Inphi had been acquired as of the beginning of fiscal year 2021.

The unaudited supplemental pro forma information includes adjustments to amortization and depreciation for acquired intangible assets and property and equipment, adjustments to share-based compensation expense, the purchase accounting effect on inventories acquired, interest expense, and transaction costs.

For fiscal year 2021, non-recurring pro forma adjustments directly attributable to the Inphi acquisition included in the pro forma information presented below include (i) share-based compensation expense of $ 43.8 million, (ii) the purchase accounting effect of inventories acquired of $ 113.5 million, (iii) interest expense of $ 11.4 million and (iv) transaction costs of $ 64.0 million.

For fiscal year 2021, non-recurring pro forma adjustments directly attributable to the Inphi acquisition in the pro forma information presented below included (i) share-based compensation expense of $ 43.8 million, (ii) the purchase accounting effect of inventories acquired of $ 187.2 million, (iii) interest expense of $ 11.4 million, and (iv) transaction costs of $ 69.0 million.

The unaudited supplemental pro forma information presented below is for informational purposes only and is not necessarily indicative of our unaudited condensed consolidated results of operations of the combined business had the Inphi acquisition actually occurred at the beginning of fiscal year 2021 or of the results of our future operations of the combined business.

The unaudited supplemental pro forma financial information for the periods presented is as follows (in thousands):

Three Months Ended

Six Months Ended

2021 August 1,

Pro forma net revenue $ 2,058,224 $ 1,735,660

Pro forma net loss $ ( 191,740 ) $ ( 918,576 )

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Goodwill and Acquired Intangible Assets, Net

Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired in a business combination.

The carrying value of goodwill as of May 1, 2021 and January 30, 2021 is $ 11.0 billion and $ 5.3 billion respectively.

See “Note 3 - Business Combinations” for discussion of acquisitions and changes to the carrying value of goodwill.

The carrying value of goodwill as of July 31, 2021 and January 30, 2021 is $ 11.0 billion and $ 5.3 billion respectively.

See “Note 3 - Business Combination” for discussion of acquisitions and changes to the carrying value of goodwill.

Acquired Intangible Assets, Net

During the first quarter ended May 1, 2021, the Company acquired $ 4.4 billion of intangible assets associated with the Inphi acquisition.

The valuation of these Inphi identifiable intangible assets and their estimated useful lives are as follows (in thousands, except for weighted-average useful life):

In connection with the Inphi acquisition on April 20, 2021, the Company acquired $ 4.4 billion of intangible assets as follows (in thousands, except for weighted-average useful life as of acquisition date):

Preliminary Estimated Asset Fair Value Weighted-Average Useful Life (Years)

4 unchanged sentences

IPR&D 820,000 n/a

In connection with the Cavium acquisition on July 6, 2018, the Aquantia acquisition on September 19, 2019, and the Avera acquisition on November 5, 2019, the Company acquired $ 3.3 billion of intangible assets.

As of May 1, 2021 and January 30, 2021, net carrying amounts are as follows (in thousands, except for weighted-average remaining amortization period):

In connection with the Cavium acquisition on July 6, 2018, the Aquantia acquisition on September 19, 2019, and the Avera acquisition on November 5, 2019, the Company acquired a total of $ 3.3 billion of intangible assets.

As of July 31, 2021 and January 30, 2021, net carrying amounts are as follows (in thousands, except for weighted-average remaining amortization period):

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

July 31, 2021

Gross Carrying Amounts Accumulated Amortization Net Carrying Amounts Weighted-Average Remaining Amortization Period (Years)

6 unchanged sentences

Total acquired intangible assets $ 7,658,000 $ ( 1,372,612 ) $ 6,285,388

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

January 30, 2021

10 unchanged sentences

In the event the IPR&D is abandoned, the related assets will be written off.

Amortization expense for acquired intangible assets for the three months ended May 1, 2021 and May 2, 2020 was $ 128.6 million and $ 112.9 million, respectively.

The following table presents the estimated future amortization expense of acquired amortizable intangible assets as of May 1, 2021 (in thousands):

Amortization expense for acquired intangible assets for the three and six months ended July 31, 2021 was $ 276.7 million and $ 405.3 million, respectively.

Amortization expense for acquired intangible assets for the three and six months ended August 1, 2020 was $ 111.6 million and $ 224.5 million, respectively.

The following table presents the estimated future amortization expense of acquired amortizable intangible assets as of July 31, 2021 (in thousands):

Fiscal Year Amount

4 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The following table summarizes the Company’s outstanding debt at May 1, 2021 and January 30, 2021 (in thousands):

The following table summarizes the Company’s outstanding debt at July 31, 2021 and January 30, 2021 (in thousands):

2021 January 30,

4 unchanged sentences

Term Loan Total 1,750,000 200,000

2020 Revolving Credit Facility — —

Revolving Credit Facility Total — —

4.200% MTG 2023 Senior Notes 500,000 500,000

4.875% MTG 2028 Senior Notes 500,000 500,000

4.200% MTG/MTI 2023 Senior Notes 499,952 500,000

4.875% MTG/MTI 2028 Senior Notes 499,915 500,000

1.650% 2026 Senior Notes 500,000 —

11 unchanged sentences

Non-current portion $ 4,662,844 $ 993,170

(1) As of May 1, 2021, the current portion of outstanding debt includes the 2020 Term Loan - 5 Year Tranche, which is due within twelve months.

(1) As of July 31, 2021, the current portion of outstanding debt includes the 2020 Term Loan - 5 Year Tranche, which is due within twelve months.

The Company intends to repay the amount with operating cash flow.

(2) As of May 1, 2021, as the Inphi 2021 Convertible Notes are currently convertible, the Company has classified $ 0.7 million, which is the cash portion the Company would be required to pay upon conversion, as current.

As of May 1, 2021, as the Inphi 2025 Convertible Notes are currently redeemable, the Company has classified $ 192.5 million, which is the cash redemption price the Company would be required to pay if noteholders accepted the fundamental change repurchase offer, as current.

