Item 1. Financial Statements

MARVELL TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value per share)

			October 30, 2021						January 30, 2021
ASSETS
Current assets:
Cash and cash equivalents			$	523,502					$	748,467
Accounts receivable, net			978,261						536,668
Inventories			628,600						268,228
Prepaid expenses and other current assets			114,451						63,782
Total current assets			2,244,814						1,617,145
Property and equipment, net			444,003						326,125
Goodwill			11,446,444						5,336,961
Acquired intangible assets, net			6,439,106						2,270,700
Deferred tax assets			528,985						672,424
Other non-current assets			915,490						541,569
Total assets			$	22,018,842					$	10,764,924
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	440,592					$	252,419
Accrued liabilities			521,905						435,616
Accrued employee compensation			222,835						189,421
Short-term debt			52,205						199,641
Total current liabilities			1,237,537						1,077,097
Long-term debt			4,504,321						993,170
Other non-current liabilities			590,640						258,853
Total liabilities			6,332,498						2,329,120
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.002 par value			1,682						1,350
Additional paid-in capital			14,148,741						6,331,013
Retained earnings			1,535,921						2,103,441
Total stockholders’ equity			15,686,344						8,435,804
Total liabilities and stockholders’ equity			$	22,018,842					$	10,764,924

See accompanying notes to unaudited condensed consolidated financial statements

MARVELL TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

			Three Months Ended												Nine Months Ended
			October 30, 2021						October 31, 2020						October 30, 2021						October 31, 2020
Net revenue			$	1,211,245					$	750,143					$	3,119,405					$	2,171,081
Cost of goods sold			623,425						369,083						1,741,614						1,103,863
Gross profit			587,820						381,060						1,377,791						1,067,218
Operating expenses:
Research and development			371,894						255,637						1,025,037						812,360
Selling, general and administrative			243,406						115,501						704,033						350,322
Restructuring related charges			5,861						19,312						31,041						161,189
Total operating expenses			621,161						390,450						1,760,111						1,323,871
Operating loss			(33,341)						(9,390)						(382,320)						(256,653)
Interest income			189						608						561						2,243
Interest expense			(35,423)						(16,066)						(104,378)						(48,531)
Other income (loss), net			999						299						568						3,613
Interest and other income (loss), net			(34,235)						(15,159)						(103,249)						(42,675)
Loss before income taxes			(67,576)						(24,549)						(485,569)						(299,328)
Benefit for income taxes			(5,044)						(1,641)						(58,367)						(5,494)
Net loss			$	(62,532)					$	(22,908)					$	(427,202)					$	(293,834)
Net loss per share - basic			$	(0.08)					$	(0.03)					$	(0.55)					$	(0.44)
Net loss per share - diluted			$	(0.08)					$	(0.03)					$	(0.55)					$	(0.44)
Weighted-average shares:
Basic			828,635						670,487						781,008						667,186
Diluted			828,635						670,487						781,008						667,186

See accompanying notes to unaudited condensed consolidated financial statements

MARVELL TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

			Three Months Ended												Nine Months Ended
			October 30, 2021						October 31, 2020						October 30, 2021						October 31, 2020
Net loss			$	(62,532)					$	(22,908)					$	(427,202)					$	(293,834)
Other comprehensive income (loss), net of tax:
Net change in unrealized gain (loss) on cash flow hedges			—						(450)						—						—
Other comprehensive income (loss), net of tax			—						(450)						—						—
Comprehensive loss, net of tax			$	(62,532)					$	(23,358)					$	(427,202)					$	(293,834)

See accompanying notes to unaudited condensed consolidated financial statements

MARVELL TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

			Common Stock												Additional Paid-in Capital
			Shares						Amount												Retained Earnings						Total
Balance at January 30, 2021			675,402						$	1,350					$	6,331,013											$	2,103,441					$	8,435,804
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)
Share-based compensation			—						—						92,705												—						92,705
Issuance of common stock in connection with acquisitions			129,222						259						5,910,927												—						5,911,186
Equity related issuance cost			—						—						(8,177)												—						(8,177)
Replacement equity awards attributable to pre-acquisition service			—						—						82,346												—						82,346
Conversion feature of convertible notes			—						—						244,155												—						244,155
Impact of repurchases of convertible notes			7,115						14						234,333												—						234,347
Conversion of convertible notes to common stock			2,502						5						59,704												—						59,709
Cash dividends declared and paid ($0.06 per share)			—						—						—												(40,557)						(40,557)
Net loss			—						—						—												(88,242)						(88,242)
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
Issuance of common stock in connection with acquisitions			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
Issuance of common shares in connection with equity incentive plans			1,677						3						2,087												—						2,090
Tax withholdings related to net share settlement of restricted stock units			—						—						(52,851)												—						(52,851)
Share-based compensation			—						—						121,249												—						121,249
Issuance of common stock in connection with acquisitions			16,484						33						954,254												—						954,287
Replacement equity awards attributable to pre-acquisition service			—						—						33,224												—						33,224
Conversion of convertible notes to common stock			2						—						109												—						109
Cash dividends declared and paid ($0.06 per share)			—						—						—												(50,429)						(50,429)
Net loss			—						—						—												(62,532)						(62,532)
Balance at October 30, 2021			841,540						$	1,682					$	14,148,741											$	1,535,921					$	15,686,344

MARVELL TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

			Common Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)
			Shares						Amount												Retained Earnings						Total
Balance at February 1, 2020			663,481						$	1,328					$	6,135,939					$	—					$	2,541,313					$	8,678,580
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)
Share-based compensation			—						—						60,199						—						—						60,199
Repurchase of common stock			(1,251)						(3)						(25,199)						—						—						(25,202)
Cash dividends declared and paid ($0.06 per share)			—						—						—						—						(39,763)						(39,763)
Net loss			—						—						—						—						(113,033)						(113,033)
Other comprehensive income			—						—						—						868						—						868
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
Issuance of common shares in connection with equity incentive plans			1,720						3						2,251						—						—						2,254
Tax withholdings related to net share settlement of restricted stock units			—						—						(25,911)						—						—						(25,911)
Share-based compensation			—						—						59,324						—						—						59,324
Cash dividends declared and paid ($0.06 per share)			—						—						—												(40,229)						(40,229)
Net loss			—						—						—						—						(22,908)						(22,908)
Other comprehensive loss			—						—						—						(450)						—						(450)
Balance at October 31, 2020			671,737						$	1,343					$	6,260,906					$	—					$	2,127,368					$	8,389,617

