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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended July 3, 2011

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
                     to

Commission file number 0-02287





SYMMETRICOM, INC.

(Exact name of registrant as specified in its charter)



|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Delaware                                                      |  | No. 95-1906306                     
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. EmployerIdentification No.)
|                                                              | 
|2300 Orchard Parkway,San Jose, California                     |  | 95131-1017                         
|(Address of Principal Executive Offices)                      |  | (Zip Code)                         

Registrants telephone number, including area code: (408) 433-0910



|                                                |  |                                          
|----------------------------------------------- |  | -----------------------------------------
|Securities registered pursuant to Section 12(b) |  | Name of each exchange on which registered
|Common Stock, $0.0001 Par Value                 |  | The NASDAQ Stock Market LLC              

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes ̈Nox

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes ̈Nox

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    YesxNo ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes ̈No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§29.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ̈

Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of large accelerated filer, accelerated filer and smaller reporting
company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |   |  |                   |  |   |  |                       |  |   |  |                           |  |  
|----------------------- |  | - |  | ----------------- |  | - |  | --------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer |  | x |  | Non-accelerated filer |  |  ̈ |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes ̈Nox

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the Registrant, computed by reference to
the closing price at which the Common Stock was sold on December 26, 2010, as reported on The NASDAQ Stock Market LLC was approximately $317,150,739. This calculation does not reflect a determination that such persons are affiliates of the
Registrant for any other purpose.

As of September 9, 2011, there were approximately 42,728,938 shares of
Registrants Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Registrants 2011 Annual Meeting of Stockholders are incorporated by reference in
Part III of this Form 10-K.









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SYMMETRICOM, INC.

FORM 10-K

For the Fiscal Year Ended July 3, 2011

INDEX



|         |  |                                                                                                               |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                               |  | Page |   
|PART I   | 
|Item 1.  |  | Business                                                                                                      |  |      | 3  | 
|Item 1A. |  | Risk Factors                                                                                                  |  |      | 13 | 
|Item 1B. |  | Unresolved Staff Comments                                                                                     |  |      | 24 | 
|Item 2.  |  | Properties                                                                                                    |  |      | 24 | 
|Item 3.  |  | Legal Proceedings                                                                                             |  |      | 24 | 
|Item 4.  |  | Removed and Reserved                                                                                          |  |      | 24 | 
|        
|PART II  | 
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer 
Purchases of Equity Securities |  |      | 25 | 
|Item 6.  |  | Selected Financial Data                                                                                       |  |      | 27 | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                         |  |      | 28 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                                    |  |      | 42 | 
|Item 8.  |  | Consolidated Financial Statements and Supplementary Data                                                      |  |      | 43 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure                          |  |      | 74 | 
|Item 9A. |  | Controls and Procedures                                                                                       |  |      | 74 | 
|Item 9B. |  | Other Information                                                                                             |  |      | 74 | 
|        
|PART III | 
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                        |  |      | 76 | 
|Item 11. |  | Executive Compensation                                                                                        |  |      | 76 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters                |  |      | 76 | 
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence                                     |  |      | 77 | 
|Item 14. |  | Principal Accountant Fees and Services                                                                        |  |      | 77 | 
|        
|PART IV  | 
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                    |  |      | 78 | 
|         |  | Signatures                                                                                                    |  |      | 82 | 



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PART I

FORWARD-LOOKING INFORMATION

When used in this discussion, the words
expect, anticipate, estimate, believe, plan, will, may, intend, can, project and similar expressions are intended to identify
forward-looking statements. These statements in Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere are subject to risks and uncertainties that could cause actual results to differ
materially from those projected.

These risks and uncertainties include, but are not limited to, risks relating to
general economic conditions in the markets we address and the telecommunications market in general, risks related to the development of our new products and services, reliance on our contract manufacturer for the manufacturing previously carried out
at our Puerto Rico facility and by other third party vendors, the effects of increasing competition and competitive pricing pressure, uncertainties associated with changing intellectual property laws, developments in and expenses related to
litigation, inability to obtain sufficient amounts of key components, the rescheduling or cancellations of key customer orders, the loss of a key customer, the effects of new and emerging technologies, the risk that excess inventory may result in
write-offs, price erosion and decreased demand, fluctuations in the rate of exchange of foreign currency, changes in our effective tax rate, market acceptance of our new products and services, technological advancements, undetected errors or defects
in our products, the risks associated with our international sales, potential short-term investment losses and other risks due to credit market dislocation, geopolitical risks and risk of terrorist activities, the risks associated with attempting to
integrate other companies and businesses we acquire, and the risks set forth below in Item 1A, Risk Factors.

These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

In the sections of this report entitled Business and Managements Discussion and Analysis of Financial Condition and Results of Operations all references to
Symmetricom, we, us, and our mean Symmetricom, Inc. and its subsidiaries, except where it is made clear that the term means only the parent company.

BesTime, ExacTime, PackeTime, Symmetricom, SymmTime, SyncServer, TimeCesium, TimeCreator, TimeHub, TimePieces, TimePictra,
TimeProvider, TimeScan, TimeSource, TrueTime are our trademarks. We also refer to trademarks of other corporations and organizations in this document.



|Item 1. | Business
|------- | --------

Overview

Symmetricom® is a leading source worldwide of highly precise
timekeeping technologies, instruments and solutions. We provide timekeeping in GPS satellites, national time references, and national power grids as well as in critical military and civilian networks, including those that enable next generation
data, voice, mobile and video networks and services.

Our product offering includes atomic clocks, hydrogen masers, timescale
systems, GPS instrumentation, synchronous supply units, standards-based clients and servers, performance measurement and management tools and embedded subsystems that generate, distribute and apply precise frequency and time.

Precise timekeeping is an essential component of modern life. Among other applications, it enables GPS navigation, the seamless handoff
of cellular calls, the timely receipt of data packets, the management of the electric power grid, military range finding, electronic test and measurement, signals intelligence and the ability to detect, investigate and protect against cyber threats.



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Symmetricom products are critical in all these applications in markets that include national
timekeeping, aerospace, defense, intelligence, enterprise IT, metrology, telecom, cable TV, electronic manufacturing and a broad spectrum of scientific research.

General Information

Symmetricom was incorporated in California in 1956 and
reincorporated in Delaware in 2002. Our principal executive offices are located at 2300 Orchard Parkway, San Jose, California 95131-1017, and our telephone number is (408) 433-0910.

Our website is located at www.symmetricom.com. We make available, free of charge on or through our website, our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after
we electronically file such material with, or furnish it to, the SEC. Information contained or referenced on our website is not incorporated by reference into and does not form a part of this Form 10-K.

Industry Background

The
markets we serve include:



| |  |  | Communications service providers;
| | - |  | ---------------------------------



| |  |  | Network equipment manufacturers (wireless base stations, routers, aggregation systems);
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | Silicon suppliers;
| | - |  | ------------------



| |  |  | Aerospace/Defense;
| | - |  | ------------------



| |  |  | Power utility infrastructure;
| | - |  | -----------------------------



| |  |  | IT infrastructure;
| | - |  | ------------------



| |  |  | Underwater exploration and navigation, and
| | - |  | ------------------------------------------



| |  |  | Science and metrology.
| | - |  | ----------------------

Reportable Segments

Symmetricom is organized into two reportable segments corresponding to two business units, the Communications business unit and the
Government business unit. Net revenue, gross profit, and operating income (loss) attributable to each of these reportable segments for each year in the three-year period ended July 3, 2011, is contained in Note 12 of the consolidated financial
statements. We do not identify or allocate assets, corporate operating expenses (which includes restructuring and integration charges), interest and other income, interest and other expense, or taxes to these individual reportable segments.

Communications

Our Communications business unit provides timing technologies and services for worldwide communications infrastructure. Specific products include primary reference sources; edge clocks and distribution
products for synchronization outside the network core; Building Integrated Timing Supply (BITS) and Sync Supply Unit (SSU) for the central office; the PackeTime product suite based on technologies such as IEEE 1588 (PTP) and NTP; Data Over
Cable Service Interface Specifications (DOCSIS) timing interface systems; network management and monitoring software; and embedded hardware and software solutions for integration with all elements of the communications ecosystem from silicon to
routers, switches, microwave backhaul and base stations among others. Symmetricom owns intellectual property, including patents, in advanced control algorithms for various types of deployments.



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Network service providers are driven by a need for increased bandwidth and a need for
reduced operating expenses to evolve their infrastructure toward packet-based technologies. In fiscal 2011, we continued to participate in the deployment and modernization of various synchronization networks around the world. Our products also
enabled operators of multiple cable television systems to expand the performance of their broadband offering.

We continue to
build a strong portfolio of precise timing and frequency solutions to address all layers of existing circuit switched network and the growing synchronization requirements of next-generation packet networks. The addition of a broader range of
embedded solutions enables network equipment manufacturers and silicon solution developers to provide robust synchronization solutions as part of their own offerings. During fiscal 2011, we entered into new relationships with silicon solution
developers and network equipment manufacturers to integrate our timing technology as part of their offerings to network equipment manufacturers.

In 2011, we launched the SyncWorld Ecosystem Program to promote interoperability for synchronization and timing with mobile infrastructure vendors. The membership includes communications test and
measurement providers, and also silicon and network equipment manufacturers such as Accedian Networks, Alcatel-Lucent, Anue Systems, Aviat Networks, Broadcom, Brocade, Calnex Solutions, Chronos, Ciena, Cisco, Exfo, Extreme Networks, Freescale
Semiconductor, Ixia, JDSU, MRV Optical Communications, Nokia Siemens Networks, PMC-Sierra, RAD Data Communications, Telco Systems / BATM, Tellabs and ZTE.

Government

Symmetricoms Government business unit
provides time technology products for aerospace/defense, IT infrastructure, power infrastructure and science and metrology applications. Precision time and frequency systems enable a range of critical operations, including the
international time scale, global navigation, the management of power grids, synchronization of complex control systems, and signals intelligence for securing communications in remote and hostile environments.

Product families include timescale clock sources, network time servers (both NTP and PTP), network time displays, time code generators,
bus level timing cards, primary reference standards such as rubidium and cesium oscillator standards, high stability masers, chip-scale atomic clocks, ruggedized crystal oscillators, and custom time and frequency systems. Customer applications
include synchronization of government communication networks, synchronization of computer networks, reference timing for radar, ranging, fire-control and other defense electronic systems, calibration of lab equipment, GNSS (Global Navigation
Satellite Systems), and subsystem master timing. To support both a diverse customer and product base, the business unit provides strong capabilities that allow for the tailoring of standard product platforms to meet a customers unique system
requirements.

During fiscal 2011, the business unit continued to emphasize government program business in secure mobile,
satellite, and wireline communications, as well as other defense platforms.

Communications Business Unit Markets and Products

Communications Business Unit Markets:

Within our Communications business, we serve the wireless, wireline and cable infrastructure markets with systems, sub-systems modules,
components, software solutions and GPS accessories.

Synchronization Products

We sell our synchronization products to wireless, wireline and cable service provider markets. Commonly, our products are used to
synchronize wireline communications; to provide the precise timing needed for DOCSIS 3.0 broadband services; and to provide synchronization and timing support to wireless network deployments.



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The communications network consists of a series of interconnected switching equipment and
other components that route information (i.e., voice, video, and data) through the network. For these networks to function efficiently, each network must be synchronized to a traceable time reference, and the individual nodes within the network must
operate within precise tolerances. Precision synchronization equipment throughout these networks provides a frequency reference which enables digital switching, routing and transmission systems to operate at a common, synchronized clock rate,
thereby aligning time slots, which increases bandwidth utilization while minimizing signal degradation and reducing errors throughout a network.

Our core system products are built on atomic clock, networking timing protocols (NTP and PTP) and GPS technologies and provide for the generation, distribution, and management of communications
synchronization infrastructure.



| |  |  | Primary Reference Sources (PRS)consists of the GPS-based TimeSource®, the cesium-based
TimeCesium®, and the packet-based IEEE-1588 TimeProvider® 1500 solutions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Building Integrated Timing Supplies (BITS) or Synchronization Supply Units (SSUs)consists of the carrier class SSU 2000 and TimeHub®, both intelligent sync distribution systems, and carrier class Network Time Protocol (NTP) & IEEE 1588
(PTP) plug-in server cards supporting critical applications for next generation networks. Other key products include the TimeProvider® 5000 PTP Grandmaster, the TimeProvider 1000, the industrys first node clock (hybrid SSU & PRS), TimeCreator®, the first DOCSIS Timing Interface (DTI) server qualified by CableLabs, and other products currently under
development to address emerging needs in the wireless, wireline and cable markets.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | IEEE 1588 Clientsconsists of the TimeProvider 500, designed to deliver frequency synchronization in the metropolitan area network or
access network.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Element Management Systemsconsists of TimePictra, the carrier class HP-UX based system, TimeScan, the PC-based system, and TimeCraft, the
advanced GUI management tool.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Embedded Solutions

Our embedded solutions consists of sub-systems (module), components, software solutions, and GPS accessories that enable cellular,
broadcast and cable service providers to achieve precise timing and synchronization for seamless deployment of services offerings to their end users. Symmetricom solutions are deployed in wireless base stations, switches, routers, microwave
backhaul, digital video broadcast and instrumentation equipment.

Specific embedded solutions we provide include:



| |  |  | Sub-system cards or modules customized for each manufacturer, using a combination of GPS, quartz oscillators, rubidium atomic oscillators,
input/output signals and control algorithms. Some of the control algorithms are contained in our BesTime®
technology. Symmetricoms modules are designed to be integrated into existing communications and transmission equipment such as cellular base stations (GSM, CDMA, TD-SCDMA, W-CDMA, 4G / LTE and Femto), broadcast (DVB, DVB-H, DAB, DTV), and
satellite communications equipment.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Componentssuch as Rubidium atomic oscillators with various performance levels to ensure network holdover when a network timing reference is
lost to guarantee quality of service (QoS).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Software Solutions such as the 1588 soft client software which can be embedded into various generations of base stations, routers, switches,
microwave backhaul and femto devices to provide time and frequency capabilities, and interconnects with 1588 grand masters. The IEEE 1588-2088 packet-based protocol (PTP 1588) enables next generation services when operators transition from legacy
TDM to IP-based infrastructure.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | GPS accessory components including antenna receivers, timing antennas, splitters, amplifiers, and lightning protectors.
| | - |  | -----------------------------------------------------------------------------------------------------------------------



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Services

We also provide lifecycle services for Symmetricom product lines. Service offerings fall into five main categories:



| |  |  | Engineering and installationEngineering and installation services help customers implement new Symmetricom product purchases.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operations and support programsOperations and support programs, such as Sync Office Audits, assist customers in maintenance of their sync
networks, help ensure power and alarm diversity to avoid service outages and identify system capacity.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | MaintenanceOfferings are designed to help customers with ongoing support of their Symmetricom products. These include 24 x 7 technical
support, traditional return-to-factory repair services, and on-site repair labor.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Training, certification programs and professional development coursesCourses enable customer personnel to successfully utilize and
maintain our products. These programs are also available under license for customers who maintain their own training centers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Consulting and other professional servicesConsulting services assist customers in planning new sync communications networks and developing
growth or disaster recovery plans for existing sync networks.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Government Business Unit Markets and Products

Government Business Unit Markets:

The aerospace, defense, metrology, power grid, timekeeping, and IT infrastructure markets require precision time and frequency instruments
and reference standards. Time and frequency solutions include GPS and time code instrumentation products, bus level timing cards, and precision frequency references (atomic standards). IP network timing products include dedicated network time
servers and management and monitoring software that synchronizes the timing on enterprise networks. Space, defense, and avionics applications include highly reliable and ruggedized components and systems designed to address specific customer
requirements.

Government Business Unit Products:

We offer a wide variety of precision time and frequency products sold primarily to the aerospace and defense, smart grid, metrology and IT
infrastructure sectors. These products can generally be divided into the following broad categories:



| |  |  | Precision frequency referencesPrecision Frequency References form the basis of absolute time and frequency in many systems and
applications. Our products include active hydrogen masers, cesium frequency standards, rubidium frequency standards, and quartz frequency standards. Our primary reference source instruments provide stand-alone dependability, ease of use, and ease of
installation that make them suitable for the critical time or frequency systems found in telecommunications timing, calibration and metrology laboratories, satellite tracking stations and space-based master time standards.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Quantum Chip Scale Atomic ClockWe manufacture the SA.45s Chip Scale Atomic Clock (CSAC) which provides the accuracy and
stability of atomic clock technology while achieving dramatic reductions in size, weight and power consumption. It is used in applications, especially those in GPS-denied environments that call for precise synchronization, accurate time keeping and
maximum portability. It is only 16cc in volume, weighs only 35 grams, requires only 115mW of power and provides time accuracy two orders of magnitude better than the quartz-based solutions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Bus level timingWe manufacture a broad line of precision timing products in the form of plug-in cards for computers. These cards provide
precise timing capabilities to computers equipped with common bus components. We also offer software development tools to speed the integration of these cards into software applications.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Enterprise network time serversWe manufacture several products for enterprise network time distribution. These bring entire networks of
computers into precise time synchronization.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | GPS and time code instrumentation productsWe manufacture a wide variety of general purpose and secure GPS receivers, time code generation,
translation, measurement, and distribution products. A time code is a data format for recording and processing time measurements. These instruments service a variety of end markets, including defense and smart grid applications.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Space, defense and avionicsWe provide ruggedized and militarized quartz and atomic clock platforms for the most demanding military
applications. Our designs are vibration isolated with low sensitivity to acceleration. For space applications such as GPS, where there is a high degree of exposure to radiation, our products are protected by radiation-hardened designs.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Test and measurement equipmentWe provide a line of time and frequency test solutions including a family of Phase Noise and Allan
Deviation test sets designed to measure critical performance specifications of precision time and frequency signals and sources.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Custom time and frequency systemsWe design and build custom time and frequency systems to address critical applications in
aerospace/defense and government markets. Time scale systems for national time keeping and two way time transfer systems for GPS autonomy are examples of systems we deliver to our customers
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sales Operations

We
sell our products directly to customers, through domestic and international distributors, through systems integrators, and manufacturer sales representatives. In the United States, our Communications business units products are primarily sold
through our sales force and manufacturer sales representatives to network service operators and network equipment manufacturers. Our Government business units instrumentation products are primarily sold through manufacturer sales
representatives and our enterprise products are primarily sold through telesales and the Internet. Internationally, we market and sell our products through our internal sales force, independent sales representatives, distributors, and systems
integrators.

Licenses, Patents, Trademarks and Copyrights

We use a combination of trademark rights, copyrights and patent rights, as well as associated registrations, contractual restrictions, and internal security to establish and protect our proprietary
rights. As of July 3, 2011, we had 47 active United States patents. The active patents issued will expire between July 2012 and June 2026. We believe that our patents have value, but we rely primarily on innovation, technological
expertise, and marketing competence to maintain our competitive advantage. The telecommunications industry is characterized by the existence of a large number of patents and frequent litigation based on allegations of patent infringement. We intend
to continue our efforts to obtain patents whenever possible, but there can be no assurance that patents will be issued or that any existing patents or patents that are obtained will not be challenged, invalidated or circumvented, or that the rights
granted will provide any commercial benefit to us. Additionally, if any of our processes or designs are identified as infringing upon patents held by others, there can be no assurance that a license will be available, or that the terms of obtaining
any such license will be acceptable to us. In addition, the laws of certain countries in which our products may be developed, manufactured or sold may not protect our products and intellectual property rights to the same extent as the laws of the
United States. In addition, we use technology licensed from others.



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We generally enter into confidentiality agreements with our employees, consultants, and
third parties in connection with our technology. These confidentiality agreements generally seek to control access to, and distribution of, our technology, documentation and other proprietary information. Despite these precautions, it may be
possible for a third party to obtain and use our proprietary information without authorization or to develop similar technology independently.

In addition, we use trademarks to help identify and market our products and services. We have a number of trademark registrations and pending applications both in the United States and around the world.
We rely on these trademark registrations and applications as one of the tools to protect our rights in our trademarks and brands. We also rely on our common law trademark rights in those countries that recognize such rights, such as the United
States. We can provide no assurance, however, that any of our trademark applications will be successful, or that our existing registrations will not be challenged or invalidated. Likewise, we can provide no assurance that our registrations,
applications or common law rights will enable us to stop others from infringing upon our trademarks, or enable us to successfully defend against claims of trademark infringement. Furthermore, effective trademark protection may not be available in
every country in which our products and services are distributed.

We also have copyrights on our software products, product
documentation, marketing materials, and other documentation and materials. We rely on these copyrights to protect our rights in our copyrighted materials. We can provide no assurance, however, that our copyrighted materials will not be
infringed. In addition, effective copyright protection may not be available in every country in which our products are distributed.

Manufacturing

Our
manufacturing process primarily consists of assembly, test, configuration and logistics at our manufacturing sites in Beverly, Massachusetts and Tuscaloosa, Alabama. In addition, custom and semi-custom instrumentation products are developed,
assembled, and tested in Santa Rosa, California (which we expect to transition to other manufacturing facilities in fiscal 2012) and Boulder, Colorado. The Boulder, Colorado and Santa Rosa, California facilities are registered to ISO9000:2000, while
our Beverly, Massachusetts and San Jose, California (engineering processes) facilities have been upgraded to meet the TL 9000 quality system standard (an advanced telecommunications standard for manufacturing and engineering). Our Beverly,
Massachusetts facility is also registered to AS9100 which certifies the design, development, and production of high precision time and frequency references for commercial military and space markets.

We use various contract manufacturers to build our printed circuit board assemblies and a number of completed products. During fiscal
2009, we outsourced all of our printed circuit board assemblies from our Puerto Rico facility to Sanmina-SCI Corporation (Sanmina-SCI), which has facilities in China, the United States, and other regions, in order to lower manufacturing costs and
take advantage of best-in-class production processes.

In the third quarter of fiscal 2011, we shut down our Aguadilla, Puerto
Rico facility after we completed the transfer of product fabrication processes and related activities to Sanmina-SCI facilities in the United States and we are now relying on Sanmina-SCI for the bulk of manufacturing activities that were previously
performed in Aguadilla, Puerto Rico.

Seasonality

Our business tends to generate stronger revenues in the second half of the fiscal year as communications service providers release their capital budgets for the calendar year.

Backlog

Our backlog
consists of firm orders that have yet to be shipped to the customer. Our total backlog was $60.3 million as of July 3, 2011, compared with $42.5 million as of June 27, 2010. Most orders included in backlog can be rescheduled or cancelled
by customers without significant penalty. Historically, a substantial portion of net



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revenue in any fiscal period has been derived from orders received during that fiscal period. Our backlog may also be affected by the cancellation or delay of customer orders, the overall
condition of the telecommunications industry, U.S. government spending on defense programs, overall worldwide economic conditions and the cyclical nature of customer demand in each of our markets.

Key Customers and Export Sales

During fiscal 2011, no single customer accounted for more than 10% of our net revenue. Our export sales outside the United States accounted for 35%, 33% and 36% of our net revenue in fiscal 2011, 2010,
and 2009 respectively. For additional information regarding our export sales, see Note 12 to our consolidated financial statements.

Sales and purchase obligations denominated in foreign currencies have not been significant. We do not currently engage in currency hedging activities or derivative arrangements but may do so in the future
to the extent that foreign currency transactions become more significant.

Competition

Competition in the communications industry is intense. Some of our competitors or potential competitors are well established and have
significant financial, manufacturing, technical and marketing resources. Competitors of our synchronization products include Emrise Corp., Frequency Electronics, Inc., Huawei Technologies Co. Ltd., Orolia and Trak Systems, Inc.,
Oscilloquartz SA, and Juniper Networks (through its acquisition of Brilliant Telecommunications). Competitors of our embedded components and software products include Frequency Electronics, Inc., Trimble Navigation, Ltd., Zarlink Seminconductor
Inc., and Semtech Corporation.

Competitors of our Government business unit products include Brandywine Communications, EndRun
Technologies, Frequency Electronics, Inc., Meinberg, Orolia and Trak Systems, Inc. (a Veritas Corporation subsidiary).

Research
and Development

Our development efforts include designing and developing hardware and software products, and providing
enhanced functionality to our existing products. We also do primary research in fundamental time and frequency components and systems paid for by the U.S. government. In addition to our research and development programs listed below, we utilize
domestic and international contractors to assist us in our research and development activities. Our product development programs include:



| |  |  | Communications synchronization
| | - |  | ------------------------------



| |  |  | Network management software
| | - |  | ---------------------------



| |  |  | Network time servers
| | - |  | --------------------



| |  |  | Ruggedized time and frequency component for space, defense and avionic applications
| | - |  | -----------------------------------------------------------------------------------



| |  |  | Precision time and frequency references
| | - |  | ---------------------------------------



| |  |  | Primary frequency references
| | - |  | ----------------------------



| |  |  | GPS-based time and frequency instruments and bus cards
| | - |  | ------------------------------------------------------



| |  |  | Time and frequency distribution products
| | - |  | ----------------------------------------



| |  |  | Phase noise test sets
| | - |  | ---------------------



| |  |  | Timescale systems
| | - |  | -----------------



| |  |  | Time and frequency reference systems
| | - |  | ------------------------------------



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In fiscal 2011, we enhanced our Communications portfolio by expanding our IEEE 1588 (PTP)
offering to address embedded opportunities in LTE base stations, to extend our silicon partners for our PTP softclient, and to include our TimeMonitor 3.1 software for monitoring network synchronization over packet networks. Our Government business
unit introduced: a Quantum Chip Scale Atomic Clock, Sync Server (PTP)-an IEEE 1588 PTP v.2 grandmaster clock for ultra-precise time over Ethernet networks, PCI time and frequency computer plug-in cards, a commercial time-scale system, and an
enhanced time and frequency receiver.

In fiscal 2011, 2010 and 2009, overall research and development expenditures were
$27.0, $23.7 and $23.4 million, respectively. We expensed all research and development expenditures as they were incurred. We expect to continue to support research and development efforts in order to enhance existing products and to design and
develop new technologies and products.

Our primary product development centers are in San Jose, California; Santa Rosa,
California (which is expected to transition to San Jose, California in fiscal 2012); Boulder, Colorado; Beijing, China and Beverly, Massachusetts.

Government Regulation

The telecommunications industry is subject to
domestic and foreign regulatory policies regarding pricing, taxation and tariffs, which may adversely impact the demand for our products. These policies are continuously reviewed and subject to change by the various governmental agencies. We are
also subject to government regulations and standards for our products, as well as import and export regulations. We must comply with and are affected by laws and regulations relating to the award, administration and performance of U.S. government
contracts. Government contract laws and regulations affect how we do business and, in some instances, impose added costs on our business. A violation of specific laws and regulations could result in the imposition of fines and penalties or the
termination of our contracts or debarment from bidding on contracts. See Item 1A, Risk Factors, for more information.

Environmental Regulation

Our operations are subject to numerous foreign, federal, state and local environmental regulations related to the storage, use, discharge
and disposal of toxic, volatile or otherwise hazardous chemicals and materials used in our manufacturing processes and products. Failure to comply with such regulations could result in a suspension or cessation of our operations, or could subject us
to significant future liabilities. See Note 8Litigation and ContingenciesNotes to Financial Statements (Part II, Item 8 of this Form 10-K) and Item 1A. Risk FactorsOur sales and operating results may be
adversely affected as a result of our required compliance with the adopted European Union Directives on Waste Electrical and Electronic Equipment, the Restriction of the Use of Hazardous Substances in electrical and electronic equipment and the
Registration, Evaluation, Authorization and Restriction of Chemicals, as well as other standards around the world.

Sources and
Availability of Raw Materials

We endeavor to use standard parts and components, which are generally available from
multiple sources. We make significant purchases of parts and components from third-party suppliers. Certain parts used in our manufacturing process are single sourced and may have extended lead times.

Employees

At
July 3, 2011, we had approximately 570 employees. We believe that our employee relations are good.



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Executive Officers of Symmetricom

Following is a list of our executive officers as of August 31, 2011 and brief summaries of their business experience during at least
the last five years. All officers, including executive officers, are appointed annually by the Board of Directors at its meeting following the annual meeting of stockholders. We are not aware of any officer who was appointed to the office pursuant
to any arrangement or understanding with another person.



|                  |  |     |    |  |          |                                                                         
|----------------- |  | --- | -- |  | -------- | ------------------------------------------------------------------------
|Name              |  | Age |    |  | Position
|David G. Côté     |  |     | 57 |  |          | President and Chief Executive Officer                                   
|Justin R. Spencer |  |     | 40 |  |          | Executive Vice President , Finance and Chief Financial Officer          
|James Armstrong   |  |     | 45 |  |          | Executive Vice President & General Manager, Communications Business Unit
|Daniel Scharre    |  |     | 60 |  |          | Executive Vice President & General Manager, Government Business Unit    
|Philip Bourekas   |  |     | 47 |  |          | Executive Vice President, Marketing                                     
|Juan Dewar        |  |     | 50 |  |          | Executive Vice President, Global Sales & Support                        

Mr. Côté was appointed as President and Chief Executive Officer of Symmetricom
in August 2009. Prior to joining Symmetricom, Mr. Côté was Chief Executive Officer and President at Packeteer, Inc., a leading provider of Internet application infrastructure systems, from 2002 to 2008.

Mr. Spencerhas served as Chief Financial Officer of Symmetricom since September 2008. Prior to joining Symmetricom,
Mr. Spencer served as Chief Financial Officer at Covad Communications, a provider of broadband integrated voice and data communications, from June 2007 until April 2008. From November 2002 until May 2007, Mr. Spencer served in various
positions at Covad including Interim Chief Financial Officer, Vice President of Finance, and corporate development and product management roles.

Dr. Armstronghas served as Executive Vice President and General Manager, Communications Business Unit, since February 2008. Mr. Armstrong joined Symmetricom in September 2006 and served
as Vice President of Engineering for the Communications Business Unit from September 2006 to January 2008. From July 2002 to May 2006, Mr. Armstrong was the Vice President of Engineering and later President of Movidis, Inc., a developer of
network equipment for the OEM and enterprise markets.

Dr. Scharrehas served as Executive Vice President and
General Manager, Government Business Unit, since August 2010. Dr. Scharre joined Symmetricom in April 2010 and served as Vice President of Marketing and Business Development for the Government Business Unit from April 2010 to August 2010. From
August 2007 to November 2009, Dr. Scharre was the Chief Executive Officer of Calient Networks, a manufacturer of fiber optic cross-connection systems for telecommunications service providers; from November 2006 to August 2007, he was the Chief
Operations Officer of Teak Technologies, a provider of Ethernet switching solutions; and from December 2004 to June 2006, he was the Chief Executive Officer of Loea Corporation, a developer of high-bandwidth, wireless point-to-point networking
solutions.

Mr. Bourekasjoined Symmetricom as Executive Vice President, Marketing, in November 2009. Prior to
joining Symmetricom, Mr. Bourekas served in a variety of roles at Integrated Device Technology, Inc., a developer of mixed signal semiconductor solutions for digital media, from August 1988 to April 2009, including as VP of Worldwide Marketing,
VP and GM of the Audio Products Division, and VP of Strategic Marketing for Computing and Consumer Products.

Mr. Dewar joined Symmetricom as Executive Vice President, Worldwide Sales in March 2010. Prior to joining Symmetricom,
Mr. Dewar served as Vice President Worldwide Sales of Pureenergy Solutions, a provider of wire-free power and energy storage solutions in 2009. From 2006 to 2008, Mr. Dewar served as CEO and Senior Vice President, Global Sales and Services
at Tira Wireless, a mobile content porting company. Mr. Dewar served in various positions at Sun Microsystems, Inc. from 1997 to 2006.



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|Item 1A. | Risk Factors
|-------- | ------------

Our quarterly and annual operating results have fluctuated in the past and will likely continue to fluctuate in the future, which could cause our stock price to be volatile and result in losses to
our investors

We believe that period-to-period comparisons of our operating results may not be a good indication of
our future performance. Our quarterly and annual operating results have fluctuated in the past and will likely continue to fluctuate in the future. Some of the factors that could cause our future operating results to fluctuate include:



| |  |  | adverse changes in economic conditions, particularly within the telecommunications equipment industry, which may result in revenue declines;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our dependence upon obtaining orders during a quarter and shipping those orders in the same quarter to achieve our revenue objectives;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to manage increased competition and competitive pricing pressures;
| | - |  | ------------------------------------------------------------------------------



| |  |  | our ability to accurately anticipate the volume and timing of customer orders or customer cancellations;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | the gain or loss of significant customers;
| | - |  | ------------------------------------------



| |  |  | our ability to manage our outsourced manufacturing strategy, including with respect to product supply;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | changes in our products or mix of sales to customers;
| | - |  | -----------------------------------------------------



| |  |  | the possibility that, despite our having been approved as a supplier in requests for proposals from several major Communications business unit
customers, these proposals will not result in any purchases;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | timing of purchases from customers on projects may be impacted due to spending delays, availability of resources for installation, and delays in new
product availability;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | market acceptance of new or enhanced versions of our products and our competitors products;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | our ability to manage the long sales cycle associated with our products;
| | - |  | ------------------------------------------------------------------------



| |  |  | customer delays in upgrading their old equipment with our new products;
| | - |  | -----------------------------------------------------------------------



| |  |  | our ability to obtain sufficient supplies of sole or limited source components at commercially reasonable prices;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | our ability to introduce new products in new and existing markets on a timely and cost-effective basis;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | customer delays in qualification of new products;
| | - |  | -------------------------------------------------



| |  |  | fluctuations in government spending for defense or infrastructure;
| | - |  | ------------------------------------------------------------------



| |  |  | increased industry consolidation among our customers, which may lead to decreased demand for, and downward pricing pressure on the prices of, our
products;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to manage cyclical conditions in the telecommunications industry;
| | - |  | -----------------------------------------------------------------------------



| |  |  | reduced rates of growth of telecommunications services;
| | - |  | -------------------------------------------------------



| |  |  | our ability to manage the level and value of our inventories in relation to sales volume;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | our ability to manage fluctuations in the average selling prices of our products;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | our ability to retain key employees, which could affect our ability to sell, develop and deliver our products;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | our ability to manage fluctuations in manufacturing yields of rubidium oscillators, cesium tubes or chip-scale atomic clocks;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



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| |  |  | our ability to timely implement changes developed as a result of our process improvement projects without negatively impacting operations;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | customers in the Communications business unit market buy a mix of rubidium-based and quartz-based products. This mix varies and could potentially shift
disproportionately to quartz, which sell at lower price points, and which may result in lower revenue and gross margins;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | customer labor strikes, which could result in reduced sales volume;
| | - |  | -------------------------------------------------------------------



| |  |  | our ability to collect receivables from our customers;
| | - |  | ------------------------------------------------------



| |  |  | deferring revenue for orders shipped in a period, especially for new markets;
| | - |  | -----------------------------------------------------------------------------



| |  |  | our ability to establish in a timely fashion subsidiaries in new geographic regions, which our customers or potential customers may require to do
business with us in those regions;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | foreign currency fluctuations;
| | - |  | ------------------------------



| |  |  | our ability to manage complex transactions with customers in new geographic regions;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | restructuring and integration-related charges; and
| | - |  | --------------------------------------------------



| |  |  | intangible assets impairment charges related to acquisitions and related long-term assets.
| | - |  | ------------------------------------------------------------------------------------------

A significant portion of our operating and manufacturing expenses are relatively fixed in nature, and planned expenditures are based in
part on anticipated orders. If we are unable to adjust spending in a timely manner to compensate for any unexpected future sales shortfall, our operating results will be negatively impacted. Our operations entail a high level of fixed costs and
require an adequate volume of production and sales to achieve and maintain reasonable gross profit margins and net earnings. Significant decreases in demand for our products or reduction in our average selling prices, or any material delay in
customer orders may negatively harm our business, financial condition and results of operations. Our future results depend in large part on growth in the markets for our products.

The growth in each of these markets may depend on changes in general economic and regulatory conditions, conditions related to the
markets in which we compete, changes in regulatory conditions, legislation, export rules or conditions, interest rates and fluctuations in the business cycle for any particular market segment. If our quarterly or annual operating results do not
meet the expectations of securities analysts and investors, the trading price of our common stock could decline significantly.

We recently transitioned manufacturing that was performed at our Puerto Rico facility to a contract manufacturer, on whom we are
now dependent

In fiscal 2010, we contracted with Sanmina-SCI to produce sub-assemblies as part of our outsourced
manufacturing strategy. In a significant expansion of this agreement, we announced in the fourth quarter of fiscal 2010 that we were transitioning all manufacturing at our Puerto Rico facility, which was our largest manufacturing facility, to
Sanmina-SCI. We completed this transition in the third quarter of fiscal 2011.

Our reliance on one primary contract
manufacturer to produce a significant portion of our products could expose us to the following potential risks in addition to others, each of which could have an adverse effect on our business and operating results:



| |  |  | less control over product quality, which could lead to product reliability problems and/or lower sales;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | product shortages as a result of manufacturing or capacity issues at Sanmina-SCI or our failure to make adequate forecasts;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | increased costs; and/or
| | - |  | -----------------------



| |  |  | product shipment delays.
| | - |  | ------------------------



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In addition, we cannot assure you that Sanmina-SCI will continue to be willing and able to
meet our requirements for our outsourced operations according to existing terms or at all, which could have an adverse effect on our business and operating results.

We depend on a third-party logistics warehouse to effectively and efficiently supply products to our customers.

In connection with the transition of manufacturing from our Puerto Rico facility to Sanmina-SCI in fiscal 2011, we contracted with a third-party owner-operator to provide a logistics warehouse in New
Jersey for receiving and distributing our products. We depend on the orderly operation of the receiving and distribution processes at the warehouse. Although we currently believe that receiving and distribution processes at the third-party logistics
warehouse are efficient, unforeseen disruptions in operations, for example due to fires, hurricanes, earthquakes or other catastrophic events, labor shortages or disagreements, or shipping problems, may result in delays in the delivery of our
products, which could adversely affect our business and operating results.

A substantial portion of our quarterly
revenue is attributable to shipments made in the latter part of each respective quarter

Typically, approximately 50%
or more of our quarterly shipments occur in the last month of the quarter. In addition, a substantial portion of these quarterly shipments are ordered by our customers and shipped within the same quarter. If these orders or shipments are either
delayed or the orders are not received, material fluctuations in our quarterly revenues and operating results will occur, and could cause our quarterly profitability to fall significantly short of our predictions.

The telecommunications and government markets are highly competitive, and if we are unable to compete successfully in our markets,
our revenue could decline

Competition in the telecommunications industry, in general, and in the markets we serve, is
intense and likely to increase substantially. We face competition in all of our markets. Competitors of our synchronization products include Emrise Corp., Frequency Electronics, Inc., Huawei Technologies Co. Ltd., Orolia and Trak
Systems, Inc. (a Veritas Corporation subsidiary), Oscilloquartz SA and Juniper Networks (through its acquisition of Brilliant Telecommunications). Competitors of our embedded components products include Frequency Electronics, Inc., Trimble
Navigation, Ltd., Zarlink Seminconductor Inc., and Semtech Corporation. Competitors of our Government business unit products include Brandywine Communications, EndRun Technologies, Frequency Electronics, Inc., Meinberg, Orolia and Trak
Systems, Inc. (a Veritas Corporation subsidiary). In addition, the Telecommunications Act of 1996 permits ILECs to manufacture telecommunications equipment, which may result in increased competition. Our ability to compete successfully in the
future will depend on many factors including:



| |  |  | the cost-effectiveness, quality, price, service and market acceptance of our products;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | our response to the entry of new competitors into our markets or the introduction of new products by our competitors;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | the average selling prices for our products;
| | - |  | --------------------------------------------



| |  |  | increased industry consolidation among our customers, which may lead to decreased demand for, and downward pricing pressure on the prices of, our
products;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to keep pace with changing technology and customer requirements;
| | - |  | ----------------------------------------------------------------------------



| |  |  | our continued improvement of existing products;
| | - |  | -----------------------------------------------



| |  |  | the timely development or acquisition of new or enhanced products;
| | - |  | ------------------------------------------------------------------



| |  |  | the timing of new product introductions by our competitors or us; and
| | - |  | ---------------------------------------------------------------------



| |  |  | changes in worldwide market and economic conditions.
| | - |  | ----------------------------------------------------



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Some of our competitors or potential competitors are well established and have significant
financial, manufacturing, technical and marketing resources. These competitors may be able to respond more quickly to new and emerging technologies and changes in customer requirements, to devote greater resources to the development, promotion and
sale of products, or to deliver competitive products at lower prices. We expect to continue to experience pricing pressures from our competitors in all of our markets. If we are unable to compete by delivering new products or by delivering
competitive products at lower prices, we could lose market share and our revenue could decline.

We have relied and may
continue to rely on a limited number of customers for a significant portion of our net revenue, and our revenue could decline due to lower orders, the delay of orders or cancellation of existing orders

During fiscal 2011, 2010 and 2009, no single customer accounted for more than 10% of our revenue. Nevertheless, we expect that we will
continue to depend on a relatively small number of customers for a substantial portion of our net revenue for the foreseeable future. The timing and level of sales to our largest customers have fluctuated significantly in the past and are expected
to continue to fluctuate significantly in the future. The loss of one or more of our significant customers, or a significant reduction or delay in sales to any customer, may harm our business and operating results. Major customers also have
significant leverage and may attempt to change the terms, including pricing, upon which we do business, which could also harm our business and operating results.

We have direct or indirect sales pursuant to contracts with U.S. government agencies, which can be terminated at the convenience of the government, and our revenue would decline if the government
terminated these contracts

Approximately 25% to 30% of our net revenue has been generated from sales to U.S.
government agencies either directly or indirectly through subcontracts. Government-related contracts and subcontracts are subject to standard provisions for termination at the convenience of the government. In such event, however, we are generally
entitled to reimbursement of costs incurred on the basis of work completed plus other amounts specified in each individual contract. These contracts and subcontracts are either fixed-price or cost reimbursable contracts. Fixed-price contracts
provide fixed compensation for specified work. Under cost reimbursable contracts, we agree to perform specified work in return for reimbursement of costs (to the extent allowable under government regulations) and a specified fee. In general, while
the risk of loss is greater under fixed-price contracts than under cost reimbursable contracts, the potential for profit under fixed-price contracts is greater than under cost reimbursable contracts. In addition, delays in approvals of the annual
defense budget or supplemental funding bills may also impact government sales.

We depend on U.S. Government Agency
contracts. A decline or reprioritization of funding in the U.S. defense budget, that of other customers, or delays in the budget process could adversely affect our revenue, earnings, and cash flow.

We derive approximately 25% to 30% of our net revenue from U.S. Government customers, including defense agencies. We expect to continue to
derive significant portion of our revenue from work performed under U.S. Government contracts. Those contracts are conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds on a fiscal-year
basis (September) even though contract performance may extend over many years.

The programs in which we participate must
compete with other programs and policy imperatives for consideration during the budget and appropriation process. Concerns about increased deficit spending, along with continued economic challenges, continue to place pressure on U.S. and
international customer budgets. While we believe that our programs are well aligned with national defense and other priorities, shifts in domestic and international spending and tax policy, changes in security, defense, and intelligence priorities,
the affordability of our products and services, general economic conditions and developments, and other factors may affect a decision to fund or the level of funding for existing or proposed programs.



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If we are unable to develop new products, or we are delayed in production startup, our
sales could decline

The markets for our products are characterized by:



| |  |  | rapidly changing technology;
| | - |  | ----------------------------



| |  |  | evolving industry standards; and
| | - |  | --------------------------------



| |  |  | changes in end-user requirements.
| | - |  | ---------------------------------

Technological advancements could render our products obsolete and unmarketable. Our success will depend on our ability to respond to changing technologies and customer requirements, and our ability to
develop and introduce new and enhanced products in a cost-effective and timely manner. The development of new or enhanced products is a complex and uncertain process requiring the accurate anticipation of technological and market trends. We may
experience design, manufacturing, marketing, and other difficulties that could delay or prevent the development, introduction or marketing of our new products and enhancements.

The introduction of new or enhanced products also requires that we manage a smooth transition from older products to new products. Delays
in new product development or delays in production startup could reduce our sales.

Our customers may be subject to
governmental regulations, which, if changed, could negatively impact our business results

Federal and state regulatory
agencies, including the United States Federal Communications Commission and the various state public utility commissions and public service commissions, regulate most of our domestic telecommunications customers. Similar government oversight also
exists in the international market. While we are not directly affected by this legislation, such regulation of our customers may negatively impact our business. For instance, the sale of our products may be affected by the imposition upon certain of
our customers of common carrier tariffs and the taxation of telecommunications services. These regulations are continuously reviewed and changed by the various governmental agencies. Changes in current or future laws or regulations, in the United
States or elsewhere, could negatively impact our business results.

We perform some research and development and
manufacturing offshore to lower costs; these efforts may impact our ability to deliver products to our customers, complete research and development projects on a timely basis, and cause potential misappropriation of our intellectual property

We depend upon research and development and manufacturing activities outside of the United States, and are exposed to
various legal, business, political and economic risks associated with these international operations. Over the past few years, we have developed a research and development facility in Beijing, China and outsourced a portion of our manufacturing to a
contract manufacturer at a facility in Southern China. While these activities have allowed us to reduce costs, they have and will continue to expose us to risks inherent in doing business in the Peoples Republic of China. We cannot assure you
that labor disruptions, currency fluctuations, and misappropriation of our intellectual property and other risks will not occur, any of which could materially adversely impact our ability to deliver products to our customers and our operating
results.

We purchase certain key components from single or limited sources and could lose sales if these sources fail
to fulfill our needs

We have limited or single source suppliers for a number of our components. If single source
components were to become unavailable on satisfactory terms, we would be required to purchase comparable components from other sources. If for any reason we could not obtain comparable replacement components from other sources in a timely manner,
our business, results of operations and financial condition could be harmed. In addition, some of our suppliers require long lead times to deliver requested quantities of components. If we are unable to obtain sufficient quantities of components, we
could experience delays or reductions in product



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shipments, which could also have a material adverse effect on our business, results of operations and financial condition. Due to rapid changes in technology, on occasion, one or more of the
components used in our products could become unavailable, resulting in unanticipated redesign and related delays in shipments.

As a U.S. government contractor, we are subject to a number of rules and regulations

We must comply with and are affected by laws and regulations relating to the award, administration and performance of U.S. government
contracts. Government contract laws and regulations affect how we do business and, in some instances, impose added costs on our business. A violation of specific laws and regulations could result in the imposition of fines and penalties or the
termination of our contracts or debarment from bidding on contracts. In order to administer certain U.S. government contracts we are required to have employees with Top Secret Security Clearance. Because we have a limited number of employees with
such clearance, the loss of these employees could adversely affect our ability to administer these contracts. We must also have auditors from our independent registered public accounting firm with proper security clearance levels to perform an
annual audit of revenue for these transactions.

We may pursue acquisitions and investments that could harm our
operating results and may disrupt our business

We have engaged in acquisitions in the past, and we may pursue other
acquisition and investment opportunities that could provide additional product or service offerings, technologies or additional industry expertise. Acquisitions involve risks, which include the following:



| |  |  | we may be exposed to unknown liabilities of the acquired business;
| | - |  | ------------------------------------------------------------------



| |  |  | we may not realize the revenue, cost savings or profits that we expect the acquired business to generate and incur significant write-offs;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may encounter unanticipated acquisition or integration costs that could cause our quarterly or annual operating results to fluctuate;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our managements attention may be diverted from our core business; and
| | - |  | ----------------------------------------------------------------------



| |  |  | we may not be successful in entering new markets in which we have no or limited experience.
| | - |  | -------------------------------------------------------------------------------------------

If we fail to successfully integrate acquisitions or to achieve any anticipated benefits of an acquisition, our operations and business
could be harmed.

Sales of a significant portion of our products to customers outside of the United States subjects us
to business, economic and political risks

Our export sales to Europe, Latin America, Asia, and Canada continue to
account for a significant portion of our revenue. We anticipate that sales to customers located outside of the United States will continue to be a significant part of our net revenue for the foreseeable future. Because significant portions of our
sales are to customers outside of the United States we are subject to risks, including:



| |  |  | foreign currency fluctuations;
| | - |  | ------------------------------



| |  |  | the effects of terrorist activity and armed conflict, which may disrupt general economic activity and result in revenue shortfalls;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | export restrictions;
| | - |  | --------------------



| |  |  | longer payment cycles;
| | - |  | ----------------------



| |  |  | unexpected changes in regulatory requirements or tariffs;
| | - |  | ---------------------------------------------------------



| |  |  | protectionist laws and business practices that favor local competition;
| | - |  | -----------------------------------------------------------------------



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| |  |  | dependence on local vendors;
| | - |  | ----------------------------



| |  |  | reduced or limited protection of intellectual property rights; and
| | - |  | ------------------------------------------------------------------



| |  |  | political and economic instability.
| | - |  | -----------------------------------

To date, very few of our international revenue and cost obligations have been denominated in foreign currencies. As a result, an increase in the value of the United States dollar relative to foreign
currencies could make our products more expensive, and thus, less competitive in foreign markets. A portion of our international revenues may be denominated in foreign currencies in the future, including the Euro, which will subject us to risks
associated with fluctuations in these foreign currencies. We do not currently engage in foreign currency hedging activities or derivative arrangements, but may do so in the future to the extent that such obligations become more significant.

In many foreign countries, particularly in those with developing economies, it is common to engage in business practices that
are prohibited by laws and regulations applicable to us, such as the Foreign Corrupt Practices Act. Although we implement policies and procedures designed to facilitate compliance with these laws, our employees, contractors and agents, as well as
those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation, even if prohibited by our policies, could have a material adverse effect on our business.

If we have significant inventories that become obsolete or cannot be sold at acceptable prices, our results may be negatively
impacted

Although we believe that we currently have made adequate adjustments for inventory that has declined in
value, become obsolete, or is in excess of anticipated demand, there can be no assurance that such adjustments will be adequate. If significant inventories of our products become obsolete, or are otherwise not able to be sold at favorable prices,
our results of operations could be materially affected.

Our products are complex and may contain errors or design
flaws, which could be costly to correct

Our products are complex and often use state-of-the-art components, processes
and techniques. When we release new products, or new versions of existing products, they may contain undetected or unresolved errors or defects. Despite testing, errors or defects may be found in new products or upgrades after the commencement of
commercial shipments. Undetected errors and design flaws have occurred in the past and could occur in the future. These errors could result in delays, loss of market acceptance and sales, diversion of development resources, damage to our reputation,
legal action by our customers, failure to attract new customers, and increased service and warranty costs. The occurrence of any of these factors could cause our net revenue to decline.

We are subject to environmental regulations that could result in costly environmental liability

Our operations are subject to numerous international, federal, state and local environmental regulations related to the storage, use,
labeling, discharge, disposal and human exposure to toxic, volatile or otherwise hazardous chemicals used in our manufacturing process. While we have not experienced any significant effects on our operations from environmental regulations, changes
in these regulations may require additional capital expenditures or restrict our ability to expand our operations. Failure to comply with such regulations could result in suspension or cessation of our operations or could subject us to significant
liabilities. We could also be subject to fines and civil or criminal sanctions, third-party property damage or personal injury claims, or could be required to incur substantial investigation or remediation costs, if we were to violate or become
liable under environmental laws. Liability under environmental laws can be joint and several and without regard to comparative fault. Although, we periodically review our facilities and internal operations for compliance with applicable
environmental regulations, these reviews are necessarily limited in scope and frequency and may not reveal all potential instances of noncompliance, possible injury or possible contamination. There can be no



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assurance that violations of environmental laws or regulations will not occur in the future as a result of the inability to obtain permits, human error, equipment failure or other causes. The
liabilities arising from any noncompliance with environmental regulations, or liability resulting from accidental contamination or injury from toxic or hazardous chemicals could result in liability that exceeds our resources. The risk of liabilities
increases as we acquire other companies, such as Datum, which use, or have used, hazardous substances at various current or former facilities.

A manufacturing facility previously operated by Datum in Austin, Texas is undergoing remediation for known subsurface contamination at that facility and adjoining properties. We believe that we will incur
monitoring costs for years to come in connection with this subsurface contamination. Further, we have received a demand from adjoining landowner and may be subject to claims from other adjoining landowners, in addition to claims for remediation, and
the amount of these costs and the extent of our exposure to these demands and claims cannot be determined at this time.

The
determination of the existence and cost of any additional contamination could involve costly and time-consuming negotiations and litigation. Remediation activities and subsurface contamination may require us to incur additional unreimbursed costs
and could harm on-site operations and the future use and value of the property. The remediation efforts, the property owners claims and any related governmental action may expose us to material liability and could significantly harm our
business.

Our sales and operating results may be adversely affected as a result of our required compliance with the
adopted European Union Directives on Waste Electrical and Electronic Equipment, the Restriction of the Use of Hazardous Substances in electrical and electronic equipment and the Registration, Evaluation, Authorization and Restriction of Chemicals,
as well as other standards around the world

In January 2003, the European Union enacted Directive 2002/96/EC on
the Waste Electrical and Electronic Equipment Directive, known as the WEEE Directive. The WEEE Directive requires producers of certain categories of electrical and electronic equipment to be financially responsible for the future disposal costs of
this equipment. Some of our products fall within the scope of this Directive, and, as such, we will incur some financial responsibility for the collection, recycling, treatment and disposal of both new product sold, and product already sold prior to
the WEEE Directives enforcement date, to customers within the European Union. The WEEE Directive is currently being reviewed and recast by the European Union. This process of review and redrafting is likely to be finalized by the end of
calendar year 2011. It is expected that the recast law will widen the scope of the WEEE Directive. If this happens, we may incur further financial responsibility.

At the same time, the European Union also enacted Directive 2002/95/EC on the Restriction of the use of Hazardous Substances in certain categories of electrical and electronic equipment, known as the RoHS
Directive. This Directive restricts the use of certain hazardous substances, including mercury, lead, cadmium, hexavalent chromium and certain flame retardants, used in the construction of component parts of electrical and electronic equipment.
Since 2008, the RoHS Directive has been under review by the European Union, with political agreement reached on the text of a new RoHS Directive in November 2010. This new RoHS Directive, which became effective on July 21,
2011, extends the scope of the existing RoHS Directive to cover, in principle, all electronic and electrical equipment. European Union Member States will have 18 months from the date of effectiveness to transpose the new RoHS Directive into their
own national legislation (as further described below). We may need to change our manufacturing processes, redesign or reformulate some of our products, and change some components to eliminate these hazardous substances in our products, in order to
be able to continue to offer them for sale within the European Union.

From June 2007, the European Union Regulation on the
Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) requires parties throughout the supply chain to register, assess and disclose information regarding many chemicals in their products. Depending on the types, applications,
forms and uses of chemical substances in various products, the application of REACH will lead to restrictions and/or bans on certain chemical usage.



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Individual European Union member states are required to transpose Directives into national
legislation. Although not all European Union member states have enacted legislation to fully implement the WEEE and RoHS Directives, we continue to review the applicability and impact of both Directives on the sale of our products within the
European Union. Going forward, we will review the applicability and impact of the new WEEE and RoHS Directives as and when they become effective. If we fail to comply with these laws, we may be forced to recall products and cease their manufacture
and distribution, and we could be subject to civil or criminal penalties. We may incur increased manufacturing costs, and some products may be subject to production delays to comply with future legislation which implements these Directives, but we
cannot currently estimate the extent of such increased costs or production delays, if any. However, to the extent that any such cost increases or delays are substantial, our operating results could be materially adversely affected. Also, we are
aware that lead times for new, compliant components are longer and that older, non-compliant components are being discontinued at a fast pace. In addition, we are aware of similar legislation that may be enacted in other countries and possible new
federal and state legislation in the United States, the cumulative impact of which could significantly increase our operating costs and adversely affect our operating results.

If we fail to protect our intellectual property, our competitive position could be weakened and our revenues may decline

We believe our success will depend in a large part on our ability to protect trade secrets, obtain or license patents, and operate without
infringing on the rights of others. We rely on a combination of trademark, copyright and patent registration, contractual restrictions and internal security to establish and protect our proprietary rights. These measures may not provide sufficient
protection for our trade secrets or other proprietary information. We have United States and international patents and patent applications pending that cover certain technology used by our operations. However, while we believe that our patents have
value, we rely primarily on innovation, technological expertise and marketing competence to maintain our competitive position. While we intend to continue our efforts to obtain patents whenever possible, there can be no assurance that patents will
be issued, or that new, or existing patents will not be challenged, invalidated or circumvented, or that the rights granted will provide us with any commercial benefit.

Third parties may assert intellectual property infringement claims, which would be costly to defend and may result in our loss of significant rights

The technology industry is characterized by the existence of a large number of patents and frequent litigation based on allegations of
patent infringement. We are subject to the risk of adverse claims and litigation alleging infringement of the intellectual property rights of others. From time to time we have received claims asserting that we have infringed the proprietary rights
of others. We cannot assure you that third parties will not assert infringement claims against us in the future, or that any such claims will not result in costly litigation or require us to obtain a license for such intellectual property rights
regardless of the merit of such claims. No assurance can be given that any necessary licenses will be available or that, if available, such licenses can be obtained on commercially reasonable terms. In the event any necessary licenses are not
available, we may not be able to sell or distribute our products, which may have a material adverse effect on our business.

We are subject to other significant domestic and foreign regulations relating to health and safety, packaging, product content and
labor regulations

Our business is subject to various other significant international, federal, state and local, health
and safety, packaging, product content and labor regulations. These regulations are complex, change frequently and have become more stringent over time. We may be required to incur significant expenses to comply with these regulations or to remedy
past violations of these regulations. Any failure by us to comply with applicable government regulations could also result in cessation of our operations or portions of our operations, product recalls or impositions of fines and restrictions on our
ability to carry on or expand our operations. In addition, because many of our products are regulated or sold into regulated industries, we must comply with additional



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regulations in marketing our products. Our products and operations are also often subject to the rules of industrial standards bodies, like the International Standards Organization, as well
as regulation of other agencies such as the United States Federal Communications Commission. If we fail to adequately address any of these regulations, our business may suffer.

We may be subject to additional taxes from tax reviews by foreign authorities

Although we believe that we have made adequate reserves for foreign tax provisions, there can be no assurance that such reserves will be
adequate until the foreign authorities have reviewed the foreign tax filings.

Our critical business and manufacturing
facilities in Beverly, Massachusetts; San Jose, California; Santa Rosa, California; Tuscaloosa, Alabama, and Boulder, Colorado, as well as many of our customers, suppliers, contract manufacturers, and third-party logistics warehouses, are located
near known hurricane zones, earthquake fault zones, tornado zones, and flood plains, and the occurrence of these events or other catastrophic disasters could cause damage to our facilities and equipment, which could require us, as well as our
customers, suppliers, contract manufacturers, and third-party logistics warehouses, to cease, curtail or disrupt operations

Capacity constraints, systems failures or security breaches could prevent access to our computer systems, which could interrupt our business and harm our daily operations

Our business goals of performance, reliability and availability require that we have adequate capacity in our computer systems to support
our operations. As our operations grow in size and scope, we will need to improve and upgrade our systems and infrastructure to offer internal personnel enhanced services, capacity, features and functionality. Our ability to provide high-quality
service depends on the efficient and uninterrupted operation of our computer and communications systems. Our computer system has experienced system interruptions from time to time and could experience periodic system interruptions in the future. Our
systems and operations are also vulnerable to damage or interruption from human error, natural disasters, power loss, telecommunication failures, break-ins, sabotage, computer viruses, design defects, vandalism, denial-of-service attacks and similar
events. Even though we have a formal disaster recovery plan, it may not completely prevent any system failure or security breach that causes an interruption in our business and daily operations.

We may be impacted by disruptions and liquidity issues in the credit market, which may unfavorably impact our financial condition
and results of operations

We invest excess funds in specific instruments and issuers approved for inclusion in our
cash and short-term investment accounts. Our investment criteria are to invest only in top tier quality investments or federally sponsored investments. Top tier quality investments are determined by our investment advisor in conjunction with ratings
of those investments provided by outside ratings agencies as well as our investment advisors internal credit specialists. Our cash consists of overnight instruments and instruments that will mature within ninety days from the date of purchase.
Our short-term investment portfolio consists of instruments that mature between ninety-one days and three years after the end of our fiscal quarter.

We may be impacted by the following risks, among others, as a result of credit market disruptions and liquidity issues:



| |  |  | We may experience temporary or permanent declines in the value of certain instruments which would be reflected in our consolidated financial
statements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may experience rating agency downgrades of instruments we currently own, which may degrade our portfolio quality and cause us to take impairment
charges;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We may not be able to reasonably value our investments if there is not a liquid resale market for those investments; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | We may experience losses on the sale of certain investments if we do not have sufficient operating cash to run our business and are required to sell
short-term investments to meet cash flow requirements.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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In addition to the above risks, credit market events may also impact our customers, which
would subject us to the following risks, among others:



| |  |  | We may experience lower revenues if our customers decide to reduce their capital spending plans;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | Customers may delay payments to us, reducing our operating cash flow; and
| | - |  | -------------------------------------------------------------------------



| |  |  | We may experience an increase in accounts receivable write-offs if customers are unable to pay us.
| | - |  | --------------------------------------------------------------------------------------------------

Public confidence and share value may be adversely impacted by material weaknesses in our internal controls over financial
reporting

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal
controls over financial reporting and to include a management report assessing the effectiveness of our internal controls over financial reporting in all annual reports. Section 404 also requires our independent registered public accounting
firm to attest to the effectiveness of our internal controls over financial reporting.

In past years, we have identified
material weaknesses that have led us to restate our consolidated financial statements. Because of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements, errors or omissions, and any projections
of any evaluation of effectiveness of internal controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate.
We cannot be certain in future periods that other control deficiencies that may constitute one or more significant deficiencies (as defined by the relevant auditing standards), or material weaknesses in our internal control over
financial reporting, will not be identified. If we fail to maintain the adequacy of our internal controls, including any failure to implement or difficulty in implementing required new or improved controls, our business and results of operations
could be harmed, the results of operations we report could be subject to adjustments, we could fail to be able to provide reasonable assurance as to our financial results or the effectiveness of our internal controls or meet our reporting
obligations, and there could be a material adverse effect on our stock price.

If we incur net losses or substantially
lower profit in the future, we may have to record a valuation allowance against some of our deferred tax assets, which would significantly increase our tax expense and harm our net earnings

Future losses or low profitability may create uncertainty about the realizability of our $36.3 million net deferred tax assets. If we
record a valuation allowance against our deferred tax assets, we would record an additional tax expense, which would reduce net income. In addition, uncertainties about the realizability of our deferred tax assets could limit our ability to
recognize future deferred tax assets on our balance sheet and correspondingly reduce net earnings. At the end of each fiscal quarter, our management reviews the results of operations for that quarter and forecasts for the remainder of the fiscal
year and future years to determine if it is more likely than not that a valuation allowance for the deferred tax assets is needed.



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|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

None.



|Item 2. | Properties
|------- | ----------

The following are our principal facilities as of July 3, 2011:



|               |  |                                        |  |                                |  |                             
|-------------- |  | -------------------------------------- |  | ------------------------------ |  | ----------------------------
|Location       |  | Primary Use                            |  | Owned/Leased                   |  | Segments Used by            
|San Jose, CA   |  | Headquarters, Research and Development |  | Leased                         |  | All                         
|               |  |                                        | 
|Beverly, MA    |  | Manufacturing                          |  | Owned (no encumbrances)/Leased |  | All                         
|               |  |                                        | 
|Santa Rosa, CA |  | Manufacturing                          |  | Leased                         |  | Government Business Unit    
|               |  |                                        | 
|Boulder, CO    |  | Manufacturing                          |  | Leased                         |  | Government Business Unit    
|               |  |                                        | 
|Beijing, China |  | Research and Development, Sales        |  | Leased                         |  | Communications Business Unit

We also lease other facilities in the United States, Europe, and Asia to support manufacturing, research
and development, sales and customer service. We believe that our current facilities are suitable and adequate to meet our anticipated needs for the foreseeable future, and we periodically evaluate whether additional facilities are necessary.



|Item 3. | Legal Proceedings
|------- | -----------------

See Note 8Litigation and ContingenciesNotes to Financial Statements (Part II, Item 8 of this Form 10-K) for information regarding legal proceedings in which we are involved.



|Item 4. | Removed and Reserved
|------- | --------------------



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PART II



|Item 5. | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ----------------------------------------------------------------------------------------------------------------

Our common stock is traded on The NASDAQ Stock Market LLC, under the symbol SYMM. We had
approximately 887 stockholders of record as of August 31, 2011.

The following table sets forth the high and low per
share sale prices reported on The NASDAQ Stock Market LLC for our common stock for the periods indicated.



|                         |  |      |      |  |     |   |      | 
|------------------------ |  | ---- | ---- |  | --- | - | ---- | 
|                         |  | High |      |  | Low |  
|Year ended July 3, 2011  |  |      |      |  |     |   |      | 
|First Quarter            |  | $    | 5.47 |  |     | $ | 4.81 | 
|Second Quarter           |  |      | 7.40 |  |     |   | 5.44 | 
|Third Quarter            |  |      | 7.45 |  |     |   | 5.52 | 
|Fourth Quarter           |  |      | 6.23 |  |     |   | 5.37 | 
|                         |  |     
|Year ended June 27, 2010 |  |      |      |  |     |   |      | 
|First Quarter            |  | $    | 6.54 |  |     | $ | 4.91 | 
|Second Quarter           |  |      | 5.46 |  |     |   | 4.39 | 
|Third Quarter            |  |      | 6.49 |  |     |   | 4.86 | 
|Fourth Quarter           |  |      | 7.12 |  |     |   | 5.01 | 

Symmetricom has never declared nor paid cash dividends on its capital stock and does not anticipate
paying any cash dividends in the foreseeable future.

The information required by this item regarding equity compensation
plans is incorporated by reference to the information in Part III Item 12 of this Form 10-K.

Stock Repurchase Program

As of July 3, 2011, the total number of shares available for repurchase under the repurchase program authorized by
the Board of Directors was approximately 1.6 million.

During fiscal 2011, we repurchased 1.3 million shares of common
stock pursuant to our repurchase program for an aggregate price of approximately $7.7 million.

A further 61,000 shares were
repurchased by us in fiscal 2011 for an aggregate price of approximately $0.3 million to cover the cost of taxes on vested restricted stock.

The following table provides monthly detail regarding our share repurchases during the three months ended July 3, 2011:



|                                      |  |                               |         |  |                            |   |      |                                                                             |  |  |                                                                               |  |  |  |           | 
|------------------------------------- |  | ----------------------------- | ------- |  | -------------------------- | - | ---- | --------------------------------------------------------------------------- |  |  | ----------------------------------------------------------------------------- |  |  |  | --------- | 
|Period                                |  | TotalNumberof SharesPurchased |         |  | AveragePrice Paidper Share |   |      | Total Numberof
SharesPurchased asPart of PubliclyAnnounced Plansor Programs |  |  | ApproximateNumber of SharesThat May YetBe PurchasedUnder the Plansor Programs | 
|March 28, 2011 through April 24, 2011 |  |                               |        |  |                            | $ |     |                                                                             |  |  |                                                                              |  |  |  | 1,931,061 | 
|April 25, 2011 through May 28, 2011   |  |                               | 330,754 |  |                            | $ | 5.88 |                                                                             |  |  | 330,754                                                                       |  |  |  | 1,600,307 | 
|May 29, 2011 through July 3, 2011     |  |                               |        |  |                            | $ |     |                                                                             |  |  |                                                                              |  |  |  | 1,600,307 | 
|                                      |  |                               |         |  |                            |   |      |                                                                             |  |  |                                                                               |  |  |  |           | 
|Total                                 |  |                               | 330,754 |  |                            | $ | 5.88 |                                                                             |  |  | 330,754                                                                       |  |  |  |           | 
|                                      |  |                               |         |  |                            |   |      |                                                                             |  |  |                                                                               |  |  |  |           | 



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Comparative Stock Performance

The graph below compares the cumulative total stockholders return on our common stock for the last five fiscal years with the total
return on the S&P 500 Index and the S&P Information Technology Index over the same period (assuming the investment of $100 in our common stock, the S&P 500 Index and the S&P Information Technology Index, and reinvestment of all
dividends).

LOGO



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##### Table of Contents

|Item 6. | Selected Financial Data
|------- | -----------------------

The following selected consolidated financial data for the fiscal years ended July 3, 2011, June 27, 2010, June 28, 2009, June 29, 2008, and July 1, 2007 should
be read in conjunction with our consolidated financial statements, the related notes and Managements Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Form 10-K. The historical
results are not necessarily indicative of the results to be expected for any future period.



|                                                                  |  |                                          |         |  |              |   |         |              |  |   |              |   |  |             |         |   |  |   |         |  
|----------------------------------------------------------------- |  | ---------------------------------------- | ------- |  | ------------ | - | ------- | ------------ |  | - | ------------ | - |  | ----------- | ------- | - |  | - | ------- | -
|                                                                  |  | Year ended                               |        
|                                                                  |  | July 3,2011                              |         |  | June 27,2010 |   |         | June 28,2009 |  |   | June 29,2008 |   |  | July 1,2007 |        
|                                                                  |  | (In thousands, except per share amounts) |        
|Consolidated Statement of Operations Data:                        |  |                                          |         |  |              |   |         |              |  |   |              |   |  |             |         |   |  |   |         |  
|Net revenue                                                       |  | $                                        | 208,146 |  |              | $ | 221,316 |              |  | $ | 219,746      |   |  | $           | 206,386 |   |  | $ | 207,878 |  
|Operating income (loss)(1),(2)                                    |  |                                          | 7,131   |  |              |   | 12,129  |              |  |   | (32,713      | ) |  |             | 6,947   |   |  |   | 14,704  |  
|Income (loss) from continuing operations before income taxes(3)   |  |                                          | 8,030   |  |              |   | 2,043   |              |  |   | (43,218      | ) |  |             | 1,089   |   |  |   | 14,450  |  
|Income (loss) from continuing operations(4)                       |  |                                          | 1,169   |  |              |   | 2,546   |              |  |   | (43,806      | ) |  |             | (805    | ) |  |   | 10,423  |  
|Income (loss) from discontinued operations, net of tax(5),(6),(7) |  |                                          | 254     |  |              |   | (20     | )            |  |   | (1,951       | ) |  |             | (16,942 | ) |  |   | (7,058  | )
|Net income (loss)                                                 |  |                                          | 1,423   |  |              |   | 2,526   |              |  |   | (45,757      | ) |  |             | (17,747 | ) |  |   | 3,365   |  
|Basic income (loss) per share from continuing operations          |  |                                          | 0.03    |  |              |   | 0.06    |              |  |   | (1.01        | ) |  |             | (0.02   | ) |  |   | 0.22    |  
|Basic income (loss) per share from discontinued operations        |  |                                          |        |  |              |   |        |              |  |   | (0.04        | ) |  |             | (0.38   | ) |  |   | (0.15   | )
|Basic net income (loss) per share                                 |  |                                          | 0.03    |  |              |   | 0.06    |              |  |   | (1.05        | ) |  |             | (0.40   | ) |  |   | 0.07    |  
|Diluted income (loss) per share from continuing operations        |  |                                          | 0.03    |  |              |   | 0.06    |              |  |   | (1.01        | ) |  |             | (0.02   | ) |  |   | 0.22    |  
|Diluted income (loss) per share from discontinued operations      |  |                                          |        |  |              |   |        |              |  |   | (0.04        | ) |  |             | (0.38   | ) |  |   | (0.15   | )
|Diluted net income (loss) per share                               |  |                                          | 0.03    |  |              |   | 0.06    |              |  |   | (1.05        | ) |  |             | (0.40   | ) |  |   | 0.07    |  
|                                                                  |  |                                          |         |  |             
|                                                                  |  | July 3,2011                              |         |  | June 27,2010 |   |         | June 28,2009 |  |   | June 29,2008 |   |  | July 1,2007 |        
|                                                                  |  | (In thousands)                           |        
|Consolidated Balance Sheet Data:                                  |  |                                          |         |  |              |   |         |              |  |   |              |   |  |             |         |   |  |   |         |  
|Total assets                                                      |  | $                                        | 235,840 |  |              | $ | 231,387 |              |  | $ | 272,387      |   |  | $           | 367,672 |   |  | $ | 396,158 |  
|Long-term obligations(8),(9)                                      |  |                                          | 5,212   |  |              |   | 8,296   |              |  |   | 51,769       |   |  |             | 46,301  |   |  |   | 92,050  |  
|Stockholders equity                                              |  |                                          | 184,154 |  |              |   | 183,852 |              |  |   | 179,528      |   |  |             | 233,331 |   |  |   | 256,807 |  



|(1) | During fiscal 2011 and 2010, we recorded $8.1 million and $10.3 million, respectively, in restructuring charges related to the closure of our manufacturing operations
in Puerto Rico, lease losses and facility related charges, one-time termination benefits, and other restructuring related charges.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | During fiscal 2009, we recorded an impairment charge of $48.1 million in goodwill, $9.7 million in restructuring charges related to lease losses and facility related
charges and one-time termination benefits.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | During fiscal 2010 and 2009, we recorded $7.0 million and $5.6 million, respectively, in non-cash charges related to repayment of convertible notes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | During fiscal 2011, we recorded a $4.5 million valuation allowance against California R&D tax credit deferred assets.
|--- | ---------------------------------------------------------------------------------------------------------------------



|(5) | Reflects amounts related to gains (losses) on discontinued operations. The Specialty Manufacturing / Other business segment was discontinued in the third quarter of
fiscal 2007. Our Quality of Experience Assurance business segment was discontinued and sold in fiscal 2010.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | During fiscal 2008, we recorded an impairment charge of $6.5 million in goodwill and $7.8 million in intangible assets related to our Quality of Experience Assurance
business.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | During fiscal 2007, we recorded an expense of $3.4 million for the income tax effect of the liquidations of QoSmetrics, S.A. and QoSmetrics, Inc., which were acquired
on January 2, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | During fiscal 2010, we repurchased $56.9 million in aggregate principal amount of our outstanding convertible notes, which had a carrying value of $48.7 million.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | During fiscal 2009, we repurchased $63.1 million in aggregate principal amount of our outstanding convertible notes which had a carrying value of $48.6 million.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion and analysis of our financial condition and results of operations should be read together with the
accompanying consolidated financial statements and related notes included elsewhere in this report on Form 10-K.

Overview

Symmetricom, a worldwide leader in precision time and frequency technologies, sets the worlds standard for time. We
generate, distribute and apply precise time for the communications, aerospace/defense, IT infrastructure and metrology industries. Symmetricoms customers, from communications service providers and network equipment manufacturers to governments
and their suppliers worldwide, are able to build more reliable networks and systems by using our advanced timing technologies, atomic clocks, services and solutions. Our products support todays precise timing standards, including GPS-based
timing, IEEE 1588 (PTP), Network Time Protocol (NTP), Synchronous Ethernet, Building Integrated Timing Supply (BITS) and Data Over Cable Service Interface Specifications (DOCSIS(R)) timing.

Our fiscal year is the 52 or 53 weeks ending on the Sunday closest to June 30. Fiscal years 2009 and 2010 were 52-week fiscal years,
and 2011 was a 53-week fiscal year.

Fiscal Year 2011 Summary

During fiscal 2011, we made considerable progress on our strategic growth initiatives, including capitalizing on the migration to next-generation networks, expanding into new markets, and driving
international market share.

In connection with our initiatives focused on building a more efficient organization, we
transitioned our Puerto Rico manufacturing operations to Sanmina-SCI to improve our supply chain and cost model. The manufacturing transition adversely impacted our financial results in fiscal 2011 due to product fulfillment delays; however, it has
given us a platform upon which to improve processes and build higher standards of operational performance and ultimately a more competitive organization. With the transition complete and a return to normal levels of product availability and lead
times, we are focused on leveraging our new manufacturing model for efficiency, quality, and customer service improvements.

We will continue to invest in and execute on growth initiatives that represent the most promising market opportunities in network and
system timing, as we did with PackeTime, a successfully executed key technology initiative. We intend to focus on applying that same core timing expertise and dedicated energy to our newest initiatives with CSAC, embedded soft clocks, and
applications for the high frequency trading and the power utility markets.

Known Trends and Uncertainties Impacting Future Results of
Operations: Global Market and Economic Conditions

Current macro-economic factors are dynamic and uncertain and are likely
to remain so in fiscal year 2012. If difficult economic conditions resume or markedly worsen or if there are reductions in government / defense spending, our customers may delay or reduce capital expenditures. Among other things, these factors could
result in reductions in sales of our products, longer sales cycles, difficulties in collecting accounts receivable, additional excess and obsolete inventory, gross margin deterioration, slower adoption of new technologies, increased price
competition and supplier difficulties.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States,
which require us to make estimates and judgments that affect the



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reported amounts of assets, liabilities, revenue and expenses, and related disclosures at the date of our financial statements. On an ongoing basis, management evaluates its estimates and
judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We consider the following accounting policies to be critical accounting
policies due to their subjective nature and judgments involved in each:

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, our price is
fixed or determinable and collectability is reasonably assured. Our standard arrangement for our domestic and international customers includes a signed purchase order or contract and no right of return of delivered products. Revenue is recognized
net of any taxes collected from customers and subsequently remitted to governmental authorities.

We assess collectability
based on the creditworthiness of the customer and past transaction history. We perform periodic credit evaluations of our customers and do not require collateral from our customers. However, for many of our international customers, we require an
irrevocable letter of credit to be issued by the customer before the product is shipped. If we determine that collection of the invoice is not reasonably assured, we recognize revenue at the time that collection becomes reasonably assured, which is
generally upon the receipt of cash.

Generally, product revenue is generated from the sale of synchronization and timing
equipment with embedded software that is incidental to product functionality. Service revenue is recognized as the services are performed, provided collection of the related receivable is reasonably assured. Our sales to distributors are made under
agreements allowing for returns or credits under certain circumstances. Accordingly, we record an estimate of returns from distributors based on a historical average of distributor returns. We record commission expense both when orders are received
and shipped, at which times the commission is both earned and payable.

Our multiple element product offerings generally
include hardware, software and post-contract support (PCS) services, which are considered separate units of accounting. For multiple-element arrangements entered into prior to the first quarter of fiscal 2011, we recognized revenue based
on the then relevant revenue recognition guidance that allowed us to utilize the residual method to determine the amount of revenue to be recognized on the delivered elements of the arrangement provided vendor specific objective evidence
(VSOE) existed for the undelivered elements. Under the residual method, the fair value of the undelivered elements was deferred, such as post-contract support, and the remaining portion of the arrangement consideration was recognized as
revenue. VSOE of fair value is limited to the price charged when the same element is sold separately. VSOE of fair value is established for post-contractual support based on the volume and pricing of the stand-alone sales within a narrow range. The
fair value of the post-contractual support is recognized on a straight-line basis over the term of the related support period. We adopted new revenue accounting guidance at the beginning of fiscal 2011, on a prospective basis, for applicable
transactions originating or materially modified after June 27, 2010. The adoption of this new authoritative guidance had no material impact on the Companys financial position, results of operations or cash flows in the periods presented. In
evaluating the revenue recognition for multiple element arrangements under the new accounting guidance, the total arrangement fees are allocated to all the deliverables based on their respective relative selling prices and the residual method is no
longer permitted. The relative selling price is determined using VSOE when available. When VSOE cannot be established, we attempt to establish the selling price of deliverables based on relevant third party evidence (TPE). TPE is
determined based on competitor prices for similar deliverables when sold separately. Generally, our go-to-market strategy differs from that of our competitors, and offerings may contain a significant level of proprietary technology, customization or
differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, we are unable to reliably determine what similar competitor products selling prices are on a stand-alone basis. Therefore,
we typically are not able to determine TPE.

When we are unable to establish selling price using VSOE or TPE, we use a Best
Estimate Selling Price (BESP) for the allocation of arrangement consideration. The objective of BESP is to determine the price at which



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we would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly
customized offerings. We determine BESP for a product or service by considering multiple factors including, but not limited to:



| |  |  | the price list established by our management which is typically based on general pricing practices, market conditions, geographies and targeted gross
margin of products and services sold; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | analysis of pricing history of new arrangements, including multiple element and stand-alone transactions.
| | - |  | ---------------------------------------------------------------------------------------------------------

Revenue from contracts that require development and manufacture in accordance with customer specifications and have a lengthy development
period may be categorized into two types: firm fixed price and cost-plus reimbursement. Revenue is recognized under the fixed price contracts using the percentage of completion method (cost-to-cost basis), principally based upon the costs incurred
relative to the total estimated costs at completion on the individual contracts. Any anticipated losses on contracts are charged to operations as soon as they are determinable. Revenue recognized under cost-plus contracts is recognized on the
basis of direct and indirect costs incurred plus a negotiated profit calculated as a percentage of costs or as a performance based award fee. Revenue from long-term contracts is reviewed periodically, with adjustments recorded in the period in which
the revisions are made.

Inventory Valuation

Inventories are valued at the lower of cost or market, cost being determined on a first-in, first-out basis. We assess the valuation of all inventories, including raw materials, work-in-process, finished
goods and spare parts on a periodic basis. Obsolete inventory or inventory in excess of managements estimated usage is written down to its estimated market value less costs to sell, provided its cost is higher. Inherent in the estimates of
market value are managements estimates related to current economic trends, future demand and technological obsolescence. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be
required. If the inventory value is written down to its net realizable value, and subsequently there is an increased demand for the inventory at a higher value, the increased value of the inventory is not realized until the inventory is sold.

Warranty

Our standard warranty agreement is one year from shipment. However, our warranty agreements are contract and component specific and can range to twenty years for selected components. We offer extended
warranty contracts on products that are less than eight years old. The extended warranty contract is applicable for a maximum of nine years after the expiration of the standard one-year warranty. The revenue from extended warranty contracts is
recognized ratably over the period of contract.

We accrue for anticipated warranty costs upon shipment. Our warranty reserve
is based on the number of installed units, historical analysis of the volume of product returned to us under the warranty program, managements judgment regarding anticipated rates of warranty claims and associated repair costs. We use the
historical data to forecast our anticipated future warranty obligations. This analysis is updated on a quarterly basis.

Accounting for Income Taxes

We provide for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be realized. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in the consolidated financial statements in the period that includes the enactment date.



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The carrying value of our net deferred tax assets, which are made up of tax deductions, net
operating loss carryforwards and tax credits, assumes that we will be able to generate sufficient future income to fully realize these assets. We evaluate the weight of all available evidence in determining whether it is more likely than not that
some portion of the deferred tax assets will not be realized. If we do not generate sufficient future income, the realization of these deferred tax assets may be impaired, resulting in an additional income tax expense. A portion of our tax credits
are related to stock options and have a valuation allowance because of uncertainty regarding their realization. If these tax credits are realized, the benefit will be credited to common stock.

In fiscal 2008, we adopted Financial Accounting Standards Board (FASB) authoritative guidance on accounting for uncertainty
in income taxes, which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Under this guidance, we may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position
are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Short-term Investments

Short-term investments consist of government securities, mutual funds and corporate debt securities that mature between three and 36 months. All of our short-term investments, except the deferred
compensation plan assets, are classified as available-for-sale. During fiscal 2009, we reclassified the deferred compensation plan assets from available-for-sale to trading securities in order to maintain consistency with the method in which we
account for the deferred compensation obligation. Available-for-sale securities are carried at fair value with temporary unrealized gains and losses, net of taxes, reported as a component of stockholders equity. Unrealized gains and losses
related to trading securities are included in interest income in our consolidated statements of operations.

Short-term
investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. We consult with our investment manager and consider available quantitative and qualitative evidence in evaluating potential impairment of
our investments on a quarterly basis. Other-than-temporary impairment charges exist when the entity has the intent to sell the security or it will more likely than not be required to sell the security before anticipated recovery. Once a decline in
fair value is determined to be other-than-temporary, an impairment charge is recorded to operations and a new cost basis in the investment is established.

During fiscal year 2009, we recorded losses related to short-term investments of $1.4 million. No losses related to short-term investments were recorded in fiscal 2010 and 2011.

Valuation of Long-Lived Assets Including Intangible Assets Subject to Amortization

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets
may not be recoverable. Intangible assets primarily include purchased technology and trademarks. Factors we consider important that could trigger an impairment review include significant under-performance relative to historical or projected future
operating results, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, or significant negative industry or economic trends. If these criteria indicate that the value of the intangible asset
may be impaired, an evaluation of the recoverability of the net carrying value of the asset over its remaining useful life is made. If this evaluation indicates that the intangible asset is not recoverable, the net carrying value of the related
intangible asset will be reduced to fair value. Any such impairment charge could be significant and could have a material adverse effect on our financial statements if and when an impairment charge is recorded. If an impairment charge were
recognized, the amortization related to intangible assets would decrease during the remainder of the life of the asset.

In
the third quarter of fiscal 2009, because of the identification of goodwill impairment indicators, we first reviewed our other intangible and long-lived assets for impairment and determined there was no impairment.



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Results of Operations

The following table presents the percentage of total revenue for the respective line items in our consolidated statement of operations:



|                                                       |  |              |       |    |               |  |       |               |  |  |       |   
|------------------------------------------------------ |  | ------------ | ----- | -- | ------------- |  | ----- | ------------- |  |  | ----- | --
|                                                       |  | Year ended   |      
|                                                       |  | July 3, 2011 |       |    | June 27, 2010 |  |       | June 28, 2009 | 
|Net revenue                                            |  |              |       |    |               |  |       |               |  |  |       |   
|Communications                                         |  |              | 57.2  | %  |               |  | 62.8  | %             |  |  | 63.0  | % 
|Government                                             |  |              | 42.8  | %  |               |  | 37.2  | %             |  |  | 37.0  | % 
|                                                       |  |              |       |    |               |  |       |               |  |  |       |   
|Total net revenue                                      |  |              | 100.0 | %  |               |  | 100.0 | %             |  |  | 100.0 | % 
|Cost of products and services                          |  |              | 51.9  | %  |               |  | 52.8  | %             |  |  | 50.6  | % 
|Amortization of purchased technology                   |  |              | 0.5   | %  |               |  | 0.6   | %             |  |  | 0.7   | % 
|Restructuring charges                                  |  |              | 4.5   | %  |               |  | 2.5   | %             |  |  | 1.8   | % 
|                                                       |  |              |       |    |               |  |       |               |  |  |       |   
|Gross profit                                           |  |              | 43.1  | %  |               |  | 44.1  | %             |  |  | 47.0  | % 
|Operating expenses:                                    |  |              |       |    |               |  |       |               |  |  |       |   
|Research and development                               |  |              | 13.0  | %  |               |  | 10.7  | %             |  |  | 10.7  | % 
|Selling, general and administrative                    |  |              | 27.2  | %  |               |  | 25.6  | %             |  |  | 26.4  | % 
|Amortization of intangible assets                      |  |              | 0.1   | %  |               |  | 0.1   | %             |  |  | 0.2   | % 
|Restructuring charges                                  |  |              | (0.6  | )% |               |  | 2.1   | %             |  |  | 2.7   | % 
|Impairment of goodwill                                 |  |              |      | %  |               |  |      | %             |  |  | 21.9  | % 
|                                                       |  |              |       |    |               |  |       |               |  |  |       |   
|Operating income (loss)                                |  |              | 3.4   | %  |               |  | 5.5   | %             |  |  | (14.9 | )%
|Gain on sale of asset                                  |  |              |       | %  |               |  |       | %             |  |  |       | % 
|Loss on repayment of convertible notes, net            |  |              |      | %  |               |  | (3.2  | )%            |  |  | (2.6  | )%
|Loss on short-term investments, net                    |  |              |      | %  |               |  |      | %             |  |  | (0.6  | )%
|Interest income                                        |  |              | 0.5   | %  |               |  | 0.7   | %             |  |  | 0.8   | % 
|Interest expense                                       |  |              | (0.0  | )% |               |  | (2.1  | )%            |  |  | (2.4  | )%
|                                                       |  |              |       |    |               |  |       |               |  |  |       |   
|Income (loss) from continuing operations before taxes  |  |              | 3.9   | %  |               |  | 0.9   | %             |  |  | (19.7 | )%
|Income tax provision (benefit)                         |  |              | 3.3   | %  |               |  | (0.2  | )%            |  |  | 0.3   | % 
|                                                       |  |              |       |    |               |  |       |               |  |  |       |   
|Income (loss) from continuing operations               |  |              | 0.6   | %  |               |  | 1.2   | %             |  |  | (19.9 | )%
|Income (loss) from discontinued operations, net of tax |  |              | 0.1   | %  |               |  |      |               |  |  | (0.9  | )%
|                                                       |  |              |       |    |               |  |       |               |  |  |       |   
|Net income (loss)                                      |  |              | 0.7   | %  |               |  | 1.1   | %             |  |  | (20.8 | )%
|                                                       |  |              |       |    |               |  |       |               |  |  |       |   

Fiscal 2011 compared to Fiscal 2010



|                                   |  |              |         |  |               |   |         |          |  |   |         |   |  |  |       |   
|---------------------------------- |  | ------------ | ------- |  | ------------- | - | ------- | -------- |  | - | ------- | - |  |  | ----- | --
|                                   |  | Year ended   |         |  | $ Change      |   |         | % Change | 
|                                   |  | July 3, 2011 |         |  | June 27, 2010 |   |         |          |  |   |         |  
|Net Revenue(dollars in thousands): |  |              |         |  |               |   |         |          |  |   |         |   |  |  |       |   
|Communications                     |  | $            | 119,104 |  |               | $ | 139,079 |          |  | $ | (19,975 | ) |  |  | (14.4 | )%
|Government                         |  |              | 89,042  |  |               |   | 82,237  |          |  |   | 6,805   |   |  |  | 8.3   |   
|                                   |  |              |         |  |               |   |         |          |  |   |         |   |  |  |       |   
|Total Net Revenue                  |  | $            | 208,146 |  |               | $ | 221,316 |          |  | $ | (13,170 | ) |  |  | (6.0  | )%



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Net revenueconsists of sales of products, services and software licenses. Our
Communications unit revenue decreased due to manufacturing transition-related product fulfillment issues in the second and third quarters of fiscal 2011, somewhat offset by increases in PackeTime products. Our Government business revenue increase is
attributable to higher revenue from government programs and sales of network time servers.



|                                    |  |              |        |   |               |   |        |          |  |   |         |   |  |  |       |   
|----------------------------------- |  | ------------ | ------ | - | ------------- | - | ------ | -------- |  | - | ------- | - |  |  | ----- | --
|                                    |  | Year ended   |        |   | $ Change      |   |        | % Change | 
|                                    |  | July 3, 2011 |        |   | June 27, 2010 |   |        |          |  |   |         |  
|Gross Profit(dollars in thousands): |  |              |        |   |               |   |        |          |  |   |         |   |  |  |       |   
|Communications                      |  | $            | 58,992 |   |               | $ | 69,134 |          |  | $ | (10,142 | ) |  |  | (14.7 | )%
|Government                          |  |              | 40,091 |   |               |   | 34,011 |          |  |   | 6,080   |   |  |  | 17.9  |   
|Corporate related                   |  |              | (9,351 | ) |               |   | (5,625 | )        |  |   | (3,726  | ) |  |  | 66.2  |   
|                                    |  |              |        |   |               |   |        |          |  |   |         |   |  |  |       |   
|Total Gross Profit                  |  | $            | 89,732 |   |               | $ | 97,520 |          |  | $ | (7,788  | ) |  |  | (8.0  | )%
|Percentage of Revenue               |  |              | 43.1   | % |               |   | 44.1   | %        |  |   |         |   |  |  |       |   

Gross profit:Gross profit for our Communications unit decreased in fiscal 2011 compared to
fiscal 2010 due to a decline in revenue, which resulted from manufacturing transition-related product fulfillment issues in the second and third quarters of fiscal 2011. Gross profit for our Government unit increased in fiscal 2011 compared to
fiscal 2010 due to increased revenue, better performance on long-term government contracts, and lower manufacturing costs.

Corporate related restructuring charges increased in fiscal 2011 compared to fiscal 2010 due primarily to severance and other charges
related to the planned closure of our Puerto Rico manufacturing facility, which we announced in the fourth quarter of fiscal 2010 and completed in the third quarter of fiscal 2011.



|                                               |  |              |         |   |               |   |         |          |  |   |        |   |  |  |       |   
|---------------------------------------------- |  | ------------ | ------- | - | ------------- | - | ------- | -------- |  | - | ------ | - |  |  | ----- | --
|                                               |  | Year ended   |         |   | $ Change      |   |         | % Change | 
|                                               |  | July 3, 2011 |         |   | June 27, 2010 |   |         |          |  |   |        |  
|Operating Income (Loss)(dollars in thousands): |  |              |         |   |               |   |         |          |  |   |        |   |  |  |       |   
|Communications                                 |  | $            | 22,690  |   |               | $ | 31,997  |          |  | $ | (9,307 | ) |  |  | (29.1 | )%
|Government                                     |  |              | 15,840  |   |               |   | 12,645  |          |  |   | 3,195  |   |  |  | 25.3  |   
|Corporate related                              |  |              | (31,399 | ) |               |   | (32,513 | )        |  |   | 1,114  |   |  |  | (3.4  | ) 
|                                               |  |              |         |   |               |   |         |          |  |   |        |   |  |  |       |   
|Total operating income                         |  | $            | 7,131   |   |               | $ | 12,129  |          |  | $ | (4,998 | ) |  |  | (41.2 | )%
|Percentage of Revenue                          |  |              | 3.4     | % |               |   | 5.5     | %        |  |   |        |   |  |  |       |   

Operating income:Operating income for our Communications unit decreased due to the decline
in revenue. Operating income for our Government unit increased due to higher gross profit partially offset by an increase in research and development expenses. Corporate-related operating expenses in fiscal 2011 were flat compared to fiscal 2010.



|                                                       |  |              |        |   |               |   |        |          |  |   |       |  |  |  |      |  
|------------------------------------------------------ |  | ------------ | ------ | - | ------------- | - | ------ | -------- |  | - | ----- |  |  |  | ---- | -
|                                                       |  | Year ended   |        |   | $ Change      |   |        | % Change | 
|                                                       |  | July 3, 2011 |        |   | June 27, 2010 |   |        |          |  |   |       | 
|Research and development expense(dollars in thousands) |  | $            | 27,045 |   |               | $ | 23,701 |          |  | $ | 3,344 |  |  |  | 14.1 | %
|Percentage of Revenue                                  |  |              | 13.0   | % |               |   | 10.7   | %        |  |   |       |  |  |  |      |  

Research and development expenses consist primarily of salaries and benefits, prototype
expenses and fees paid to outside consultants and facility costs. Research and development expense in fiscal 2011 increased compared to fiscal 2010 due to higher engineering costs on development programs, recruiting fees, and depreciation and
amortization expenses, partially offset by lower employee compensation and related costs.



|                                                          |  |              |        |   |               |   |        |          |  |   |      |   |  |  |      |   
|--------------------------------------------------------- |  | ------------ | ------ | - | ------------- | - | ------ | -------- |  | - | ---- | - |  |  | ---- | --
|                                                          |  | Year ended   |        |   | $ Change      |   |        | % Change | 
|                                                          |  | July 3, 2011 |        |   | June 27, 2010 |   |        |          |  |   |      |  
|Selling, general and administrative(dollars in thousands) |  | $            | 56,607 |   |               | $ | 56,743 |          |  | $ | (136 | ) |  |  | (0.2 | )%
|Percentage of Revenue                                     |  |              | 27.2   | % |               |   | 25.6   | %        |  |   |      |   |  |  |      |   



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Selling, general and administrative expense consists primarily of salaries,
benefits, sales commissions and travel-related expenses for our sales and services, marketing, finance, human resources, information technology and facilities departments. In fiscal 2011, there were lower employee compensation and related costs and
commissions, compared to fiscal 2010, which were offset by higher consulting and outside services costs resulting in selling, general and administrative expenses remaining flat from fiscal 2010 to fiscal 2011.



|                                                        |  |              |     |   |               |   |     |          |  |   |     |   |  |  |       |   
|------------------------------------------------------- |  | ------------ | --- | - | ------------- | - | --- | -------- |  | - | --- | - |  |  | ----- | --
|                                                        |  | Year ended   |     |   | $ Change      |   |     | % Change | 
|                                                        |  | July 3, 2011 |     |   | June 27, 2010 |   |     |          |  |   |     |  
|Amortization of intangible assets(dollars in thousands) |  | $            | 243 |   |               | $ | 281 |          |  | $ | (38 | ) |  |  | (13.5 | )%
|Percentage of Revenue                                   |  |              | 0.1 | % |               |   | 0.1 | %        |  |   |     |   |  |  |       |   

Amortization of intangible assetsdecreased in fiscal 2011 compared to fiscal 2010 due to
certain assets becoming fully amortized during fiscal 2011.



|                                            |  |              |        |    |               |   |       |          |  |   |        |   |  |  |        |   
|------------------------------------------- |  | ------------ | ------ | -- | ------------- | - | ----- | -------- |  | - | ------ | - |  |  | ------ | --
|                                            |  | Year ended   |        |    | $ Change      |   |       | % Change | 
|                                            |  | July 3, 2011 |        |    | June 27, 2010 |   |       |          |  |   |        |  
|Restructuring charges(dollars in thousands) |  | $            | (1,294 | )  |               | $ | 4,666 |          |  | $ | (5,960 | ) |  |  | (127.7 | )%
|Percentage of Revenue                       |  |              | (0.6   | )% |               |   | 2.1   | %        |  |   |        |   |  |  |        |   

Restructuring charges decreased in fiscal 2011 compared to fiscal 2010 due to a $2.3
million credit from utilization of a section of the San Jose facility that had previously been recorded as a lease loss at the time we ceased using the space and the sublease of a section of our Santa Rosa facility that had previously been recorded
as a lease loss at the time we ceased using the space.



|                                                                  |  |              |   |   |               |   |        |          |  |   |       |  |  |  |        |   
|----------------------------------------------------------------- |  | ------------ | - | - | ------------- | - | ------ | -------- |  | - | ----- |  |  |  | ------ | --
|                                                                  |  | Year ended   |   |   | $ Change      |   |        | % Change | 
|                                                                  |  | July 3, 2011 |   |   | June 27, 2010 |   |        |          |  |   |       | 
|Loss on repayment of convertible notes, net(dollars in thousands) |  | $            |  |   |               | $ | (7,026 | )        |  | $ | 7,026 |  |  |  | (100.0 | )%
|Percentage of Revenue                                             |  |              |  | % |               |   | (3.2   | )%       |  |   |       |  |  |  |        |   

Loss on repayment of convertible notes: In the
fourth quarter of fiscal 2010 we repaid the remaining principal amount of $56.9 million of our convertible notes and incurred a loss of $7.0 million. The outstanding notes were repaid in June of fiscal 2010, and there were no notes outstanding in
fiscal 2011.



|                                      |  |              |     |   |               |   |       |          |  |   |      |   |  |  |       |   
|------------------------------------- |  | ------------ | --- | - | ------------- | - | ----- | -------- |  | - | ---- | - |  |  | ----- | --
|                                      |  | Year ended   |     |   | $ Change      |   |       | % Change | 
|                                      |  | July 3, 2011 |     |   | June 27, 2010 |   |       |          |  |   |      |  
|Interest income(dollars in thousands) |  | $            | 957 |   |               | $ | 1,594 |          |  | $ | (637 | ) |  |  | (40.0 | )%
|Percentage of Revenue                 |  |              | 0.5 | % |               |   | 0.7   | %        |  |   |      |   |  |  |       |   

Interest incomedecreased in fiscal 2011 compared to the same period in the prior year due
to lower investment balances combined with lower yields on those investments.



|                                       |  |              |      |    |               |   |        |          |  |   |       |  |  |  |       |   
|-------------------------------------- |  | ------------ | ---- | -- | ------------- | - | ------ | -------- |  | - | ----- |  |  |  | ----- | --
|                                       |  | Year ended   |      |    | $ Change      |   |        | % Change | 
|                                       |  | July 3, 2011 |      |    | June 27, 2010 |   |        |          |  |   |       | 
|Interest expense(dollars in thousands) |  | $            | (58  | )  |               | $ | (4,654 | )        |  | $ | 4,596 |  |  |  | (98.8 | )%
|Percentage of Revenue                  |  |              | (0.0 | )% |               |   | (2.1   | )%       |  |   |       |  |  |  |       |   

Interest expense consists primarily of interest on our convertible notes. Interest expense
decreased in fiscal 2011 compared to fiscal 2010 due to the repayment of all outstanding notes in June of fiscal 2010. There were no notes outstanding during fiscal 2011.



|                                                     |  |              |       |   |               |   |      |          |  |   |       |  |  |  |          |   
|---------------------------------------------------- |  | ------------ | ----- | - | ------------- | - | ---- | -------- |  | - | ----- |  |  |  | -------- | --
|                                                     |  | Year ended   |       |   | $ Change      |   |      | % Change | 
|                                                     |  | July 3, 2011 |       |   | June 27, 2010 |   |      |          |  |   |       | 
|Income tax provision (benefit)(dollars in thousands) |  | $            | 6,861 |   |               | $ | (503 | )        |  | $ | 7,364 |  |  |  | (1,464.0 | )%
|Percentage of Revenue                                |  |              | 3.3   | % |               |   | (0.2 | )%       |  |   |       |  |  |  |          |   



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##### Table of Contents

Income tax provision (benefit):Our effective tax rate in fiscal 2011 was
85.5% on income from continuing operations before income taxes of $8.0 million, compared to an effective tax rate of (24.6%) on income from continuing operations before income taxes of $2.0 million in fiscal 2010. The tax rate in fiscal 2011
was impacted by a $4.5 million valuation allowance related to state income tax credits primarily attributable to research and development credits that will not be utilized. Fiscal 2010 income taxes benefited favorably from various tax credits.



|                                                                     |  |              |     |   |               |   |      |          |  |   |     |  |  |  |          |   
|-------------------------------------------------------------------- |  | ------------ | --- | - | ------------- | - | ---- | -------- |  | - | --- |  |  |  | -------- | --
|                                                                     |  | Year ended   |     |   | $ Change      |   |      | % Change | 
|                                                                     |  | July 3, 2011 |     |   | June 27, 2010 |   |      |          |  |   |     | 
|Income(loss) from discontinued operations, net of tax (in thousands) |  | $            | 254 |   |               | $ | (20  | )        |  | $ | 274 |  |  |  | (1,370.0 | )%
|Percentage of Revenue                                                |  |              | 0.1 | % |               |   | (0.0 | )%       |  |   |     |  |  |  |          |   

Discontinued Operations: In fiscal 2010, we completed the sale of our QoE business, which
resulted in a gain on sale of discontinued operations of $0.9 million and partially offset the losses of the QoE business for the fiscal year. Income from discontinued operations in fiscal 2011 represents a gain on the release of funds that were
held in escrow to satisfy indemnification and other obligations to the buyer.

Fiscal 2010 compared to Fiscal 2009



|                                   |  |               |         |   |               |   |         |          |  |   |       |  |  |  |     |  
|---------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | -------- |  | - | ----- |  |  |  | --- | -
|                                   |  | Year ended    |         |   | $ Change      |   |         | % Change | 
|                                   |  | June 27, 2010 |         |   | June 28, 2009 |   |         |          |  |   |       | 
|Net Revenue(dollars in thousands): |  |               |         |   |               |   |         |          |  |   |       |  |  |  |     |  
|Communications                     |  | $             | 139,079 |   |               | $ | 138,534 |          |  | $ | 545   |  |  |  | 0.4 | %
|Government                         |  |               | 82,237  |   |               |   | 81,212  |          |  |   | 1,025 |  |  |  | 1.3 |  
|                                   |  |               |         |   |               |   |         |          |  |   |       |  |  |  |     |  
|Total Net Revenue                  |  | $             | 221,316 |   |               | $ | 219,746 |          |  | $ | 1,570 |  |  |  | 0.7 | %
|Percentage of Revenue              |  |               | 100.0   | % |               |   | 100.0   | %        |  |   |       |  |  |  |     |  

Net revenue increased by $1.6 million, or 0.7%, in fiscal 2010 compared to fiscal 2009.
Communications revenue was flat in fiscal 2010 compared to fiscal 2009. Revenue declines from our DOCSIS Timing Interface (DTI) products and international sales of our traditional sync products were offset by higher revenues from our new PackeTime
products, higher sales of embedded timing systems for WiMax base stations, and higher installation services. Government revenue increased by $1.0 million, or 1.3%, compared to the same period for the prior year, due to higher sales of atomic clocks
and hydrogen masers, offset by lower sales of government communication and signal intelligence systems.



|                                    |  |               |        |   |               |   |         |          |  |   |        |   |  |  |      |   
|----------------------------------- |  | ------------- | ------ | - | ------------- | - | ------- | -------- |  | - | ------ | - |  |  | ---- | --
|                                    |  | Year ended    |        |   | $ Change      |   |         | % Change | 
|                                    |  | June 27, 2010 |        |   | June 28, 2009 |   |         |          |  |   |        |  
|Gross Profit(dollars in thousands): |  |               |        |   |               |   |         |          |  |   |        |   |  |  |      |   
|Communications                      |  | $             | 69,134 |   |               | $ | 71,214  |          |  | $ | (2,080 | ) |  |  | (2.9 | )%
|Government                          |  |               | 34,011 |   |               |   | 35,874  |          |  |   | (1,863 | ) |  |  | (5.2 | ) 
|Corporate related                   |  |               | (5,625 | ) |               |   | (3,866  | )        |  |   | (1,759 | ) |  |  | 45.5 |   
|                                    |  |               |        |   |               |   |         |          |  |   |        |   |  |  |      |   
|Total Gross Profit                  |  | $             | 97,520 |   |               | $ | 103,222 |          |  | $ | (5,702 | ) |  |  | (5.5 | )%
|Percentage of Revenue               |  |               | 44.1   | % |               |   | 47.0    | %        |  |   |        |   |  |  |      |   

Gross profit decreased $5.7 million or 5.5% during fiscal 2010 compared to the prior year.
Gross profit as a percentage of revenue declined by 2.9%. Gross profit for our Communications unit decreased by $2.1 million, or 2.9%, despite a revenue increase of 0.4%, primarily due to a change in product mix towards lower margin products,
including installation services. Gross profit for our Government unit decreased by $1.9 million, or 5.2%, despite a revenue increase of 1.3%, primarily due to a product mix shift toward lower margin products within our government communication and
signal intelligence products.



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Corporate related restructuring charges increased $1.8 million, or 45.5%, due to severance
and other charges related to the planned closure of our Puerto Rico manufacturing facility, which we announced in the fourth quarter of fiscal 2010.



|                                               |  |               |         |   |               |   |         |          |  |   |        |   |  |  |        |   
|---------------------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | -------- |  | - | ------ | - |  |  | ------ | --
|                                               |  | Year ended    |         |   | $ Change      |   |         | % Change | 
|                                               |  | June 27, 2010 |         |   | June 28, 2009 |   |         |          |  |   |        |  
|Operating Income (Loss)(dollars in thousands): |  |               |         |   |               |   |         |          |  |   |        |   |  |  |        |   
|Communications                                 |  | $             | 31,997  |   |               | $ | 4,666   |          |  | $ | 27,331 |   |  |  | 585.8  | % 
|Government                                     |  |               | 12,645  |   |               |   | (5,137  | )        |  |   | 17,782 |   |  |  | 346.2  |   
|Corporate related                              |  |               | (32,513 | ) |               |   | (32,242 | )        |  |   | (271   | ) |  |  | 0.8    |   
|                                               |  |               |         |   |               |   |         |          |  |   |        |   |  |  |        |   
|Total operating income (loss)                  |  | $             | 12,129  |   |               | $ | (32,713 | )        |  | $ | 44,842 |   |  |  | (137.1 | )%
|Percentage of Revenue                          |  |               | 5.5     | % |               |   | (14.9   | )%       |  |   |        |   |  |  |        |   

Operating income:Operating income for our Communications unit increased by $27.3 million,
or 585.8%, due to a $28.0 million goodwill impairment charge taken in the third quarter of fiscal 2009. Operating income for our Government unit increased $17.8 million or 346.2%, due to a $20.1 million goodwill impairment charge taken in the third
quarter of fiscal 2009. Corporate-related operating expenses in fiscal 2010 were flat compared to fiscal 2009.



|                                                       |  |               |        |   |               |   |        |          |  |   |     |  |  |  |     |  
|------------------------------------------------------ |  | ------------- | ------ | - | ------------- | - | ------ | -------- |  | - | --- |  |  |  | --- | -
|                                                       |  | Year ended    |        |   | $ Change      |   |        | % Change | 
|                                                       |  | June 27, 2010 |        |   | June 28, 2009 |   |        |          |  |   |     | 
|Research and development expense(dollars in thousands) |  | $             | 23,701 |   |               | $ | 23,421 |          |  | $ | 280 |  |  |  | 1.2 | %
|Percentage of Revenue                                  |  |               | 10.7   | % |               |   | 10.7   | %        |  |   |     |  |  |  |     |  

Research and development expensesin fiscal 2010 increased $0.3 million, or 1.2%, compared
to the same period of fiscal 2009 due to higher incentive compensation, stock based compensation, and fringe benefit costs.



|                                                          |  |               |        |   |               |   |        |          |  |   |        |   |  |  |      |   
|--------------------------------------------------------- |  | ------------- | ------ | - | ------------- | - | ------ | -------- |  | - | ------ | - |  |  | ---- | --
|                                                          |  | Year ended    |        |   | $ Change      |   |        | % Change | 
|                                                          |  | June 27, 2010 |        |   | June 28, 2009 |   |        |          |  |   |        |  
|Selling, general and administrative(dollars in thousands) |  | $             | 56,743 |   |               | $ | 58,119 |          |  | $ | (1,376 | ) |  |  | (2.4 | )%
|Percentage of Revenue                                     |  |               | 25.6   | % |               |   | 26.4   | %        |  |   |        |   |  |  |      |   

Selling, general and administrative expense decreased by 2.4% to $56.7 million compared to
$58.1 million for fiscal 2009. The decrease in expenses consisted primarily of lower salary expenses as a result of headcount reductions and lower outside services and consulting expenses.



|                                                        |  |               |     |   |               |   |     |          |  |   |      |   |  |  |       |   
|------------------------------------------------------- |  | ------------- | --- | - | ------------- | - | --- | -------- |  | - | ---- | - |  |  | ----- | --
|                                                        |  | Year ended    |     |   | $ Change      |   |     | % Change | 
|                                                        |  | June 27, 2010 |     |   | June 28, 2009 |   |     |          |  |   |      |  
|Amortization of intangible assets(dollars in thousands) |  | $             | 281 |   |               | $ | 411 |          |  | $ | (130 | ) |  |  | (31.6 | )%
|Percentage of Revenue                                   |  |               | 0.1 | % |               |   | 0.2 | %        |  |   |      |   |  |  |       |   

Amortization of intangible assetsdecreased in fiscal 2010 compared to fiscal 2009 due to
certain assets becoming fully amortized during fiscal 2010.



|                                            |  |               |       |   |               |   |       |          |  |   |        |   |  |  |       |   
|------------------------------------------- |  | ------------- | ----- | - | ------------- | - | ----- | -------- |  | - | ------ | - |  |  | ----- | --
|                                            |  | Year ended    |       |   | $ Change      |   |       | % Change | 
|                                            |  | June 27, 2010 |       |   | June 28, 2009 |   |       |          |  |   |        |  
|Restructuring charges(dollars in thousands) |  | $             | 4,666 |   |               | $ | 5,840 |          |  | $ | (1,174 | ) |  |  | (20.1 | )%
|Percentage of Revenue                       |  |               | 2.1   | % |               |   | 2.7   | %        |  |   |        |   |  |  |       |   



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Restructuring charges decreased in fiscal 2010 compared to fiscal 2009 due to
lower severance costs recognized in fiscal 2010 that were related to the restructuring activities announced in the second half of fiscal 2009.



|                                             |  |               |   |   |               |   |        |          |  |   |         |   |  |  |       |  
|-------------------------------------------- |  | ------------- | - | - | ------------- | - | ------ | -------- |  | - | ------- | - |  |  | ----- | -
|                                             |  | Year ended    |   |   | $ Change      |   |        | % Change | 
|                                             |  | June 27, 2010 |   |   | June 28, 2009 |   |        |          |  |   |         |  
|Impairment of goodwill(dollars in thousands) |  | $             |  |   |               | $ | 48,144 |          |  | $ | (48,144 | ) |  |  | 100.0 | %
|Percentage of Revenue                        |  |               |  | % |               |   | 21.9   | %        |  |   |         |   |  |  |       |  

Impairment of goodwill:In the third quarter of fiscal 2009, we recognized goodwill
impairment charges of $28.0 million and $20.1 million related to our Communications and Government reporting segments, respectively.



|                                                                  |  |               |        |    |               |   |        |          |  |   |        |   |  |  |       |  
|----------------------------------------------------------------- |  | ------------- | ------ | -- | ------------- | - | ------ | -------- |  | - | ------ | - |  |  | ----- | -
|                                                                  |  | Year ended    |        |    | $ Change      |   |        | % Change | 
|                                                                  |  | June 27, 2010 |        |    | June 28, 2009 |   |        |          |  |   |        |  
|Loss on repayment of convertible notes, net(dollars in thousands) |  | $             | (7,026 | )  |               | $ | (5,623 | )        |  | $ | (1,403 | ) |  |  | 100.0 | %
|Percentage of Revenue                                             |  |               | (3.2   | )% |               |   | (2.6   | )%       |  |   |        |   |  |  |       |  

Loss on repayment of convertible notes: In the first quarter of fiscal 2009, we repaid
$62.5 million principal amount of our convertible notes and incurred a loss of $5.6 million related to the difference in the carrying value of the liability component of the redeemed amount compared to its fair value at redemption in the first
quarter of fiscal 2009. Similarly, in the fourth quarter of fiscal 2010, we repaid the remaining principal amount of $56.9 million of our convertible notes and incurred a loss of $7.0 million.



|                                                          |  |               |   |   |               |   |        |          |  |   |       |  |  |  |        |   
|--------------------------------------------------------- |  | ------------- | - | - | ------------- | - | ------ | -------- |  | - | ----- |  |  |  | ------ | --
|                                                          |  | Year ended    |   |   | $ Change      |   |        | % Change | 
|                                                          |  | June 27, 2010 |   |   | June 28, 2009 |   |        |          |  |   |       | 
|Loss on short-term investments, net(dollars in thousands) |  | $             |  |   |               | $ | (1,368 | )        |  | $ | 1,368 |  |  |  | (100.0 | )%
|Percentage of Revenue                                     |  |               |  | % |               |   | (0.6   | )%       |  |   |       |  |  |  |        |   

Loss on short-term investments:The net loss on short-term investments recognized in fiscal
2009 is attributable to an other than temporary loss of $1.5 million related to corporate debt securities and mutual funds related to our deferred compensation plan, partially offset by a gain of $0.1 million related to a recovery on an
investment for which we previously recognized an other than temporary loss in fiscal 2008.



|                                      |  |               |       |   |               |   |       |          |  |   |      |   |  |  |       |   
|------------------------------------- |  | ------------- | ----- | - | ------------- | - | ----- | -------- |  | - | ---- | - |  |  | ----- | --
|                                      |  | Year ended    |       |   | $ Change      |   |       | % Change | 
|                                      |  | June 27, 2010 |       |   | June 28, 2009 |   |       |          |  |   |      |  
|Interest income(dollars in thousands) |  | $             | 1,594 |   |               | $ | 1,807 |          |  | $ | (213 | ) |  |  | (11.8 | )%
|Percentage of Revenue                 |  |               | 0.7   | % |               |   | 0.8   | %        |  |   |      |   |  |  |       |   

Interest incomedecreased by $0.2 million in fiscal 2010 compared to the same period in the
prior year due to lower interest rates.



|                                       |  |               |        |    |               |   |        |          |  |   |     |  |  |  |       |   
|-------------------------------------- |  | ------------- | ------ | -- | ------------- | - | ------ | -------- |  | - | --- |  |  |  | ----- | --
|                                       |  | Year ended    |        |    | $ Change      |   |        | % Change | 
|                                       |  | June 27, 2010 |        |    | June 28, 2009 |   |        |          |  |   |     | 
|Interest expense(dollars in thousands) |  | $             | (4,654 | )  |               | $ | (5,321 | )        |  | $ | 667 |  |  |  | (12.5 | )%
|Percentage of Revenue                  |  |               | (2.1   | )% |               |   | (2.4   | )%       |  |   |     |  |  |  |       |   

Interest expense consists primarily of interest on our Notes. Interest expense decreased
$0.7 million in fiscal 2010 compared to the same period in the prior year due to the repayment of $62.5 million in convertible



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notes in the first quarter of fiscal 2009. Late in the fourth quarter of fiscal 2010, we repaid the remaining principal amount of $56.9 million of our convertible notes. Further, in the first
quarter of fiscal 2010, we adopted FASB authoritative guidance on accounting for our contingent convertible subordinated notes. As a result of this adoption, interest expense includes non-cash interest costs of $2.8 million in fiscal 2010 and $3.1
million in fiscal 2009.



|                                           |  |               |      |    |               |   |     |          |  |   |        |   |  |  |        |   
|------------------------------------------ |  | ------------- | ---- | -- | ------------- | - | --- | -------- |  | - | ------ | - |  |  | ------ | --
|                                           |  | Year ended    |      |    | $ Change      |   |     | % Change | 
|                                           |  | June 27, 2010 |      |    | June 28, 2009 |   |     |          |  |   |        |  
|Income tax provision(dollars in thousands) |  | $             | (503 | )  |               | $ | 588 |          |  | $ | (1,091 | ) |  |  | (185.5 | )%
|Percentage of Revenue                      |  |               | (0.2 | )% |               |   | 0.3 | %        |  |   |        |   |  |  |        |   

Income tax provision (benefit):Our income tax benefit was $0.5 million in fiscal 2010,
compared to a $0.6 million provision in fiscal 2009. Our effective tax rate in the fiscal 2010 was (24.6)% on earnings before income taxes of $2.0 million, compared to an effective tax rate of 1.4% on losses before income taxes of $43.2 million in
the corresponding period of fiscal 2009. The tax rate in fiscal 2009 was impacted by the impairment of goodwill, which provided no tax benefit. The tax rate and provision are not readily comparable because the prior year goodwill impairment
generated a large non-deductible loss before income taxes, while in fiscal 2010, we reported $2.0 million as earnings before income taxes. Fiscal 2010 income taxes benefited favorably from various tax credits.



|                                                                     |  |               |      |    |               |   |        |          |  |   |       |  |  |  |       |   
|-------------------------------------------------------------------- |  | ------------- | ---- | -- | ------------- | - | ------ | -------- |  | - | ----- |  |  |  | ----- | --
|                                                                     |  | Year ended    |      |    | $ Change      |   |        | % Change | 
|                                                                     |  | June 27, 2010 |      |    | June 28, 2009 |   |        |          |  |   |       | 
|Income (loss) from discontinued operations, net of tax(in thousands) |  | $             | (20  | )  |               | $ | (1,951 | )        |  | $ | 1,931 |  |  |  | (99.0 | )%
|Percentage of Revenue                                                |  |               | (0.0 | )% |               |   | (0.9   | )%       |  |   |       |  |  |  |       |   

Discontinued Operations:In the third quarter of fiscal 2010, we completed the sale of our
QoE business. The $1.9 million increase in income from discontinued operations in fiscal 2010 compared to fiscal 2009 was mainly attributable to the gain on sale of discontinued operations of $0.9 million, net of income taxes.

Key Operating Metrics

Key operating metrics for measuring our performance include sales backlog and contract revenue. These metrics, which compare fiscal year
2011 with fiscal year 2010, are discussed below.

Sales backlog:

Our backlog consists of firm orders that have yet to be shipped to the customer, or may not be shippable to a customer until a future
period. Most orders included in backlog can be rescheduled or cancelled by customers without significant penalty. Historically, a substantial portion of net revenue in any fiscal period has been derived from orders received during that fiscal
period. Our total backlog amounted to $60.3 million as of July 3, 2011, compared to $42.5 million as of June 27, 2010. The $17.8 million increase in backlog between July 3, 2011 and June 27, 2010 was due primarily to strong
bookings for multi-year government programs and early volume orders for our Quantum Chip Scale Atomic Clock. Our backlog shippable within the next six months was $38.6 million as of July 3, 2011, compared to $28.7 million as of June 27,
2010.

Contract revenue:

Revenue from contracts that require development and manufacture in accordance with customer specifications and have a lengthy development period may be categorized into two types: firm fixed price and
cost-plus reimbursement. Revenue is recognized under the fixed price contracts using the percentage of completion method, (cost-to-cost basis) principally based upon the costs incurred relative to the total estimated costs at completion
on the individual contracts. Any anticipated losses on contracts are charged to operations as



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##### Table of Contents

soon as they are determinable. Revenue recognized under cost-plus contracts is recognized on the basis of direct and indirect costs incurred plus a negotiated profit calculated as a percentage of
costs or as performance based award fee. Revenue from long-term contracts is reviewed periodically, with adjustments recorded in the period in which the revisions are made. As of July 3, 2011, we had approximately $16.1 million in contract
revenue to be performed and recognized within the next 36 months, compared to approximately $9.5 million in contract revenue that was to be performed and recognized within the following 36 months as of June 27, 2010. These amounts have been
accounted for as part of our sales backlog discussed above.

Liquidity and Capital Resources

Balance Sheet and Cash Flows

The following table summarizes our cash, cash equivalents and short-term investments (in thousands):



|                          |  |              |        |  |               |   |        |          |  |   |         |  
|------------------------- |  | ------------ | ------ |  | ------------- | - | ------ | -------- |  | - | ------- | -
|                          |  | July 3, 2011 |        |  | June 27, 2010 |   |        | Change $ | 
|Cash and cash equivalents |  | $            | 20,318 |  |               | $ | 21,794 |          |  | $ | (1,476  | )
|Short-term investments    |  |              | 43,340 |  |               |   | 53,825 |          |  |   | (10,485 | )
|                          |  |              |        |  |               |   |        |          |  |   |         |  
|Total                     |  | $            | 63,658 |  |               | $ | 75,619 |          |  | $ | (11,961 | )
|                          |  |              |        |  |               |   |        |          |  |   |         |  

As of July 3, 2011, our principal sources of liquidity consisted of cash, cash equivalents and
short-term investments of $63.7 million and accounts receivable, net of $40.5 million.

As of July 3, 2011, working
capital was $134.7 million compared to $129.1 million as of June 27, 2010. Cash, cash equivalents and short-term investments as of July 3, 2011 decreased to $63.7 million from $75.6 million as of June 27, 2010. This decrease was due
primarily to an increase in inventory of $27.2 million, along with $8.0 million of repurchases of common stock and $5.6 million of purchases of plant and equipment.

Our days sales outstanding in accounts receivable was 65 days as of July 3, 2011, compared to 66 days as of June 27, 2010.

Our principal uses of cash historically have consisted of the purchase of inventories, payroll and other operating expenses related to
the manufacturing of products, development of new products and the purchase of property, plant and equipment.

Cash
flows from operating activities

Net cash provided by operating activities in fiscal 2011 was $0.2 million. The net
cash provided by operating activities consisted of non-cash charges of $20.3 million and net income of $1.4 million. The non-cash charges consisted of $7.0 million in deferred income taxes, $6.7 million in depreciation and amortization expenses,
$4.8 million in stock-based compensation expense and $1.8 million in provision for excess and obsolete inventory. Cash provided by operating activities in fiscal 2011 was partially offset by $21.5 million of net changes in operating assets and
liabilities. Those net changes consisted primarily of a $27.2 million increase in inventory primarily to support the transfer of manufacturing activity to a third-party contract manufacturer, a decrease in accrued compensation of $5.0 million, an
increase in accounts receivable of $0.5 million and a decrease in other accrued liabilities of $0.2 million, partially offset by an increase in accounts payable of $9.4 million and a decrease in prepaid and other assets of $2.0 million.

Cash flows from investing activities

Net cash provided by investing activities was $3.8 million in fiscal 2011, which represented the sale/maturities of short-term investments of $66.1 million, partially offset by the purchase of short-term
investments and property, plant and equipment of $56.7 million and $5.6 million, respectively.



39



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##### Table of Contents

Cash flows from financing activities

Net cash used for financing activities was $5.8 million in fiscal 2011, which represented the repurchase of common stock of $8.0 million,
partially offset by cash generated from the exercise of common stock options of $2.2 million.

We believe that our existing
cash resources will be sufficient to meet our anticipated operating and working capital expenditure needs in the ordinary course of business for at least the next 12 months and the foreseeable future. We base our expense levels in part on our
expectation of future revenue levels. If our revenue for a particular period is lower than we expect, we may take steps to reduce our operating expenses accordingly. If cash generated from operations is insufficient to satisfy our liquidity
requirements or if we require additional capital resources to grow our business or to acquire complementary technologies and businesses in the future, we may seek to issue additional equity securities or obtain debt financing. Additional financing
may not be available at all or on terms acceptable to us. Additional financing may also be dilutive to our existing stockholders. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements
that are reasonably likely to materially affect our liquidity or the availability of our capital resources.

Contractual Obligations

We operate in multiple locations domestically and internationally. As such, certain facilities and equipment are leased
under operating lease agreements. Due to excess capacity on several non-cancelable leases as a result of the economic downturn and reorganization, we subleased certain facilities and recognized lease loss liabilities for the remainder.

We incur purchase commitments during our normal course of business. As of July 3, 2011, our principal commitments totaled $35.7
million and related primarily to commitments to purchase inventory.

The following table summarizes our contractual cash
obligations as of July 3, 2011, and the effect such obligations are expected to have on liquidity and cash flow in future periods.



|                                        |  |                        |        |  |                 |   |        |           |  |   |           |  |  |                  |       |  |  |   |     | 
|--------------------------------------- |  | ---------------------- | ------ |  | --------------- | - | ------ | --------- |  | - | --------- |  |  | ---------------- | ----- |  |  | - | --- | 
|                                        |  | Payments due by period |       
|                                        |  | Total                  |        |  | Less than1 year |   |        | 1-3 years |  |   | 3-5 years |  |  | More than5 years |      
|                                        |  | (In thousands)         |       
|Contractual Obligations                 |  |                        |        | 
|Operating leases obligations(1)         |  |                        | 17,951 |  |                 |   | 3,792  |           |  |   | 7,617     |  |  |                  | 6,457 |  |  |   | 85  | 
|Purchase obligations                    |  |                        | 35,685 |  |                 |   | 34,918 |           |  |   | 160       |  |  |                  | 268   |  |  |   | 339 | 
|Post-retirement benefits liabilities(2) |  |                        | 241    |  |                 |   | 34     |           |  |   | 61        |  |  |                  | 52    |  |  |   | 94  | 
|Lease obligations on abandoned space(3) |  |                        | 2,362  |  |                 |   | 569    |           |  |   | 1,049     |  |  |                  | 744   |  |  |   |    | 
|                                        |  |                        |        |  |                 |   |        |           |  |   |           |  |  |                  |       |  |  |   |     | 
|Total                                   |  | $                      | 56,239 |  |                 | $ | 39,313 |           |  | $ | 8,887     |  |  | $                | 7,521 |  |  | $ | 518 | 
|                                        |  |                        |        |  |                 |   |        |           |  |   |           |  |  |                  |       |  |  |   |     | 



|(1) | Consists of lease obligations on space used by the Company for operations and does not include lease obligations on space that has been abandoned.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Relates to a post-retirement health care benefits plan, assumed during an acquisition in fiscal 2003. The plan was curtailed in fiscal 2003, and only existing retired
participants and employees of the acquired company, now employed by Symmetricom and meeting the retirement eligibility requirements by December 31, 2004, are eligible for participation. The health care plan is a contributory plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Consists of gross lease obligations on abandoned space whether sub-leased or not.
|--- | ---------------------------------------------------------------------------------



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Uncertain tax positions of $16.2 million consist of amounts included in the net deferred tax
asset balance of $36.3 million at July 3, 2011, which would affect our income tax expense if recognized. Due to the high degree of uncertainty regarding the settlement of these liabilities, we are unable to estimate the year in which the future
cash flows may occur and therefore have not included them in the above table.

Recent Accounting Pronouncements

Refer to Note 1 of Notes to Consolidated Financial Statements in this Form 10-K for a discussion of the expected impact of recently issued
accounting pronouncements.



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|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Interest Rate Exposure

As of July 3, 2011, we had short-term
investments of $43.3 million. These investments are mainly in government sponsored enterprise and corporate debt securities that have maturity dates of greater than three months. These securities are subject to interest rate risk in as much as their
fair value will fall if market interest rates increase. A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to rates at July 3, 2011 would not have materially affected the fair value of our
investment portfolio. We do not use derivative financial instruments to mitigate the risks inherent in these securities.

Foreign Currency
Exchange Rate Exposure

Our exposure to market risk due to fluctuations in currency exchange rates relates primarily to the
intercompany balances with our subsidiaries in the United Kingdom, Germany, China and India. Although we transact business in various countries, settlement amounts are usually based on United States currency. Transaction gains or losses have not
been significant in the past and we do not presently engage in hedging activity. A hypothetical 10% adverse change in Pound Sterling, Euro, Chinese Yuan Renminbi or Indian Rupee against United States dollars shall not result in a material
foreign exchange loss. Consequently, we do not expect that a sudden or significant fluctuation in foreign exchange rates would have a direct material impact on our business.

Notwithstanding the foregoing analysis of the direct effects of interest rate and currency exchange rate fluctuations on the value of our investments and accounts, the indirect effects of such
fluctuations could have a materially harmful effect on our business. For example, international demand for our products is affected by foreign currency exchange rates. In addition, interest rate fluctuations may affect the buying patterns of our
customers. Furthermore, interest rate and currency exchange rate fluctuations have broad influence on the general condition of the United States, foreign and global economies which could materially harm our business.



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|Item 8. | Consolidated Financial Statements and Supplementary Data
|------- | --------------------------------------------------------

Supplementary quarterly financial data (unaudited):

The following table
shows our unaudited condensed, consolidated quarterly statements of operations data for each of the quarters in the fiscal years ended July 3, 2011 and June 27, 2010. This information has been derived from our unaudited financial
information, which, in the opinion of management, has been prepared on the same basis as our audited financial statements and includes all adjustments necessary for the fair presentation of the financial information for the quarters presented.



|                                                             |  |                                          |        |   |               |   |        |              |  |   |               |  |  |   |        |  
|------------------------------------------------------------ |  | ---------------------------------------- | ------ | - | ------------- | - | ------ | ------------ |  | - | ------------- |  |  | - | ------ | -
|                                                             |  | FirstQuarter                             |        |   | SecondQuarter |   |        | ThirdQuarter |  |   | FourthQuarter | 
|                                                             |  | (In thousands, except per share amounts) |       
|Fiscal 2011                                                  |  |                                          |        |   |               |   |        |              |  |   |               |  |  |   |        |  
|Net revenue                                                  |  | $                                        | 54,379 |   |               | $ | 41,844 |              |  | $ | 51,234        |  |  | $ | 60,689 |  
|Gross profit                                                 |  |                                          | 23,739 |   |               |   | 14,445 |              |  |   | 22,866        |  |  |   | 28,682 |  
|Operating income (loss)                                      |  |                                          | 5,153  |   |               |   | (5,988 | )            |  |   | 3,639         |  |  |   | 4,327  |  
|Income (loss) from continuing operations before taxes        |  |                                          | 4,990  |   |               |   | (5,657 | )            |  |   | 4,080         |  |  |   | 4,617  |  
|Income (loss) from continuing operations                     |  |                                          | 3,094  |   |               |   | (3,476 | )            |  |   | 2,985         |  |  |   | (1,434 | )
|Income (loss) from discontinued operations, net of tax       |  |                                          | 127    |   |               |   | (49    | )            |  |   | 19            |  |  |   | 157    |  
|Net income (loss)                                            |  |                                          | 3,221  |   |               |   | (3,525 | )            |  |   | 3,004         |  |  |   | (1,277 | )
|Basic income (loss) per share from continuing operations     |  |                                          | 0.07   |   |               |   | (0.08  | )            |  |   | 0.07          |  |  |   | (0.03  | )
|Basic income per share from discontinued operations          |  |                                          |       |   |               |   |       |              |  |   |              |  |  |   |       |  
|Basic net income (loss) per share                            |  |                                          | 0.07   |   |               |   | (0.08  | )            |  |   | 0.07          |  |  |   | (0.03  | )
|Diluted income (loss) per share from continuing operations   |  |                                          | 0.07   |   |               |   | (0.08  | )            |  |   | 0.07          |  |  |   | (0.03  | )
|Diluted income per share from discontinued operations        |  |                                          |       |   |               |   |       |              |  |   |              |  |  |   |       |  
|Diluted net income (loss) per share                          |  |                                          | 0.07   |   |               |   | (0.08  | )            |  |   | 0.07          |  |  |   | (0.03  | )
|                                                             |  |                                          |        |  
|Fiscal 2010                                                  |  |                                          |        |   |               |   |        |              |  |   |               |  |  |   |        |  
|Net revenue                                                  |  | $                                        | 52,268 |   |               | $ | 56,862 |              |  | $ | 56,526        |  |  | $ | 55,660 |  
|Gross profit                                                 |  |                                          | 21,501 |   |               |   | 24,679 |              |  |   | 27,433        |  |  |   | 23,907 |  
|Operating income                                             |  |                                          | 1,677  |   |               |   | 3,710  |              |  |   | 6,304         |  |  |   | 438    |  
|Income (loss) from continuing operations before taxes        |  |                                          | 864    |   |               |   | 2,945  |              |  |   | 5,336         |  |  |   | (7,102 | )
|Income (loss) from continuing operations                     |  |                                          | 549    |   |               |   | 1,890  |              |  |   | 3,688         |  |  |   | (3,581 | )
|Income (loss) from discontinued operations, net of tax       |  |                                          | (375   | ) |               |   | (391   | )            |  |   | 804           |  |  |   | (58    | )
|Net income (loss)                                            |  |                                          | 174    |   |               |   | 1,499  |              |  |   | 4,492         |  |  |   | (3,639 | )
|Basic income (loss) per share from continuing operations     |  |                                          | 0.01   |   |               |   | 0.04   |              |  |   | 0.08          |  |  |   | (0.08  | )
|Basic income (loss) per share from discontinued operations   |  |                                          | (0.01  | ) |               |   | (0.01  | )            |  |   | 0.02          |  |  |   |       |  
|Basic net income (loss) per share                            |  |                                          |       |   |               |   | 0.03   |              |  |   | 0.10          |  |  |   | (0.08  | )
|Diluted income (loss) per share from continuing operations   |  |                                          | 0.01   |   |               |   | 0.04   |              |  |   | 0.08          |  |  |   | (0.08  | )
|Diluted income (loss) per share from discontinued operations |  |                                          | (0.01  | ) |               |   | (0.01  | )            |  |   | 0.02          |  |  |   |       |  
|Diluted net income (loss) per share                          |  |                                          |       |   |               |   | 0.03   |              |  |   | 0.10          |  |  |   | (0.08  | )



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SYMMETRICOM, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                                    |  |      |    | 
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                                    |  | Page |   
|Report of Independent Registered Public Accounting Firm                                                                                             |  |      | 45 | 
|                                                                                                                                                    | 
|Consolidated Balance Sheets at July 3, 2011 and June 27, 2010                                                                                       |  |      | 46 | 
|                                                                                                                                                    | 
|Consolidated Statements of Operations for the years ended July 3, 2011, June 
27, 2010, and June 28, 2009                                           |  |      | 47 | 
|                                                                                                                                                    | 
|Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss) for the years ended July 3,
 2011, June 27, 2010, and June 28, 2009 |  |      | 48 | 
|                                                                                                                                                    | 
|Consolidated Statements of Cash Flows for the years ended July 3, 2011, June 
27, 2010, and June 28, 2009                                           |  |      | 49 | 
|                                                                                                                                                    | 
|Notes to the Consolidated Financial Statements                                                                                                      |  |      | 50 | 



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Symmetricom, Inc.

San Jose, California

We have audited the accompanying consolidated balance sheets of Symmetricom, Inc. and subsidiaries (the Company) as of
July 3, 2011 and June 27, 2010, and the related consolidated statements of operations, stockholders equity and comprehensive income (loss), and cash flows for each of the three years in the period ended July 3, 2011. Our audits
also included the financial statement schedule listed in the Index at Item 15(a)2. These consolidated financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to
express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Symmetricom, Inc. and subsidiaries as of July 3, 2011 and June 27, 2010, and the results of their operations and their
cash flows for each of the three years in the period ended July 3, 2011, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, in the year ended July 3, 2011, the Company changed its method of recognizing revenue for multiple element arrangements in accordance
with the Financial Accounting Standards Boards Accounting Standards Update (ASU) 2009-13, Multiple-Deliverable Revenue Arrangements and ASU 2009-14, Certain Revenue Arrangements that include Software Elements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companys internal
control over financial reporting as of July 3, 2011, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated
September 15, 2011 expressed an unqualified opinion on the Companys internal control over financial reporting.

/s/
Deloitte & Touche LLP

San Jose, California

September 15, 2011



45



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SYMMETRICOM, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)



|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------- | - | ------- | -
|                                                                                                                                                                    |  | July 3, 2011 |         |   | June 27, 2010 |  
|ASSETS                                                                                                                                                              |  |              |         |   |               |   |         |  
|Current assets:                                                                                                                                                     |  |              |         |   |               |   |         |  
|Cash and cash equivalents                                                                                                                                           |  | $            | 20,318  |   |               | $ | 21,794  |  
|Short-term investments                                                                                                                                              |  |              | 43,340  |   |               |   | 53,825  |  
|Accounts receivable, net of allowance for doubtful accounts of $315 in 2011 and $427 in 2010                                                                        |  |              | 40,511  |   |               |   | 40,075  |  
|Inventories                                                                                                                                                         |  |              | 62,622  |   |               |   | 37,229  |  
|Prepaids and other current assets                                                                                                                                   |  |              | 14,004  |   |               |   | 15,108  |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|Total current assets                                                                                                                                                |  |              | 180,795 |   |               |   | 168,031 |  
|Property, plant and equipment, net                                                                                                                                  |  |              | 23,255  |   |               |   | 23,077  |  
|Intangible assets, net                                                                                                                                              |  |              | 2,429   |   |               |   | 3,745   |  
|Deferred taxes and other assets                                                                                                                                     |  |              | 29,361  |   |               |   | 36,534  |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|Total assets                                                                                                                                                        |  | $            | 235,840 |   |               | $ | 231,387 |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                |  |              |         |   |               |   |         |  
|Current liabilities:                                                                                                                                                |  |              |         |   |               |   |         |  
|Accounts payable                                                                                                                                                    |  | $            | 16,113  |   |               | $ | 6,768   |  
|Accrued compensation                                                                                                                                                |  |              | 13,743  |   |               |   | 18,731  |  
|Accrued warranty                                                                                                                                                    |  |              | 1,601   |   |               |   | 2,900   |  
|Other accrued liabilities                                                                                                                                           |  |              | 14,683  |   |               |   | 10,506  |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|Total current liabilities                                                                                                                                           |  |              | 46,140  |   |               |   | 38,905  |  
|Long-term obligations                                                                                                                                               |  |              | 5,212   |   |               |   | 8,296   |  
|Deferred income taxes                                                                                                                                               |  |              | 334     |   |               |   | 334     |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|Total liabilities                                                                                                                                                   |  |              | 51,686  |   |               |   | 47,535  |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|Commitments and contingencies (Notes 7 and 8)                                                                                                                       |  |              |         |   |               |   |         |  
|Stockholders equity:                                                                                                                                               |  |              |         |   |               |   |         |  
|Preferred stock, $0.0001 par value; 500 shares authorized, none issued                                                                                              |  |              |        |   |               |   |        |  
|Common stock, $0.0001 par value; 70,000 shares authorized, 50,579 shares issued and 42,960 outstanding in 2011; 49,933 shares
issued and 43,699 outstanding in 2010 |  |              | 201,002 |   |               |   | 202,450 |  
|Accumulated other comprehensive loss                                                                                                                                |  |              | (29     | ) |               |   | (356    | )
|Accumulated deficit                                                                                                                                                 |  |              | (16,819 | ) |               |   | (18,242 | )
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|Total stockholders equity                                                                                                                                          |  |              | 184,154 |   |               |   | 183,852 |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  
|Total liabilities and stockholders equity                                                                                                                          |  | $            | 235,840 |   |               | $ | 231,387 |  
|                                                                                                                                                                    |  |              |         |   |               |   |         |  

See notes to the consolidated financial statements.



46



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SYMMETRICOM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)



|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|------------------------------------------------------ |  | ------------ | ------- | - | ------------- | - | ------- | ------------- |  | - | ------- | -
|                                                       |  | Year ended   |        
|                                                       |  | July 3, 2011 |         |   | June 27, 2010 |   |         | June 28, 2009 | 
|Net revenue                                            |  | $            | 208,146 |   |               | $ | 221,316 |               |  | $ | 219,746 |  
|Cost of products and services                          |  |              | 107,990 |   |               |   | 116,889 |               |  |   | 111,184 |  
|Amortization of purchased technology                   |  |              | 1,073   |   |               |   | 1,282   |               |  |   | 1,474   |  
|Restructuring charges                                  |  |              | 9,351   |   |               |   | 5,625   |               |  |   | 3,866   |  
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Total cost of sales                                    |  |              | 118,414 |   |               |   | 123,796 |               |  |   | 116,524 |  
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Gross profit                                           |  |              | 89,732  |   |               |   | 97,520  |               |  |   | 103,222 |  
|Operating expenses:                                    |  |              |         |   |               |   |         |               |  |   |         |  
|Research and development                               |  |              | 27,045  |   |               |   | 23,701  |               |  |   | 23,421  |  
|Selling, general and administrative                    |  |              | 56,607  |   |               |   | 56,743  |               |  |   | 58,119  |  
|Amortization of intangible assets                      |  |              | 243     |   |               |   | 281     |               |  |   | 411     |  
|Restructuring charges                                  |  |              | (1,294  | ) |               |   | 4,666   |               |  |   | 5,840   |  
|Impairment of goodwill                                 |  |              |        |   |               |   |        |               |  |   | 48,144  |  
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Total operating expenses                               |  |              | 82,601  |   |               |   | 85,391  |               |  |   | 135,935 |  
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Operating income (loss)                                |  |              | 7,131   |   |               |   | 12,129  |               |  |   | (32,713 | )
|Loss on repayment of convertible notes                 |  |              |        |   |               |   | (7,026  | )             |  |   | (5,623  | )
|Loss on short-term investments, net                    |  |              |        |   |               |   |        |               |  |   | (1,368  | )
|Interest income                                        |  |              | 957     |   |               |   | 1,594   |               |  |   | 1,807   |  
|Interest expense                                       |  |              | (58     | ) |               |   | (4,654  | )             |  |   | (5,321  | )
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Income (loss) from continuing operations before taxes  |  |              | 8,030   |   |               |   | 2,043   |               |  |   | (43,218 | )
|Income tax provision (benefit)                         |  |              | 6,861   |   |               |   | (503    | )             |  |   | 588     |  
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Income (loss) from continuing operations               |  |              | 1,169   |   |               |   | 2,546   |               |  |   | (43,806 | )
|Income (loss) from discontinued operations, net of tax |  |              | 254     |   |               |   | (20     | )             |  |   | (1,951  | )
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Net income (loss)                                      |  | $            | 1,423   |   |               | $ | 2,526   |               |  | $ | (45,757 | )
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Earnings (loss) per sharebasic:                       |  |              |         |   |               |   |         |               |  |   |         |  
|Income (loss) from continuing operations               |  | $            | 0.03    |   |               | $ | 0.06    |               |  | $ | (1.01   | )
|Loss from discontinued operations, net of tax          |  |              |        |   |               |   |        |               |  |   | (0.04   | )
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Net income (loss)                                      |  | $            | 0.03    |   |               | $ | 0.06    |               |  | $ | (1.05   | )
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Weighted average shares outstandingbasic              |  |              | 43,188  |   |               |   | 43,380  |               |  |   | 43,500  |  
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Earnings (loss) per sharediluted:                     |  |              |         |   |               |   |         |               |  |   |         |  
|Income (loss) from continuing operations               |  | $            | 0.03    |   |               | $ | 0.06    |               |  | $ | (1.01   | )
|Loss from discontinued operations, net of tax          |  |              |        |   |               |   |        |               |  |   | (0.04   | )
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Net income (loss)                                      |  | $            | 0.03    |   |               | $ | 0.06    |               |  | $ | (1.05   | )
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  
|Weighted average shares outstandingdiluted            |  |              | 43,782  |   |               |   | 43,897  |               |  |   | 43,500  |  
|                                                       |  |              |         |   |               |   |         |               |  |   |         |  

See notes to the consolidated financial statements.



47



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SYMMETRICOM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

AND COMPREHENSIVE INCOME (LOSS)

(In thousands)



|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------- |  | ------------ | ------ | - | ------------------------------------------ | - | ------- | ------------------------------------ |  | - | ------------------------- | - |  | -------------------------------- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                     |  | Common Stock |        |   | AccumulatedOtherComprehensiveIncome (loss) |   |         | RetainedEarnings(accumulateddeficit) |  |   | TotalStock-holdersEquity |   |  | TotalComprehensive
Income (loss) |        
|                                                                     |  | Shares       |        |   | Amount                                     |   |         |                                      |  |  
|Balance at June 30, 2008                                             |  |              | 44,925 |   |                                            | $ | 208,402 |                                      |  | $ | (60                       | ) |  | $                                | 24,989  |   |  | $ | 233,331 |   |  | $ | (18,210 | )
|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Issuance of common stock:                                            |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Stock option exercises                                               |  |              | 151    |   |                                            |   | 595     |                                      |  |   |                          |   |  |                                  |        |   |  |   | 595     |   |  |   |         |  
|Restricted stock issued                                              |  |              | 30     |   |                                            |   |        |                                      |  |   |                          |   |  |                                  |        |   |  |   |        |   |  |   |         |  
|Repurchase of common stock                                           |  |              | (1,416 | ) |                                            |   | (5,785  | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (5,785  | ) |  |   |         |  
|Restricted stock canceled                                            |  |              | (134   | ) |                                            |   |        |                                      |  |   |                          |   |  |                                  |        |   |  |   |        |   |  |   |         |  
|Stock option income tax expense                                      |  |              |       |   |                                            |   | (670    | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (670    | ) |  |   |         |  
|Stock-based compensation                                             |  |              |       |   |                                            |   | 3,292   |                                      |  |   |                          |   |  |                                  |        |   |  |   | 3,292   |   |  |   |         |  
|Adjustment for repayment of convertible notes, net                   |  |              |       |   |                                            |   | (5,682  | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (5,682  | ) |  |   |         |  
|Comprehensive income (loss):                                         |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Loss from continuing operations                                      |  |              |       |   |                                            |   |        |                                      |  |   |                          |   |  |                                  | (43,806 | ) |  |   | (43,806 | ) |  |   | (43,806 | )
|Loss from discontinued operations, net of tax                        |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  | (1,951  | ) |  |   | (1,951  | ) |  |   | (1,951  | )
|Unrealized gain on short-term investments, net of taxes              |  |              |       |   |                                            |   |        |                                      |  |   | 372                       |   |  |                                  |        |   |  |   | 372     |   |  |   | 372     |  
|Cumulative adjustments to foreign currency translation, net of taxes |  |              |       |   |                                            |   |        |                                      |  |   | (168                      | ) |  |                                  |        |   |  |   | (168    | ) |  |   | (168    | )
|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Balance at June 28, 2009                                             |  |              | 43,556 |   |                                            | $ | 200,152 |                                      |  | $ | 144                       |   |  | $                                | (20,768 | ) |  | $ | 179,528 |   |  | $ | (45,553 | )
|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Issuance of common stock:                                            |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Stock option exercises                                               |  |              | 439    |   |                                            |   | 1,968   |                                      |  |   |                          |   |  |                                  |        |   |  |   | 1,968   |   |  |   |         |  
|Restricted stock issued                                              |  |              | 127    |   |                                            |   |        |                                      |  |   |                          |   |  |                                  |        |   |  |   |        |   |  |   |         |  
|Repurchase of common stock                                           |  |              | (348   | ) |                                            |   | (1,824  | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (1,824  | ) |  |   |         |  
|Restricted stock canceled                                            |  |              | (75    | ) |                                            |   |        |                                      |  |   |                          |   |  |                                  |        |   |  |   |        |   |  |   |         |  
|Stock option income tax expense                                      |  |              |       |   |                                            |   | (949    | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (949    | ) |  |   |         |  
|Stock-based compensation                                             |  |              |       |   |                                            |   | 3,714   |                                      |  |   |                          |   |  |                                  |        |   |  |   | 3,714   |   |  |   |         |  
|Adjustment for repayment of convertible notes, net                   |  |              |       |   |                                            |   | (611    | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (611    | ) |  |   |         |  
|Comprehensive income:                                                |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Income from continuing operations                                    |  |              |       |   |                                            |   |        |                                      |  |   |                          |   |  |                                  | 2,546   |   |  |   | 2,546   |   |  |   | 2,546   |  
|Loss from discontinued operations, net of tax                        |  |              |       |   |                                            |   |        |                                      |  |   |                          |   |  |                                  | (20     | ) |  |   | (20     | ) |  |   | (20     | )
|Unrealized loss on short-term investments, net of taxes              |  |              |       |   |                                            |   |        |                                      |  |   | (213                      | ) |  |                                  |        |   |  |   | (213    | ) |  |   | (213    | )
|Cumulative adjustments to foreign currency translation, net of taxes |  |              |       |   |                                            |   |        |                                      |  |   | (287                      | ) |  |                                  |        |   |  |   | (287    | ) |  |   | (287    | )
|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Balance at June 27, 2010                                             |  |              | 43,699 |   |                                            | $ | 202,450 |                                      |  | $ | (356                      | ) |  | $                                | (18,242 | ) |  | $ | 183,852 |   |  | $ | 2,026   |  
|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Issuance of common stock:                                            |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Stock option exercises                                               |  |              | 462    |   |                                            |   | 2,167   |                                      |  |   |                          |   |  |                                  |        |   |  |   | 2,167   |   |  |   |         |  
|Restricted stock issued                                              |  |              | 211    |   |                                            |   |        |                                      |  |   |                          |   |  |                                  |        |   |  |   |        |   |  |   |         |  
|Repurchase of common stock                                           |  |              | (1,385 | ) |                                            |   | (7,957  | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (7,957  | ) |  |   |         |  
|Restricted stock canceled                                            |  |              | (27    | ) |                                            |   |        |                                      |  |   |                          |   |  |                                  |        |   |  |   |        |   |  |   |         |  
|Stock option income tax expense                                      |  |              |       |   |                                            |   | (456    | )                                    |  |   |                          |   |  |                                  |        |   |  |   | (456    | ) |  |   |         |  
|Stock-based compensation                                             |  |              |       |   |                                            |   | 4,798   |                                      |  |   |                          |   |  |                                  |        |   |  |   | 4,798   |   |  |   |         |  
|Comprehensive income:                                                |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Income from continuing operations                                    |  |              |       |   |                                            |   |        |                                      |  |   |                          |   |  |                                  | 1,169   |   |  |   | 1,169   |   |  |   | 1,169   |  
|Income from discontinued operations, net of tax                      |  |              |       |   |                                            |   |        |                                      |  |   |                          |   |  |                                  | 254     |   |  |   | 254     |   |  |   | 254     |  
|Unrealized gain on short-term investments, net of taxes              |  |              |       |   |                                            |   |        |                                      |  |   | 49                        |   |  |                                  |        |   |  |   | 49      |   |  |   | 49      |  
|Cumulative adjustments to foreign currency translation, net of taxes |  |              |       |   |                                            |   |        |                                      |  |   | 278                       |   |  |                                  |        |   |  |   | 278     |   |  |   | 278     |  
|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  
|Balance at July 3, 2011                                              |  |              | 42,960 |   |                                            | $ | 201,002 |                                      |  | $ | (29                       | ) |  | $                                | (16,819 | ) |  | $ | 184,154 |   |  | $ | 1,750   |  
|                                                                     |  |              |        |   |                                            |   |         |                                      |  |   |                           |   |  |                                  |         |   |  |   |         |   |  |   |         |  

See notes to the consolidated financial statements.



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SYMMETRICOM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------- | -
|                                                                                         |  | Year ended  |        
|                                                                                         |  | July 3,2011 |         |   | June 27,2010 |   |         | June 28,2009 | 
|Cash flows from operating activities:                                                    |  |             |         |   |              |   |         |              |  |   |         |  
|Net income (loss)                                                                        |  | $           | 1,423   |   |              | $ | 2,526   |              |  | $ | (45,757 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |             |         |   |              |   |         |              |  |   |         |  
|Impairment of goodwill                                                                   |  |             |        |   |              |   |        |              |  |   | 48,144  |  
|Depreciation and amortization                                                            |  |             | 6,664   |   |              |   | 6,913   |              |  |   | 8,948   |  
|Deferred income taxes                                                                    |  |             | 6,953   |   |              |   | (1,042  | )            |  |   | (2,565  | )
|Non-cash interest on convertible bonds                                                   |  |             |        |   |              |   | 2,845   |              |  |   | 3,075   |  
|Gain on sale of discontinued operations                                                  |  |             |        |   |              |   | (915    | )            |  |   |        |  
|Loss on short-term investments                                                           |  |             |        |   |              |   |        |              |  |   | 1,368   |  
|Loss on repayment of convertible notes, net                                              |  |             |        |   |              |   | 7,026   |              |  |   | 5,623   |  
|Loss on disposal of fixed assets                                                         |  |             | 13      |   |              |   | 265     |              |  |   | 786     |  
|Allowance for doubtful accounts                                                          |  |             | 102     |   |              |   | 178     |              |  |   | (328    | )
|Provision for excess and obsolete inventory                                              |  |             | 1,760   |   |              |   | 971     |              |  |   | 2,619   |  
|Stock-based compensation                                                                 |  |             | 4,798   |   |              |   | 3,714   |              |  |   | 3,292   |  
|Changes in assets and liabilities:                                                       |  |             |         |   |              |   |         |              |  |   |         |  
|Accounts receivable                                                                      |  |             | (538    | ) |              |   | 2,102   |              |  |   | (5,379  | )
|Inventories                                                                              |  |             | (27,153 | ) |              |   | 241     |              |  |   | (2,912  | )
|Prepaids and other assets                                                                |  |             | 1,995   |   |              |   | 2,057   |              |  |   | (1,260  | )
|Accounts payable                                                                         |  |             | 9,401   |   |              |   | (1,568  | )            |  |   | (780    | )
|Accrued compensation                                                                     |  |             | (4,987  | ) |              |   | (494    | )            |  |   | 5,511   |  
|Other accrued liabilities                                                                |  |             | (206    | ) |              |   | 2,870   |              |  |   | 1,296   |  
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Net cash provided by operating activities                                                |  |             | 225     |   |              |   | 27,689  |              |  |   | 21,681  |  
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Cash flows from investing activities:                                                    |  |             |         |   |              |   |         |              |  |   |         |  
|Purchases of short-term investments                                                      |  |             | (56,662 | ) |              |   | (86,956 | )            |  |   | (26,371 | )
|Sale/maturities of short-term investments                                                |  |             | 66,068  |   |              |   | 72,245  |              |  |   | 7,262   |  
|Purchases of plant and equipment                                                         |  |             | (5,595  | ) |              |   | (8,075  | )            |  |   | (3,685  | )
|Cash proceeds from sale of discontinued operations                                       |  |             |        |   |              |   | 1,850   |              |  |   |        |  
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Net cash provided by (used for) investing activities                                     |  |             | 3,811   |   |              |   | (20,936 | )            |  |   | (22,794 | )
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Cash flows from financing activities:                                                    |  |             |         |   |              |   |         |              |  |   |         |  
|Repayment of long-term obligations                                                       |  |             |        |   |              |   |        |              |  |   | (1,395  | )
|Proceeds from issuance of common stock                                                   |  |             | 2,167   |   |              |   | 1,968   |              |  |   | 595     |  
|Repurchase of common stock                                                               |  |             | (7,957  | ) |              |   | (1,824  | )            |  |   | (5,785  | )
|Repayment of convertible notes                                                           |  |             |        |   |              |   | (56,880 | )            |  |   | (62,489 | )
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Net cash used for financing activities                                                   |  |             | (5,790  | ) |              |   | (56,736 | )            |  |   | (69,074 | )
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Effect of exchange rate changes in cash                                                  |  |             | 278     |   |              |   | (287    | )            |  |   | (168    | )
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Net decrease in cash and cash equivalents                                                |  |             | (1,476  | ) |              |   | (50,270 | )            |  |   | (70,355 | )
|Cash and cash equivalents at beginning of year                                           |  |             | 21,794  |   |              |   | 72,064  |              |  |   | 142,419 |  
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Cash and cash equivalents at end of year                                                 |  | $           | 20,318  |   |              | $ | 21,794  |              |  | $ | 72,064  |  
|                                                                                         |  |             |         |   |              |   |         |              |  |   |         |  
|Non-cash investing and financing activities:                                             |  |             |         |   |              |   |         |              |  |   |         |  
|Unrealized gain (loss) on securities, net                                                |  | $           | 49      |   |              | $ | (213    | )            |  | $ | 372     |  
|Plant and equipment purchases included in accounts payable                               |  |             | 77      |   |              |   | 133     |              |  |   | 48      |  
|Cash payments for:                                                                       |  |             |         |   |              |   |         |              |  |   |         |  
|Interest                                                                                 |  | $           | 53      |   |              | $ | 1,733   |              |  | $ | 2,125   |  
|Income taxes                                                                             |  |             | 371     |   |              |   | 835     |              |  |   | 1,008   |  

See notes to the consolidated financial statements.



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1Summary of Significant Accounting Policies

Business

Symmetricom, a leading provider of precision time and frequency technologies, sets the worlds standard for time. We
generate, distribute and apply precise time for the communications, aerospace/defense, IT infrastructure and metrology industries. Symmetricoms customers, from communications service providers and network equipment manufacturers to governments
and their suppliers worldwide, are able to build more reliable networks and systems by using our advanced timing technologies, atomic clocks, services and solutions. Our products support todays precise timing standards, including GPS-based
timing, IEEE 1588 (PTP), Network Time Protocol (NTP), Synchronous Ethernet, Building Integrated Timing Supply (BITS) and Data Over Cable Service Interface Specifications (DOCSIS(R)) timing.

Principles of Consolidation

The consolidated financial statements include the accounts of Symmetricom, Inc., and its wholly owned subsidiaries (Symmetricom, we, our or the
Company). All significant intercompany accounts and transactions are eliminated.

Fiscal Year

Our fiscal year is the 52 or 53 weeks ending on the Sunday closest to June 30. Fiscal years 2009 and 2010 were 52-week fiscal years
and 2011 was a 53-week fiscal year.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates include:



| |  |  | Revenue recognition
| | - |  | -------------------



| |  |  | Accounting for income taxes
| | - |  | ---------------------------



| |  |  | Inventory valuation
| | - |  | -------------------



| |  |  | Warranty accrual
| | - |  | ----------------



| |  |  | Accruals for contingent liabilities (including restructuring charges)
| | - |  | ---------------------------------------------------------------------



| |  |  | Stock based compensation
| | - |  | ------------------------



| |  |  | Allowance for doubtful accounts
| | - |  | -------------------------------



| |  |  | Valuation of short-term investments
| | - |  | -----------------------------------



| |  |  | Valuation of long-lived assets including intangible assets
| | - |  | ----------------------------------------------------------

These estimates are based on available information as of the date of these consolidated financial statements and actual results could differ from these estimates.

Cash and Cash Equivalents

We consider all highly liquid debt investments with a remaining maturity of three months or less when purchased to be cash and cash equivalents.



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Short-term Investments

Short-term investments consist of government sponsored enterprise debt securities, mutual funds and corporate debt securities that mature
between three and thirty six months. All of our short-term investments, except the deferred compensation plan assets, are classified as available-for-sale. During fiscal 2009, we reclassified the deferred compensation plan assets from
available-for-sale to trading securities in order to maintain consistency with the method in which we account for the deferred compensation obligation. Available-for-sale securities are carried at fair value with temporary unrealized gains and
losses, net of taxes, reported as a component of stockholders equity. Unrealized gains and losses related to trading securities are included in interest income in our consolidated statements of operations.

Short-term investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. We consult with
our investment manager and consider available quantitative and qualitative evidence in evaluating potential impairment of our investments on a quarterly basis. Other-than-temporary impairment charges exist when the entity has the intent to sell the
security or it will more likely than not be required to sell the security before anticipated recovery. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to operations and a new cost basis in the
investment is established.

In fiscal 2009, we determined that market values of certain corporate debt instruments and mutual
funds related to our deferred compensation plan, had declined and were other than temporarily impaired. As a result of this assessment, we recognized a $1.4 million other than temporary loss in fiscal 2009.

Fair Values of Financial Instruments

The estimated fair value of our financial instruments, which include cash and cash equivalents, short-term investments, accounts receivable, and accounts payable, approximate their carrying amount.

Allowance for Doubtful Accounts

We record allowance for doubtful accounts based upon an assessment of various factors. We consider historical experience, the age of the accounts receivable balances, the credit quality of the customers,
current economic conditions and other factors that may affect customers ability to pay to determine the level of allowance required.

Inventories

Inventories are stated at the lower-of-cost (first-in,
first-out) or market. We assess the valuation of all inventories, including raw materials, work-in-process, finished goods and spare parts on a periodic basis. Obsolete inventory or inventory in excess of managements estimated usage is written
down to its estimated market value less costs to sell, if less than its cost. Inherent in the estimates of market value are managements estimates related to current economic trends, future demand and technological obsolescence.

Property, Plant and Equipment, Net

Property, plant and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method based on the estimated useful lives of the assets except for land as follows:



|                                           |  |                                           
|------------------------------------------ |  | ------------------------------------------
|Buildings and improvements                 |  | 15 - 39 years                             
|Leasehold improvements                     |  | 5 - 15 years, or life of lease, if shorter
|Machinery, equipment and computer software |  | 3 - 7 years                               



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Accounting for Income Taxes

We provide for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in the financial statements in the period that includes the
enactment date.

The carrying value of our net deferred tax assets, which are made up of tax deductions, net operating loss
carryforwards and tax credits, assumes that we will be able to generate sufficient future income to fully realize these assets. We evaluate the weight of all available evidence in determining whether it is more likely than not that some portion of
the deferred tax assets will not be realized. If we do not generate sufficient future income, the realization of these deferred tax assets may be impaired, resulting in an additional income tax expense. A portion of our tax credits are related to
stock options and have a valuation allowance because of uncertainty regarding their realization. If these tax credits are realized, the benefit will be credited to common stock. Additionally, for state income tax purposes, we have research and
development tax credit carryforwards that have no expiration date but we have full valuation allowance on such credits.

In
fiscal 2008, we adopted the provisions of Financial Accounting Standards Board (FASB) guidance on accounting for uncertainty in income taxes which provides a financial statement recognition threshold and measurement attribute for a tax
position taken or expected to be taken in a tax return. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate
settlement.

Valuation of Long-lived Assets Including Other Intangible Assets Subject to Amortization

The carrying value of long-lived assets is evaluated whenever events or changes in circumstances indicate that the carrying value of the
asset may be impaired. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, is less than the carrying value of the asset. An impairment loss is measured
as the amount by which the carrying amount exceeds the fair value.

In the third quarter of fiscal 2009, because of the
identification of goodwill impairment indicators, we first reviewed our other intangible and long-lived assets for impairment and determined there was no impairment.

Comprehensive Income

FASB issued authoritative guidance on reporting
comprehensive income, establishes standards for reporting and display of comprehensive income and its components. It also requires companies to report comprehensive income that includes unrealized holding gains and losses and other items that have
previously been excluded from net income and reflected instead in stockholders equity.

Accumulated other comprehensive
income (loss), consists of the following:



|                                                       |  |                |     |   |               |   |      |               |  |   |     |  
|------------------------------------------------------ |  | -------------- | --- | - | ------------- | - | ---- | ------------- |  | - | --- | -
|                                                       |  | July 3, 2011   |     |   | June 27, 2010 |   |      | June 28, 2009 | 
|                                                       |  | (in thousands) |    
|Foreign currency translation adjustments, net of taxes |  | $              | (40 | ) |               | $ | (318 | )             |  | $ | (31 | )
|Unrealized gain (loss) on investments, net of taxes.   |  |                | 11  |   |               |   | (38  | )             |  |   | 175 |  
|                                                       |  |                |     |   |               |   |      |               |  |   |     |  
|Total accumulated other comprehensive income (loss)    |  | $              | (29 | ) |               | $ | (356 | )             |  | $ | 144 |  
|                                                       |  |                |     |   |               |   |      |               |  |   |     |  



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Warranty

Our standard warranty agreement is one year from shipment. However, our warranty agreements are contract and component specific and can range to twenty years for selected components. We offer extended
warranty contracts to our customers. The extended warranty is offered on products that are less than eight years old. The extended warranty contract is applicable for a maximum of nine years after the expiration of the standard one-year warranty.
The revenue from extended warranty contracts is recognized ratably over the period of contract.

We accrue for anticipated
warranty costs upon shipment. Our warranty reserve is based on the number of installed units, historical analysis of the volume of product returned to us under the warranty program, managements judgment regarding anticipated rates of warranty
claims and associated repair costs. We use the historical data to forecast our anticipated future warranty obligations.

The
change in accrued warranty expense is summarized as follows:



|                                        |  |                |        |   |               |   |        |               |  |   |        |  
|--------------------------------------- |  | -------------- | ------ | - | ------------- | - | ------ | ------------- |  | - | ------ | -
|                                        |  | Year ended     |       
|                                        |  | July 3, 2011   |        |   | June 27, 2010 |   |        | June 28, 2009 | 
|                                        |  | (In thousands) |       
|Beginning balance                       |  | $              | 2,900  |   |               | $ | 3,737  |               |  | $ | 3,801  |  
|Provision for warranty for the year     |  |                | 1,617  |   |               |   | 2,035  |               |  |   | 2,869  |  
|Accruals related to changes in estimate |  |                | (520   | ) |               |   | (478   | )             |  |   | (15    | )
|Less: Actual warranty costs             |  |                | (2,396 | ) |               |   | (2,394 | )             |  |   | (2,918 | )
|                                        |  |                |        |   |               |   |        |               |  |   |        |  
|Ending balance                          |  | $              | 1,601  |   |               | $ | 2,900  |               |  | $ | 3,737  |  
|                                        |  |                |        |   |               |   |        |               |  |   |        |  

Software Development Costs

Costs for the development of new software and substantial enhancements to existing software are expensed as incurred until technological
feasibility has been established, at which time any additional development costs would be capitalized in accordance with FASB issued authoritative guidance on Accounting for the Cost of Computer Software to Be Sold, Leased, or Otherwise Marketed. We
believe the current process for developing software is essentially completed concurrently with the establishment of technological feasibility; accordingly, no costs have been capitalized to date.

Foreign Currency Translation

The functional currency of each of our international subsidiaries in the United Kingdom and China is the U.S. dollar, while in Germany it is the Euro and in India it is the Indian rupee.

For our subsidiaries in which the U.S. Dollar is the functional currency, foreign currency denominated assets and liabilities are
translated at the period-end exchange rates, except for inventories, prepaid expenses, and property and equipment, which are translated at historical exchange rates. Statements of operations are translated at the average exchange rates during the
year except for those expenses related to the balance sheet amounts, which are translated using historical exchange rates. Net gains (losses) from these foreign exchange remeasurements are charged to operations and have not been material to our
consolidated operating results for any of the periods presented.

For our subsidiaries in Germany and India, foreign currency
denominated assets and liabilities are translated at the period-end exchange rates, while revenue and expenses are translated at average rates prevailing during the year. Translation adjustments are reported in other comprehensive income (loss).



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, our price is
fixed or determinable and collectability is reasonably assured. Our standard arrangement for our domestic and international customers includes a signed purchase order or contract and no right of return of delivered products. Revenue is recognized
net of any taxes collected from customers and subsequently remitted to governmental authorities.

We assess collectability
based on the creditworthiness of the customer and past transaction history. We perform periodic credit evaluations of our customers and do not require collateral from our customers. However, for many of our international customers, we require an
irrevocable letter of credit to be issued by the customer before the product is shipped. If we determine that collection of the invoice is not reasonably assured, we recognize revenue at the time that collection becomes reasonably assured, which is
generally upon the receipt of cash.

Generally, product revenue is generated from the sale of synchronization and timing
equipment with embedded software that is incidental to product functionality. Service revenue is recognized as the services are performed, provided collection of the related receivable is reasonably assured. Our sales to distributors are made under
agreements allowing for returns or credits under certain circumstances. Accordingly, we record an estimate of returns from distributors based on a historical average of distributor returns. We record commission expense both when orders are received
and shipped, at which times the commission is both earned and payable.

Our multiple element product offerings generally
include hardware, software and post-contract support (PCS) services, which are considered separate units of accounting. For multiple-element arrangements entered into prior to the first quarter of fiscal 2011, we recognized revenue based
on the then relevant revenue recognition guidance that allowed us to utilize the residual method to determine the amount of revenue to be recognized on the delivered elements of the arrangement provided vendor specific objective evidence
(VSOE) existed for the undelivered elements. Under the residual method, the fair value of the undelivered elements was deferred, such as post-contract support, and the remaining portion of the arrangement consideration was recognized as
revenue. VSOE of fair value is limited to the price charged when the same element is sold separately. VSOE of fair value is established for post-contractual support based on the volume and pricing of the stand-alone sales within a narrow range. The
fair value of the post-contractual support is recognized on a straight-line basis over the term of the related support period. We adopted new revenue accounting guidance at the beginning of fiscal 2011, on a prospective basis, for applicable
transactions originating or materially modified after June 27, 2010. The adoption of this new authoritative guidance had no material impact on the Companys financial position, results of operations or cash flows in the periods presented. In
evaluating the revenue recognition for multiple element arrangements under the new accounting guidance, the total arrangement fees are allocated to all the deliverables based on their respective relative selling prices and the residual method is no
longer permitted. The relative selling price is determined using VSOE when available. When VSOE cannot be established, we attempt to establish the selling price of deliverables based on relevant third party evidence (TPE). TPE is
determined based on competitor prices for similar deliverables when sold separately. Generally, our go-to-market strategy differs from that of our competitors, and offerings may contain a significant level of proprietary technology, customization or
differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, we are unable to reliably determine what similar competitor products selling prices are on a stand-alone basis. Therefore,
we typically are not able to determine TPE.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



When we are unable to establish selling price using VSOE or TPE, we use a best estimate
of selling price (BESP) for the allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used
for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. We determine BESP for a product or service by considering multiple factors including, but not limited to:



| |  |  | the price list established by our management which is typically based on general pricing practices, market conditions, geographies and targeted gross
margin of products and services sold; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | analysis of pricing history of new arrangements, including multiple element and stand-alone transactions.
| | - |  | ---------------------------------------------------------------------------------------------------------

Revenue from contracts that require development and manufacture in accordance with customer specifications and have a lengthy development
period may be categorized into two types: firm fixed price and cost-plus reimbursement. Revenue is recognized under the fixed price contracts using the percentage of completion method (cost-to-cost basis), principally based upon the costs incurred
relative to the total estimated costs at completion on the individual contracts. Any anticipated losses on contracts are charged to operations as soon as they are determinable. Revenue recognized under cost-plus contracts is recognized on the
basis of direct and indirect costs incurred plus a negotiated profit calculated as a percentage of costs or as a performance based award fee. Revenue from long-term contracts is reviewed periodically, with adjustments recorded in the period in which
the revisions are made.

Unbilled receivables totaled $3.5 million as of July 3, 2011 compared to $4.3 million as of
June 27, 2010 and are included within the Prepaid and Other Current Assets line item on our consolidated balance sheets. All unbilled receivables as of July 3, 2011 are expected to be collected in fiscal 2012.

Stock-Based Compensation

We account for stock-based compensation in accordance with FASB issued authoritative guidance on share-based compensation. Under this guidance, share-based compensation cost is measured at the grant date
based on the fair value of the award using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires that we determine subjective variables including estimated term of the award and the estimated volatility
in addition to other less subjective variables. The identified fair value resulting from this model is recognized as expense, net of estimated forfeitures, over the applicable vesting period of the stock award.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by
dividing net income (loss) by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options, employee stock purchase plan and restricted stock using the treasury stock method, except when
antidilutive.



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



A reconciliation of the denominator used in the calculation of basic and diluted net
earnings (loss) per share is as follows:



|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|---------------------------------------------------------------- |  | ---------------------------------------- | ------ | - | ------------- | - | ------ | ------------- |  | - | ------- | -
|                                                                 |  | Year ended                               |       
|                                                                 |  | July 3, 2011                             |        |   | June 27, 2010 |   |        | June 28, 2009 | 
|                                                                 |  | (In thousands, except per share amounts) |       
|Numerator:                                                       |  |                                          |        |   |               |   |        |               |  |   |         |  
|Net income (loss) from continuing operations                     |  | $                                        | 1,169  |   |               | $ | 2,546  |               |  | $ | (43,806 | )
|Income (loss) from discontinued operations                       |  |                                          | 254    |   |               |   | (20    | )             |  |   | (1,951  | )
|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|Net income (loss)                                                |  | $                                        | 1,423  |   |               | $ | 2,526  |               |  | $ | (45,757 | )
|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|                                                                 |  |                                          |       
|Shares (Denominator):                                            |  |                                          |        |   |               |   |        |               |  |   |         |  
|Weighted average common shares outstanding                       |  |                                          | 43,368 |   |               |   | 43,705 |               |  |   | 44,167  |  
|Weighted average common shares outstanding subject to repurchase |  |                                          | (180   | ) |               |   | (325   | )             |  |   | (667    | )
|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|Weighted average shares outstandingbasic                        |  |                                          | 43,188 |   |               |   | 43,380 |               |  |   | 43,500  |  
|Weighted average dilutive share equivalents from stock options   |  |                                          | 530    |   |               |   | 278    |               |  |   |        |  
|Weighted average dilutive common shares subject to repurchase    |  |                                          | 64     |   |               |   | 239    |               |  |   |        |  
|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|Weighted average shares outstandingdiluted                      |  |                                          | 43,782 |   |               |   | 43,897 |               |  |   | 43,500  |  
|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|Earnings (loss) per sharebasic:                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|Income (loss) from continuing operations                         |  | $                                        | 0.03   |   |               | $ | 0.06   |               |  | $ | (1.01   | )
|Loss from discontinued operations                                |  |                                          |       |   |               |   |       |               |  |   | (0.04   | )
|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|Net income (loss)                                                |  | $                                        | 0.03   |   |               | $ | 0.06   |               |  | $ | (1.05   | )
|Earnings (loss) per sharediluted:                               |  |                                          |        |   |               |   |        |               |  |   |         |  
|Income (loss) from continuing operations                         |  | $                                        | 0.03   |   |               | $ | 0.06   |               |  | $ | (1.01   | )
|Loss from discontinued operations                                |  |                                          |       |   |               |   |       |               |  |   | (0.04   | )
|                                                                 |  |                                          |        |   |               |   |        |               |  |   |         |  
|Net income (loss)                                                |  | $                                        | 0.03   |   |               | $ | 0.06   |               |  | $ | (1.05   | )

Unvested restricted stock is subject to repurchase by the Company and therefore is not included in the
calculation of the weighted-average shares outstanding for basic earnings (loss) per share.

The following common stock
equivalents were excluded from the net earnings (loss) per share calculation, as their effect would have been antidilutive:



|                                                                                             |  |                |       |  |               |  |       |               |  |  |       | 
|-------------------------------------------------------------------------------------------- |  | -------------- | ----- |  | ------------- |  | ----- | ------------- |  |  | ----- | 
|                                                                                             |  | Year ended     |      
|                                                                                             |  | July 3, 2011   |       |  | June 27, 2010 |  |       | June 28, 2009 | 
|                                                                                             |  | (In thousands) |      
|Stock options                                                                                |  |                | 2,777 |  |               |  | 4,128 |               |  |  | 5,678 | 
|Common shares subject to repurchase                                                          |  |                |      |  |               |  |      |               |  |  | 667   | 
|                                                                                             |  |                |       |  |               |  |       |               |  |  |       | 
|Total shares of common stock excluded from diluted net earnings (loss) per share calculation |  |                | 2,777 |  |               |  | 4,128 |               |  |  | 6,345 | 
|                                                                                             |  |                |       |  |               |  |       |               |  |  |       | 

We accounted for our contingent convertible notes in accordance with Financial Accounting Standards Board
(FASB) issued authoritative guidance on the effect of contingently convertible debt on diluted earnings per share, which required us to include the dilutive effect of the shares of our common stock issuable upon conversion of the
outstanding convertible notes in our diluted earnings per share calculation regardless of whether the market price trigger or other contingent conversion feature would have been met. Because our contingent convertible notes included mandatory cash
settlement feature for the principal payment, we applied



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



the treasury stock method. This method results in incremental dilutive shares when the average fair value of our common stock for a reporting period exceeds the initial conversion price per share
of $12.49. However, because our share price did not exceed $12.49, no shares associated with the contingent convertible notes were included in our diluted earnings per share for fiscal years 2010 and 2009. In the fourth quarter of fiscal 2010, we
repurchased the remainder of our convertible notes. There were no contingently convertible notes outstanding during fiscal 2011.

Convertible Subordinated Notes

We record convertible debt instruments that
may be settled in cash or other assets, or partially in cash upon conversion by allocating the initial proceeds between a liability and an equity component based on the fair value of the liability component as of the issuance date. The fair value of
the liability component of the Notes was valued using a discounted cash flow analysis.

Convertible Subordinated
NotesRedemptionFiscal 2009

On June 30, 2008, we offered to purchase for cash, on a pro rata basis,
$63.1 million aggregate principal amount of the convertible subordinated notes (the Notes), at a purchase price equal to $990 per $1,000 of the principal amount of the Notes, plus accrued and unpaid interest. The tender offer cap
was equal to 52.6% of the $120.0 million aggregate principal amount outstanding. As of July 30, 2008, pursuant to the offer, Symmetricom accepted for payment $63.1 million aggregate principal amount of the Notes. The aggregate purchase
price for the Notes surrendered was approximately $62.5 million, which included interest of $0.3 million. After the purchase pursuant to the offer, approximately $56.9 million aggregate principal amount of the Notes remained
outstanding.