(2) As of July 31, 2021, as the Inphi 2021 Convertible Notes are currently convertible, the Company has classified $ 0.1 million, which is the cash portion the Company would be required to pay upon conversion, as current.

The Company intends to repay the amount with operating cash flow.

On April 20, 2021, the Company completed its acquisition of Inphi.

As part of the acquisition, the Company assumed $ 15.7 million principal amount of Inphi’s 0.75 % convertible senior notes due 2021 (the “Inphi 2021 Convertible Notes”) and $ 506.0 million principal amount of Inphi’s 0.75 % convertible senior notes due 2025 (the “Inphi 2025 Convertible Notes”, and together with the 2021 Notes, the “Inphi Convertible Notes”) See “Note 3 - Business Combinations” for more information.

In connection with the acquisition, the Company executed a series of financing arrangements from December 2020 through April 2021 as summarized below.

See “Note 3 - Business Combination” for more information.

In connection with the acquisition, the Company entered into a series of financing arrangements from December 2020 through April 2021 as summarized below.

In April 2021, the Company also terminated a $ 2.5 billion bridge loan commitment.

1 unchanged sentence

The bridge loan was never drawn upon.

The Company recognized a write-off of $ 11.4 million in capitalized debt issuance cost related to the termination of the bridge loan commitment during the quarter ended May 1, 2021.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The Company recognized a write-off of $ 11.4 million in capitalized debt issuance costs related to the termination of the bridge loan commitment during the quarter ended May 1, 2021.

In December 2020, the Company executed a debt agreement to obtain an $ 875.0 million 3-year term loan and an $ 875.0 million 5-year term loan.

1 unchanged sentence

On April 12, 2021, the Company completed a debt offering and issued (i) $ 500.0 million of Senior Notes with a 5 year term due in 2026, (ii) $ 750.0 million of Senior Notes with a 7 year term due in 2028, and (iii) $ 750.0 million of Senior Notes with a 10 year term due in 2031.

In addition, in conjunction with the U.S.

domiciliation, the Company exchanged certain of its existing senior notes due in 2023 and 2028 that were previously issued by the Company’s former Bermuda-based parent company with like notes that are now issued by the Company’s new parent company domiciled in Delaware.

On May 4, 2021, in conjunction with the U.S.

domiciliation, the Company exchanged certain existing senior notes due in 2023 and 2028 that were previously issued by the Bermuda-domiciled Marvell Technology Group Ltd.

with like notes that are now issued by the Delaware-domiciled Marvell Technology, Inc.

Below is further discussion of the terms of the various debt agreements.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

2020 Term Loan Agreement

On December 7, 2020, the Company entered into a term loan credit agreement with a lending syndicate led by JPMorgan Chase Bank, N.A (the “2020 Term Loan Agreement”) in order to finance the expected merger with Inphi.

The 2020 Term Loan Agreement provided for borrowings of up to $ 1.75 billion consisting of:

The 2020 Term Loan Agreement provided for borrowings of $ 1.75 billion consisting of:

(i) $ 875.0 million loan with a three-year term from the funding date (the “3-Year Tranche Loan”) and (ii) $ 875.0 million loan with a five-year term from the funding date (the “5-Year Tranche Loan” and, together with the 3-Year Tranche Loan, the “2020 Term Loans”).

The 3-Year Tranche Loan has a stated floating interest rate which equates to reserve-adjusted LIBOR + 125 bps.

The effective interest rate for the 3-Year Tranche Loan was 1.687 % as of July 31, 2021.

The 5-Year Tranche Loan has a stated floating interest rate which equates to reserve-adjusted LIBOR + 137.5 bps.

The effective interest rate for the 5-Year Tranche Loan was 1.798 % as of July 31, 2021.

The 3-Year Tranche Loan does not require any scheduled principal payments prior to final maturity but do permit the Company to make early principal payments without premium or penalty.

The 5-year Tranche Loan requires scheduled principal payments at the end of each fiscal quarter equal to (i) 1.25 % of the aggregate principal amount on the term funding date for the first four full fiscal quarters following the term loan funding date, (ii) 2.50 % of the aggregate principal amount on the term funding date for the fifth through twelfth full fiscal quarters following the term loan funding date, (iii) 3.75 % of the aggregate principal amount on the term funding date for each fiscal quarter following the twelfth full fiscal quarter following the term loan funding date.

The 5-year Tranche Loan requires scheduled principal payments at the end of each fiscal quarter equal to (i) 1.25 % of the aggregate principal amount on the term funding date for the first four full fiscal quarters following the term loan funding date, (ii) 2.50 % of the aggregate principal amount on the term funding date for the fifth through twelfth full fiscal quarters following the term loan funding date, and (iii) 3.75 % of the aggregate principal amount on the term funding date for each fiscal quarter following the twelfth full fiscal quarter following the term loan funding date.

The 2020 Term Loan Agreement requires that the Company and its subsidiaries comply with covenants relating to customary matters, including with respect to creating or permitting certain liens, entering into sale and leaseback transactions, and consolidating, merging, liquidating or dissolving.

It also prohibits subsidiaries of the Company from incurring additional indebtedness, subject to certain exceptions, and requires that the Company maintain a leverage ratio financial covenant as of the end of any fiscal quarter.

The term loan was drawn in full in April 2021 to fund the purchase price of the Inphi acquisition.

As of May 1, 2021, the Company has $ 1.75 billion Term Loan borrowings outstanding, and is in compliance with its debt covenants.

As of July 31, 2021, the Company has $ 1.75 billion Term Loan borrowings outstanding, and is in compliance with its debt covenants.

2020 Revolving Credit Facility

4 unchanged sentences

An unused commitment fee is payable quarterly based on unused balances at a rate that is based on the ratings of the Company’s senior unsecured long-term indebtedness.

This annual rate was 0.175 % at May 1, 2021.

As of May 1, 2021, the 2020 Revolving Credit Facility is undrawn.