See accompanying notes to unaudited condensed consolidated financial statements

MARVELL TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

			Nine Months Ended
			October 30, 2021						October 31, 2020
Cash flows from operating activities:
Net loss			$	(427,202)					$	(293,834)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			189,677						149,922
Share-based compensation			325,922						182,060
Amortization of acquired intangible assets			684,593						333,934
Amortization of inventory fair value adjustment associated with acquisitions			191,030						17,284
Amortization of deferred debt issuance costs and debt discounts			19,031						3,217
Restructuring related impairment charges			5,205						123,559
Other expense, net			60,053						19,448
Deferred income taxes			(67,570)						415
Changes in assets and liabilities, net of acquisition:
Accounts receivable			(341,444)						2,075
Prepaid expenses and other assets			(65,339)						(8,692)
Inventories			(200,675)						29,817
Accounts payable			93,788						34,768
Accrued employee compensation			12,980						38,202
Accrued liabilities and other non-current liabilities			(7,004)						26,817
Net cash provided by operating activities			473,045						658,992
Cash flows from investing activities:
Purchases of technology licenses			(9,371)						(8,476)
Purchases of property and equipment			(130,483)						(88,242)
Acquisitions, net of cash acquired			(3,539,729)						—
Other, net			(2,457)						223
Net cash used in investing activities			(3,682,040)						(96,495)
Cash flows from financing activities:
Repurchases of common stock			—						(25,202)
Proceeds from employee stock plans			42,784						50,490
Tax withholding paid on behalf of employees for net share settlement			(169,001)						(82,626)
Dividend payments to stockholders			(140,318)						(120,111)
Payments on technology license obligations			(97,858)						(76,794)
Proceeds from issuance of debt			3,806,096						—
Principal payments of debt			(425,938)						(100,000)
Payment for repurchases and settlement of convertible notes			(181,207)						—
Proceeds from capped calls			160,319						—
Payment of equity and debt financing costs			(11,850)						(22,313)
Other, net			1,003						(1,504)
Net cash provided by (used in) financing activities			2,984,030						(378,060)
Net increase (decrease) in cash and cash equivalents			(224,965)						184,437
Cash and cash equivalents at beginning of period			748,467						647,604
Cash and cash equivalents at end of period			$	523,502					$	832,041

See accompanying notes to unaudited condensed consolidated financial statements

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

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 and nine months ended October 30, 2021, have been prepared as required by the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted as permitted by the SEC. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s fiscal year 2021 audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021. In the opinion of management, the financial statements include all adjustments, including normal recurring adjustments and other adjustments, that are considered necessary for fair presentation of the Company’s financial position and results of operations. All inter-company accounts and transactions have been eliminated. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for the entire year. Certain prior period amounts have been reclassified to conform to current period presentation. These financial statements should also be read in conjunction with the Company’s critical accounting policies included in the Company’s Annual Report on Form 10-K for the year ended January 30, 2021 and those included in this Form 10-Q below.

The Company’s fiscal year is the 52- or 53-week period ending on the Saturday closest to January 31. Accordingly, every fifth or sixth fiscal year will have a 53-week period. The additional week in a 53-week year is added to the fourth quarter, making such quarter consist of 14 weeks. Fiscal 2021 had a 52-week year. Fiscal 2022 is a 52-week year.

On April 20, 2021, the Company completed its acquisition of Inphi Corporation (“Inphi”). 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 through the Company’s third quarter ended October 30, 2021. See “Note 3 - Business Combinations”, “Note 4 - Goodwill and Acquired Intangible Assets, Net” 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 12 - Income Taxes” for more information.

On October 5, 2021, the Company completed its acquisition of Innovium, Inc. (“Innovium”), a leading provider of networking solutions for cloud and edge data centers, in an all-stock transaction. The unaudited condensed consolidated financial statements include the operating results of Innovium for the period from the date of acquisition through the Company’s third quarter ended October 30, 2021. See “Note 3 - Business Combinations”, “Note 4 - Goodwill and Acquired Intangible Assets, Net” for more information.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, provisions for sales returns and allowances, inventory excess and obsolescence, goodwill and other intangible assets, assets acquired and liabilities assumed in connection with acquisitions, restructuring, income taxes, litigation and other contingencies. Actual results could differ from these estimates and such differences could affect the results of operations reported in future periods. In the current macroeconomic environment affected by COVID-19, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods.

Note 2. Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued an accounting standards update that simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation and modified the methodology for calculating income taxes in an interim period. It also clarifies and simplifies other aspects of the accounting for income taxes. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022, with early adoption permitted. 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

In August 2020, the FASB issued an accounting standards update that simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. The standard requires a convertible debt instrument to be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. It also made changes to the disclosures for convertible instruments and earnings-per-share guidance, among other updates. The guidance is effective for the Company beginning in the first quarter of fiscal year 2023, with early adoption permitted and permits the use of either the modified retrospective or fully retrospective method of transition. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.

In October 2021, the FASB issued an accounting standards update that requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. The guidance is effective for the Company beginning in the first quarter of fiscal year 2024, with early adoption permitted. The guidance should be applied prospectively to acquisitions occurring on or after the effective date. The Company is evaluating the impact that this new standard will have on the Company’s consolidated financial statements.

Note 3. Business Combinations

Innovium

On October 5, 2021, the Company completed the acquisition of Innovium, Inc. (“Innovium”), a leading provider of networking solutions for cloud and edge data centers, in an all-stock transaction for total purchase consideration of $1.0 billion attributable to stock consideration of $994.2 million and the fair value of a previously held equity interest of $10.0 million. The Innovium acquisition was primarily intended to allow the Company to immediately participate in the fastest growing segment of the switch market with a cloud-optimized solution. In accordance with the terms of the Agreement and Plan of Merger dated August 2, 2021 (the “Innovium merger agreement”), the Company’s common stock was issued in exchange for all outstanding equity of Innovium, including shares of Innovium’s preferred and common stock, employee equity awards and warrants.

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 Innovium acquisition is not expected to be deductible for tax purposes.

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

Common stock issued or to be issued			$	971,022
Stock consideration for replacement equity awards attributable to pre-combination service			33,224
Total merger consideration			$	1,004,246

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The merger consideration allocation set forth herein is preliminary and may be revised with adjustment to goodwill as additional information becomes available during the measurement period from the closing date of the acquisition to finalize such preliminary estimates. Any such revisions or changes may be material.

In accordance with U.S. GAAP requirements for business combinations, the Company allocated the fair value of the purchase consideration to the tangible assets, liabilities and intangible assets acquired, including in-process research and development (“IPR&D”), generally based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life. The Company’s valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. Acquisition-related costs are expensed in the periods in which such costs are incurred. See “Note 4 - Goodwill and Acquired Intangible Assets, Net” for additional information.

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

Cash and cash equivalents			$	60,436
Inventories			69,991
Goodwill			470,000
Acquired intangible assets, net			433,000
Other, net			(29,181)
Total merger consideration			$	1,004,246

The Company incurred total acquisition related costs of $11.9 million during the three and nine months ended October 30, 2021, which were recorded in selling, general and administrative expense in the unaudited condensed consolidated statements of operations.

Post acquisition revenue and income (loss) on a standalone basis is impracticable to determine as the Company integrated Innovium into its existing financial systems and operations in the third quarter ended October 30, 2021.

