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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 001-40357
mrvl-20220730_g1.jpg
MARVELL TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 85-3971597
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1000 N. West Street, Suite 1200
Wilmington, Delaware 19801
(302) 295-4840
(Address of principal executive offices, zip code and registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
 
     
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.002 per share MRVL The Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filer
¨  
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No
The number of shares of common stock of the registrant outstanding as of August 19, 2022 was 852.6 million.


TABLE OF CONTENTS
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

1

PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
MARVELL TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value per share)
 
July 30,
2022
January 29,
2022
ASSETS
Current assets:
Cash and cash equivalents$617.1 $613.5 
Accounts receivable, net1,291.3 1,048.6 
Inventories913.1 720.3 
Prepaid expenses and other current assets93.5 111.0 
Total current assets2,915.0 2,493.4 
Property and equipment, net508.2 462.8 
Goodwill11,579.0 11,511.1 
Acquired intangible assets, net5,642.5 6,153.4 
Deferred tax assets310.5 493.5 
Other non-current assets1,206.9 994.4 
Total assets$22,162.1 $22,108.6 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$490.3 $461.5 
Accrued liabilities823.6 622.6 
Accrued employee compensation188.4 241.3 
Short-term debt653.5 63.2 
Total current liabilities2,155.8 1,388.6 
Long-term debt3,947.4 4,484.8 
Other non-current liabilities528.7 533.1 
Total liabilities6,631.9 6,406.5 
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock, $0.002 par value
1.7 1.7 
Additional paid-in capital14,300.5 14,209.0 
Retained earnings1,228.0 1,491.4 
Total stockholders’ equity15,530.2 15,702.1 
Total liabilities and stockholders’ equity$22,162.1 $22,108.6 
    
See accompanying notes to unaudited condensed consolidated financial statements
2

MARVELL TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In millions, except per share amounts)
 
 Three Months EndedSix Months Ended
 July 30,
2022
July 31,
2021
July 30,
2022
July 31,
2021
Net revenue$1,516.9 $1,075.9 $2,963.8 $1,908.2 
Cost of goods sold730.9 704.1 1,426.9 1,118.2 
Gross profit786.0 371.8 1,536.9 790.0 
Operating expenses:
Research and development449.0 367.0 893.1 653.1 
Selling, general and administrative211.7 259.2 432.4 460.7 
Legal settlement85.0  100.0  
Restructuring related charges1.2 12.3 2.5 25.2 
Total operating expenses746.9 638.5 1,428.0 1,139.0 
Operating income (loss)39.1 (266.7)108.9 (349.0)
Interest income0.8 0.2 1.3 0.4 
Interest expense(39.8)(33.8)(76.1)(68.9)
Other income, net3.7 (1.7)8.9 (0.5)
Interest and other income (loss), net(35.3)(35.3)(65.9)(69.0)
Income (loss) before income taxes3.8 (302.0)43.0 (418.0)
Provision (benefit) for income taxes(0.5)(25.6)204.4 (53.4)
Net income (loss)$4.3 $(276.4)$(161.4)$(364.6)
Comprehensive income (loss), net of tax$4.3 $(276.4)$(161.4)$(364.6)
Net income (loss) per share - basic$0.01 $(0.34)$(0.19)$(0.48)
Net income (loss) per share - diluted$0.01 $(0.34)$(0.19)$(0.48)
Weighted-average shares:
Basic850.9 821.1 849.4 757.2 
Diluted857.9 821.1 849.4 757.2 
See accompanying notes to unaudited condensed consolidated financial statements
3

MARVELL TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions, except per share amounts)

Common StockAdditional Paid-in Capital
SharesAmountRetained EarningsTotal
Balance at January 29, 2022846.7 $1.7 $14,209.0 $1,491.4 $15,702.1 
Issuance of common stock in connection with equity incentive plans4.1 — 2.4 — 2.4 
Tax withholdings related to net share settlement of restricted stock units— — (137.6)— (137.6)
Stock-based compensation— — 129.7 — 129.7 
Repurchase of common stock(0.3)— (15.0)— (15.0)
Cash dividends declared and paid ($0.06 per share)
— — — (50.9)(50.9)
Net loss— — — (165.7)(165.7)
Balance at April 30, 2022850.5 $1.7 $14,188.5 $1,274.8 $15,465.0 
Issuance of common stock in connection with equity incentive plans2.9  48.9 — 48.9 
Tax withholdings related to net share settlement of restricted stock units— — (34.1)— (34.1)
Stock-based compensation— — 147.2 — 147.2 
Repurchase of common stock(0.9) (50.0)— (50.0)
Cash dividends declared and paid ($0.06 per share)
— — — (51.1)(51.1)
Net income— — — 4.3 4.3 
Balance at July 30, 2022852.5 $1.7 $14,300.5 $1,228.0 $15,530.2 