Subsequent to quarter end, on May 4, 2021, the Company drew down $ 75.0 million on the 2020 Revolving Credit Facility.

The Company intends to repay prior to the end of the second quarter of fiscal year 2022.

This annual rate was 0.175 % at July 31, 2021.

On May 4, 2021, the Company drew down $ 75.0 million on the 2020 Revolving Credit Facility.

On July 6, 2021, the Company repaid the outstanding balance of the 2020 Revolving Credit Facility in full.

As of July 31, 2021, the 2020 Revolving Credit Facility is undrawn.

The 2020 Revolving Credit Facility requires that the Company and its subsidiaries comply with covenants relating to customary matters.

3 unchanged sentences

To the extent LIBOR ceases to exist, the 2020 Term Loans and 2020 Revolving Credit Facility agreements contemplate an alternative benchmark rate without the need for any amendment thereto.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

2026, 2028, and 2031 Senior Unsecured Notes

1 unchanged sentence

The Senior Notes were sold pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), to purchasers in the United States and pursuant to Regulation S under the Securities Act to purchasers outside of the United States.

The 2026 Senior Notes mature on April 15, 2026, the 2028 Senior Notes matures on April 15, 2028, and the 2031 Senior Notes mature on April 15, 2031.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The 2026 Senior Notes mature on April 15, 2026, the 2028 Senior Notes mature on April 15, 2028, and the 2031 Senior Notes mature on April 15, 2031.

The stated and effective interest rates for the 2026 Senior Notes are 1.650 % and 1.839 %, respectively.

4 unchanged sentences

The indenture governing the Senior Notes also contains certain limited covenants restricting the Company’s ability to incur certain liens, enter into certain sale and leaseback transactions and merge or consolidate with any other entity or convey, transfer or lease all or substantially all of the Company’s properties or assets to another person, which, in each case, are subject to certain qualifications and exceptions.

As of May 1, 2021, the Company has $ 2.0 billion Senior Notes borrowings outstanding.

As of July 31, 2021, the Company has $ 2.0 billion Senior Notes borrowings outstanding.

2023 and 2028 Senior Unsecured Notes

On June 22, 2018, the Company’s Bermuda-based parent company Marvell Technology Group, Inc.

On June 22, 2018, the Company’s Bermuda-based parent company Marvell Technology Group, Ltd.

(“MTG”) completed a public offering of (i) $ 500.0 million aggregate principal amount of the Company’s 4.200 % Senior Notes due 2023 (the “MTG 2023 Notes”) and (ii) $ 500.0 million aggregate principal amount of the Company’s 4.875 % Senior Notes due 2028 (the “MTG 2028 Notes” and, together with the 2023 Notes, the “MTG Senior Notes”).

The proceeds of the MTG Senior Notes were used to fund a portion of the cash consideration for the Cavium acquisition, repay Cavium’s debt, and pay transaction expenses in connection with the Cavium acquisition.

In April 2021, in alignment with the Company’s U.S.

In April 2021, in conjunction with the Company’s U.S.

domiciliation, the Company commenced Exchange Offers on April 19, 2021 for the outstanding $ 1.0 billion in aggregate principal amount of MTG Senior Notes outstanding in exchange for corresponding senior notes to be issued by the Company’s new U.S.

2 unchanged sentences

Each new series of MTI Senior Notes will have the same interest rate, maturity date, redemption terms and interest payment dates and will be subject to substantially similar covenants as the corresponding series of the MTG Senior Notes for which they are being offered in exchange.

The settlement of the Exchange Offers occurred on May 4, 2021 with $ 433.9 million aggregate principal amount of the MTG 2023 Notes and $ 479.5 million aggregate principal amount of the MTG 2028 Notes exchanged.

The exchange was accounted for as a debt modification in accordance with applicable accounting guidance.

The MTI 2023 Notes mature on June 22, 2023 and the MTI 2028 Notes mature on June 22, 2028.

4 unchanged sentences

The indenture governing the MTI Senior Notes also contains certain limited covenants restricting the Company’s ability to incur certain liens, enter into certain sale and leaseback transactions and merge or consolidate with any other entity or convey, transfer or lease all or substantially all of the Company’s properties or assets to another person, which, in each case, are subject to certain qualifications and exceptions.

As of May 1, 2021, the Company has $ 1.0 billion MTG Senior Notes borrowings outstanding.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The settlement of the Exchange Offers occurred subsequent to quarter end on May 4, 2021.

$ 433.9 million aggregate principal amount of the MTG 2023 Notes and $ 479.5 million aggregate principal amount of the MTG 2028 Notes were exchanged.

The exchange will be accounted for as a debt modification in accordance with applicable accounting guidance.

The MTG 2023 Notes mature on June 22, 2023 and the MTG 2028 Notes mature on June 22, 2028.

The stated and effective interest rates for the MTG 2023 Notes are 4.200 % and 4.360 %, respectively.

The stated and effective interest rates for the MTI 2028 Notes are 4.875 % and 4.940 %, respectively.

The Company may redeem the MTG Senior Notes, in whole or in part, at any time prior to their maturity at the redemption prices set forth in MTG Senior Notes.

In addition, upon the occurrence of a change of control repurchase event (which involves the occurrence of both a change of control and a ratings event involving the MTG Senior Notes being rated below investment grade), the Company will be required to make an offer to repurchase the MTG Senior Notes at a price equal to 101 % of the principal amount of the notes, plus accrued and unpaid interest to, but excluding, the repurchase date.

The indenture governing the MTG Senior Notes also contains certain limited covenants restricting the Company’s ability to incur certain liens, enter into certain sale and leaseback transactions and merge or consolidate with any other entity or convey, transfer or lease all or substantially all of the Company’s properties or assets to another person, which, in each case, are subject to certain qualifications and exceptions.

As of July 31, 2021, the Company has $ 1.0 billion MTG/MTI Senior Notes borrowings outstanding.

Inphi Convertible Notes

As a result of the Inphi acquisition, the Company assumed all of Inphi’s outstanding convertible notes.