Inphi

On April 20, 2021, the Company completed the acquisition of Inphi (the “Inphi acquisition”). Inphi is a global leader in high-speed data movement enabled by optical interconnects. The Inphi acquisition was primarily intended to create an opportunity for the combined company to be uniquely positioned to serve the data-driven world, addressing high growth, attractive end markets such as cloud data center and 5G. In accordance with the terms of the Agreement and Plan of Merger dated as of October 29, 2020, by and among the Company and Inphi (the “Inphi merger agreement”), the Company acquired all outstanding shares of common stock of Inphi for $66 per share in cash and 2.323 shares of the Company’s common stock exchanged for each share of Inphi common stock. The merger consideration paid in cash was funded with a combination of cash on hand and funds from the Company’s debt financing. 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):

Cash consideration			$	3,673,217
Common stock issued			5,917,811
Stock consideration for replacement equity awards attributable to pre-combination service			82,346
Equity component of convertible debt			244,155
Total merger consideration			$	9,917,529

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The merger consideration allocation set forth herein is preliminary and may be revised with adjustment to goodwill as additional information becomes available during the measurement period from the closing date of the acquisition to finalize such preliminary estimates. Any such revisions or changes may be material.

In accordance with U.S. GAAP requirements for business combinations, the Company allocated the fair value of the purchase consideration to the tangible assets, liabilities and intangible assets acquired, including IPR&D, generally based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life. The Company’s valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. Acquisition-related costs are expensed in the periods in which such costs are incurred. See “Note 4 - Goodwill and Acquired Intangible Assets, Net” for additional information.

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

Cash and cash equivalents			$	72,251
Accounts receivable, net			99,728
Inventories			270,382
Prepaid expenses and other current assets			213,292
Property and equipment, net			98,528
Acquired intangible assets, net			4,420,000
Other non-current assets			145,856
Goodwill			5,639,483
Accounts payable and accrued liabilities			(189,807)
Convertible debt - short-term			(313,664)
Convertible debt - long-term			(240,317)
Other non-current liabilities			(298,203)
Total merger consideration			$	9,917,529

The amounts presented in the table above is the purchase price allocation reported in the Company’s Form 10-Q for the second quarter ended July 31, 2021. There were no measurement period adjustments during the third quarter ended October 30, 2021.

There were no acquisition costs incurred in the three months ended October 30, 2021. The Company incurred $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 nine months ended October 30, 2021. The Company also incurred $39.8 million of aggregate debt financing costs. As of October 30, 2021, $2.5 million is included in short-term debt, and $32.0 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.

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

Unaudited Supplemental Pro Forma Information

The unaudited supplemental pro forma financial information presented below is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the acquisitions had been completed on the date indicated, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position. 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 Innovium and 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 Innovium and Inphi acquisitions in the pro forma information presented below included (i) share-based compensation expense of $46.7 million, (ii) the purchase accounting effect of inventories acquired of $233.0 million, (iii) interest expense of $11.4 million, and (iv) transaction costs of $77.4 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):

						Nine Months Ended
						October 30, 2021						October 31, 2020
Pro forma net revenue						$	3,295,498					$	2,693,723
Pro forma net loss						$	(262,210)					$	(1,213,149)

Note 4. Goodwill and Acquired Intangible Assets, Net

Goodwill

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 October 30, 2021 and January 30, 2021 is $11.4 billion and $5.3 billion respectively. See “Note 3 - Business Combinations” for discussion of acquisitions and changes to the carrying value of goodwill.

Acquired Intangible Assets, Net

In connection with the Innovium acquisition on October 5, 2021, the Company acquired $433.0 million 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)
Developed technology						$	274,000					8.00
Customer contracts and related relationships						66,000						8.00
IPR&D						93,000						n/a
						$	433,000

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)
Developed technology						$	2,010,000					6.00
Customer contracts and related relationships						1,470,000						6.00
Order backlog						70,000						0.80
Trade name						50,000						5.00
IPR&D						820,000						n/a
						$	4,420,000

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

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

			October 30, 2021
			Gross Carrying Amounts						Accumulated Amortization						Net Carrying Amounts						Weighted-Average Remaining Amortization Period (Years)
Developed technologies			$	4,740,000					$	(1,154,971)					$	3,585,029					5.41
Customer contracts and related relationships			2,179,000						(428,370)						1,750,630						5.45
Order backlog			70,000						(45,642)						24,358						0.28
Trade names			73,000						(22,911)						50,089						4.17
Total acquired amortizable intangible assets			$	7,062,000					$	(1,651,894)					$	5,410,106					5.39
IPR&D			1,029,000						—						1,029,000						n/a
Total acquired intangible assets			$	8,091,000					$	(1,651,894)					$	6,439,106

			January 30, 2021
			Gross Carrying Amounts						Accumulated Amortization						Net Carrying Amounts						Weighted-Average Remaining Amortization Period (Years)
Developed technologies			$	2,454,000					$	(724,215)					$	1,729,785					5.54
Customer contracts and related relationships			643,000						(228,845)						414,155						5.62
Trade names			23,000						(14,240)						8,760						2.20
Total acquired amortizable intangible assets			$	3,120,000					$	(967,300)					$	2,152,700					5.54
IPR&D			118,000						—						118,000						n/a
Total acquired intangible assets			$	3,238,000					$	(967,300)					$	2,270,700

The intangible assets are amortized on a straight-line basis over the estimated useful lives, except for certain Cavium customer contracts and related relationships, which are amortized using an accelerated method of amortization over the expected customer lives, which more closely align with the pattern of realization of economic benefits expected to be obtained. The IPR&D will be accounted for as an indefinite-lived intangible asset and will not be amortized until the underlying projects reach technological feasibility and commercial production at which point the IPR&D will be amortized over the estimated useful life. Useful lives for these IPR&D projects are expected to range between 3 to 10 years. In the event the IPR&D is abandoned, the related assets will be written off.

Amortization expense for acquired intangible assets for the three and nine months ended October 30, 2021 was $279.3 million and $684.6 million, respectively. Amortization expense for acquired intangible assets for the three and nine months ended October 31, 2020 was $109.4 million and $333.9 million, respectively.

The following table presents the estimated future amortization expense of acquired amortizable intangible assets as of October 30, 2021 (in thousands):

Fiscal Year						Amount
Remainder of 2022						$	285,684
2023						1,050,897
2024						1,039,160
2025						987,134
2026						902,277
Thereafter						1,144,954
						$	5,410,106

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Note 5. Debt

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

						October 30, 2021						January 30, 2021
Face Value Outstanding:
2018 Term Loan						$	—					$	200,000
2020 Term Loan - 3 Year Tranche						735,000						—
2020 Term Loan - 5 Year Tranche						864,063						—
Term Loan Total						1,599,063						200,000
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						—
2.450% 2028 Senior Notes						750,000						—
2.950% 2031 Senior Notes						750,000						—
Senior Notes Total						2,999,867						1,000,000
Total borrowings						$	4,598,930					$	1,200,000
Less: Unamortized debt discount and issuance cost						(42,404)						(7,189)
Net carrying amount of debt						$	4,556,526					$	1,192,811
Less: Current portion - Term Loan (1)						52,205						199,641
Non-current portion						$	4,504,321					$	993,170

(1)As of October 30, 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.

