Marvell Technology Group (MRVL)

Provision (Benefit) for Income Taxes

Our effective tax rate was 13.8% for fiscal 2009 compared to (3.0)% for fiscal 2008. The increase in the fiscal 2009 effective tax rate compared to fiscal 2008 was primarily due to increases to FIN 48 reserves despite significant foreign subsidiary net operating losses, which arose due to the restructure of certain foreign entities as well as a fiscal 2008 reduction in the unrecognized tax benefits due to closure of foreign audits and lapsing of statutes of limitations. We continued to incur significant non-tax deductible expenses such as stock-based compensation expenses and intangible amortization resulting in lower profit before tax in jurisdictions where we are not able to utilize the tax benefits. In addition, the tax benefits associated with our tax holidays vary from year to year based on the relative profitability in Israel, Singapore and Switzerland.

During fiscal 2008, the U.S. entities completed corporate income tax audits for fiscal years 2004 through 2006. The Internal Revenue Service, or IRS, completed its field work of the U.S. subsidiaries with no income tax adjustments. The U.S. tax authorities are reviewing employment taxes with regard to the re-measured stock options. The payroll tax portion of the U.S. audit remains open with regard to stock-based compensation and related items. Also, notice for a state audit arrived in the fourth quarter of fiscal 2009. The field work for the state audit will re-commence in April 2009.

Starting March 2009, a foreign subsidiary is scheduled to begin audit field work for fiscal years 2003 through 2008. We believe we have adequately reserved for any uncertain tax positions related to foreign subsidiaries.

Provision (Benefit) for Income Taxes

Our effective tax rate was 13.8% for fiscal 2009 compared to (3.0)% for fiscal 2008. The increase in the fiscal 2009 effective tax rate compared to fiscal 2008 was primarily due to increases to FIN 48 reserves despite significant foreign subsidiary net operating losses, which arose due to the restructure of certain foreign entities as well as a fiscal 2008 reduction in the unrecognized tax benefits due to closure of foreign audits and lapsing of statutes of limitations. We continued to incur significant non-tax deductible expenses such as stock-based compensation expenses and intangible amortization resulting in lower profit before tax in jurisdictions where we are not able to utilize the tax benefits. In addition, the tax benefits associated with our tax holidays vary from year to year based on the relative profitability in Israel, Singapore and Switzerland.

During fiscal 2008, the U.S. entities completed corporate income tax audits for fiscal years 2004 through 2006. The Internal Revenue Service, or IRS, completed its field work of the U.S. subsidiaries with no income tax adjustments. The U.S. tax authorities are reviewing employment taxes with regard to the re-measured stock options. The payroll tax portion of the U.S. audit remains open with regard to stock-based compensation and related items. Also, notice for a state audit arrived in the fourth quarter of fiscal 2009. The field work for the state audit will re-commence in April 2009.

Starting March 2009, a foreign subsidiary is scheduled to begin audit field work for fiscal years 2003 through 2008. We believe we have adequately reserved for any uncertain tax positions related to foreign subsidiaries.

Provision (Benefit) for Income Taxes

Provision (benefit) for Income Taxes

Our effective tax rate was (3.0)% for fiscal 2008 compared to 341.6% for fiscal 2007. The decrease in the fiscal 2008 effective tax rate compared to fiscal 2007 was primarily due to foreign subsidiary net operating losses which were made available by restructuring of certain foreign entities as well as a reduction in the unrecognized tax benefits due to closure of foreign audits and lapsing of statutes of limitations. We continued to incur significant non-tax deductible expenses such as stock-based compensation, acquisition related expenses and intangible amortization resulting in lower profit before tax in jurisdictions where we are not able to utilize the tax benefits. In addition, the tax benefits associated with our tax holidays vary year to year based on the relative profitability in Israel, Singapore and Switzerland.

During fiscal 2008, our U.S. and one of our foreign subsidiaries underwent and completed corporate income tax audits of fiscal years 2004 through 2006 and fiscal years 2005 through 2007, respectively. The foreign audit closed with no material adverse impact on our financial statements, and the IRS completed its field work of the U.S. subsidiaries with no income tax adjustments. The report is under review by the IRS national office and we expect to receive a final determination within the next year. However, the payroll tax portion of the U.S. audit remains open with regard to stock-based compensation and related items.

Provision (benefit) for Income Taxes

Our effective tax rate was (3.0)% for fiscal 2008 compared to 341.6% for fiscal 2007. The decrease in the fiscal 2008 effective tax rate compared to fiscal 2007 was primarily due to foreign subsidiary net operating losses which were made available by restructuring of certain foreign entities as well as a reduction in the unrecognized tax benefits due to closure of foreign audits and lapsing of statutes of limitations. We continued to incur significant non-tax deductible expenses such as stock-based compensation, acquisition related expenses and intangible amortization resulting in lower profit before tax in jurisdictions where we are not able to utilize the tax benefits. In addition, the tax benefits associated with our tax holidays vary year to year based on the relative profitability in Israel, Singapore and Switzerland.

During fiscal 2008, our U.S. and one of our foreign subsidiaries underwent and completed corporate income tax audits of fiscal years 2004 through 2006 and fiscal years 2005 through 2007, respectively. The foreign audit closed with no material adverse impact on our financial statements, and the IRS completed its field work of the U.S. subsidiaries with no income tax adjustments. The report is under review by the IRS national office and we expect to receive a final determination within the next year. However, the payroll tax portion of the U.S. audit remains open with regard to stock-based compensation and related items.