Marvell Technology Group (MRVL)

Item 4. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of November 1, 2008. Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective because of the material weakness described under “Management’s Report on Internal Control Over Financial Reporting” in Item 9A of our Annual Report on Form 10-K for the year ended February 2, 2008, which we are still in the process of remediating. This material weakness is described below:

        Control environment.     We did not maintain an effective control environment based on criteria established in the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Specifically: (1) internal control deficiencies were not remediated in a timely manner as our management did not exercise the necessary rigor and commitment to internal control over financial reporting and senior management was unable to timely implement the planned remediation actions of the control deficiencies identified in fiscal 2007; (2) we did not maintain a sufficient complement of personnel with a level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial reporting requirements; and (3) we did not maintain effective, timely and sufficient communication within our finance department and between our finance department and other departments.

        These control deficiencies resulted in audit adjustments for the year ended February 2, 2008 relating to the valuation of intangible assets, valuation of goodwill in purchase accounting, completeness of litigation accrual, valuation of inventory, valuation of deferred tax assets, valuation of accounts receivable, certain other accounts and the related financial disclosures. Additionally, these control deficiencies could result in misstatements to substantially all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that these control deficiencies constitute a material weakness.

Because of this material weakness, which we are still in the process of remediating, management has concluded that we did not maintain effective internal control over financial reporting as of November 1, 2008, based on the criteria established in “Internal Control - Integrated Framework” issued by the COSO. We have undertaken the remediation steps described below, and in connection with the preparation of this Quarterly Report on Form 10-Q, our management undertook and completed reconciliations, analyses, reviews and control procedures in addition to those historically completed to confirm that this Quarterly Report on Form 10-Q fairly presents in all material aspects our financial position, results of operations and cash flows as of, and for the period presented in accordance with U.S. generally accepted accounting principles.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended November 1, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described below.

Implemented or Planned Remedial Actions of Material Weakness

Management has made significant improvements to the overall design of its control environment to address the material weaknesses in internal control over financial reporting described in Item 9A of our Annual Report on Form 10-K for the year ended February 2, 2008. Specifically,

(1) We have developed and implemented remediation plans during the first three quarters of fiscal 2009, and will continue to implement during the remainder of fiscal 2009, specific remediation plans to address internal control deficiencies that were identified as at February 2, 2008. In addition to the above, we proactively identify opportunities for control improvements and have reassessed internal controls financial reporting over other processes that may be susceptible to potential material misstatements.

42

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of August 2, 2008. Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective because of the material weakness described under “Management’s Report on Internal Control Over Financial Reporting” in Item 9A of our Annual Report on Form 10-K for the year ended February 2, 2008, which we are still in the process of remediating. This material weakness is described below:

        Control environment.     We did not maintain an effective control environment based on criteria established in the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Specifically: (1) internal control deficiencies were not remediated in a timely manner as our management did not exercise the necessary rigor and commitment to internal control over financial reporting and senior management was unable to timely implement the planned remediation actions of the control deficiencies identified in fiscal 2007; (2) we did not maintain a sufficient complement of personnel with a level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial reporting requirements; and (3) we did not maintain effective, timely and sufficient communication within our finance department and between our finance department and other departments.

        These control deficiencies resulted in audit adjustments for the year ended February 2, 2008 relating to the valuation of intangible assets, valuation of goodwill in purchase accounting, completeness of litigation accrual, valuation of inventory, valuation of deferred tax assets, valuation of accounts receivable, certain other accounts and the related financial disclosures. Additionally, these control deficiencies could result in misstatements to substantially all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that these control deficiencies constitute a material weakness.