Convertible debt is included in the aggregate short-term and long-term debt in the accompanying unaudited condensed consolidated balance sheet, as applicable.

Inphi 2021 Convertible Notes

12 unchanged sentences

As part of the Inphi acquisition, the Company assumed $ 15.7 million principal amount of Inphi’s 2021 Convertible Notes with a fair value of $ 48.0 million.

The Inphi acquisition constitutes a fundamental change under the Inphi 2021 Convertible Notes Indenture.

As a result, the Inphi 2021 Convertible Notes are currently convertible into Inphi conversion units of 17.7522 per $1,000 in principal amount of such notes.

The Inphi acquisition constituted a fundamental change under the Inphi 2021 Convertible Notes Indenture.

As a result, the Inphi 2021 Convertibles Notes were convertible into Inphi conversion units of 17.7522 per $1,000 in principal amount of such notes from April 20, 2021 through June 3, 2021.

Based on the terms of the Inphi merger agreement, the holders of the Inphi 2021 Convertible Notes received 41.2384 shares of the Company's common stock and $1,171.65 in cash per $1,000 in principal amount of such notes upon conversion.

The Inphi 2021 Convertible Notes are currently convertible into Inphi conversion units of 17.7508 per $1,000 in principal amount of such notes.

Based on the terms of the merger agreement, the holders of the Inphi 2021 Convertible Notes would receive 41.2351 shares of the Company’s common stock and $1,171.55 in cash per $1,000 in principal amount of such notes upon conversion.

1 unchanged sentence

A total of $ 9.6 million in aggregate principal of the Inphi 2021 Convertible Notes was settled pursuant to the Exchange Agreements (discussed below).

Between April 20 and May 1, 2021, $ 5.5 million in aggregate principal of the Inphi 2021 Convertible Notes was converted into 0.2 million shares of the Company’s common stock and $ 6.4 million in cash pursuant to the contractual terms of the Inphi 2021 Convertible Notes Indenture.

Between April 20 and July 31, 2021, $ 6.0 million in aggregate principal of the Inphi 2021 Convertible Notes was converted into 0.2 million shares of the Company’s common stock and $ 7.0 million in cash pursuant to the contractual terms of the Inphi 2021 Convertible Notes Indenture.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Inphi 2025 Convertible Notes

3 unchanged sentences

Interest on the Inphi 2025 Convertible Notes is payable on April 15 and October 15 of each year.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Under the 2025 Notes Indenture, the Inphi 2025 Convertible Notes are convertible at the option of the holders at any time, prior to the close of business on the business day immediately preceding October 15, 2024, only under the following circumstances:

Under the Inphi 2025 Notes Indenture, the Inphi 2025 Convertible Notes are convertible at the option of the holders at any time, prior to the close of business on the business day immediately preceding October 15, 2024, only under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price for the Inphi 2025 Notes on each applicable trading day;

3 unchanged sentences

On or after October 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Inphi 2025 Convertible Notes at any time, regardless of the foregoing circumstances.

The Company may redeem for cash all or any portion of the Inphi 2025 Convertible Notes, at its option, on or after April 20, 2023 if the last reported sale price of the common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Inphi 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Upon the occurrence of certain fundamental changes, the holders of the Inphi 2025 Convertible Notes may require the Company to repurchase all or a portion of the Inphi 2025 Convertible Notes for cash at a price equal to 100 % of the principal amount of the Inphi 2025 Convertible Notes, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

3 unchanged sentences

As part of the Inphi acquisition, the Company assumed $ 506.0 million in principal of Inphi 2025 Convertible Notes with a fair value of $ 750.2 million.

The Inphi acquisition constitutes a fundamental change under the Inphi 2025 Convertible Notes Indenture.

As a result, the Inphi 2025 Convertible Notes are convertible into Inphi conversion units of 8.595 per $1,000 in principal amount of such notes.

Based on the terms of the merger agreement, the holders of the Inphi 2025 Convertible Notes would receive 19.9662 shares of the Company’s common stock and $ 567.27 in cash per $1,000 in principal amount of such notes upon conversion.

The Inphi acquisition constituted a fundamental change under the Inphi 2025 Convertible Notes Indenture.

As a result, the Inphi 2025 Convertible Notes were convertible into Inphi conversion units of 8.595 per $1,000 in principal amount of such notes.

Based on the terms of the Inphi merger agreement, the holders of the Inphi 2025 Convertible Notes would receive 19.9662 shares of the Company’s common stock and $ 567.27 in cash per $1,000 in principal amount of such notes upon conversion.

A total of $ 199.5 million in aggregate principal of the Inphi 2025 Convertible Notes was settled pursuant to the Exchange Agreements (discussed below).

21 unchanged sentences

In connection with the Exchange Agreements (discussed below), a portion of the remaining Inphi Capped Calls were settled for $ 35.5 million on April 29, 2021.

As of May 1, 2021, the fair value of the remaining capped calls was $ 50.1 million.

Exchange Agreements

5 unchanged sentences

In exchange for $ 9.6 million and $ 199.5 million in aggregate principal of the Inphi 2021 Convertible Notes and Inphi 2025 Convertible Notes, respectively, the Company issued a total of 7.1 million shares of its common stock to the Noteholders.

2018 Term Loan and 2018 Revolving Credit Facility

On June 13, 2018, the Company entered into a credit agreement (“Credit Agreement”) with twelve lenders.

The Credit Agreement provides for borrowings of:

(i) up to $ 500.0 million in the form of a revolving line of credit (the “2018 Revolving Credit Facility”) and (ii) $ 900.0 million in the form of a term loan (the “2018 Term Loan”) due July 6, 2021.

The proceeds of the 2018 Term Loan were used to fund a portion of the cash consideration for the Cavium acquisition, repay Cavium’s debt, and pay transaction expenses in connection with the Cavium acquisition.

On December 7, 2020, the 2018 Revolving Credit Facility under the 2018 Credit Agreement was terminated and replaced by the 2020 Revolving Credit Facility.

The 2018 Term Loan borrowings were repaid in full in the first quarter ended May 1, 2021.