4

MARVELL TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - (Continued)
(In millions, except per share amounts)
Common StockAdditional Paid-in Capital
SharesAmountRetained EarningsTotal
Balance at January 30, 2021675.4 $1.4 $6,331.0 $2,103.4 $8,435.8 
Issuance of common stock in connection with equity incentive plans2.2 — 0.5 — 0.5 
Tax withholdings related to net share settlement of restricted stock units— — (68.3)— (68.3)
Stock-based compensation— — 92.7 — 92.7 
Issuance of common stock in connection with acquisitions129.2 0.3 5,910.9 — 5,911.2 
Equity related issuance cost— — (8.2)— (8.2)
Replacement equity awards attributable to pre-acquisition service— — 82.3 — 82.3 
Conversion feature of convertible notes— — 244.2 — 244.2 
Impact of repurchases of convertible notes7.1 — 234.3 — 234.3 
Conversion of convertible notes to common stock2.5 — 59.7 — 59.7 
Cash dividends declared and paid ($0.06 per share)
— — — (40.6)(40.6)
Net loss— — — (88.2)(88.2)
Balance at May 1, 2021816.4 $1.7 $12,879.1 $1,974.6 $14,855.4 
Issuance of common stock in connection with equity incentive plans2.9  40.2 — 40.2 
Tax withholdings related to net share settlement of restricted stock units— — (42.0)— (42.0)
Stock-based compensation— — 122.3 — 122.3 
Issuance of common stock in connection with acquisitions0.1  6.6 — 6.6 
Conversion of convertible notes to common stock3.9 — 84.4 — 84.4 
Cash dividends declared and paid ($0.06 per share)
— — — (49.3)(49.3)
Net loss— — — (276.4)(276.4)
Balance at July 31, 2021823.3 $1.7 $13,090.6 $1,648.9 $14,741.2 

See accompanying notes to unaudited condensed consolidated financial statements
5

MARVELL TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 Six Months Ended
 July 30,
2022
July 31,
2021
Cash flows from operating activities:
Net loss$(161.4)$(364.6)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization152.6 118.0 
Stock-based compensation275.6 206.8 
Amortization of acquired intangible assets544.3 405.3 
Amortization of inventory fair value adjustment associated with acquisitions15.6 169.6 
Other expense, net24.2 66.1
Deferred income taxes178.4 (51.6)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable(239.7)(149.2)
Prepaid expenses and other assets(184.9)(46.2)
Inventories(207.1)(82.2)
Accounts payable3.9 0.6 
Accrued employee compensation(53.7)(56.3)
Accrued liabilities and other non-current liabilities 178.5 (7.9)
Net cash provided by operating activities526.3 208.4 
Cash flows from investing activities:
Purchases of technology licenses(4.2)(6.6)
Purchases of property and equipment(109.5)(53.6)
Acquisitions, net of cash acquired(98.6)(3,600.2)
Other, net (2.5)
Net cash used in investing activities(212.3)(3,662.9)
Cash flows from financing activities:
Repurchases of common stock(65.0) 
Proceeds from employee stock plans51.4 40.3 
Tax withholding paid on behalf of employees for net share settlement(171.7)(116.2)
Dividend payments to stockholders(102.0)(89.9)
Payments on technology license obligations(71.2)(67.3)
Proceeds from issuance of debt200.0 3,806.1 
Principal payments of debt(151.9)(275.0)
Payment for repurchases and settlement of convertible notes (180.9)
Proceeds from capped calls 160.3 
Payment of equity and debt financing costs (11.8)
Net cash provided by (used in) financing activities(310.4)3,265.6 
Net increase (decrease) in cash and cash equivalents3.6 (188.9)
Cash and cash equivalents at beginning of period613.5 748.5 
Cash and cash equivalents at end of period$617.1 $559.6 
See accompanying notes to unaudited condensed consolidated financial statements
6

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 six months ended July 30, 2022, 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 2022 audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022. 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 29, 2022 and those included in this Form 10-Q below. All dollar amounts in the financial statements and tables in these notes, except per share amounts, are stated in millions of U.S. dollars unless otherwise noted.