Because of this material weakness, which we are still in the process of remediating, management has concluded that we did not maintain effective internal control over financial reporting as of August 2, 2008, based on the criteria established in “Internal Control - Integrated Framework” issued by the COSO. We have undertaken the remediation steps described below, and in connection with the preparation of this Quarterly Report on Form 10-Q, our management undertook and completed reconciliations, analyses, reviews and control procedures in addition to those historically completed to confirm that this Quarterly Report on Form 10-Q fairly presents in all material aspects our financial position, results of operations and cash flows as of, and for the period presented in accordance with U.S. generally accepted accounting principles.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended August 2, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described below.

Implemented or Planned Remedial Actions of Material Weakness

Management has made significant improvements to the overall design of its control environment to address the material weaknesses in internal control over financial reporting described in Item 9A of our Annual Report on Form 10-K for the year ended February 2, 2008. Specifically,

(1) We have developed and implemented remediation plans during the first and second quarters of fiscal 2009, and will continue to implement during the remainder of fiscal 2009, specific remediation plans to address internal control deficiencies that were identified as at February 2, 2008. In addition to the above, we proactively identify opportunities for control improvements and have reassessed internal controls financial reporting over other processes that may be susceptible to potential material misstatements.

39

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of May 3, 2008. Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to management, including the Chief Executive Officer and interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our management, including our Chief Executive Officer and interim Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective because of the material weakness described under “Management’s Report on Internal Control Over Financial Reporting” in Item 9A of the Company’s Annual Report on Form 10-K for the year ended February 2, 2008, which the Company is still in the process of remediating. This material weakness is described below:

Control environment.     We did not maintain an effective control environment based on criteria established in the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Specifically: (1) internal control deficiencies were not remediated in a timely manner as our management did not exercise the necessary rigor and commitment to internal control over financial reporting and senior management was unable to timely implement the planned remediation actions of the control deficiencies identified in fiscal 2007; (2) we did not maintain a sufficient complement of personnel with a level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial reporting requirements; and (3) we did not maintain effective, timely and sufficient communication within our finance department and between our finance department and other departments of the Company.

These control deficiencies resulted in audit adjustments for the year ended February 2, 2008 relating to the valuation of intangible assets, valuation of goodwill in purchase accounting, completeness of litigation accrual, valuation of inventory, valuation of deferred tax assets, valuation of accounts receivable, certain other accounts and the related financial disclosures. Additionally, these control deficiencies could result in misstatements to substantially all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that these control deficiencies constitute a material weakness.

Because of this material weakness, which we are still in the process of remediating, management has concluded that we did not maintain effective internal control over financial reporting as of May 3, 2008, based on the criteria established in “Internal Control - Integrated Framework” issued by the COSO. We have undertaken the remediation steps described below, and in connection with the preparation of this Quarterly Report, our management undertook and completed reconciliations, analyses, reviews and control procedures in addition to those historically completed to confirm that this Quarterly Report on Form 10-Q fairly presents in all material aspects our financial position, results of operations and cash flows as of, and for the period presented in accordance with U.S. generally accepted accounting principles.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended May 3, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described below.

Implemented or Planned Remedial Actions of Material Weakness

Management is committed to and continues to make significant progress in reducing internal control deficiencies.  During the quarter ended May 3, 2008 and subsequent to that date, we implemented or plan to implement further remedial actions regarding the material weakness in internal control over financial reporting related to an ineffective control environment, specifically:

(1) We have identified the general nature of our deficiencies at February 2, 2008 and have already begun remediation efforts. We have developed a detailed remediation plan for internal control deficiencies and have already addressed a number of deficiencies during the quarter ended May 3, 2008.  We continue to address the remaining deficiencies with rigor and

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Item 9A.    Controls and Procedures

Management's Evaluation of Disclosure Controls and Procedures

        Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of February 2, 2008. Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and interim Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of February 2, 2008 because of the material weaknesses described below. Notwithstanding the material weaknesses described below, our current management has concluded that the consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K are fairly stated in all material respects in accordance with generally accepted accounting principles in the United States for each of the periods presented herein.

Management's Report on Internal Control Over Financial Reporting

        Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        Management has evaluated the effectiveness of our internal control over financial reporting as of February 2, 2008 using the criteria set forth in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

        A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that we have the following material weakness in our internal control over financial reporting as of February 2, 2008:

        Control environment.    We did not maintain an effective control environment based on criteria established in the COSO framework. Specifically: (1) internal control deficiencies were not remediated in a timely manner as our management did not exercise the necessary rigor and commitment to internal control over financial reporting and senior management was unable to timely implement the planned remediation actions of the control deficiencies identified in fiscal year 2007; (2) we did not maintain a sufficient complement of personnel with a level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial reporting requirements; and (3) we did not maintain effective, timely and sufficient communication within our finance department and between our finance department and other departments of the Company.

132

        These control deficiencies resulted in audit adjustments relating to the valuation of intangible assets, valuation of goodwill in purchase accounting, completeness of litigation accrual, valuation of inventory, valuation of deferred tax assets, valuation of accounts receivable, certain other accounts and the related financial disclosures. Additionally, these control deficiencies could result in misstatements to substantially all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that these control deficiencies constitute a material weakness.

        As a result of the material weakness described above, management concluded that our internal control over financial reporting was not effective as of February 2, 2008 based on the criteria established in Internal Control — Integrated Framework issued by the COSO.

        The effectiveness of our internal control over financial reporting as of February 2, 2008 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

        There were no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Remediation of Fiscal 2007 Deficiencies

        As previously disclosed in our Annual Report on Form 10-K for fiscal 2007 we had a material weakness in our control environment and a material weakness in our controls over stock-based compensation expense. As of February 2, 2008, we have remediated the material weakness in our controls over stock-based compensation expense. As noted above in Management's Report on Internal Control Over Financial Reporting, the control environment material weakness continues to exist, however, we have remediated the deficiency with respect to certain individuals involved in the stock option process that said they did not feel able to provide frank advice to senior management regarding controls over processing, recording and reporting of stock option transactions. The following corrective actions were implemented throughout fiscal 2008, in addition to the various measures previously disclosed in our Annual Report on Form 10-K for fiscal 2007, relating to both the control environment and stock-based compensation expense material weaknesses:

•

Certain management personnel involved in the processing, recording and reporting of stock option transactions have either been terminated or reassigned to other positions in the Company that have no role in the equity award grant process.



•

During fiscal year 2008 we hired a new Vice President of Human Resources whose responsibilities include providing oversight of the equity award grant process and implementing directives of the Executive Compensation Committee with respect thereto.



•

During fiscal year 2008, a number of our senior management personnel completed training programs as planned for fiscal year 2008 to ensure better governance of the company and a more open environment.



•

The Executive Compensation Committee and Board adopted and enforced an equity award grant policy during fiscal year 2008.



•

All equity awards granted during fiscal year 2008 were memorialized in minutes of the Executive Compensation Committee.



•

The Company significantly enhanced its controls over stock-based compensation expense, including enhancements to improve the rigor of our review process.

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•

During the fourth quarter of fiscal year 2008, we hired an interim Chief Financial Officer and an interim General Counsel. To date, we have increased the number of independent members of our Board by one compared to fiscal year 2007.

Remediation Plan of Fiscal 2008 Material Weakness

        We plan to implement further remedial actions related to the 2008 material weakness, specifically:

•

We are conducting a search for a permanent Chief Financial Officer and General Counsel and, following completion of our recruitment of a permanent Chief Financial Officer, we are planning to conduct a search for a permanent Chief Operating Officer and a Vice President of Compliance. The Vice President of Compliance will report directly to the Audit Committee of the Board. The Board's Governance Committee is continuing its search for additional independent directors to fill existing vacancies, and an independent director will succeed Dr. Sutardja as Chairman of the Board.



•

We also plan to further strengthen our controls over the monthly closing and financial reporting processes by continuing to hire additional personnel, including personnel with knowledge, experience and training in the application of U.S. generally accepted accounting principles commensurate with our financial reporting requirements. The hiring and retention of additional, qualified personnel is critical to the building of a finance organization with the depth and breadth of knowledge to support our planned operations. Additionally, we are evaluating our resource and automation requirements in related functions to adequately support the finance organization.



•

We further plan to enhance communications through the design of formalized inter-departmental information exchanges on a recurring basis, and enhancements to the design of certain internal controls to enable a more detailed review process to occur on a timely basis.

Item 9A.    Controls and Procedures

Management's Evaluation of Disclosure Controls and Procedures

        Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of February 2, 2008. Disclosure controls and procedures are designed to
ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and
that such information is accumulated and communicated to management, including the Chief Executive Officer and interim Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. Based on this evaluation, our Chief Executive Officer and interim Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of
February 2, 2008 because of the material weaknesses described below. Notwithstanding the material weaknesses described below, our current management has concluded that the consolidated
financial statements for the periods covered by and included in this Annual Report on Form 10-K are fairly stated in all material respects in accordance with generally accepted
accounting principles in the United States for each of the periods presented herein.

Management's Report on Internal Control Over Financial Reporting

        Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        Management
has evaluated the effectiveness of our internal control over financial reporting as of February 2, 2008 using the criteria set forth in the Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

        A
material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that we have the following material weakness in our
internal control over financial reporting as of February 2, 2008:

        Control environment.    We did not maintain an effective control environment based on criteria established in the COSO
framework. Specifically: (1) internal control deficiencies were not remediated in a timely manner as our management did not exercise the necessary rigor and commitment to internal control over
financial reporting and senior management was unable to timely implement the planned remediation actions of the control deficiencies identified in fiscal year 2007; (2) we did not maintain a
sufficient complement of personnel with a level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial
reporting requirements; and (3) we did not maintain effective, timely and sufficient communication within our finance department and between our finance department and other departments of the
Company.

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        These
control deficiencies resulted in audit adjustments relating to the valuation of intangible assets, valuation of goodwill in purchase accounting, completeness of litigation accrual,
valuation of inventory, valuation of deferred tax assets, valuation of accounts receivable, certain other accounts and the related financial disclosures. Additionally, these control deficiencies could
result in misstatements to substantially all financial statement accounts and disclosures that would result in a material
misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that these control deficiencies constitute a
material weakness.

        As
a result of the material weakness described above, management concluded that our internal control over financial reporting was not effective as of February 2, 2008 based on the
criteria established in Internal Control — Integrated Framework issued by the COSO.

        The
effectiveness of our internal control over financial reporting as of February 2, 2008 has been audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report included in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

        There were no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.

Remediation of Fiscal 2007 Deficiencies

        As previously disclosed in our Annual Report on Form 10-K for fiscal 2007 we had a material weakness in our control environment and a material
weakness in our controls over stock-based compensation expense. As of February 2, 2008, we have remediated the material weakness in our controls over stock-based compensation expense. As noted
above in Management's Report on Internal Control Over Financial Reporting, the control environment material weakness continues to exist, however, we have remediated the deficiency with respect to
certain individuals involved in the stock option process that said they did not feel able to provide frank advice to senior management regarding controls over processing, recording and reporting of
stock option transactions. The following corrective actions were implemented throughout fiscal 2008, in addition to the various measures previously disclosed in our Annual Report on
Form 10-K for fiscal 2007, relating to both the control environment and stock-based compensation expense material weaknesses:

•

Certain
management personnel involved in the processing, recording and reporting of stock option transactions have either been terminated or reassigned to other positions in
the Company that have no role in the equity award grant process.




•

During
fiscal year 2008 we hired a new Vice President of Human Resources whose responsibilities include providing oversight of the equity award grant process and
implementing directives of the Executive Compensation Committee with respect thereto.