Interest Expense and Future Contractual Maturities

During the three and six months ended July 31, 2021, the Company recognized $ 30.9 million and $ 53.0 million, respectively, of interest expense in its unaudited condensed consolidated statements of operations related to interest, amortization of debt issuance costs and accretion of discount associated with the outstanding borrowings.

During the three and six months ended August 1, 2020, the Company recognized $ 14.1 million and $ 29.5 million, respectively, of interest expense in its unaudited condensed consolidated statements of operations related to interest, amortization of debt issuance costs and accretion of discount associated with the outstanding borrowings.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Summary of Outstanding Debt

During the three months ended May 1, 2021, the Company recognized $ 22.1 million of interest expense in its unaudited condensed consolidated statements of operations related to interest, amortization of debt issuance costs and accretion of discount associated with the outstanding borrowings.

During the three months ended May 2, 2020, the Company recognized $ 15.4 million of interest expense in its unaudited condensed consolidated statements of operations related to interest, amortization of debt issuance costs and accretion of discount associated with the outstanding borrowings.

As of May 1, 2021, the aggregate future contractual maturities of the Company’s outstanding debt, at face value, were as follows (in thousands):

As of July 31, 2021, the aggregate future contractual maturities of the Company’s outstanding debt, at face value, were as follows (in thousands):

Fiscal Year Amount

1 unchanged sentence

2024 1,462,452

2026 1,067,548

Thereafter 2,959,290

1 unchanged sentence

The majority of the Company’s revenue is generated from sales of the Company’s products.

The following table summarizes net revenue disaggregated by end market (in thousands, except percentages):

Three Months Ended Six Months Ended

2021 % of Total August 1,

2020 % of Total July 31,

2021 % of Total August 1,

2020 % of Total

Net revenue by end market:

Data center $ 433,722 40 % $ 266,920 37 % $ 710,788 37 % $ 532,387 37 %

Carrier infrastructure 196,656 18 % 142,438 20 % 364,222 19 % 264,685 19 %

Enterprise networking 222,732 21 % 158,080 22 % 397,576 21 % 316,380 22 %

Consumer 165,380 16 % 134,370 18 % 332,046 18 % 254,661 18 %

Automotive/Industrial 57,391 5 % 25,489 3 % 103,528 5 % 52,825 4 %

$ 1,075,881 $ 727,297 $ 1,908,160 $ 1,420,938

The Company classifies end market revenue by using estimates and assumptions based on historical experience and knowledge of current conditions, given available information.

The following table summarizes net revenue disaggregated by product group (in thousands, except percentages):

Three Months Ended

2021 % of Total May 2,

Three Months Ended Six Months Ended

2021 % of Total August 1,

2020 % of Total July 31,

2021 % of Total August 1,

2020 % of Total

10 unchanged sentences

The following table summarizes net revenue disaggregated by primary geographical market based on destination of shipment (in thousands, except percentages):

Three Months Ended

2021 % of Total May 2,

Three Months Ended Six Months Ended

2021 % of Total August 1,

2020 % of Total July 31,

2021 % of Total August 1,

2020 % of Total

11 unchanged sentences

The following table summarizes net revenue disaggregated by customer type (in thousands, except percentages):

Three Months Ended

2021 % of Total May 2,

Three Months Ended Six Months Ended

2021 % of Total August 1,

2020 % of Total July 31,

2021 % of Total August 1,

2020 % of Total

5 unchanged sentences

Contract liabilities consist of the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration or the amount is due from the customer.

As of May 1, 2021, contract liability balances are comprised of variable consideration estimated based on a portfolio basis using the expected value methodology based on analysis of historical data, current economic conditions, and contractual terms.

As of July 31, 2021, contract liability balances are comprised of variable consideration estimated based on a portfolio basis using the expected value methodology based on analysis of historical data, current economic conditions, and contractual terms.

Variable consideration estimates consist of the estimated returns, price discounts, price protection, rebates, and stock rotation programs.

3 unchanged sentences

The opening balance of contract liabilities at the beginning of the first quarter of fiscal year 2022 was $ 181.0 million.

During the three months ended May 1, 2021, contract liabilities increased by $ 238.2 million associated with variable consideration estimates, offset by $ 248.7 million decrease in such reserves primarily due to credit memos issued to customers.

The ending balance of contract liabilities as of the first quarter of fiscal year 2022 was $ 170.5 million.

The amount of revenue recognized during the three months ended May 1, 2021 that was included in the contract liabilities balance at January 30, 2021 was no t material.

During the six months ended July 31, 2021, contract liabilities increased by $ 484.7 million associated with variable consideration estimates, offset by $ 475.2 million decrease in such reserves primarily due to credit memos issued to customers.

The ending balance of contract liabilities as of the second quarter of fiscal year 2022 was $ 190.5 million.

The amount of revenue recognized during the six months ended July 31, 2021 that was included in the contract liabilities balance at January 30, 2021 was not material.

Sales Commissions

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The Company continuously evaluates its existing operations to increase operational efficiency, decrease costs and increase profitability.

A restructuring plan was initiated in Q1 fiscal 2022 (the "Fiscal 2022 Plan") in order to realign the organization and enable further investment in key priority areas.

A restructuring plan was initiated during the first quarter of fiscal 2022 (the “Fiscal 2022 Plan”) in order to realign the organization and enable further investment in key priority areas.

Restructuring charges are mainly comprised of severance and other one-time termination benefits, facility closures where sites may be redundant within the same region or no longer suitably sized for the local employee base, and other costs.

The Company recorded restructuring and other related charges of $ 12.9 million for the three months ended May 1, 2021, which includes $ 9.8 million of charges related to the Fiscal 2022 Plan.

The Company recorded restructuring and other related charges of $ 12.3 million and $ 25.2 million for the three and six months ended July 31, 2021, respectively, which includes $ 10.1 million and $ 19.9 million of charges related to the Fiscal 2022 Plan.

The Company expects to complete these restructuring actions by the end of fiscal 2023.

