##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 001-31650
 MINDSPEED TECHNOLOGIES, INC.
  Delaware
    
    01-0616769(State of incorporation)
    
    (I.R.S. EmployerIdentification No.)4000 MacArthur Boulevard, East TowerNewport Beach, California
    
    92660-3095(Address of principal executive offices)
    
    (Zip code)
  (949) 579-3000
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### Table of Contents



FORWARD-LOOKING STATEMENTS
  
    
    the ability of our relationships with network infrastructure original equipment
manufacturers to facilitate early adoption of our products, enhance our ability to obtain
design wins and encourage adoption of our technology in the industry;
    
    the growth prospects for the network infrastructure equipment and communications
semiconductors markets, including increased demand for network capacity, the upgrade and
expansion of existing networks and the build-out of networks in developing countries;
    
    our belief that our diverse portfolio of semiconductor solutions has positioned us to
capitalize on some of the most significant trends in telecommunications spending;
    
    our belief that we are well-situated in China and that fiber deployments are being
rolled out by the countrys major telecommunications carriers;
    
    our plans to make substantial investments in research and development and participate
in the formulation of industry standards;
    
    our belief that we can maximize our return on our research and development spending by
focusing our investment in what we believe are key growth markets;
    
    the continuation of intense price and product competition, and the resulting declining
average selling prices for our products;
    
    the increasing trend toward industry consolidation and the effect it could have on our
operating results;
    
    the sufficiency of our cash balances, along with cash expected from product sales to
fund our operations, research and development efforts, anticipated capital expenditures,
working capital and other financing requirements, including interest payments on debt
obligations, for the next 12 months;
    
    our expectations with respect to our recognition of income tax benefits in the future;
    
    our restructuring plans, including timing, expected workforce reductions, the expected
cost savings under our restructuring plans and the uses of those savings, the timing and
amount of payments, the impact on our business, the amounts of future charges to complete
our restructuring plans, including any future plans to reduce operating expenses and/or
increase revenue;
    
    the value of our intellectual property, our ability to continue recognizing
patent-related revenue from the sale or licensing of our intellectual property and our
plans to periodically enter into strategic arrangements to leverage our portfolio by
licensing or selling our intellectual property;
    
    our intention to continue to expand our international business activities, including
expansion of design and operations centers abroad, and the challenges associated with such
expansion;
    
    our expectations regarding the cyclical nature of the semiconductor industry;
 2




---



##### Table of Contents




    
    the impact of recent accounting pronouncements and the adoption of new accounting
standards.
  
    
    fluctuations in our operating results and future operating losses;
    
    worldwide political and economic uncertainties and specific conditions in the markets
we address;
    
    fluctuations in the price of our common stock;
    
    loss of or diminished demand from one or more key customers or distributors;
    
    successful development and introduction of new products;
    
    constraints in the supply of wafers and other product components from our third-party
manufacturers;
    
    cash requirements and terms and availability of financing;
    
    our ability to attract and retain qualified personnel;
    
    doing business internationally and our ability to successfully and cost effectively
establish and manage operations in foreign jurisdictions;
    
    pricing pressures and other competitive factors;
    
    lengthy sales cycles;
    
    order and shipment uncertainty;
    
    our ability to obtain design wins and develop revenue from them;
    
    the expense of and our ability to defend our intellectual property against infringement
claims by others;
    
    product defects and bugs;
    
    business acquisitions and investments; and
    
    our ability to utilize our net operating loss carryforwards and certain other tax attributes.
  ® ®
 3




---



##### 



MINDSPEED TECHNOLOGIES, INC.
  
 INDEX
 PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Consolidated Condensed Balance Sheets  December 31, 2010 and October 1, 2010
    
    5Consolidated Condensed Statements of Operations  Three Months Ended December 31, 2010
and January 1, 2010
    
    6Consolidated Condensed Statements of Cash Flows  Three Months Ended December 31, 2010
and January 1, 2010
    
    7Notes to Consolidated Condensed Financial Statements
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    29Item 4. Controls and Procedures
    
    30PART II. OTHER INFORMATIONItem 1A. Risk Factors
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    42Item 6. Exhibits
    
    43Signature
    
    45EX-31.1EX-31.2EX-32.1EX-32.2
  4




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 MINDSPEED TECHNOLOGIES, INC.
Consolidated Condensed Balance Sheets
(unaudited, in thousands)
 December 31,
    
    
    October 1,2010
    
    
    2010ASSETSCurrent AssetsCash and cash equivalents
    
    $
    45,558
    
    
    $
    43,685Receivables, net of allowance for doubtful
accounts of $189 at both December 31, 2010
and October 1, 2010
    
    
    17,022
    
    
    