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 2022 had a 52-week year. Fiscal 2023 is a 52-week year.

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, 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 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 should be applied prospectively to acquisitions occurring on or after the effective date. The new standard was early adopted by the Company on January 30, 2022 and did not have a material effect on the Company’s condensed consolidated financial statements.


7

MARVELL TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Note 3. 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 millions, except percentages):

Three Months EndedSix Months Ended
July 30,
2022
% of TotalJuly 31,
2021
% of TotalJuly 30,
2022
% of TotalJuly 31,
2021
% of Total
Net revenue by end market:
Data center$643.4 42 %$433.7 40 %$1,283.9 43 %$710.8 37 %
Carrier infrastructure285.2 19 %196.718 %537.2 18 %364.3 19 %
Enterprise networking340.3 22 %222.721 %626.9 21 %397.5 21 %
Consumer164.4 11 %165.416 %342.9 12 %332.1 18 %
Automotive/industrial83.6 6 %57.45 %172.9 6 %103.5 5 %
$1,516.9 $1,075.9 $2,963.8 $1,908.2 

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

Three Months EndedSix Months Ended
July 30,
2022
% of TotalJuly 31,
2021
% of TotalJuly 30,
2022
% of TotalJuly 31,
2021
% of Total
Net revenue based on destination of shipment:
China$693.6 46 %$488.3 45 %$1,337.6 45 %$829.4 43 %
United States185.0 12 %123.2 11 %334.5 11 %210.6 11 %
Malaysia113.9 8 %72.4 7 %195.1 7 %131.0 7 %
Thailand74.9 5 %83.0 8 %174.2 6 %160.8 8 %
       Japan71.1 5 %56.4 5 %138.1 5 %100.2 5 %
Singapore67.1 4 %58.4 5 %117.2 4 %109.9 6 %
Taiwan61.3 4 %29.0 3 %114.9 4 %57.6 3 %
Philippines46.9 3 %55.7 5 %98.8 3 %103.3 5 %
Other203.1 13 %109.5 11 %453.4 15 %205.4 12 %
$1,516.9 $1,075.9 $2,963.8 $1,908.2 

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.

8

MARVELL TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

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

Three Months EndedSix Months Ended
July 30,
2022
% of TotalJuly 31,
2021
% of TotalJuly 30,
2022
% of TotalJuly 31,
2021
% of Total
Net revenue by customer type:
Direct customers$976.0 64 %$820.8 76 %$1,969.9 66 %$1,391.1 73 %
Distributors540.9 36 %255.1 24 %993.9 34 %517.1 27 %
$1,516.9 $1,075.9 $2,963.8 $1,908.2 

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 six months ended July 30, 2022 that was included in deferred revenue balance at January 29, 2022 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.


9

MARVELL TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

Note 4. Debt

Summary of Borrowings and Outstanding Debt

The following table summarizes the Company’s outstanding debt at July 30, 2022 and January 29, 2022 (in millions):
July 30,
2022
January 29,
2022
Face Value Outstanding:
2024 Term Loan - 3 Year Tranche$735.0 $735.0 
2026 Term Loan - 5 Year Tranche831.2 853.1 
     Term Loan Total1,566.2 1,588.1 
2020 Revolving Credit Facility 70.0  
     Revolving Credit Facility Total70.0  
4.200% MTG/MTI 2023 Senior Notes
500.0 500.0 
4.875% MTG/MTI 2028 Senior Notes
499.9 499.9 
1.650% 2026 Senior Notes
500.0 500.0 
2.450% 2028 Senior Notes
750.0 750.0 
2.950% 2031 Senior Notes
750.0 750.0 
     Senior Notes Total2,999.9 2,999.9 
Total borrowings$4,636.1 $4,588.0 
Less: Unamortized debt discount and issuance cost(35.2)(40.0)
Net carrying amount of debt$4,600.9 $4,548.0 
Less: Current portion (1)653.5 63.2 
Non-current portion$3,947.4 $4,484.8 

(1)As of July 30, 2022, the current portion of outstanding debt includes the MTG/MTI 2023 Senior Notes and the portion of the 2026 Term Loan - 5 Year Tranche, which are due within twelve months, and the outstanding balance of the 2020 Revolving Credit Facility. The Company intends to repay the amount with operating cash flow. The weighted average interest rate on short-term debt outstanding at July 30, 2022 and January 29, 2022 was 4.011% and 1.485%, respectively.