2 unchanged sentences

These plans are substantially complete.

The Company recorded restructuring related charges of $ 21.3 million for the three months ended May 2, 2020.

The Company recorded restructuring related charges of $ 120.6 million and $ 141.9 million for the three and six months ended August 1, 2020, respectively.

The following table sets forth a reconciliation of the beginning and ending restructuring liability balances by each major type of cost associated with the restructuring charges (in thousands):

4 unchanged sentences

Non-cash items — ( 2,560 ) ( 2,560 )

Liability at May 1, 2021

Liability at July 31, 2021

$ 9,179 $ 3,560 $ 12,739

The current and non-current portions of the restructuring liability at May 1, 2021 of $ 6.8 million and $ 1.7 million are included as a component of accrued liabilities and other non-current liabilities respectively in the accompanying unaudited condensed consolidated balance sheet.

The current and non-current portions of the restructuring liability at July 31, 2021 of $ 11.1 million and $ 1.6 million are included as a component of accrued liabilities and other non-current liabilities respectively in the accompanying unaudited condensed consolidated balance sheets.

Supplemental Financial Information (in thousands)

4 unchanged sentences

Inventories $ 459,532 $ 268,228

The inventory balance at May 1, 2021 includes $ 173.5 million related to the inventory step-up adjustment from the Inphi acquisition.

The inventory balance at July 31, 2021 includes $ 17.6 million related to the remaining inventory fair value adjustment from the Inphi acquisition.

MARVELL TECHNOLOGY, INC.

12 unchanged sentences

Technology and other licenses $ 323,665 $ 242,244

Operating right-of-use assets 155,903 101,411

Prepaid ship and debits 172,250 131,657

Operating right-of-use assets 142,348 101,411

Non-marketable equity investments 36,506 7,646

8 unchanged sentences

Accrued legal reserve 27,862 50,101

Deferred revenue 24,855 16,146

Accrued interest 21,563 8,709

Accrued royalty 20,514 12,740

Deferred revenue 8,146 16,146

Other 36,945 26,034

Accrued liabilities $ 519,214 $ 435,616

* Contract liabilities consist of the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration or the amount is due from the customer.

See “Note 6 - Revenue” for further details.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

2021 January 30,

Other non-current liabilities

Deferred tax liabilities $ 253,830 $ 22,359

Lease liabilities-non current $ 146,145 $ 104,417

1 unchanged sentence

Non-current income tax payable 30,943 22,526

Deferred tax liabilities 22,451 22,359

Other 22,226 23,310

Other non-current liabilities $ 350,158 $ 258,853

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Accumulated Other Comprehensive Income

As of May 1, 2021, there are no changes in accumulated other comprehensive income (loss) by components.

As of July 31, 2021, there are no changes in accumulated other comprehensive income (loss) by components.

The changes in accumulated other comprehensive income (loss) by components for the comparative period are presented in the following table:

5 unchanged sentences

Net current-period other comprehensive income, net of tax 450

Balance at May 2, 2020 $ 868

Balance at August 1, 2020 $ 450

Consolidated Statements of Cash Flows

The noncash consideration paid for the acquisition of Inphi was $ 6.2 billion for the three months ended May 1, 2021.

Noncash consideration paid for the acquisition of Inphi was $ 6.2 billion during the six months ended July 31, 2021.

Share Repurchase Program

2 unchanged sentences

On October 16, 2018, the Company announced that its Board of Directors authorized a $ 700 million addition to the balance of its existing share repurchase program.

As of May 1, 2021, there was $ 564.5 million remaining available for future share repurchases.

As of July 31, 2021, there was $ 564.5 million remaining available for future share repurchases.

The Company intends to effect share repurchases in accordance with the conditions of Rule 10b-18 under the Exchange Act, but may also make repurchases in the open market outside of Rule 10b-18 or in privately negotiated transactions.

1 unchanged sentence

The Company temporarily suspended the share repurchase program in late March 2020 to preserve cash during the COVID-19 pandemic and the program remains suspended as the Company focuses on reducing its debt and de-levering its balance sheet.

As a result, the Company did no t repurchase any shares during the three months ended May 1, 2021.

The Company repurchased 1.3 million of its common shares for $ 25.2 million during the three months ended May 2, 2020.

As a result, the Company did no t repurchase any shares during the three and six months ended July 31, 2021.

The Company repurchased 1.3 million of its common shares for $ 25.2 million during the six months ended August 1, 2020.

The Company records all repurchases, as well as investment purchases and sales, based on their trade date.

The repurchased shares are retired immediately after repurchases are completed.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Fair Value Measurements

6 unchanged sentences

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s Level 1 assets include institutional money-market funds that are classified as cash equivalents, and marketable equity investments that are classified as other non-current assets and which are valued primarily using quoted market prices.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The Company’s Level 1 assets include marketable equity investments that are classified as other non-current assets and which are valued primarily using quoted market prices.

The Company’s Level 2 assets include time deposits, as the market inputs used to value these instruments consist of market yields.

2 unchanged sentences

The tables do not include assets and liabilities that are measured at historical cost or any basis other than fair value (in thousands):

Fair Value Measurements at May 1, 2021

Fair Value Measurements at July 31, 2021

Level 1 Level 2 Level 3 Total

1 unchanged sentence

Cash equivalents:

Money market funds $ 65 $ — $ — $ 65

Time deposits — 159,961 — 159,961

5 unchanged sentences

Total assets $ 1,368 $ 160,662 $ — $ 162,030

Short term convertible debt:

Short term debt:

Convertible notes $ — $ 135 $ — $ 135

Long term convertible debt:

Long term debt:

Convertible notes — 287 — 287

3 unchanged sentences

They are classified as Level 3 in the fair value hierarchy because the value is estimated based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility, rights and obligations of the securities held.

As of May 1, 2021, non-marketable equity investments had a carrying value of $ 35.3 million and are included in other non-current assets in the Company’s unaudited condensed consolidated balance sheets.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

As of July 31, 2021, non-marketable equity investments had a carrying value of $ 36.5 million and are included in other non-current assets in the Company’s unaudited condensed consolidated balance sheets.