    25,678Inventories, net
    
    
    9,189
    
    
    
    10,205Deferred tax assets, net  current
    
    
    2,202
    
    
    
    2,264Prepaid expenses and other current assets
    
    
    3,228
    
    
    
    3,035Total current assets
    
    
    77,199
    
    
    
    84,867Property, plant and equipment, net
    
    
    13,618
    
    
    
    12,700License agreements, net
    
    
    12,998
    
    
    
    9,887Other assets
    
    
    1,290
    
    
    
    1,230Total assets
    
    $
    105,105
    
    
    $
    108,684LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    6,400
    
    
    $
    9,303Accrued compensation and benefits
    
    
    5,316
    
    
    
    9,336Accrued income tax
    
    
    1,109
    
    
    
    1,503Deferred income on sales to distributors
    
    
    4,890
    
    
    
    5,199Deferred revenue
    
    
    564
    
    
    
    658Restructuring
    
    
    371
    
    
    
    710Other current liabilities
    
    
    5,358
    
    
    
    4,396Total current liabilities
    
    
    24,008
    
    
    
    31,105Convertible senior notes  long term
    
    
    13,910
    
    
    
    13,810Other liabilities
    
    
    2,008
    
    
    
    2,133Total liabilities
    
    
    39,926
    
    
    
    47,048Commitments and contingencies (Note 6)
    
    
    
    
    
    
    Stockholders EquityPreferred stock, $0.01 par value: 25,000
shares authorized; no shares issued or
outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 100,000 shares
authorized; 32,500 (December 31, 2010) and
32,220 (October 1, 2010) issued and
outstanding shares
    
    
    325
    
    
    
    322Additional paid-in capital
    
    
    320,385
    
    
    
    318,468Accumulated deficit
    
    
    (255,302
    )
    
    
    (257,001
    )Accumulated other comprehensive loss
    
    
    (229
    )
    
    
    (153
    )Total stockholders equity
    
    
    65,179
    
    
    
    61,636Total liabilities and stockholders equity
    
    $
    105,105
    
    
    $
    108,684
  5




---



##### Table of Contents



MINDSPEED TECHNOLOGIES, INC.
Consolidated Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)
 Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Net revenue:Products
    
    $
    38,043
    
    
    $
    37,026Intellectual property
    
    
    2,500
    
    
    
    Total net revenue
    
    
    40,543
    
    
    
    37,026Cost of goods sold
    
    
    14,281
    
    
    
    13,463Gross margin
    
    
    26,262
    
    
    
    23,563Operating expenses:Research and development
    
    
    13,923
    
    
    
    12,588Selling, general and administrative
    
    
    10,211
    
    
    
    9,634Special charges
    
    
    (18
    )
    
    
    860Total operating expenses
    
    
    24,116
    
    
    
    23,082Operating income
    
    
    2,146
    
    
    
    481Interest expense
    
    
    (398
    )
    
    
    (630
    )Other income, net
    
    
    
    
    
    
    5Income/(loss) before income taxes
    
    
    1,748
    
    
    
    (144
    )Provision for income taxes
    
    
    49
    
    
    
    16Net income/(loss)
    
    $
    1,699
    
    
    $
    (160
    )Net income/(loss) per share, basic and diluted
    
    $
    0.05
    
    
    $
    (0.01
    )Shares used in computation of net income/(loss) per share:Basic
    
    
    31,908
    
    
    
    28,500Diluted
    
    
    32,870
    
    
    
    28,500
  6




---



##### Table of Contents



MINDSPEED TECHNOLOGIES, INC.

Consolidated Condensed Statements of Cash Flows
(unaudited, in thousands)
 Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Cash Flows From Operating ActivitiesNet income/(loss)
    
    $
    1,699
    
    
    $
    (160
    )Adjustments required to reconcile net income/(loss) to net
cash provided by operating activities:Depreciation and amortization
    
    
    1,202
    
    
    
    1,192Amortization of license agreements
    
    
    574
    
    
    
    239Restructuring charges
    
    
    (18
    )
    
    
    860Stock-based compensation
    
    
    1,162
    
    
    
    940Inventory provisions
    
    
    27
    
    
    
    963Amortization of debt discount on convertible debt
    
    
    121
    
    
    
    249Other non-cash items, net
    
    
    
    
    
    
    197Changes in operating assets and liabilities:Receivables
    
    
    8,675
    
    
    
    (5,097
    )Inventories
    
    
    989
    
    
    
    544Accounts payable
    
    
    (1,517
    )
    
    
    714Deferred income on sales to distributors
    
    
    (310
    )
    
    
    2,459Restructuring
    
    
    (321
    )
    
    
    (395
    )Accrued compensation and benefits
    
    
    (3,995
    )
    
