Marvell Technology Group (MRVL)

Note 8. Restructuring

During the three months ended May 2, 2009, in response to the challenging economic environment, the Company implemented certain cost reduction measures that included reductions in workforce in all functions of the organization worldwide. As a result, a restructuring charge of $8.3 million was recorded which consisted of $7.4 million of severance and related employee benefits to approximately 300 terminated employees and $0.9 million of equipment and other related charges. This is in addition to the approximately 208 employees who were terminated during the fourth quarter ended January 31, 2009 that resulted in a restructuring charge of $9.7 million, which consisted of $6.6 million of severance and related employee benefits, approximately $2.7 million of charges related to the impairment of abandoned facilities and $0.4 million of other equipment charges. All expenses associated with the Company’s restructuring plans are included in “Restructuring” in the Unaudited Condensed Consolidated Statements of Operations.

The following table sets forth an analysis of the components of the restructuring charges and the payments made through May 2, 2009 (in thousands):

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The Company anticipates that $3.8 million will be paid out in cash during the three months ending August 1, 2009. The remaining facility lease charges included in the restructure liabilities will be paid out through fiscal 2019.

Restructuring

Restructuring charges included in operating expenses increased $8.3 million in the three months ended May 2, 2009 compared to the three months ended May 3, 2008. During the first quarter ended May 2, 2009, in response to the challenging economic environment we implemented certain cost reduction measures that included reductions in workforce in all functions of the organization worldwide, impacting approximately 300 employees. As a result, a restructuring charge of $8.3 million was recorded that consisted of $7.4 million of severance and related employee benefits to the terminated employees and $0.9 million for equipment and other related charges.

Restructuring

Restructuring charges increased $1.8 million in fiscal 2009 compared to fiscal 2008. During the fourth quarter of fiscal 2009, we implemented certain cost reduction measures that included reductions in workforce in all functions of the organization worldwide, impacting approximately 200 employees, in order to reduce our cost structure. As a result, a restructuring charge of $9.7 million was recorded that consisted of severance and related

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employee benefits to the terminated employees, approximately $2.7 million of charges related to the impairment of abandoned facilities and $0.4 million of other equipment charges. The lease abandonment charges included $1.8 million resulting from the closing of the Canada office and another $0.9 million related to a change in the estimated sublease income for the duration of the remaining lease term on another facility. The lease abandonment charge includes the remaining lease commitment of the facilities reduced by the estimated sublease income through the duration of the lease term. During the fourth quarter of fiscal 2008, we implemented cost- cutting measures that included reductions in workforce in all functions of the organization worldwide in order to reduce our cost structure. A restructuring charge of $7.8 million was recorded relating to severance and benefits to 438 terminated employees in the fourth quarter of fiscal 2008. All expenses associated with our cost-cutting measures are included in “Restructuring” in the Consolidated Statements of Operations. For further discussion on our restructuring plan, please refer to Note 7 — Restructuring of our notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.

Restructuring

Restructuring charges increased $1.8 million in fiscal 2009 compared to fiscal 2008. During the fourth quarter of fiscal 2009, we implemented certain cost reduction measures that included reductions in workforce in all functions of the organization worldwide, impacting approximately 200 employees, in order to reduce our cost structure. As a result, a restructuring charge of $9.7 million was recorded that consisted of severance and related

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employee benefits to the terminated employees, approximately $2.7 million of charges related to the impairment of abandoned facilities and $0.4 million of other equipment charges. The lease abandonment charges included $1.8 million resulting from the closing of the Canada office and another $0.9 million related to a change in the estimated sublease income for the duration of the remaining lease term on another facility. The lease abandonment charge includes the remaining lease commitment of the facilities reduced by the estimated sublease income through the duration of the lease term. During the fourth quarter of fiscal 2008, we implemented cost- cutting measures that included reductions in workforce in all functions of the organization worldwide in order to reduce our cost structure. A restructuring charge of $7.8 million was recorded relating to severance and benefits to 438 terminated employees in the fourth quarter of fiscal 2008. All expenses associated with our cost-cutting measures are included in “Restructuring” in the Consolidated Statements of Operations. For further discussion on our restructuring plan, please refer to Note 7 — Restructuring of our notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.