Fair Value Measurements at January 30, 2021

8 unchanged sentences

The Inphi 2021 Convertible Notes are carried in the unaudited condensed consolidated balance sheets at fair value.

As of May 1, 2021, the fair value of convertible notes was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy.

As of July 31, 2021, the fair value of convertible notes was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy.

See “Note 5 - Debt” for information on the fair value of the Inphi 2021 Convertible Notes.

The 2025 Inphi Convertible Notes are carried in the unaudited condensed consolidated balance sheets at fair value at Inphi acquisition when assumed.

The Inphi 2025 Convertible Notes are not marked to fair value at the end of each reporting period.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The Company classified the 2020 Term Loan, the 2023 Notes, the 2026 Notes, 2028 Notes, and 2031 Notes as Level 2 in the fair value measurement hierarchy.

The carrying value of the 2020 Term Loan approximates its fair value as the 2020 Term Loan is carried at a market observable interest rate that resets periodically.

The estimated aggregate fair value of the unsecured senior notes was $ 3.1 billion at May 1, 2021 and $ 1.1 billion at January 30, 2021, and were classified as Level 2 as there are quoted prices from less active markets for the notes.

The Inphi convertible debt capped calls provide for variable cash settlement based on the Company’s stock price.

These capped calls qualify as derivatives and, accordingly, the Company measures these capped calls at fair value, with changes in fair value reported in earnings.

As of May 1, 2021, the fair value of the remaining capped calls was $ 50.1 million.

The estimated aggregate fair value of the unsecured senior notes was $ 3.2 billion at July 31, 2021 and $ 1.1 billion at January 30, 2021, and were classified as Level 2 as there are quoted prices from less active markets for the notes.

Commitments and Contingencies

1 unchanged sentence

Under the Company’s manufacturing relationships with its foundry partners, cancellation of outstanding purchase orders is allowed but requires payment of all costs and expenses incurred through the date of cancellation.

At May 1, 2021, the Company had approximately $ 819.5 million in outstanding purchase orders with foundries.

At July 31, 2021, the Company had approximately $ 775.6 million in outstanding purchase orders with foundries.

During the second quarter ended July 31, 2021 the Company entered into a wafer supply capacity reservation agreement with one of the Company’s foundry suppliers to reserve manufacturing supply capacity due to the current global supply shortage environment.

Under the agreement, the Company has agreed to pay certain fees as well as meet annual wafer purchase commitments in exchange for the foundry’s guarantee to produce a specific minimum quantity of wafers from 2022 through 2025.

Such wafers will be purchased by the Company at predetermined sales prices.

If the Company does not meet the annual wafer purchase commitment for any of these years, the Company will be required to pay a portion of the difference between the actual wafer purchases and the wafer purchase commitment for that calendar year.

The Company currently estimates that it is obligated to purchase at least $ 770 million of wafers for the calendar years 2022 through 2025 under the capacity reservation agreement.

Subsequent to quarter end, the Company entered into a capacity reservation agreement with another supplier to reserve additional materials, assembly, and test capacity.

Under the agreement, the Company is required to make five scheduled refundable deposits totaling $ 100 million between August 2021 and November 2022 as well as meet annual purchase commitments for calendar years from 2022 through 2026 in exchange for the supplier’s guarantee to produce material and reserve capacity for a minimum quantity of devices.

The Company currently estimates that it will purchase at least $ 1 billion during the five year period under the capacity reservation agreement.

Contingencies and Legal Proceedings

23 unchanged sentences

The maximum potential amount of any future payments that the Company could be required to make under these indemnification obligations could be significant.

Stockholders ’ Equity

Following the Inphi acquisition and in accordance with the Inphi merger agreement, certain outstanding options to purchase shares of Inphi common stock and certain restricted stock units with respect to Inphi common stock, each granted under the Inphi Amended and Restated 2010 Stock Incentive Plan (“Inphi 2010 EIP”), were assumed by the Company and converted into options to purchase common shares of the Company and restricted stock units with respect to common shares of the Company, respectively.

The Company filed a registration statement on April 20, 2021 to register 10,301,589 common shares of the Company, issuable under the Inphi 2010 EIP, comprised of 127,249 common shares issuable pursuant to outstanding but unexercised options under the Inphi 2010 EIP, 10,040,693 common shares issuable pursuant to outstanding unvested restricted stock units under the Inphi 2010 EIP, and 133,647 common shares issuable pursuant to outstanding unvested performance stock units under the Inphi 2010 EIP.

Inphi 2010 EIP

The Inphi 2010 EIP was adopted by Inphi on June 7, 2010.

The 2010 Plan provided for the grants of restricted stock, stock appreciation rights and stock unit awards to employees, non-employee directors, advisors and consultants.

Awards under the Inphi 2010 EIP generally vest over 3 to 4 years.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Inphi Acquisition-related Equity Awards

The awards under the Inphi Plans assumed by the Company in the Inphi acquisition were measured at the acquisition date based on the estimated fair value of $ 589.7 million.

A portion of that fair value, $ 161.7 million, which represented the pre-acquisition service provided by employees to Inphi, was included in the total consideration transferred as part of the acquisition.

As of the acquisition date, the remaining portion of the fair value of those awards was $ 428.0 million, representing post-acquisition share-based compensation expense that will be recognized as these employees provide service over the remaining vesting periods.

During the three months ended May 1, 2021, the Company recognized $ 49.6 million of share-based compensation expense in connection with the acquisition of Inphi, of which $ 43.8 million was due to the accelerated vesting of outstanding equity awards of certain Inphi employees.

During the three months ended May 1, 2021, Inphi merger equity consideration related tax withholdings of $ 14.6 million were included as a component of tax withholdings for net share settlement of restricted stock units in the accompanying unaudited condensed consolidated statement of stockholders’ equity.