    
    99Accrued expenses and other current liabilities
    
    
    (620
    )
    
    
    (436
    )Other
    
    
    (363
    )
    
    
    (359
    )Net cash provided by operating activities
    
    
    7,305
    
    
    
    2,009Cash Flows From Investing ActivitiesPurchases of property, plant and equipment
    
    
    (2,237
    )
    
    
    (349
    )Payments under license agreements
    
    
    (3,865
    )
    
    
    (459
    )Net cash used in investing activities
    
    
    (6,102
    )
    
    
    (808
    )Cash Flows From Financing ActivitiesExtinguishment of convertible debt
    
    
    
    
    
    
    (10,500
    )Payments made on capital lease obligations
    
    
    (107
    )
    
    
    (151
    )Borrowings under line of credit
    
    
    
    
    
    
    7,000Payments made on borrowings under line of credit
    
    
    
    
    
    
    (7,000
    )Repurchase of restricted stock for income tax withholding
    
    
    (221
    )
    
    
    (28
    )Proceeds from equity compensation programs
    
    
    979
    
    
    
    44Net cash provided by/(used in) financing activities
    
    
    651
    
    
    
    (10,635
    )Effect of foreign currency exchange rates on cash
    
    
    19
    
    
    
    24Net increase/(decrease) in cash and cash equivalents
    
    
    1,873
    
    
    
    (9,410
    )Cash and cash equivalents at beginning of period
    
    
    43,685
    
    
    
    20,891Cash and cash equivalents at end of period
    
    $
    45,558
    
    
    $
    11,481
  7




---



##### Table of Contents



MINDSPEED TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 1. Basis of Presentation and Significant Accounting Policies
  Basis of Presentation
 Fiscal Periods
 Recent Accounting Standards
 Revenue Recognition
  8




---



##### Table of Contents



Income Taxes
 Per Share Information
 9




---



##### Table of Contents



Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Earnings per share   basicNet income/(loss)
    
    $
    1,699
    
    
    $
    (160
    )Basic weighted average common shares outstanding
    
    
    31,908
    
    
    
    28,500Earnings per share  basic
    
    $
    0.05
    
    
    $
    (0.01
    )Basic weighted average common shares outstanding
    
    
    31,908
    
    
    
    28,500Effect of dilutive securities:Convertible senior notes
    
    
    
    
    
    
    Dilutive stock awards
    
    
    962
    
    
    
    Dilutive employee stock purchase plan shares
    
    
    
    
    
    
    Diluted weighted average common shares outstanding
    
    
    32,870
    
    
    
    28,500Earnings per share   diluted
    
    $
    0.05
    
    
    $
    (0.01
    )
  Concentrations 
  Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Customer A
    
    
    18
    %
    
    
    11
    %Customer B
    
    
    16
    %
    
    
    16
    %Customer C
    
    
    7
    %
    
    
    11
    %
 10




---



##### Table of Contents



December 31,
    
    
    October 1,2010
    
    
    2010Customer B
    
    
    18
    %
    
    
    25
    %Customer D
    
    
    15
    %
    
    
    8
    %Customer E
    
    
    7
    %
    
    
    12
    %
 Supplemental Cash Flow Information
 2. Supplemental Financial Statement Data
 Inventories
  December 31,
    
    
    October 1,2010
    
    
    2010Work-in-process
    
    $
    3,561
    
    
    $
    4,681Finished goods
    
    
    5,628
    
    
    
    5,524Total inventories, net
    
    $
    9,189
    
    
    $
    10,205
 Deferred Income on Sales to Distributors
  December 31,
    
    
    October 1,2010
    
    
    2010Deferred revenue on shipments to distributors
    
    $
    5,275
    
    
    $
    5,674Deferred cost of goods sold on shipments to distributors
    
    
    (428
    )
    
    
    (528
    )Reserves
    
    
    43
    
    
    
    53Deferred income on sales to distributors
    
    $
    4,890
    
    
    $
    5,199
 Comprehensive Income/(Loss)
  Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Net income/(loss)
    
    $
    1,699
    
    
    $
    (160
    )Foreign currency translation adjustments, net of tax
    
    
    (76
    )
    
    
    (92
    )Comprehensive income/(loss)
    
    $
    1,623
    
    
    $
    (252
    )
 11




---



##### Table of Contents



Net Revenue by Product Line
  Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Communications convergence processing products
    
    $
    16,625
    
    
    $
    13,955High-performance analog products
    
    
    14,104
    
    
    
    11,580WAN communications products
    
    
    7,314
    
    
    
    11,491Intellectual property
    
    
    2,500
    
    
    
    Total net revenue
    
    $
    40,543
    
    
    $
    37,026
 Net Revenue by Geographic Area
  Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Americas
    
    $
    12,031
    
    
    $
    8,618Asia-Pacific
    
    
    25,172
    
    
    
    26,056Europe, Middle East and Africa
    
    
    3,340
    
    
    
    2,352Total net revenue
    
    $
    40,543
    
    
    $
    37,026
  3. Fair Value Measurements
   
    
    Level 1uses unadjusted quoted prices that are available in active markets for
identical assets or liabilities. The Companys Level 1 assets include investments in money
market funds.
    
    Level 2uses inputs other than quoted prices included in Level 1 that are either
directly or indirectly observable through correlation with market data. These include
quoted prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets or liabilities in markets that are not active; and inputs to
valuation models or other pricing methodologies that do not require significant judgment
because the inputs used in the model, such as interest rates and volatility, can be
corroborated by readily observable market data. The Companys Level 2 liabilities include
convertible senior notes.
    
    Level 3uses one or more significant inputs that are unobservable and supported by
little or no market activity, and reflect the use of significant management judgment. Level
3 assets and liabilities include those whose fair value measurements are determined using
pricing models, discounted cash flow methodologies or similar valuation techniques and
significant management judgment or estimation. The Company does not have any assets or
liabilities that are valued using inputs identified under a Level 3 hierarchy.
  Quoted Prices inActive Marketsfor Identical
    
    
    Total Fair ValueInstruments
    
    
    asDecember 31, 2010
    
    (Level 1)
    
    
    of December 31, 2010Assets:Cash
    
    $
    19,540
    
    
    $
    19,540Money market fund
    
    
    15,512
    
    
    
    15,512Government money market fund
    
    
    10,506
    
    
    
    10,506Total cash and cash equivalents
    
    $
    45,558
    
    
    $
    45,558
 12




---



##### Table of Contents



Quoted Prices inActive Marketsfor Identical
    
    
    Total Fair ValueInstruments
    
    
    asOctober 1, 2010
    
    (Level 1)
    
    
    of October 1, 2010Assets:Cash
    
    $
    22,174
    
    
    $
    22,174Money market fund
    
    
    16,007
    
    
    
    16,007Government money market fund
    
    
    5,504
    
    
    
    5,504Total cash and cash equivalents
    
    $
    43,685
    
    
    $
    43,685
 4. Stock-Based Compensation
     Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Weighted-average fair value of options granted
    
    $
    3.96
    
    
    $
    2.48Weighted-average assumptions:Expected option life
    
    2.8 years
    
    
    2.6 yearsRisk-free interest rate
    
    
    0.5
    %
    
    
    1.2
    %Expected volatility
    
    
    101
    %
    
    
    96
    %Dividend yield
    
    
    
    
    
    
    
   Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    2010Cost of goods sold
    
    $
    43
    
    
    $
    32Research and development
    
    
    308
    
    
    
    307Selling, general and administrative
    
    
    811
    
    
    
    601Total stock-based compensation expense
    
    $
    1,162
    
    
    $
    940
 13




---



##### Table of Contents



Stock Compensation Plans
     Stock Option Awards
   Weighted-AverageNumber
    
    
    Weighted-Average
    
    
    Remainingof Shares
    
    
    Exercise Price
    
    
    Contractual TermOutstanding at October 1, 2010
    
    
    2,900
    
    
    $
    6.41
    
    
    4.8 yearsGranted
    
    
    381
    
    
    
    6.58Exercised
    
    
    (67
    )
    
    
    3.56Forfeited or expired
    
    
    (53
    )
    
    
    11.72Outstanding at December 31, 2010
    
    
    3,161
    
    
    
    6.40
    
    
    5.0 yearsExercisable at end of period
    
    
    1,543
    
    
    $
    8.54
    
    
    3.4 years
 14




---



##### Table of Contents



Stock Awards
     Weighted-Number
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueNonvested shares at October 1, 2010
    
    
    680
    
    
    $
    6.64Granted
    
    
    117
    
    
    
    6.51Vested
    
    
    (127
    )
    
    
    4.52Forfeited
    
    
    (3
    )
    
    
    2.32Nonvested shares at December 31, 2010
    
    
    667
    
    
    $
    6.82
  5. Revolving Credit Facility and Convertible Senior Notes
 Revolving Credit Facility
  15




---



##### Table of Contents



3.75% Convertible Senior Notes due 2009
   Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    20103.75% convertible senior notesInterest expense   coupon
    
    $
    
    
    
    $
    48Interest expense   debt discount amortization
    
    
    
    
    
    
    151Total
    
    $
    
    
    
    $
    199Effective interest rate on the liability component for the period
    
    
    
    
    
    
    14.68
    %
 6.50% Convertible Senior Notes due 2013
    16




---



##### Table of Contents



December 31, 2010
    
    
    October 1, 20106.50% convertible senior notesPrincipal value of the liability component
    
    $
    15,000
    
    
    $
    15,000Unamortized value of the liability component
    
    
    1,090
    
    
    
    1,190Net carrying value of the liability component
    
    $
    13,910
    
    
    $
    13,810
  Three Months EndedDecember 31,
    
    
    January 1,2010
    
    
    20106.50% convertible senior notesInterest expense   coupon
    
    $
    244
    
    
    $
    244Interest expense   debt discount amortization
    
    
    101
    
    
    
    98Total
    
    $
    345
    
    
    $
    342Effective interest rate on the liability component for the period
    
    
    9.02
    %
    
    
    9.12
    %
 6. Commitments and Contingencies
   7. Special Charges
  Restructuring Charges
  Mindspeed Fourth Quarter of Fiscal 2010 Restructuring Plan 
 17




---



##### Table of Contents



Workforce
    
    
    Facility andReductions
    
    
    Other
    
    
    TotalRestructuring balance, October 1, 2010
    
    $
    701
    
    
    $
    
    
    
    $
    701Cash payments
    
    
    (319
    )
    
    
    
    
    
    
    (319
    )Restructuring balance, December 31, 2010
    
    $
    382
    
    
    $
    
    
    
    $
    382
  Mindspeed Fiscal 2009 Restructuring Plans 
  8. Related Party Transactions
  18




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
   
    
    Communications Convergence Processing  triple-play edge and metro trunking gateways
for Voice-over-Internet protocol (VoIP) platforms; broadband customer premises equipment
(CPE) gateways and other equipment that carriers use to deliver voice, data and video
services to residential subscribers; Internet protocol (IP) private branch exchange (PBX)
equipment and security appliances used in the enterprise and 3G/4G mobile base stations in
the carrier infrastructure;
    
    High-Performance Analog  next-generation fiber access network equipment (including
passive optical networking, or PON, systems); storage and server systems supporting
high-speed PCI Express, Serial Attached SCSI (SAS) and InfiniBand protocols; and production
switches, routers and other systems that are driving the migration to 3G high-definition
(HD) transmission; and
    
    WAN Communications  circuit-switched networking equipment that implements
asynchronous transfer mode (ATM) and T1/E1 and T3/E3 communications protocols.
  Trends and Factors Affecting Our Business
  19




---



##### Table of Contents



20




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Inventories
   Stock-Based
Compensation
 Revenue
Recognition
 21




---



##### Table of Contents



Deferred
Income Taxes and Uncertain Tax Positions 
 22




---



##### Table of Contents



Impairment
of Long-Lived Assets
 Recent Accounting Pronouncements
  23




---



##### Table of Contents



Results of Operations
 Net Revenue
  Three Months EndedDecember 31,
    
    
    
    
    
    
    January 1,($ in millions)
    
    2010
    
    
    Change
    
    
    2010Communications convergence processing products
    
    $
    16.6
    
    
    
    19
    %
    
    $
    13.9High-performance analog products
    
    
    14.1
    
    
    
    22
    %
    
    
    11.6WAN communications products
    
    
    7.3
    
    
    
    (37
    )%
    
    
    11.5Intellectual property
    
    
    2.5
    
    
    
    100
    %
    
    
    Net revenue
    
    $
    40.5
    
    
    
    9
    %
    
    $
    37.0
  Gross Margin
 Three Months EndedDecember 31,
    
    
    
    
    
    
    January 1,($ in millions)
    
    2010
    
    
    Change
    
    
    2010Gross margin
    
    $
    26.3
    
    
    
    11
    %
    
    $
    23.6Percent of net revenue
    
    
    65
    %
    
    
    
    
    
    
    64
    %
   24




---



##### Table of Contents



Research and Development
 Three Months EndedDecember 31,
    
    
    
    
    
    
    January 1,($ in millions)
    
    2010
    
    
    Change
    
    
    2010Research and development
    
    $
    13.9
    
    
    
    10
    %
    
    $
    12.6Percent of net revenue
    
    
    34
    %
    
    
    
    
    
    
    34
    %
  Selling, General and Administrative
 Three Months EndedDecember 31,
    
    
    
    
    
    
    January 1,($ in millions)
    
    2010
    
    
    Change
    
    
    2010Selling, general and administrative
    
    $
    10.2
    
    
    
    6
    %
    
    $
    9.6Percent of net revenue
    
    
    25
    %
    
    
    
    
    
    
    26
    %
  Special Charges
  Restructuring Charges
  Mindspeed Fourth Quarter of Fiscal 2010 Restructuring Plan 
  Workforce
    
    
    Facility andReductions
    
    
    Other
    
    
    TotalRestructuring balance, October 1, 2010
    
    $
    701
    
    
    $
    
    
    
    $
    701Cash payments
    
    
    (319
    )
    
    
    
    
    
    
    (319
    )Restructuring balance, December 31, 2010
    
    $
    382
    
    
    $
    
    
    
    $
    382
 25




---



##### Table of Contents



Mindspeed Fiscal 2009 Restructuring Plans 
  Interest Expense
 Three Months EndedDecember 31,
    
    
    January 1,($ in millions)
    
    2010
    
    
    2010Interest expense
    
    $
    (0.4
    )
    
    $
    (0.6
    )
  Other Income, Net
  Provision for Income Taxes
  Liquidity and Capital Resources
  26




---



##### Table of Contents



27




---



##### Table of Contents



Revolving Credit Facility and Convertible Senior Notes
 Revolving Credit Facility
    3.75% Convertible Senior Notes due 2009
  6.50% Convertible Senior Notes due 2013
    28




---



##### Table of Contents



Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
   29




---



##### Table of Contents



Foreign Exchange Risk
   
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
   30




---



##### Table of Contents



Our operating results are subject to substantial quarterly and annual fluctuations.
  
    
    changes in end-user demand for the products manufactured and sold by our customers;
    
    the effects of competitive pricing pressures, including decreases in average selling prices of our
products;
    
    the gain or loss of significant customers;
    
    market acceptance of our products and our customers products;
    
    our ability to develop, introduce, market and support new products and technologies on a timely basis;
    
    availability and cost of products from our suppliers;
    
    intellectual property disputes;
    
    the timing of receipt, reduction or cancellation of significant orders by customers;
    
    fluctuations in the levels of component inventories held by our customers and changes in our
customers inventory management practices;
    
    shifts in our product mix and the effect of maturing products;
    
    the timing and extent of product development costs;
    
    new product and technology introductions by us or our competitors;
    
    fluctuations in manufacturing yields; and
    
    significant warranty claims, including those not covered by our suppliers.
  Our operating results may be adversely impacted by worldwide economic uncertainties and specific
conditions in the markets we address, including the cyclical nature of and volatility in the
semiconductor industry.
   31




---



##### Table of Contents



The price of our common stock may fluctuate significantly.
  
    
    our operating and financial performance and prospects, including our ability to sustain the
profitability we have recently achieved;
    
    the depth and liquidity of the market for our common stock which can impact, among other things,
the volatility of our stock price and the availability of market participants to borrow shares;
    
    investor perception of us and the industry in which we operate;
    
    the level of research coverage of our common stock;
    
    changes in earnings estimates or buy/sell recommendations by analysts;
    
    the issuance and sale of additional shares of common stock;
    
    general financial and other market conditions; and
    
    domestic and international economic conditions.
  The loss of one or more key customers or distributors, or the diminished demand for our products
from a key customer could significantly reduce our net revenue, gross margin and results of
operations.
  Our success depends on our ability to develop competitive new products in a timely manner and keep
abreast of the rapid technological changes in our market.
  32




---



##### Table of Contents




    
    our ability to anticipate customer and market requirements and changes in technology and industry
standards;
    
    our ability to accurately define new products;
    
    our ability to complete development of new products, and bring our products to market, on a
timely basis;
    
    our ability to differentiate our products from offerings of our competitors; and
    
    overall market acceptance of our products.
   We are entirely dependent upon third parties for the manufacture of our products and are vulnerable
to their capacity constraints during times of increasing demand for semiconductor products.
   
    
    the lack of assured supply, potential shortages and higher prices;
    
    the effects of disputes or litigation involving our third-party foundries;
    
    increased lead times;
    
    limited control over delivery schedules, manufacturing yields, production costs and product
quality; and
    
    the unavailability of, or delays in obtaining, products or access to key process technologies.
 33




---



##### Table of Contents



We have substantial cash requirements to fund our operations, research and development efforts and
capital expenditures. Our capital resources are limited and capital needed for our business may not
be available when we need it.
  34




---



##### Table of Contents



We may not be able to attract and retain qualified personnel necessary for the design, development,
sale and support of our products. Our success could be negatively affected if key personnel leave.
    We are subject to the risks of doing business internationally.
  