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”). As of October 30, 2021, the Inphi Convertible Notes have been settled. See “Note 3 - Business Combinations” 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. This bridge loan commitment was provided by the underwriting bankers at the time of the Inphi merger agreement execution in October 2020. The bridge loan was never drawn upon. 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. The Company also executed a debt agreement to obtain a 5-year $750.0 million revolving credit facility in December 2020, replacing its previous $500 million revolving credit facility. 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.

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.

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 $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”).

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

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 1.655% as of October 30, 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 October 30, 2021. The 3-Year Tranche Loan does not require any scheduled principal payments prior to final maturity but does permit the Company to make early principal payments without premium or penalty. During the quarter ended October 30, 2021, the Company repaid $140 million of the principal outstanding of the 3-Year Tranche Loan, and wrote off $1.1 million of associated unamortized debt issuance costs. 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. During the quarter ended October 30, 2021, the Company repaid $10.9 million of the principal outstanding of the 5-Year Tranche Loan.

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. As of October 30, 2021, the Company has $1.6 billion Term Loan borrowings outstanding, and is in compliance with its debt covenants.

2020 Revolving Credit Facility

On December 7, 2020, the Company entered into a revolving line of credit agreement (the “2020 Revolving Credit Facility”) with a lending syndicate led by JPMorgan Chase Bank, N.A for borrowings of up to $750.0 million. Borrowings from the 2020 Revolving Credit Facility are intended for general corporate use, which may include among other things, the financing of acquisitions, the refinancing of other indebtedness and the payment of transaction expenses related to the foregoing. The 2020 Revolving Credit Facility has a five-year term and a stated floating interest rate which equates to reserve-adjusted LIBOR plus an applicable margin. The Company may prepay any borrowings at any time without premium or penalty through December 7, 2025. 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 October 30, 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 October 30, 2021, the 2020 Revolving Credit Facility is undrawn.

Subsequent to quarter end, on November 22, 2021, the Company drew down $90.0 million on the 2020 Revolving Credit Facility. The Company intends to repay the drawn amount by the end of fiscal year 2022.

The 2020 Revolving Credit Facility requires that the Company and its subsidiaries comply with covenants relating to customary matters. The covenants are consistent with the 2020 Term Loan covenants discussed above.

The Company currently carries debt that relies on LIBOR as the benchmark rate. LIBOR is expected to be phased out as a benchmark rate starting at the end of 2021. 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.

2026, 2028, and 2031 Senior Unsecured Notes

On April 12, 2021, the Company completed an offering of (i) $500.0 million aggregate principal amount of the Company’s 1.650% Senior Notes due 2026 (the “2026 Senior Notes”), (ii) $750.0 million aggregate principal amount of the Company’s 2.450% Senior Notes due 2028 (the “2028 Senior Notes”) and (iii) $750.0 million aggregate principal amount of the Company’s 2.950% Senior Notes due 2031 (the “2031 Senior Notes”, and, together with the 2026 Senior Notes and the 2028 Senior Notes, the “Senior Notes”). On October 8, 2021, the Senior Notes issued on April 12, 2021 were exchanged for new notes. The terms of the new notes issued in the exchange are substantially identical to the notes issued in April 2021, except that the new notes are registered under the Securities Act of 1933 and the transfer restrictions and registration rights applicable to the Senior Notes issued in April 2021 do not apply to the new notes.

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. The stated and effective interest rates for the 2028 Senior Notes are 2.450% and 2.554%, respectively. The stated and effective interest rates for the 2031 Senior Notes are 2.950% and 3.043%, respectively. The Company may redeem the Senior Notes, in whole or in part, at any time prior to their respective maturity at the redemption prices set forth in the indenture governing the 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 Senior Notes being rated below investment grade), the Company will be required to make an offer to repurchase the 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 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 October 30, 2021, the Company had $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, Ltd. (“MTG”) completed a public offering of (i) $500.0 million aggregate principal amount of 4.200% Senior Notes due 2023 (the “MTG 2023 Notes”) and (ii) $500.0 million aggregate principal amount of 4.875% Senior Notes due 2028 (the “MTG 2028 Notes” and, together with the 2023 Notes, the “MTG Senior Notes”).

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. domiciled parent Marvell Technology, Inc. (“MTI”). MTI made an offer to (i) exchange any and all of the outstanding MTG 2023 Notes for up to an aggregate principal amount of $500.0 million of new 4.200% Senior Notes due 2023 issued by MTI (the “MTI 2023 Notes”) and to (ii) exchange any and all of the outstanding MTG 2028 Notes for up to an aggregate principal amount of $500.0 million of new 4.875% Senior Notes due 2028 issued by MTI (the “MTI 2028 Notes” and, together with the MTI 2023 Notes, the “MTI Senior Notes”). Each new series of MTI Senior Notes have the same interest rate, maturity date, redemption terms and interest payment dates and are subject to substantially similar covenants as the corresponding series of the MTG Senior Notes for which they were 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. 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. The stated and effective interest rates for the MTI 2023 Notes are 4.200% and 4.502%, respectively. The stated and effective interest rates for the MTI 2028 Notes are 4.875% and 4.988%, respectively. The Company may redeem the MTI Senior Notes, in whole or in part, at any time prior to their maturity at the redemption prices set forth in MTI 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 MTI Senior Notes being rated below investment grade), the Company will be required to make an offer to repurchase the MTI 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 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.

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 MTG 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.

As of October 30, 2021, the Company had $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.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Inphi 2021 Convertible Notes

In September 2016, Inphi issued $287.5 million of 0.75% convertible senior notes due 2021. The Inphi 2021 Convertible Notes are governed by the terms of an indenture dated September 12, 2016 (the “Inphi 2021 Convertible Notes Indenture”). The Inphi 2021 Convertible Notes matured on September 1, 2021, unless earlier converted or repurchased. Interest on the Inphi 2021 Convertible Notes was payable on March 1 and September 1 of each year.

Under the Inphi 2021 Convertible Notes Indenture, on or after March 1, 2021, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. The Inphi 2021 Convertible Notes are not redeemable at the Company’s option prior to maturity.

The initial conversion rate at issuance in September 2016 was 17.7508 shares of Inphi common stock per $1,000 principal amount of Inphi 2021 Convertible Notes, which represented an initial conversion price of approximately $56.34 per Inphi share. The conversion rate for the Inphi 2021 Convertible Notes is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain fundamental changes that occur prior to the maturity date, the Company will increase the conversion rate of the Inphi 2021 Convertible Notes for a holder who elects to convert in connection with such a fundamental change in certain circumstances. Upon the occurrence of certain fundamental changes, the holders of the Inphi 2021 Convertible Notes may require the Company to repurchase all or a portion of their Inphi 2021 Convertible Notes for cash at a price equal to 100% of the principal amount of the Inphi 2021 Convertible notes, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Inphi 2021 Convertible Notes are not redeemable at the Company’s option prior to maturity.

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 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. From June 4, 2021 through August 31, 2021, the Inphi 2021 Convertible Notes were convertible into Inphi conversion units of 17.7508 per $1,000 in principal amount of such notes. Based on the terms of the Inphi 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. The Company has elected to measure the Inphi 2021 Convertible Notes at fair value.

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 September 1, 2021, $6.1 million in aggregate principal of the Inphi 2021 Convertible Notes was converted into 0.2 million shares of the Company’s common stock and $7.1 million in cash pursuant to the contractual terms of the Inphi 2021 Convertible Notes Indenture.

The Inphi 2021 Convertible Notes matured on September 1, 2021 and the Company settled the remaining outstanding balance.

Inphi 2025 Convertible Notes

In April 2020, Inphi issued $506.0 million 0.75% convertible senior notes due 2025. The Inphi 2025 Convertible Notes are governed by an indenture dated April 24, 2020 (the “Inphi 2025 Notes Indenture”). The Inphi 2025 Convertible Notes will mature on April 15, 2025, unless earlier converted or repurchased. 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 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; (ii) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading per $1,000 principal amount of Inphi 2025 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; (iii) if the Company calls any or all of the Inphi 2025 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (iv) upon the occurrence of specified corporate events. 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.

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.

The initial conversion rate at issuance in April 2020 was 8.0059 shares of Inphi common stock per $1,000 principal amount of Inphi 2025 Convertible Notes, which represented an initial conversion price of approximately $124.91 per Inphi share. The conversion rate for the Inphi 2025 Convertible Notes is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain fundamental changes that occur prior to the maturity date or following the Company’s issuance of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate of the Inphi 2025 Convertible Notes for a holder who elects to convert in connection with such a fundamental change or notice of redemption, as the case may be.

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 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). Between April 20 and May 1, 2021, $114.0 million in aggregate principal of the Inphi 2025 Convertible Notes was converted pursuant to the contractual terms of the Inphi 2025 Convertible Notes Indenture into 2.3 million shares of the Company’s common stock and $64.7 million in cash. Between May 2, 2021 and June 3, 2021, $192.5 million in aggregate principal of the Inphi 2025 Convertible Notes was converted pursuant to the contractual terms of the Inphi 2025 Convertible Notes Indenture into 3.8 million shares of the Company’s common stock and $109.2 million in cash.

In accounting for the Inphi 2025 Convertible Notes as of April 20, 2021, the Company separated the Inphi 2025 Convertible Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the fair value of the Inphi 2025 Convertible Notes as a whole. The fair value of $750.2 million was accordingly allocated between debt for $506.0 million and stockholders’ equity for $244.2 million.

As of October 30, 2021, there was no outstanding balance of Inphi 2025 Convertible Notes.

Inphi Capped Calls

In connection with the issuance of each of the Inphi Convertible Notes, Inphi entered into capped call transactions (the “Inphi 2021 Capped Calls” and the “Inphi 2025 Capped Calls,” collectively, the “Inphi Capped Calls”) in private transactions. Under the Inphi Capped Calls, Inphi purchased capped call options that in aggregate relate to 100% of the total number of shares of the Company’s common stock underlying the Inphi Convertible Notes, with a strike price approximately equal to the conversion price of the Inphi 2021 Convertible Notes and the Inphi 2025 Convertible Notes, respectively, and with a capped price equal to $73.03 per Inphi share and $188.54 per Inphi share, respectively.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The purchased Inphi Capped Calls allowed Inphi to receive shares of its common stock and/or cash from counterparties equal to the amounts of common stock and/or cash related to the excess of the market price per share of the common stock, as measured under the terms of the Inphi Capped Calls, over the strike prices of the Inphi Capped Calls during the relevant valuation period. The purchased Inphi Capped Calls were intended to reduce the potential dilution to common stock upon future conversion of the Inphi 2021 Convertible Notes and Inphi 2025 Convertible Notes by effectively increasing the initial conversion price to approximately $73.03 and $188.54, respectively, as well as to offset potential cash payments that Inphi would be required to make in excess of the principal amount of the Inphi Convertible Notes in applicable events.

The Inphi Capped Calls were separate transactions entered into by Inphi with the option counterparties, are not part of the terms of the Inphi Convertible Notes, and will not change the holders’ rights under the Inphi Convertible Notes.

In connection with the Inphi acquisition, the Company entered into unwind agreements related to the Inphi Capped Calls. Based on the terms of the unwind agreements, the Inphi Capped Calls do not qualify for equity classification. As such, the Company has classified the Inphi Capped Calls as assets and included in “prepaid expenses and other current assets” in the unaudited condensed consolidated balance sheet. Under the unwind agreements, the Company and the counterparties agreed to settle a portion of Inphi Capped Calls for a fixed payment of $74.1 million, which were settled on April 23, 2021. The remaining Inphi 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. The Company reports cash flows from capped calls in cash flows from financing activities. 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 October 30, 2021, there was no outstanding balance of Inphi Capped Calls.

Exchange Agreements

On April 20, 2021, the Company entered into separate, privately negotiated exchange agreements (the “Exchange Agreements”) with a limited number of holders (“Noteholders”) of the Inphi Convertible Notes. Under the terms of the Exchange Agreements, the Noteholders agreed to exchange approximately $9.6 million in aggregate principal amount of Inphi 2021 Convertible Notes and $199.5 million in aggregate principal amount of Inphi 2025 Convertible Notes for a number of shares of the Company’s common stock that was partially based on a trailing daily volume-weighted average of the Company’s stock price.

The Exchange Agreements were accounted for as liabilities and measured at fair value, with changes in fair value recorded in earnings. For the three months ended May 1, 2021, the Company recognized interest expense of $5.0 million on the remeasurement of the Exchange Agreements in its unaudited condensed statements of operations.

The Exchange Agreements were settled on April 29, 2021. 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.

Interest Expense and Future Contractual Maturities

During the three and nine months ended October 30, 2021, the Company recognized $33.6 million and $86.6 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 nine months ended October 31, 2020, the Company recognized $14.1 million and $43.6 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)

As of October 30, 2021, the aggregate future contractual maturities of the Company’s outstanding debt, at face value, were as follows (in thousands):

Fiscal Year						Amount
Remainder of 2022						$	10,938
2023						65,625
2024						1,322,452
2025						109,375
2026						131,250
Thereafter						2,959,290
Total						$	4,598,930

Note 6. Revenue

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																								Nine Months Ended
						October 30, 2021						% of Total						October 31, 2020						% of Total						October 30, 2021						% of Total						October 31, 2020						% of Total
Net revenue by end market:
Data center						$	499,748					41		%				$	239,159					32		%				$	1,210,536					39		%				$	771,546					36		%
Carrier infrastructure						215,108						18		%				168,584						23		%				579,330						19		%				433,269						20		%
Enterprise networking						247,210						20		%				158,933						21		%				644,786						21		%				475,313						22		%
Consumer						182,535						15		%				152,269						20		%				514,581						16		%				406,930						19		%
Automotive/industrial						66,644						6		%				31,198						4		%				170,172						5		%				84,023						3		%
						$	1,211,245											$	750,143											$	3,119,405											$	2,171,081

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 primary geographical market based on destination of shipment (in thousands, except percentages):

						Three Months Ended																								Nine Months Ended
						October 30, 2021						% of Total						October 31, 2020						% of Total						October 30, 2021						% of Total						October 31, 2020						% of Total
Net revenue based on destination of shipment:
China						$	558,899					46		%				$	324,927					43		%				$	1,388,292					45		%				$	908,255					42		%
United States						123,969						10		%				73,751						10		%				334,545						11		%				241,814						11		%
Thailand						97,381						8		%				55,617						7		%				258,158						8		%				183,625						8		%
Malaysia						65,620						5		%				73,582						10		%				196,633						6		%				198,436						9		%
Japan						68,195						6		%				32,811						4		%				168,427						5		%				104,676						5		%
Philippines						52,987						4		%				44,356						6		%				156,309						5		%				118,485						5		%
Other						244,194						21		%				145,099						20		%				617,041						20		%				415,790						20		%
						$	1,211,245											$	750,143											$	3,119,405											$	2,171,081

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

These destinations of shipment are not necessarily indicative of the geographic location of the Company’s end customers or the country in which the Company’s end customers sell devices containing the Company’s products. For example, a substantial majority of the shipments made to China relate to sales to non-China based customers that have factories or contract manufacturing operations located within China.

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

						Three Months Ended																								Nine Months Ended
						October 30, 2021						% of Total						October 31, 2020						% of Total						October 30, 2021						% of Total						October 31, 2020						% of Total
Net revenue by customer type:
Direct customers						$	893,495					74		%				$	573,759					76		%				$	2,284,589					73		%				$	1,646,511					76		%
Distributors						317,750						26		%				176,384						24		%				834,816						27		%				524,570						24		%
						$	1,211,245											$	750,143											$	3,119,405											$	2,171,081

Contract Liabilities

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. Contract liability balances are comprised of deferred revenue. The amount of revenue recognized during the nine months ended October 30, 2021 that was included in the deferred revenue balance at January 30, 2021 was not material.

As of the end of a reporting period, some of the performance obligations associated with contracts will have been unsatisfied or only partially satisfied. In accordance with the practical expedients available in the guidance, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.

Sales Commissions

The Company has elected to apply the practical expedient to expense commissions when incurred as the amortization period is typically one year or less. These costs are recorded in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

Note 7. Restructuring

The Company continuously evaluates its existing operations to increase operational efficiency, decrease costs and increase profitability. 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 $5.9 million and $31.0 million for the three and nine months ended October 30, 2021, respectively, which includes $1.2 million and $21.1 million of charges related to the Fiscal 2022 Plan. The Company expects to complete these restructuring actions by the end of fiscal 2023.

In prior years, the Company initiated restructuring plans in order to realign the organization and enable further investment in key priority areas. Restructuring charges were mainly comprised of severance and other one-time termination benefits, facility closures where sites were redundant within the same region or no longer suitably sized for the local employee base, and other costs. These plans are substantially complete. The Company recorded restructuring related charges of $19.3 million and $170.8 million for the three and nine months ended October 31, 2020, respectively.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

The following table provides a summary of restructuring related charges, as presented in the unaudited condensed consolidated statements of operations (in thousands):

			Three Months Ended												Nine Months Ended
			October 30, 2021						October 31, 2020						October 30, 2021						October 31, 2020
Cost of goods sold			$	—					$	—					$	—					$	9,594
Restructuring related charges			5,861						19,312						31,041						161,189
			$	5,861					$	19,312					$	31,041					$	170,783

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):

			Employee Severance						Other												Total
Liability at January 30, 2021			$	5,596					$	5,204											$	10,800
Charges			24,215						6,826												31,041
Cash payments			(22,308)						(5,888)												(28,196)
Non-cash items			—						(2,661)												(2,661)
Liability at October 30, 2021			$	7,503					$	3,481											$	10,984

The current and non-current portions of the restructuring liability at October 30, 2021 of $9.7 million and $1.3 million are included as a component of accrued liabilities and other non-current liabilities respectively in the accompanying unaudited condensed consolidated balance sheets.

Note 8. Supplemental Financial Information (in thousands)

Consolidated Balance Sheets

			October 30, 2021						January 30, 2021
Inventories:
Work-in-process			$	516,649					$	187,351
Finished goods			111,951						80,877
Inventories			$	628,600					$	268,228

The inventory balance at October 30, 2021 includes $41.9 million related to the remaining inventory fair value adjustment from the Innovium acquisition.

			October 30, 2021						January 30, 2021
Property and equipment, net:
Machinery and equipment			$	853,484					$	693,689
Land, buildings, and leasehold improvements			291,409						284,532
Computer software			107,712						103,789
Furniture and fixtures			28,732						26,990
			1,281,337						1,109,000
Less: Accumulated depreciation and amortization			(837,334)						(782,875)
Property and equipment, net			$	444,003					$	326,125

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

			October 30, 2021						January 30, 2021
Other non-current assets:
Technology and other licenses			$	506,145					$	242,244
Operating right-of-use assets			153,780						101,411
Prepaid ship and debits			139,754						131,657
Prepayments on supply capacity reservation agreements			30,250						—
Non-marketable equity investments			26,751						7,646
Other			58,810						58,611
Other non-current assets			$	915,490					$	541,569

			October 30, 2021						January 30, 2021
Accrued liabilities:
Variable consideration estimates (1)			$	197,217					$	180,995
Technology license obligations			104,716						71,130
Deferred non-recurring engineering credits			57,562						37,300
Lease liabilities - current portion			41,868						32,461
Deferred revenue			37,389						16,146
Accrued interest			20,344						8,709
Accrued royalty			15,920						12,740
Accrued legal reserve			9,003						50,101
Other			37,886						26,034
Accrued liabilities			$	521,905					$	435,616

(1) Variable consideration estimates consist of estimated customer returns, price discounts, price protection, rebates, and stock rotation programs.

			October 30, 2021						January 30, 2021
Other non-current liabilities
Technology license obligations			$	308,287					$	86,241
Lease liabilities-non current			150,847						104,417
Deferred tax liabilities			56,262						22,359
Non-current income tax payable			34,237						22,526
Other			41,007						23,310
Other non-current liabilities			$	590,640					$	258,853

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Accumulated Other Comprehensive Income

As of October 30, 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:

			Unrealized Gain (Loss) on Cash Flow Hedges
Balance at February 1, 2020			$	—
Other comprehensive income before reclassifications			1,214
Amounts reclassified from accumulated other comprehensive income			(1,214)
Net current-period other comprehensive income, net of tax			—
Balance at Balance at October 31, 2020			$	—

Consolidated Statements of Cash Flows

Noncash consideration paid for the acquisitions of Inphi and Innovium was $7.2 billion during the nine months ended October 30, 2021.

Share Repurchase Program

On November 17, 2016, the Company announced that its Board of Directors authorized a $1.0 billion share repurchase plan. The newly authorized stock repurchase program replaced in its entirety the prior $3.25 billion stock repurchase program. 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 October 30, 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. The share repurchase program will be subject to market conditions and other factors, and does not obligate the Company to repurchase any dollar amount or number of its common shares and the repurchase program may be extended, modified, suspended or discontinued at any time.

The Company temporarily suspended the share repurchase program in late March 2020 to preserve cash during the COVID-19 pandemic. The Company is focused on reducing its debt and de-levering its balance sheet. As a result, the Company did not repurchase any shares during the three and nine months ended October 30, 2021. The Company repurchased 1.3 million of its common shares for $25.2 million during the nine months ended October 31, 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.

Note 9. Fair Value Measurements

Fair value is an exit price representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1—Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2—Other inputs that are directly or indirectly observable in the marketplace.

Level 3—Unobservable inputs that are supported by little or no market activity.

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.

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. In addition, the severance pay fund is classified as a Level 2 asset as the valuation inputs are based on quoted prices and market observable data of similar instruments.

The tables below set forth, by level, the Company’s assets and liabilities that are measured at fair value on a recurring basis. 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 October 30, 2021
			Level 1						Level 2						Level 3						Total
Items measured at fair value on a recurring basis:
Assets
Cash equivalents:
Time deposits			$	—					$	167,636					$	—					$	167,636
Other non-current assets:
Marketable equity investments			1,234						—						—						1,234
Severance pay fund			—						697						—						697
Total assets			$	1,234					$	168,333					$	—					$	169,567

The carrying value of investments in non-marketable equity securities recorded to fair value on a non-recurring basis is adjusted for observable transactions for identical or similar investments of the same issuer or for impairment. These securities relate to equity investments in privately-held companies. 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 October 30, 2021, non-marketable equity investments had a carrying value of $26.8 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
			Level 1						Level 2						Level 3						Total
Items measured at fair value on a recurring basis:
Assets
Cash equivalents:
Time deposits			$	—					$	114,645					$	—					$	114,645
Other non-current assets:
Severance pay fund			—						623						—						623
Total assets			$	—					$	115,268					$	—					$	115,268

Fair Value of Debt

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 October 30, 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.

Note 10. Commitments and Contingencies

Commitments

The Company’s commitments primarily consist of wafer purchase obligations with foundry partners, supply capacity reservation payment commitments with foundries and test & assembly partners, and technology license fee payment obligations.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Total future unconditional purchase commitments as of October 30, 2021 are as follows (in thousands):

Fiscal Year						Purchase commitments to foundries and test & assembly partners						Technology license fees
Remainder of 2022						$	61,899					$	41,562
2023						1,068,090						128,292
2024						498,975						96,842
2025						541,868						74,178
2026						498,569						32,533
Thereafter						539,972						227,992
Total unconditional purchase commitments						$	3,209,373					$	601,399

Technology license fees include the liabilities under agreements for technology licenses between the Company and various vendors.

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.

The Company entered into manufacturing supply capacity reservation agreements with foundries and test & assembly suppliers this fiscal year due to the current global supply shortage environment. Under these arrangements, the Company agreed to pay capacity fees or refundable deposits to the suppliers in exchange for reserved manufacturing production capacity over the term of the agreements, which ranges from four to ten years. In addition, the Company committed to certain purchase levels that were in line with the capacity reserved. If the Company does not meet the purchase level commitments, the agreements either require the Company to pay a fee for the difference between the actual purchases and the purchase commitment or lose priority to reserved capacity for a period of time. The Company currently estimates that it has agreed to purchase level commitments of at least $2.4 billion of wafers, substrates, and other manufacturing products for the fiscal years 2022 through 2031 under the capacity reservation agreements. In addition, total fees payable under these arrangements are $213.5 million in fiscal years 2022 through 2026. Such purchase commitments are summarized in the preceding table.

In September 2021, the Company entered into an IP licensing agreement with a vendor which provides complete access to the vendor’s IP portfolio for 10 years. The arrangement provides access to IP over the term of the contract, including existing IP, as well as IP in development, and to be developed in the future. The contract provides support and maintenance over the term of the contract as well. Aggregate fees of $354 million are payable quarterly over the contract term.

Contingencies and Legal Proceedings

The Company currently is, and may from time to time become, a party to claims, lawsuits, governmental inquiries, inspections or investigations and other legal proceedings (collectively, “Legal Matters”) arising in the course of its business. Such Legal Matters, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

The Company is currently unable to predict the final outcome of its pending Legal Matters and therefore cannot determine the likelihood of loss or estimate a range of possible loss, except with respect to amounts where it has determined a loss is both probable and estimable and has made an accrual. The Company evaluates, at least on a quarterly basis, developments in its Legal Matters that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. The ultimate outcome of any Legal Matter involves judgments, estimates and inherent uncertainties. An unfavorable outcome in a Legal Matter, particularly in a patent dispute, could require the Company to pay damages or could prevent the Company from selling some of its products in certain jurisdictions. While the Company cannot predict with certainty the results of the Legal Matters in which it is currently involved, the Company does not expect that the ultimate costs to resolve these Legal Matters will individually or in the aggregate have a material adverse effect on its financial condition, however, there can be no assurance that the current or any future Legal Matters will be resolved in a manner that is not adverse to the Company’s business, financial condition, results of operations or cash flows.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Indemnities, Commitments and Guarantees

During its normal course of business, the Company has made certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities may include indemnities for general commercial obligations, indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease, and indemnities to directors and officers of the Company to the maximum extent permitted under the laws of Bermuda. In addition, the Company has contractual commitments to various customers, which could require the Company to incur costs to repair an epidemic defect with respect to its products outside of the normal warranty period if such defect were to occur. The duration of these indemnities, commitments and guarantees varies, and in certain cases, is indefinite. Some of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential future payments that the Company could be obligated to make. In general, the Company does not record any liability for these indemnities, commitments and guarantees in the accompanying unaudited condensed consolidated balance sheets as the amounts cannot be reasonably estimated and are not considered probable. The Company does, however, accrue for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and estimable.