Summary of Share-based Compensation Expense

The following table summarizes share-based compensation expense (in thousands):

Three Months Ended

Cost of goods sold $ 9,803 $ 3,538

Research and development 38,377 37,815

Selling, general and administrative 61,413 18,334

Total share-based compensation $ 109,593 $ 59,687

Share-based compensation capitalized in inventory was $ 4.3 million at May 1, 2021, $ 3.8 million at January 30, 2021.

The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period.

11 unchanged sentences

tax jurisdictions with tax rates lower than 21%.

The income tax benefit of $ 27.8 million for the three months ended May 1, 2021 includes a discrete tax benefit related to stock-based compensation in addition to the release of unrecognized benefits that were recorded in prior periods.

The income tax expense of $ 5.0 million for the three months ended May 2, 2020 included a tax benefit related to the release of unrecognized tax benefits that were recorded in prior periods, offset by tax expense due on certain foreign undistributed earnings that were previously considered to be indefinitely reinvested.

The income tax benefit of $ 25.6 million for the three months ended July 31, 2021 is primarily related to the recognition of a $ 10.0 million tax benefit for tax basis on the transfer of certain intellectual property from the Inphi acquisition to a subsidiary in Singapore, as well as discrete tax benefits related to stock-based compensation.

The income tax benefit of $ 53.3 million for the six months ended July 31, 2021 is primarily related to the recognition of the $ 10.0 million tax benefit attributable to the aforementioned Singapore tax basis in intellectual property, tax benefits related to stock-based compensation, and benefits from expirations of the statutes of limitations related to certain previously unrecognized tax benefits that were recorded in prior periods.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The Company’s gross unrecognized tax benefits were $ 319.2 million and $ 242.2 million on May 1, 2021 and January 30, 2021, respectively.

The Company’s gross unrecognized tax benefits were $ 322.0 million and $ 242.2 million on July 31, 2021 and January 30, 2021, respectively.

The net increase to the Company’s gross unrecognized tax benefits of $ 79.8 million is primarily the result of certain unrecognized tax benefits recorded in the Company’s accounting for the acquisition of Inphi.

If the gross unrecognized tax benefits as of May 1, 2021 were realized in a subsequent period, the Company would record a tax benefit of $ 198.7 million within its provision for income taxes at such time.

The amount of interest and penalties accrued as of May 1, 2021, and January 30, 2021 was $ 3.8 million and $ 4.0 million, respectively.

It is reasonably possible that the amount of unrecognized tax benefits could increase or decrease significantly due to changes in tax law in various jurisdictions, new tax audits and changes in the U.S.

If the gross unrecognized tax benefits as of July 31, 2021 were realized in a subsequent period, the Company would record a tax benefit of $ 201.5 million within its provision for income taxes at such time.

The amount of interest and penalties accrued as of July 31, 2021, and January 30, 2021 was $ 3.6 million and $ 4.0 million, respectively.

It is reasonably possible that the amount of unrecognized tax benefits could increase or decrease significantly due to changes in tax law in various jurisdictions, the effects of income tax audits, and changes in the U.S.

dollar as compared to foreign currencies within the next 12 months.

Excluding these factors, it is reasonably possible that uncertain tax positions may decrease by as much as $ 2.5 million from the lapse of statutes of limitation in various jurisdictions during the next 12 months.

Excluding these factors, it is reasonably possible that uncertain tax positions may decrease by as much as $ 2.1 million during the next 12 months.

Government tax authorities from certain non-U.S.

jurisdictions are examining the Company’s income tax returns.

The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to its tax audits and that any settlement will not have a material effect on its results or financial position at this time.

The Company believes that it has adequately provided for the expected outcomes related to these tax audits and that any settlements with respect to these audits will not have a material effect on its results or financial position at this time.

The Company operates under tax incentives in certain countries that may be extended and/or renewed if certain additional requirements are satisfied.

The tax incentives are conditional upon meeting certain employment and investment thresholds.

In the three months ended May 1, 2021, tax savings associated with these tax holidays were approximately $ 7.8 million, which if paid would impact the Company’s earnings per share by less than $ 0.02 per share in the three months ended May 1, 2021.

There were no such tax savings recognized in three months ended May 2, 2020.

The Company’s principal source of liquidity as of May 1, 2021 consisted of approximately $ 522.5 million of cash and cash equivalents, of which approximately $ 350.3 million was held by subsidiaries outside of the United States.

Because of existing deductions and tax attributes, the Company currently expects no net tax benefits from its tax incentives in the current fiscal year.

Similarly, there were no such tax benefits in the prior fiscal year.

The Company’s principal source of liquidity as of July 31, 2021 consisted of approximately $ 559.6 million of cash and cash equivalents, of which approximately $ 431.8 million was held by subsidiaries outside of the United States.

The Company has not recognized a deferred tax liability on $ 294.1 million of these assets as those amounts are deemed to be indefinitely reinvested.

3 unchanged sentences

The computations of basic and diluted net loss per share are presented in the following table (in thousands, except per share amounts):

Three Months Ended

Three Months Ended Six Months Ended

2021 August 1,

2020 July 31,

2021 August 1,

Net loss $ ( 276,428 ) $ ( 157,893 ) $ ( 364,670 ) $ ( 270,926 )

13 unchanged sentences

Anti-dilutive potential shares are presented in the following table (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

2021 August 1,

2020 July 31,

2021 August 1,

Weighted-average shares outstanding:

3 unchanged sentences

Anti-dilutive potential shares from convertible debt are excluded from the calculation of diluted earnings per share for all periods reported above because the shares that would be issued upon conversion of the Company’s convertible debt were determined to be anti-dilutive based on applying the if-converted method.

Anti-dilutive potential shares from share-based awards are excluded from the calculation of diluted earnings per share for the three months ended May 1, 2021 and May 2, 2020 due to the net losses reported in those periods.

Anti-dilutive potential shares from share-based awards are excluded from the calculation of diluted earnings per share for the three and six months ended July 31, 2021 and August 1, 2020 due to the net losses reported in those periods.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements