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These excerpts taken from the MRVL 10-K filed Apr 1, 2009. Remediation of Fiscal 2008 Material Weakness Our management report on internal control over financial reporting for the fiscal year ended February 2, 2008 described the following material weakness in our internal control over financial reporting: 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 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 our other departments. Throughout the first three quarters of fiscal 2009, we were engaged in the implementation and testing of remedial measures to address this material weakness. In the fourth quarter of fiscal 2009, we completed testing of
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Table of Contentsthe design and operating effectiveness of our internal controls to demonstrate their operating effectiveness over a period of time sufficient to support our conclusion that, as of January 31, 2009, we had remediated the previously reported material weakness in our internal control over financial reporting. During fiscal 2009, we implemented the following remedial actions in our internal control over financial reporting to address the previously reported material weakness: (1) We completed our remediation activities during fiscal 2009 with rigor and commitment and these remediation activities specifically address internal control deficiencies that were identified as of February 2, 2008. These remediation activities included the implementation of additional internal controls and the enhancement of certain existing internal controls in order to strengthen the control over the monthly close and financial reporting processes. These remediation activities also included a process that, throughout fiscal 2009, tracked and monitored remediation progress and results systematically against an established remediation timeline, until all remediation activities were completed. In addition, we proactively identified opportunities for control improvements and implemented such improvements. We also reassessed internal controls in financial reporting over other processes that may be susceptible to potential material misstatements. (2) We hired a permanent Chief Financial Officer effective June 23, 2008 and a permanent General Counsel effective October 30, 2008. The permanent Chief Financial Officer is serving as the Interim Chief Operating Officer until the search for a permanent Chief Operating Officer is concluded. We have completed the recruitment activities for the Compliance Director and we expect to fill that position in the near future. The Compliance Director will report directly to the Audit Committee of our Board of Directors. Until the position is filled, we engaged external resources to support and assist in our compliance efforts. We have strengthened our controls over the monthly closing and financial reporting processes by hiring personnel with knowledge, experience and training in the application of U.S. generally accepted accounting principles commensurate with our financial reporting requirements. In May 2007, our Board of Directors decided to implement the recommendation of our Board of Directors’ Special Committee Regarding Derivative Litigation that Dr. Sehat Sutardja remain Chief Executive Officer and a member of our Board of Directors, but step down as Chairman of the Board in favor of a non-executive Chairman. This non-executive Chairman was to be selected from a group of new independent directors appointed to fill the then-three vacancies on our Board of Directors. Since that time, we have added two new independent directors, Dr. Juergen Gromer and John G. Kassakian, to our Board of Directors, and our Board of Directors continues to search for additional independent directors. Our Board of Directors is evaluating the roles of independent directors in the governance of the Board, and our Board of Directors will designate an independent director either as non-executive Chairman or non-executive Lead Director (if it retains an executive Chairman) once it has completed its search for additional new independent directors. (3) We have made significant improvements in communication, both within our finance department and between finance and other departments, through the implementation of formalized inter-departmental and intra-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. Remediation of Fiscal 2008 Material Weakness Our management report on internal control over financial reporting for the fiscal year ended February 2, 2008 described the following material weakness in our internal control over financial reporting: 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 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 our other departments. Throughout the first three quarters of fiscal 2009, we were engaged in the implementation and testing of remedial measures to address this material weakness. In the fourth quarter of fiscal 2009, we completed testing of
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Table of Contentsthe design and operating effectiveness of our internal controls to demonstrate their operating effectiveness over a period of time sufficient to support our conclusion that, as of January 31, 2009, we had remediated the previously reported material weakness in our internal control over financial reporting. During fiscal 2009, we implemented the following remedial actions in our internal control over financial reporting to address the previously reported material weakness: (1) We completed our remediation activities during fiscal 2009 with rigor and commitment and these remediation activities specifically address internal control deficiencies that were identified as of February 2, 2008. These remediation activities included the implementation of additional internal controls and the enhancement of certain existing internal controls in order to strengthen the control over the monthly close and financial reporting processes. These remediation activities also included a process that, throughout fiscal 2009, tracked and monitored remediation progress and results systematically against an established remediation timeline, until all remediation activities were completed. In addition, we proactively identified opportunities for control improvements and implemented such improvements. We also reassessed internal controls in financial reporting over other processes that may be susceptible to potential material misstatements. (2) We hired a permanent Chief Financial Officer effective June 23, 2008 and a permanent General Counsel effective October 30, 2008. The permanent Chief Financial Officer is serving as the Interim Chief Operating Officer until the search for a permanent Chief Operating Officer is concluded. We have completed the recruitment activities for the Compliance Director and we expect to fill that position in the near future. The Compliance Director will report directly to the Audit Committee of our Board of Directors. Until the position is filled, we engaged external resources to support and assist in our compliance efforts. We have strengthened our controls over the monthly closing and financial reporting processes by hiring personnel with knowledge, experience and training in the application of U.S. generally accepted accounting principles commensurate with our financial reporting requirements. In May 2007, our Board of Directors decided to implement the recommendation of our Board of Directors’ Special Committee Regarding Derivative Litigation that Dr. Sehat Sutardja remain Chief Executive Officer and a member of our Board of Directors, but step down as Chairman of the Board in favor of a non-executive Chairman. This non-executive Chairman was to be selected from a group of new independent directors appointed to fill the then-three vacancies on our Board of Directors. Since that time, we have added two new independent directors, Dr. Juergen Gromer and John G. Kassakian, to our Board of Directors, and our Board of Directors continues to search for additional independent directors. Our Board of Directors is evaluating the roles of independent directors in the governance of the Board, and our Board of Directors will designate an independent director either as non-executive Chairman or non-executive Lead Director (if it retains an executive Chairman) once it has completed its search for additional new independent directors. (3) We have made significant improvements in communication, both within our finance department and between finance and other departments, through the implementation of formalized inter-departmental and intra-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. | EXCERPTS ON THIS PAGE:
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