    
    currency exchange rate fluctuations;
    
    local economic and political conditions;
    
    disruptions of capital and trading markets;
    
    accounts receivable collection and longer payment cycles;
    
    wage inflation;
    
    difficulties in staffing and managing foreign operations;
 35




---



##### Table of Contents




    
    potential hostilities and changes in diplomatic and trade relationships;
    
    restrictive governmental actions (such as restrictions on the transfer or repatriation of funds
and trade protection measures, including export duties and quotas and customs duties and tariffs);
    
    changes in legal or regulatory requirements;
    
    difficulty in obtaining distribution and support;
    
    the laws and policies of the U.S. and other countries affecting trade, foreign investment and
loans and import or export licensing requirements;
    
    existing or future environmental laws and regulations governing, among other things, air emissions,
wastewater
discharges, the contents of our products, the use, handling and disposal of hazardous substances
and wastes, soil and groundwater contamination and employee health and safety;
    
    tax laws;
    
    limitations on our ability under local laws to protect our intellectual property;
    
    cultural differences in the conduct of business; and
    
    natural disasters, acts of terrorism and war.
   We are subject to intense competition.
   
    
    stronger financial position and liquidity;
    
    longer, or stronger, presence in key markets;
    
    greater name recognition;
    
    more secure supply chain;
    
    lower cost alternatives to our products;
    
    access to larger customer bases; and
    
    significantly greater sales and marketing, manufacturing, distribution, technical and other resources.
 36




---



##### Table of Contents



Because of the lengthy sales cycles of many of our products, we may incur significant expenses
before we generate any revenue related to those products.
  Uncertainties involving the ordering and shipment of our products could adversely affect our
business.
   If network infrastructure OEMs do not design our products into their equipment, we will be unable
to sell those products. Moreover, a design win from a customer does not guarantee future sales to
that customer.
  37




---



##### Table of Contents



We may be subject to claims, or we may be required to defend and indemnify customers against
claims, of infringement of third-party intellectual property rights or demands that we, or our
customers, license third-party technology, which could result in significant expense.
   
    
    pay substantial damages for past, present and future use of the infringing technology;
    
    cease the manufacture, use or sale of infringing products;
    
    discontinue the use of infringing technology;
    
    expend significant resources to develop non-infringing technology;
    
    pay substantial damages to our customers or end users to discontinue use or replace infringing
technology with non-infringing technology;
    
    license technology from the third party claiming infringement, which license may not be available
on commercially reasonable terms, or at all; or
    
    relinquish intellectual property rights associated with one or more of our patent claims, if such claims
are held invalid or otherwise unenforceable.
 If we are not successful in protecting our intellectual property rights, it may harm our ability to
compete.
  
    
    the steps we take to prevent misappropriation or infringement of our intellectual property
may not be successful;
    
    any existing or future patents may be challenged, invalidated or circumvented; or
    
    the measures described above may not provide meaningful protection.
  38




---



##### Table of Contents



The complexity of our products may lead to errors, defects and bugs, which could subject us to
significant costs or damages and adversely affect market acceptance of our products.
   We may make business acquisitions or investments, which involve significant risk.
  
    
    issuances of equity securities dilutive to our existing stockholders;
    
    substantial cash payments;
    
    the incurrence of substantial debt and assumption of unknown liabilities;
    
    large one-time write-offs;
    
    amortization expenses related to intangible assets;
    
    ability to use our net operating loss carryforwards;
    
    the diversion of managements attention from other business concerns; and
    
    the potential loss of key employees, customers and suppliers of the acquired business.
  39




---



##### Table of Contents



Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be
limited.
  Our results of operations could vary as a result of the methods, estimates and judgments we use in
applying our accounting policies.
  Substantial sales of the shares of our common stock issuable upon conversion of our convertible
senior notes or exercise of the warrant issued to Conexant could adversely affect our stock price
or our ability to raise additional financing in the public capital markets.
  Antidilution and other provisions in the warrant issued to Conexant may also adversely affect our
stock price or our ability to raise additional financing.
  40




---



##### Table of Contents



Some of our directors and executive officers may have potential conflicts of interest because of
their positions with Conexant or their ownership of Conexant common stock.
    Provisions in our organizational documents and stockholders rights agreements and Delaware law will
make it more difficult for someone to acquire control of us.
  
    
    the division of our board of directors into three classes to be elected on a staggered basis, one class
each year;
    
    the exclusive responsibility of the board of directors to fill vacancies on the board of directors;
    
    the ability of our board of directors to issue shares of our preferred stock in one or more
series without further authorization of our stockholders;
    
    a prohibition on stockholder action by written consent;
    
    a requirement that stockholders provide advance notice of any stockholder nominations of directors
or any proposal of new business to be considered at any meeting of stockholders;
    
    a requirement that a supermajority vote be obtained to remove a director for cause or to amend
or repeal certain provisions of our restated certificate of incorporation or amended and restated bylaws;
    
    elimination of the right of stockholders to call a special meeting of stockholders; and
    
    a fair price provision.
 41




---



##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
 Total Number of
    
    
    Average PriceShares (or Units)
    
    
    Paid per SharePurchased (a)
    
