This excerpt taken from the MRVL 8-K filed Oct 17, 2006.
Our operating results for certain prior periods will be materially and adversely impacted by the results of the ongoing internal review relating to our historical grants of stock options and related accounting matters. We will not be able to accurately quantify the magnitude of the additional stock-based compensation expense that we will need to record for those periods or assess any additional potential consequences to the Company until the review is concluded.
In connection with the internal review of the special committee of our board of directors relating to our historical stock option grants and related accounting matters, we announced that we will need to restate our historical financial statements to record additional non-cash charges for stock-based compensation expense related to past option grants. We have not yet been able to determine the exact amount of these charges, the resulting tax and accounting impact of these actions, or which specific reporting periods require restatement. However, we expect that such non-cash stock compensation charges will be material in the aggregate and material to one or more prior annual and interim periods. Accordingly, our board of directors has concluded that our financial statements and all earnings press releases and similar communications issued by us relating to periods beginning on or after our initial public offering in June 2000 should no longer be relied upon.
We have received a letter of informal inquiry from the Securities and Exchange Commission requesting certain documents relating to our stock option grants and practices and have also received a grand jury subpoena from the office of the United States Attorney for the Northern District of California requesting substantially similar documents. We do not know when either inquiry will be concluded or what, if any, actions the SEC or the United States Attorney may take or require us to take as a result of their inquiries. The special committee of our board has yet to finish its review and, accordingly, we do not know what conclusions the special committee will reach as a result of its review or any actions that may be taken or required as a result of that review. We do not know whether, as a result of these SEC and United States Attorney inquiries, any additional regulatory proceedings or investigations that may arise, or the special committee review, any actions will be taken against us, our directors, executive officers or other officers or employees. If any such action is taken, that action or its consequences, which could include the resignation or removal of directors, executive officers or other officers or employees, could impair
our ability to achieve our business objectives and adversely impact our reputation, business, financial condition and results of operations. Regardless of the outcome, the ongoing inquiries and internal review, and any further regulatory proceedings or actions, have diverted and could continue to divert managements attention from our business and have resulted and could continue to result in significant legal and accounting expenses.