•

During
fiscal year 2008, a number of our senior management personnel completed training programs as planned for fiscal year 2008 to ensure better governance of the company
and a more open environment.




•

The
Executive Compensation Committee and Board adopted and enforced an equity award grant policy during fiscal year 2008.




•

All
equity awards granted during fiscal year 2008 were memorialized in minutes of the Executive Compensation Committee.




•

The
Company significantly enhanced its controls over stock-based compensation expense, including enhancements to improve the rigor of our review process.

133

•

During
the fourth quarter of fiscal year 2008, we hired an interim Chief Financial Officer and an interim General Counsel. To date, we have increased the number of
independent members of our Board by one compared to fiscal year 2007.

Remediation Plan of Fiscal 2008 Material Weakness

        We plan to implement further remedial actions related to the 2008 material weakness, specifically:

•

We
are conducting a search for a permanent Chief Financial Officer and General Counsel and, following completion of our recruitment of a permanent Chief Financial Officer,
we are planning to conduct a search for a permanent Chief Operating Officer and a Vice President of Compliance. The Vice President of Compliance will report directly to the Audit Committee of the
Board. The Board's Governance Committee is continuing its search for additional independent directors to fill existing vacancies, and an independent director will succeed Dr. Sutardja as
Chairman of the Board.




•

We
also plan to further strengthen our controls over the monthly closing and financial reporting processes by continuing to hire additional personnel, including personnel
with knowledge, experience and training in the application of U.S. generally accepted accounting principles commensurate with our financial reporting requirements. The hiring and retention of
additional, qualified personnel is critical to the building of a finance organization with the depth and breadth of knowledge to support our planned operations. Additionally, we are evaluating our
resource and automation requirements in related functions to adequately support the finance organization.




•

We
further plan to enhance communications through the design of formalized inter-departmental information exchanges on a recurring basis, and enhancements to the design of
certain internal controls to enable a more detailed review process to occur on a timely basis.

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of October 27, 2007. Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based in this evaluation, our management, including our Chief Executive Officer and interim Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective because of the material weaknesses described under “Management’s Report on Internal Control Over Financial Reporting” in Item 9A of the Company’s Annual Report on Form 10-K for the year ended January 27, 2007, which the Company is still in the process of remediating. These material weaknesses are described below:

Control environment. We did not maintain an effective control environment based on criteria established in the COSO framework and commensurate with our rapid growth and increasing complexity.  Our management, including those individuals responsible for our Finance and Legal Departments, did not exercise the necessary rigor and commitment to internal control over financial reporting.  Specifically, (1) internal control deficiencies were not remediated in a timely manner; (2) certain individuals involved in the stock option process said that they did not feel able to provide frank advice to senior management regarding controls over processing, recording and reporting of stock options transactions; and (3) we did not maintain a sufficient complement of personnel with a level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with our financial reporting requirements.  This lack of an effective control environment contributed to the restatement of the consolidated financial statements of annual periods through fiscal 2006, each of the quarters of fiscal year 2006, as well as the first quarter of fiscal year 2007.  Additionally, this lack of an effective control environment could result in misstatements of any of our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevent or detected; this lack of effective control environment also contributed to the material weakness described below. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

Controls over stock-based compensation expense under FASB Statement of Financial Accounting Standards No. 123 (revised 2004), “Share Based Payments” (“FAS 123(R)”). We did not maintain effective controls over the accounting for and disclosure of our stock-based compensation expense under FAS 123(R). Our controls, including monitoring controls, policies and procedures relating to the accounting for and disclosure of stock-based compensation were not effective. Specifically, effective controls were not maintained to ensure the existence, completeness, accuracy, valuation and presentation of our stock-based compensation expense. This control deficiency resulted in audit adjustments to stock-based compensation expense for the year ended January 27, 2007. This control deficiency could also result in a misstatement to compensation expense that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

41

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

31

We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2006, the end of the quarterly period covered by this report. Based on the foregoing, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

      There has been no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

40