    
    (or Unit)October 2, 2010 to October 29, 2010
    
    
    
    
    
    $
    October 30, 2010 to November 26, 2010
    
    
    25,771
    
    
    
    6.76November 27, 2010 to December 31, 2010
    
    
    7,060
    
    
    
    6.6232,831
    
    
    $
    6.73
 
 (a)
    
    Represents shares of our common stock withheld from, or delivered by, employees in order to
satisfy applicable tax withholding obligations in connection with the vesting of restricted
stock. These repurchases were not made pursuant to any publicly announced plan or program. 42




---



##### Table of Contents



ITEM 6. EXHIBITS
 3.1
    
    Restated Certificate of Incorporation of the Registrant, filed as Exhibit 4.1 to the Registrants Registration
Statement on Form S-3 (Registration Statement No. 333-106146), is incorporated herein by reference.3.2
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant, filed as Exhibit 3.1
to the Registrants Current Report on Form 8-K dated July 1, 2008, is incorporated herein by reference (SEC
File No. 001-31650).3.3
    
    Certificate of Designation of Series B Junior Participating Preferred Stock, filed as Exhibit 3.1 to the
Registrants Current Report on Form 8-K filed on August 10, 2009, is incorporated herein by reference (SEC File
No. 001-31650).3.4
    
    Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.1 to the Registrants Current Report on Form
8-K dated January 27, 2011, is incorporated herein by reference (SEC File No. 000-31650).4.1
    
    Specimen Certificate for the Registrants Common Stock, par value $.01 per share, filed as Exhibit 4.1 to the
Registrants Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2008, is incorporated herein
by reference (SEC File No. 001-31650).4.2
    
    Rights Agreement dated as of June 26, 2003, by and between the Registrant and Mellon Investor Services LLC, as
Rights Agent, filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K dated July 1, 2003, is
incorporated herein by reference (SEC File No. 001-31650).4.3
    
    First Amendment to Rights Agreement, dated as of December 6, 2004, by and between the Registrant and Mellon
Investor Services LLC, filed as Exhibit 4.4 to the Registrants Current Report on Form 8-K dated December 2,
2004, is incorporated herein by reference (SEC File No. 001-31650).4.4
    
    Second Amendment to Rights Agreement, dated as of June 16, 2008, by and between the Registrant and Mellon
Investor Services LLC, filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K dated June 11, 2008,
is incorporated herein by reference (SEC File No. 000-50499).4.5
    
    Section 382 Rights Agreement, dated as of August 9, 2009, between the Registrant and Mellon Investor Services
LLC, filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K dated August 10, 2009, is incorporated
herein by reference (SEC File No. 001-31650).4.6
    
    Common Stock Purchase Warrant dated June 27, 2003, issued by the Registrant to Conexant Systems, Inc., filed as
Exhibit 4.5 to the Registrants Registration Statement on Form S-3 (Registration Statement No. 333-109523), is
incorporated herein by reference.4.7
    
    Registration Rights Agreement dated as of June 27, 2003 by and between the Registrant and Conexant Systems,
Inc., filed as Exhibit 4.6 to the Registrants Registration Statement on Form S-3 (Registration Statement No.
333-109523), is incorporated herein by reference.4.8
    
    Indenture, dated as of August 1, 2008, between the Registrant and Wells Fargo Bank, N.A., filed as Exhibit 4.1
to the Registrants Current Report on Form 8-K dated August 4, 2008, is incorporated herein by reference (SEC
File No. 001-31650).4.9
    
    Form of 6.50% Convertible Senior Notes due 2013, attached as Exhibit A to the Indenture (Exhibit 4.9 hereto),
is incorporated herein by reference.*10.1
    
    Stock Option Terms and Conditions under the Mindspeed
Technologies, Inc. Directors Stock Plan, filed as
Exhibit 10.33 to the Registrants Annual Report on Form
10-K for the fiscal year ended October 1, 2010, is
incorporated herein by reference (SEC File No.
001-31650).*10.2
    
    Restricted Stock Unit Terms and Conditions under the
Mindspeed Technologies, Inc. Directors Stock Plan,
filed as Exhibit 10.37 to the Registrants Annual
Report on Form 10-K for the fiscal year ended October
1, 2010, is incorporated herein by reference (SEC File
No. 001-31650).
 43




---



##### Table of Contents



31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Management contract or compensatory plan or arrangement. 44




---



##### Table of Contents



SIGNATURE
  MINDSPEED TECHNOLOGIES, INC.
(Registrant)Date: February 8, 2011
    By
    /s/ BRET W. JOHNSENBret W. JohnsenSenior Vice President andChief Financial Officer
(principal financial and accounting officer) 45




---



##### Table of Contents



EXHIBIT INDEX
 31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 46