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 January 29, 2022, the Inphi Convertible Notes have been settled.

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 a 3-year $875.0 million term loan and a 5-year $875.0 million 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 $500.0 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. (the “MTG Senior Notes”) with like notes that are now issued by the Delaware-domiciled Marvell Technology, Inc. (the “MTI Senior Notes”). Below is further discussion of the terms of the various debt agreements.
10

MARVELL TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)


2024 and 2026 Term Loans

On December 7, 2020, the Company entered into a term loan credit agreement with a lending syndicate led by JP Morgan Chase Bank, N.A (the “2024 and 2026 Term Loan Agreement”) in order to finance the merger with Inphi. The 2024 and 2026 Term Loan Agreement provides 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 “2024 and 2026 Term Loans”).

The 3-Year Tranche Loan has a stated floating interest rate which equates to reserve-adjusted LIBOR + 125 bps. The effective interest rate for the 3-Year Tranche Loan was 2.936% as of July 30, 2022. 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 3.245% as of July 30, 2022. 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. 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 six months ended July 30, 2022, the Company repaid $21.8 million of the principal outstanding of the 5-Year Tranche Loan.

The 2024 and 2026 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 July 30, 2022, 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 JP Morgan 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. During the quarter ended July 30, 2022, the Company drew down $200.0 million on the 2020 Revolving Credit Facility of which $130.0 million was repaid in the same quarter and $70.0 million of aggregate principal amount of borrowings remained outstanding at July 30, 2022. The Company intends to repay the outstanding amount during the third quarter of fiscal 2023. As of July 30, 2022, $680.0 million of the $750.0 million of the 2020 Revolving Credit Facility was undrawn and will be available for draw down 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 July 30, 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 2024 and 2026 Term Loan covenants discussed above.

The Company currently carries debt that relies on one-month LIBOR as the benchmark rate. The one-month LIBOR is expected to cease publication after June 30, 2023. To the extent the one-month LIBOR ceases to exist, the 2024 and 2026 Term Loans and 2020 Revolving Credit Facility agreements contemplate an alternative benchmark rate without the need for any amendment thereto.
11

MARVELL TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)


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.

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 July 30, 2022, 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. On December 16, 2021, the MTI Senior Notes issued on May 4, 2021 were exchanged for new notes. The terms of the new notes issued in the exchange are substantially identical to the notes issued in May 2021, except that the new notes are registered under the Securities Act of 1933 and the transfer restrictions and registration rights applicable to the MTI Senior Notes issued in May 2021 do not apply to the new notes.

12

MARVELL TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

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 July 30, 2022, 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.

Inphi 2021 Convertible Notes

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

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. After these conversions, 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. In connection with the Inphi acquisition, the Company entered into unwind agreements related to the Inphi Capped Calls. 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 provided for variable cash settlement based on the Company’s stock price. 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 July 30, 2022, there was no outstanding balance of Inphi Capped Calls.
13

MARVELL TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ‑ (Continued)

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 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 six months ended July 30, 2022, the Company recognized $37.4 million and $70.3 million of interest expense in its unaudited condensed consolidated statements of operations related to interest, amortization of debt issuance costs and accretion of discount associated with the outstanding term loans and senior notes.

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

As of July 30, 2022, the aggregate future contractual maturities of the Company’s outstanding debt, at face value, were as follows (in millions):

Fiscal YearAmount
Remainder of 2023$113.7 
2024587.5 
2025844.4 
2026131.2 
2027959.4 
Thereafter1,999.9 
Total $4,636.1 


Note 5. Commitments and Contingencies

Warranty Obligations

The Company’s products carry a standard one-year warranty with certain exceptions in which the warranty period can extend to more than one year based on contractual agreements. The Company’s warranty expense has not been material in the periods presented.

Commitments

The Company’s commitments primarily consist of wafer purchase obligations with foundry partners, supply c