Intellectual Property Indemnification

In addition to the above indemnities, the Company has agreed to indemnify certain customers for claims made against the Company’s products where such claims allege infringement of third-party intellectual property rights, including, but not limited to, patents, registered trademarks, and/or copyrights. Under the aforementioned indemnification clauses, the Company may be obligated to defend the customer and pay for the damages awarded against the customer as well as the attorneys’ fees and costs under an infringement claim. The Company’s indemnification obligations generally do not expire after termination or expiration of the agreement containing the indemnification obligation. Generally, but not always, there are limits on and exceptions to the Company’s potential liability for indemnification. Historically the Company has not made significant payments under these indemnification obligations and the Company cannot estimate the amount of potential future payments, if any, that it might be required to make as a result of these agreements. The maximum potential amount of any future payments that the Company could be required to make under these indemnification obligations could be significant.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Note 11. Stockholders’ Equity

Innovium Acquisition-related Equity Awards and the Innovium 2015 EIP

Following the Innovium acquisition and in accordance with the Innovium merger agreement, certain outstanding options to purchase shares of Innovium common stock and certain restricted stock units with respect to Innovium common stock, each granted under the Innovium Amended and Restated 2015 Stock Incentive Plan (“Innovium 2015 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 October 5, 2021 to register 1,232,805 common shares of the Company, issuable under the Innovium 2015 EIP, comprised of 421,648 common shares issuable pursuant to outstanding but unexercised options under the Innovium 2015 EIP and 811,157 common shares issuable pursuant to outstanding unvested restricted stock units under the Innovium 2015 EIP.

The Innovium 2015 EIP was adopted by Innovium on January 2015 and amended and restated in September 2020. The Innovium 2015 EIP 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 Innovium 2015 EIP generally vest over 3 to 4 years.

The awards under the Innovium 2015 EIP assumed by the Company in the Innovium acquisition were measured at the acquisition date based on the estimated fair value of $80.9 million. A portion of that fair value, $39.8 million, which represented the pre-acquisition service provided by employees to Innovium, 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 $41.1 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 and nine months ended October 30, 2021, the Company recognized $4.1 million of share-based compensation expense in connection with the acquisition of Innovium, of which $2.9 million was due to the accelerated vesting of outstanding equity awards of certain Innovium employees. During the three and nine months ended October 30, 2021, Innovium merger equity consideration related tax withholdings of $10.6 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.

Inphi Acquisition-related Equity Awards and the Inphi 2010 EIP

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.

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.

The awards under the Inphi 2010 EIP 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.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Summary of Share-based Compensation Expense

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

			Three Months Ended												Nine Months Ended
			October 30, 2021						October 31, 2020						October 30, 2021						October 31, 2020
Cost of goods sold			$	9,370					$	4,435					$	21,838					$	12,055
Research and development			75,514						36,856						184,577						114,349
Selling, general and administrative			34,206						18,496						136,373						55,656
Total share-based compensation			$	119,090					$	59,787					$	342,788					$	182,060

Share-based compensation capitalized in inventory was $14.6 million at October 30, 2021 and $4.3 million at January 30, 2021.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Note 12. Income Tax

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. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in tax laws, the applicability of special tax regimes, changes in how we do business, discrete items, and acquisitions, as well as the integration of such acquisitions.

On April 20, 2021, the Company completed its acquisition of Inphi Corporation. As a result of this transaction, the parent company was domiciled in the United States and not Bermuda. Therefore, for periods after closing, the income from all foreign subsidiaries is now subject to the U.S. provisions applicable to Global Intangible Low Taxed Income (“GILTI”), which generally requires for GILTI income to be included in the taxable income of U.S. entities, and which may adversely impact future effective tax rates and tax liabilities.

The Company’s estimated effective tax rate for the year differs from the U.S. statutory rate of 21% primarily due to a substantial portion of its earnings, or in some cases, losses being taxed or benefited at rates lower than the U.S. statutory rate. The Company’s effective tax rate is the result of an anticipated annual net income tax benefit and includes the effects of certain non-U.S. tax jurisdictions with tax rates lower than 21%.

The income tax benefit of $5.0 million for the three months ended October 30, 2021 is primarily related to the recognition of discrete tax benefits related to stock-based compensation, in addition to the recognition of tax benefits related to the settlement of audits in certain jurisdictions, which were previously unrecognized tax benefits recorded in prior periods.

The income tax benefit of $58.4 million for the nine months ended October 30, 2021 is primarily related to the recognition of the $10 million tax benefit for tax basis on the transfer of certain intellectual property from the Inphi acquisition to a subsidiary in Singapore, tax benefits related to stock-based compensation, and the recognition of tax benefits related to the settlement of audits in certain jurisdictions and the expirations of the statutes of limitations both of which were previously unrecognized tax benefits recorded in prior periods.

The Company’s gross unrecognized tax benefits were $335.7 million and $242.2 million on October 30, 2021 and January 30, 2021, respectively. The net increase to the Company’s gross unrecognized tax benefits of $93.5 million is primarily the result of certain unrecognized tax benefits recorded in the Company’s accounting for the acquisitions of Inphi and Innovium. If the gross unrecognized tax benefits as of October 30, 2021 were realized in a subsequent period, the Company would record a tax benefit of $200.5 million within its provision for income taxes at such time. The amount of interest and penalties accrued as of October 30, 2021, and January 30, 2021 was $3.7 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 $1.9 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 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. 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 October 30, 2021 consisted of approximately $523.5 million of cash and cash equivalents, of which approximately $437.0 million was held by subsidiaries outside of the United States. The Company has not recognized a deferred tax liability on $268.4 million of these assets as those amounts are deemed to be indefinitely reinvested. The Company manages its worldwide cash requirements by, among other things, reviewing available funds held by its foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States.

MARVELL TECHNOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Note 13. Net Loss Per Share

The Company reports both basic net loss per share, which is based on the weighted-average number of common shares outstanding during the period, and diluted net loss per share, which is based on the weighted-average number of common shares outstanding and potentially dilutive shares outstanding during the period.

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												Nine Months Ended
			October 30, 2021						October 31, 2020						October 30, 2021						October 31, 2020
Numerator:
Net loss			$	(62,532)					$	(22,908)					$	(427,202)					$	(293,834)
Denominator:
Weighted-average shares — basic			828,635						670,487						781,008						667,186
Effect of dilutive securities:
Share-based awards			—						—						—						—
Convertible debt			—						—						—						—
Weighted-average shares — diluted			828,635						670,487						781,008						667,186
Net loss per share:
Basic			$	(0.08)					$	(0.03)					$	(0.55)					$	(0.44)
Diluted			$	(0.08)					$	(0.03)					$	(0.55)					$	(0.44)

Potential dilutive securities include dilutive common shares from share-based awards attributable to the assumed exercise of stock options, restricted stock units and employee stock purchase plan shares using the treasury stock method. Potential dilutive securities include dilutive common shares from share-based awards attributable to the shares that could be issued upon conversion of the Company’s convertible debt using the if-converted method. Under the treasury stock method and if-converted method, potential common shares outstanding are not included in the computation of diluted net income per share if their effect is anti-dilutive.

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

			Three Months Ended												Nine Months Ended
			October 30, 2021						October 31, 2020						October 30, 2021						October 31, 2020
Weighted-average shares outstanding:
Share-based awards			17,642						12,456						15,334						10,401
Convertible debt			2						—						732						—

Anti-dilutive potential shares from share-based awards are excluded from the calculation of diluted earnings per share for all periods reported above because either their exercise price exceeded the average market price during the period or the share-based awards were determined to be anti-dilutive based on applying the treasury stock method. 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 and nine months ended October 30, 2021 and October 31, 2020 due to the net losses reported in those periods.