Restructuring

During the fourth quarter of fiscal 2008, we implemented cost-cutting measures that included reductions in workforce in all functions of the organization worldwide in order to reduce our cost structure. A restructuring charge of $7.9 million was recorded relating to severance and benefits to 438 terminated employees. All expenses associated with our cost-cutting measures are included in “Restructuring” in the Consolidated Statements of Operations.

Restructuring

During the fourth quarter of fiscal 2008, we implemented cost-cutting measures that included reductions in workforce in all functions of the organization worldwide in order to reduce our cost structure. A restructuring charge of $7.9 million was recorded relating to severance and benefits to 438 terminated employees. All expenses associated with our cost-cutting measures are included in “Restructuring” in the Consolidated Statements of Operations.

The calculation of non-GAAP net income per share is adjusted for the following item:

·                  Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares (diluted). For purposes of calculating non-GAAP net income per share, the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the benefits of SFAS 123R compensation costs attributable to future services and not yet recognized in the financial statements that are treated as proceeds assumed to be used to repurchased shares under the GAAP treasury stock method. GAAP weighted average shares outstanding (diluted) also includes the dilutive/antidilutive effects of warrants, common stock options and restricted stock. Since Marvell’s non-GAAP net income does not reflect the effects of these compensation costs, management believes these amounts should not be applied to the repurchase of shares in calculating non-GAAP net income per share.

Non-GAAP net income and non-GAAP net income per share should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Marvell’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Marvell’s results as reported under GAAP. Marvell expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from Marvell’s non-GAAP net income should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Some of the limitations in relying on non-GAAP net income and non-GAAP net income per share are:

·                  Non-GAAP net income does not account for stock compensation expense related to equity awards granted to Marvell’s employees. Marvell’s stock incentive plans are important components of its employee incentive compensation arrangements and are reflected as expenses in Marvell’s GAAP results under SFAS 123R, effective as of January 29, 2006. Prior to the adoption of SFAS 123R, Marvell’s GAAP results reflect stock compensation expense under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related guidance.

·                  While amortization of purchased intangible assets does not directly affect Marvell’s current cash position, such expense represents the declining value of the technology and other intangible assets that Marvell has acquired over their respective expected economic lives. The expense associated with this decline in value is excluded from the non-GAAP net income presentation, and therefore

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Note 6 — Restructuring:

        During the fourth quarter of fiscal 2008 the Company implemented a restructuring plan which included reductions in workforce in all functions of the organization worldwide in order to reduce the Company's cost structure. A restructuring charge of $7.9 million was recorded all of which related to severance and benefits to 438 terminated employees. All expenses associated with the Company's restructuring plans are included in "Restructuring" in the Condensed Consolidated Statements of Operations.

        The following table sets forth an analysis of the components of the restructuring charges and the payments made through February 2, 2008 (in thousands):

        The Company anticipates that the restructuring reserve balance of $0.8 million will be paid out in cash in the first quarter of fiscal 2009.

Note 6 — Restructuring:

        During the fourth quarter of fiscal 2008 the Company implemented a restructuring plan which included reductions in workforce in all functions of the organization
worldwide in order to reduce the Company's cost structure. A restructuring charge of $7.9 million was recorded all of which related to severance and benefits to 438 terminated employees. All
expenses associated with the Company's restructuring plans are included in "Restructuring" in the Condensed Consolidated Statements of Operations.

        The
following table sets forth an analysis of the components of the restructuring charges and the payments made through February 2, 2008 (in thousands):

        The
Company anticipates that the restructuring reserve balance of $0.8 million will be paid out in cash in the first quarter of fiscal 2009.