As a result of the partial redemption of the Notes in the first quarter of fiscal 2009, we recognized a pre-tax
loss of $5.6 million, which represents the difference between the carrying value of the liability component of the redeemed amount and its fair value at the date of redemption in the first quarter of fiscal 2009.

Convertible Subordinated NotesRedemptionFiscal 2010

During the fourth quarter of fiscal 2010, we purchased all remaining $56.9 million aggregate principal amount of our Notes in privately
negotiated transactions, for a purchase price of $57.7 million, representing the par value principal amount of the Notes plus accrued and unpaid interest. The purchased Notes were retired and cancelled.

As a result of the full redemption of the Notes in the fourth quarter of fiscal 2010, we recognized a pre-tax loss of $7.0 million along
with the write-off of the unamortized bond issuance costs, which represents the difference between the carrying value of the liability component of the redeemed amount and its fair value at the date of redemption in the fourth quarter of fiscal
2010.

Recent accounting pronouncements not yet adopted

In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to
report other comprehensive income and its components in the statement of stockholders equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but
consecutive statements. The new guidance will be effective for us beginning first quarter of fiscal 2013, will require retrospective application, and will only affect presentation of comprehensive income (loss).



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In May 2011, the FASB issued guidance to amend the accounting and disclosure
requirements for fair value measurements. The new guidance limits the highest-and-best-use measure to non-financial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be
measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, the new guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and
assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. The new guidance will be effective for us beginning third quarter of fiscal 2012. Other than requiring
additional disclosures, we do not anticipate material impacts on our financial statements upon adoption.

Note 2Balance Sheet
Components

Inventoriesconsist of the following:



|                |  |                |        |  |               |   |        | 
|--------------- |  | -------------- | ------ |  | ------------- | - | ------ | 
|                |  | July 3, 2011   |        |  | June 27, 2010 |  
|                |  | (In thousands) |       
|Raw materials   |  | $              | 27,206 |  |               | $ | 19,419 | 
|Work-in-process |  |                | 9,520  |  |               |   | 8,593  | 
|Finished goods  |  |                | 25,896 |  |               |   | 9,217  | 
|                |  |                |        |  |               |   |        | 
|Inventories     |  | $              | 62,622 |  |               | $ | 37,229 | 
|                |  |                |        |  |               |   |        | 

Property, plant and equipment, netconsist of the following:



|                                          |  |                |         |   |               |   |         |  
|----------------------------------------- |  | -------------- | ------- | - | ------------- | - | ------- | -
|                                          |  | July 3, 2011   |         |   | June 27, 2010 |  
|                                          |  | (In thousands) |        
|Property, plant and equipment, net:       |  |                |         |   |               |   |         |  
|Land                                      |  | $              | 200     |   |               | $ | 200     |  
|Buildings and improvements                |  |                | 16,199  |   |               |   | 16,193  |  
|Machinery and equipment                   |  |                | 26,093  |   |               |   | 27,334  |  
|Computer software                         |  |                | 11,967  |   |               |   | 10,607  |  
|Leasehold improvements                    |  |                | 18,548  |   |               |   | 19,956  |  
|                                          |  |                |         |   |               |   |         |  
|                                          |  |                | 73,007  |   |               |   | 74,290  |  
|Accumulated depreciation and amortization |  |                | (49,752 | ) |               |   | (51,213 | )
|                                          |  |                |         |   |               |   |         |  
|                                          |  | $              | 23,255  |   |               | $ | 23,077  |  
|                                          |  |                |         |   |               |   |         |  

Other accrued liabilitiesconsist of the following:



|                                                      |  |                |        |  |               |   |        | 
|----------------------------------------------------- |  | -------------- | ------ |  | ------------- | - | ------ | 
|                                                      |  | July 3, 2011   |        |  | June 27, 2010 |  
|                                                      |  | (In thousands) |       
|Other accrued liabilities:                            |  |                |        |  |               |   |        | 
|Deferred revenue                                      |  | $              | 7,058  |  |               | $ | 4,841  | 
|Accrued expenses                                      |  |                | 5,823  |  |               |   | 3,292  | 
|Manufacturer sales representative commissions payable |  |                | 1,187  |  |               |   | 1,168  | 
|Lease loss accrual, net                               |  |                | 570    |  |               |   | 1,070  | 
|Income tax                                            |  |                | 45     |  |               |   | 135    | 
|                                                      |  |                |        |  |               |   |        | 
|Total                                                 |  | $              | 14,683 |  |               | $ | 10,506 | 
|                                                      |  |                |        |  |               |   |        | 



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Long-term obligationsconsist of the following:



|                         |  |                |       |  |               |   |       | 
|------------------------ |  | -------------- | ----- |  | ------------- | - | ----- | 
|                         |  | July 3, 2011   |       |  | June 27, 2010 |  
|                         |  | (In thousands) |      
|Long-term obligations:   |  |                |       |  |               |   |       | 
|Deferred revenue         |  | $              | 2,131 |  |               | $ | 1,919 | 
|Lease loss accrual, net  |  |                | 1,793 |  |               |   | 4,784 | 
|Rent accrual             |  |                | 1,088 |  |               |   | 1,066 | 
|Post-retirement benefits |  |                | 200   |  |               |   | 227   | 
|Income tax               |  |                |      |  |               |   | 300   | 
|                         |  |                |       |  |               |   |       | 
|Total                    |  | $              | 5,212 |  |               | $ | 8,296 | 
|                         |  |                |       |  |               |   |       | 

Note 3Financial Instruments

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the
market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:



| |  |  | Level 1inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | Level 2inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3inputs are generally unobservable and typically reflect managements estimates of assumptions that market participants would use in
pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financial assets measured at fair value on a recurring basis consisted of the following types of instruments as of July 3, 2011 and
June 27, 2010:



|                                                |  |                             |        |  |                                                            |   |        |                                            |  |   |        | 
|----------------------------------------------- |  | --------------------------- | ------ |  | ---------------------------------------------------------- | - | ------ | ------------------------------------------ |  | - | ------ | 
|                                                |  | Fair Value asof July 3,2011 |        |  | Quoted Prices inActive Marketsfor IdenticalAssets(Level 1) |   |        | Significant OtherObservableInputs(Level 2) | 
|                                                |  | (In thousands)              |       
|Assets:                                         |  |                             |        |  |                                                            |   |        |                                            |  |   |        | 
|Money market funds                              |  | $                           | 12,630 |  |                                                            | $ | 12,630 |                                            |  | $ |       | 
|                                                |  |                             |        |  |                                                            |   |        |                                            |  |   |        | 
|Short-term investments:                         |  |                             |        |  |                                                            |   |        |                                            |  |   |        | 
|Corporate debt securities                       |  |                             | 23,430 |  |                                                            |   |       |                                            |  |   | 23,430 | 
|Government sponsored enterprise debt securities |  |                             | 16,456 |  |                                                            |   |       |                                            |  |   | 16,456 | 
|Mutual funds                                    |  |                             | 3,454  |  |                                                            |   | 3,454  |                                            |  |   |       | 
|                                                |  |                             |        |  |                                                            |   |        |                                            |  |   |        | 
|Total short-term investments                    |  |                             | 43,340 |  |                                                            |   | 3,454  |                                            |  |   | 39,886 | 
|                                                |  |                             |        |  |                                                            |   |        |                                            |  |   |        | 
|Total financial assets                          |  | $                           | 55,970 |  |                                                            | $ | 16,084 |                                            |  | $ | 39,886 | 
|                                                |  |                             |        |  |                                                            |   |        |                                            |  |   |        | 



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                |  |                              |        |  |                                                            |   |        |                                            |  |   |        | 
|----------------------------------------------- |  | ---------------------------- | ------ |  | ---------------------------------------------------------- | - | ------ | ------------------------------------------ |  | - | ------ | 
|                                                |  | Fair Value asof June 27,2010 |        |  | Quoted Prices inActive Marketsfor IdenticalAssets(Level 1) |   |        | Significant OtherObservableInputs(Level 2) | 
|                                                |  | (In thousands)               |       
|Assets:                                         |  |                              |        |  |                                                            |   |        |                                            |  |   |        | 
|Money market funds                              |  | $                            | 9,729  |  |                                                            | $ | 9,729  |                                            |  | $ |       | 
|                                                |  |                              |        |  |                                                            |   |        |                                            |  |   |        | 
|Short-term investments:                         |  |                              |        |  |                                                            |   |        |                                            |  |   |        | 
|Corporate debt securities                       |  |                              | 37,264 |  |                                                            |   |       |                                            |  |   | 37,264 | 
|Government sponsored enterprise debt securities |  |                              | 13,336 |  |                                                            |   |       |                                            |  |   | 13,336 | 
|Mutual funds                                    |  |                              | 3,225  |  |                                                            |   | 2,500  |                                            |  |   | 725    | 
|                                                |  |                              |        |  |                                                            |   |        |                                            |  |   |        | 
|Total short-term investments                    |  |                              | 53,825 |  |                                                            |   | 2,500  |                                            |  |   | 51,325 | 
|                                                |  |                              |        |  |                                                            |   |        |                                            |  |   |        | 
|Total financial assets                          |  | $                            | 63,554 |  |                                                            | $ | 12,229 |                                            |  | $ | 51,325 | 
|                                                |  |                              |        |  |                                                            |   |        |                                            |  |   |        | 

The fair values of our money market funds and mutual funds (except certain mutual funds in fiscal 2010)
were derived from quoted market prices as active markets for these instruments exist. The fair values of corporate debt securities, government sponsored enterprise debt securities and certain mutual funds (in fiscal 2010) were derived from
non-binding market consensus prices that are corroborated by observable market data.

Subsequent to the issuance of the fiscal
2010 consolidated financial statements, the Company determined that investments in government sponsored enterprise debt securities should be classified as Level 2 investments (rather than Level 1 investments as originally classified) as of
June 27, 2010 as these specific securities do not have quoted prices in active markets. Accordingly, we have corrected the classification of these securities from Level 1 to Level 2 in the table of fair value measurements as of
June 27, 2010.

The investments in mutual funds are held in a Rabbi trust to support the terms of our deferred
compensation plan discussed further in Note 10.

The following table summarizes available-for-sale and trading securities
recorded as cash and cash equivalents or short-term investments:



|                                                |  |                |        |  |                                |   |    |            |  |   |        | 
|----------------------------------------------- |  | -------------- | ------ |  | ------------------------------ | - | -- | ---------- |  | - | ------ | 
|                                                |  | Amortized Cost |        |  | Gross UnrealizedGains (Losses) |   |    | Fair Value | 
|                                                |  | (In thousands) |       
|July 3, 2011                                    |  |                |        |  |                                |   |    |            |  |   |        | 
|Money market funds                              |  | $              | 12,630 |  |                                | $ |   |            |  | $ | 12,630 | 
|Corporate debt securities                       |  |                | 23,424 |  |                                |   | 6  |            |  |   | 23,430 | 
|Government sponsored enterprise debt securities |  |                | 16,456 |  |                                |   |   |            |  |   | 16,456 | 
|Mutual funds                                    |  |                | 3,454  |  |                                |   |   |            |  |   | 3,454  | 
|                                                |  |                |        |  |                                |   |    |            |  |   |        | 
|Total financial assets                          |  | $              | 55,964 |  |                                | $ | 6  |            |  | $ | 55,970 | 
|                                                |  |                |        |  |                                |   |    |            |  |   |        | 
|June 27, 2010                                   |  |                |        |  |                                |   |    |            |  |   |        | 
|Money market funds                              |  | $              | 9,729  |  |                                | $ |   |            |  | $ | 9,729  | 
|Corporate debt securities                       |  |                | 37,200 |  |                                |   | 64 |            |  |   | 37,264 | 
|Government sponsored enterprise debt securities |  |                | 13,336 |  |                                |   |   |            |  |   | 13,336 | 
|Mutual funds                                    |  |                | 3,225  |  |                                |   |   |            |  |   | 3,225  | 
|                                                |  |                |        |  |                                |   |    |            |  |   |        | 
|Total financial assets                          |  | $              | 63,490 |  |                                | $ | 64 |            |  | $ | 63,554 | 
|                                                |  |                |        |  |                                |   |    |            |  |   |        | 



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes the contractual maturities of fixed income securities
(Corporate debt securities and Government sponsored enterprise debt securities) recorded as short-term investments:



|                    |  |                |        |  |           |  |        | 
|------------------- |  | -------------- | ------ |  | --------- |  | ------ | 
|                    |  | AmortizedCost  |        |  | FairValue | 
|                    |  | (In thousands) |       
|Less than 1 year    |  |                | 11,078 |  |           |  | 11,093 | 
|Due in 1 to 3 years |  |                | 28,802 |  |           |  | 28,793 | 
|                    |  |                |        |  |           |  |        | 
|Total               |  |                | 39,880 |  |           |  | 39,886 | 
|                    |  |                |        |  |           |  |        | 

Actual maturities may differ from the contractual maturities because borrowers may have the right to call
or prepay certain obligations.

Note 4Intangible Assets

Intangible assets are recorded at cost, less accumulated amortization. Other intangible assets as of July 3, 2011 and June 27, 2010 consist of:



|                              |  |                     |        |  |                         |   |         |                     |  |   |       | 
|----------------------------- |  | ------------------- | ------ |  | ----------------------- | - | ------- | ------------------- |  | - | ----- | 
|                              |  | GrossCarryingAmount |        |  | AccumulatedAmortization |   |         | NetIntangibleAssets | 
|                              |  | (in thousands)      |       
|Purchased technology          |  | $                   | 24,357 |  |                         | $ | (23,226 | )                   |  | $ | 1,131 | 
|Customer lists and trademarks |  |                     | 7,025  |  |                         |   | (5,727  | )                   |  |   | 1,298 | 
|                              |  |                     |        |  |                         |   |         |                     |  |   |       | 
|Total as of July 3, 2011      |  | $                   | 31,382 |  |                         | $ | (28,953 | )                   |  | $ | 2,429 | 
|                              |  |                     |        |  |                         |   |         |                     |  |   |       | 
|Purchased technology          |  | $                   | 24,357 |  |                         | $ | (22,150 | )                   |  | $ | 2,207 | 
|Customer lists and trademarks |  |                     | 7,025  |  |                         |   | (5,487  | )                   |  |   | 1,538 | 
|                              |  |                     |        |  |                         |   |         |                     |  |   |       | 
|Total as of June 27, 2010     |  | $                   | 31,382 |  |                         | $ | (27,637 | )                   |  | $ | 3,745 | 
|                              |  |                     |        |  |                         |   |         |                     |  |   |       | 

The estimated future amortization expense is as follows:



|                   |  |                |       | 
|------------------ |  | -------------- | ----- | 
|                   |  | (in thousands) |      
|Fiscal year:       |  |                |       | 
|2012               |  |                | 726   | 
|2013               |  |                | 502   | 
|2014               |  |                | 502   | 
|2015               |  |                | 232   | 
|2016               |  |                | 159   | 
|Thereafter         |  |                | 308   | 
|                   |  |                |       | 
|Total amortization |  | $              | 2,429 | 
|                   |  |                |       | 

Intangible asset amortization expense for fiscal 2011, 2010, and 2009 was approximately $1.3 million,
$1.6 million, and $1.9 million, respectively.



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 5Income Taxes

Income (loss) from continuing operations before income tax and income tax provision (benefit) on income (loss) from continuing operations consists of the following:



|                                                              |  |                |       |   |              |   |       |              |  |   |         |  
|------------------------------------------------------------- |  | -------------- | ----- | - | ------------ | - | ----- | ------------ |  | - | ------- | -
|                                                              |  | Year ended     |      
|                                                              |  | July 3,2011    |       |   | June 27,2010 |   |       | June 28,2009 | 
|                                                              |  | (In thousands) |      
|Income (loss) from continuing operations before income taxes: |  |                |       |   |              |   |       |              |  |   |         |  
|Domestic                                                      |  | $              | 7,443 |   |              | $ | 1,243 |              |  | $ | (44,218 | )
|Foreign                                                       |  |                | 587   |   |              |   | 800   |              |  |   | 1,000   |  
|                                                              |  |                |       |   |              |   |       |              |  |   |         |  
|Total                                                         |  | $              | 8,030 |   |              | $ | 2,043 |              |  | $ | (43,218 | )
|                                                              |  |                |       |   |              |   |       |              |  |   |         |  
|Income tax provision (benefit):                               |  |                |       |   |              |   |       |              |  |   |         |  
|Current:                                                      |  |                |       |   |              |   |       |              |  |   |         |  
|Federal                                                       |  | $              | (107  | ) |              | $ | 106   |              |  | $ | (348    | )
|State                                                         |  |                | 56    |   |              |   | 105   |              |  |   | 130     |  
|Puerto Rico                                                   |  |                | 216   |   |              |   | (257  | )            |  |   | 593     |  
|Foreign                                                       |  |                | (142  | ) |              |   | 297   |              |  |   | 667     |  
|                                                              |  |                |       |   |              |   |       |              |  |   |         |  
|Total                                                         |  |                | 23    |   |              |   | 251   |              |  |   | 1,042   |  
|                                                              |  |                |       |   |              |   |       |              |  |   |         |  
|Deferred:                                                     |  |                |       |   |              |   |       |              |  |   |         |  
|Federal                                                       |  |                | 1,670 |   |              |   | (92   | )            |  |   | (638    | )
|State                                                         |  |                | 4,861 |   |              |   | (586  | )            |  |   | 37      |  
|Puerto Rico                                                   |  |                | 307   |   |              |   | (76   | )            |  |   | 58      |  
|Foreign                                                       |  |                |      |   |              |   |      |              |  |   | 89      |  
|                                                              |  |                |       |   |              |   |       |              |  |   |         |  
|Total                                                         |  |                | 6,838 |   |              |   | (754  | )            |  |   | (454    | )
|                                                              |  |                |       |   |              |   |       |              |  |   |         |  
|Total income tax provision (benefit) on continuing operations |  | $              | 6,861 |   |              | $ | (503  | )            |  | $ | 588     |  
|                                                              |  |                |       |   |              |   |       |              |  |   |         |  

The income tax provision (benefit) attributable to continuing operations and discontinued operations,
included in the consolidated statements of operations, is as follows:



|                              |  |                |       |  |              |   |      |              |  |   |        |  
|----------------------------- |  | -------------- | ----- |  | ------------ | - | ---- | ------------ |  | - | ------ | -
|                              |  | Year ended,    |      
|                              |  | July 3,2011    |       |  | June 27,2010 |   |      | June 28,2009 | 
|                              |  | (In thousands) |      
|Tax provision (benefit) from: |  |                |       |  |              |   |      |              |  |   |        |  
|Continuing operations         |  | $              | 6,861 |  |              | $ | (503 | )            |  | $ | 588    |  
|Discontinued operations       |  |                | 143   |  |              |   | (11  | )            |  |   | (1,233 | )
|                              |  |                |       |  |              |   |      |              |  |   |        |  
|Total provision (benefit)     |  | $              | 7,004 |  |              | $ | (514 | )            |  | $ | (645   | )
|                              |  |                |       |  |              |   |      |              |  |   |        |  



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The effective income tax rate on our continuing operations differs from the federal
statutory income tax rate as follows:



|                                                           |  |             |      |   |              |  |       |              |  |  |       |   
|---------------------------------------------------------- |  | ----------- | ---- | - | ------------ |  | ----- | ------------ |  |  | ----- | --
|                                                           |  | Year ended  |     
|                                                           |  | July 3,2011 |      |   | June 27,2010 |  |       | June 28,2009 | 
|Federal statutory income tax expense (benefit) rate        |  |             | 35.0 | % |              |  | 35.0  | %            |  |  | (35.0 | )%
|Puerto Rico taxes                                          |  |             | 6.5  |   |              |  | (16.3 | )            |  |  | 1.5   |   
|State income taxes, net of federal benefit                 |  |             | 4.9  |   |              |  | (26.2 | )            |  |  | 0.3   |   
|Valuation allowance- state credits, net of federal benefit |  |             | 55.7 |   |              |  |      |              |  |  |      |   
|Foreign taxes                                              |  |             | (3.7 | ) |              |  |      |              |  |  |      |   
|Goodwill                                                   |  |             |     |   |              |  |      |              |  |  | 35.3  |   
|Federal research and development credit                    |  |             | (6.9 | ) |              |  | (16.2 | )            |  |  | (1.6  | ) 
|Other                                                      |  |             | (6.0 | ) |              |  | (0.9  | )            |  |  | 0.9   |   
|                                                           |  |             |      |   |              |  |       |              |  |  |       |   
|Effective income tax rate on continuing operations         |  |             | 85.5 | % |              |  | (24.6 | )%           |  |  | 1.4   | % 
|                                                           |  |             |      |   |              |  |       |              |  |  |       |   

The principal components of deferred tax assets and liabilities are as follows:



|                                 |  |                |        |   |              |   |        |  
|-------------------------------- |  | -------------- | ------ | - | ------------ | - | ------ | -
|                                 |  | July 3,2011    |        |   | June 27,2010 |  
|                                 |  | (In thousands) |       
|Deferred tax assets:             |  |                |        |   |              |   |        |  
|Net operating loss carryforwards |  | $              | 8,397  |   |              | $ | 9,361  |  
|Tax credit carryforwards         |  |                | 15,402 |   |              |   | 15,469 |  
|Reserves and accruals            |  |                | 8,501  |   |              |   | 8,615  |  
|Depreciation and amortization    |  |                | 11,830 |   |              |   | 14,597 |  
|                                 |  |                |        |   |              |   |        |  
|                                 |  |                | 44,130 |   |              |   | 48,042 |  
|Valuation allowance              |  |                | (7,498 | ) |              |   | (3,974 | )
|                                 |  |                |        |   |              |   |        |  
|Total deferred tax assets        |  |                | 36,632 |   |              |   | 44,068 |  
|Deferred tax liabilities        |  |                |        |   |              |   |        |  
|Unremitted foreign earnings      |  |                | 334    |   |              |   | 334    |  
|                                 |  |                |        |   |              |   |        |  
|Net deferred tax assets          |  | $              | 36,298 |   |              | $ | 43,734 |  
|                                 |  |                |        |   |              |   |        |  

Net deferred tax assets are comprised of the following:



|                        |  |                |        |   |              |   |        |  
|----------------------- |  | -------------- | ------ | - | ------------ | - | ------ | -
|                        |  | July 3,2011    |        |   | June 27,2010 |  
|                        |  | (In thousands) |       
|Current assets          |  | $              | 7,732  |   |              | $ | 8,146  |  
|Non-current assets      |  |                | 28,900 |   |              |   | 35,922 |  
|Non-current liabilities |  |                | (334   | ) |              |   | (334   | )
|                        |  |                |        |   |              |   |        |  
|Net deferred tax assets |  | $              | 36,298 |   |              | $ | 43,734 |  
|                        |  |                |        |   |              |   |        |  

As of July 3, 2011, for federal income tax purposes, we had regular net operating loss carryforwards
of approximately $27.9 million which will expire in years 2023 through 2025. We had California regular net operating loss carryforwards of approximately $6.8 million which will expire in years 2014 through 2031.



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Also, we had federal research and development tax credit carryforwards of approximately
$6.6 million that will expire in the fiscal years 2012 through 2031, alternative minimum tax credit carryforwards of approximately $3.9 million that have no expiration date, and approximately $1.2 million of foreign tax credits that will expire in
2017 through 2020. Additionally, for state income tax purposes, we had research and development tax credit carryforwards of approximately $4.5 million that have no expiration date.

We have provided a valuation allowance for certain deferred tax assets because we have determined that it is more likely than not that we
will not have sufficient taxable income to realize these tax assets. At July 3, 2011, $1.1 million of the valuation allowance was attributable to the tax benefit of potentially expiring tax credits stemming from stock option transactions, which
will be credited to common stock if realized rather than as a reduction of the tax provision. We have $0.2 million of the valuation allowance attributable to other potentially expiring tax credits. Also, $1.6 million of the valuation allowance was
attributable to fiscal 2008 and fiscal 2009 short-term investment losses incurred which have a limited carryforward period. For state income tax purposes, we have a $4.5 million valuation allowance related to state income tax credits primarily
attributable to research and development credits that will not be utilized. The valuation allowance decreased by $1.0 million in fiscal 2011 due to the expiration of the statute of limitations on certain federal research and development credits
which had a full valuation allowance and increased by $4.5 million related to state tax credits.

As of July 3, 2011, we
had $16.2 million of unrecognized tax benefits, all of which $16.2 million, if recognized, would impact our effective tax rate. We do not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next twelve
months. Our policy is to include material interest and penalties related to unrecognized tax benefits in income tax expense. As of July 3, 2011 and June 27, 2010, we had no accrued interest or penalties on our consolidated balance sheet.

The aggregate changes in the balance of unrecognized tax benefits were as follows:



|                                                            |  |               |      |   |              |   |      |              |  |   |      |  
|----------------------------------------------------------- |  | ------------- | ---- | - | ------------ | - | ---- | ------------ |  | - | ---- | -
|                                                            |  | Year ended    |     
|                                                            |  | July 3,2011   |      |   | June 27,2010 |   |      | June 28,2009 | 
|                                                            |  | (in millions) |     
|Beginning balance                                           |  | $             | 15.4 |   |              | $ | 14.3 |              |  | $ | 14.3 |  
|Additions based on tax position related to the current year |  |               | 0.7  |   |              |   | 0.1  |              |  |   | 0.2  |  
|Additions for tax positions of prior years                  |  |               | 0.6  |   |              |   | 1.0  |              |  |   | 0.1  |  
|Lapse of Statute of Limitations                             |  |               | (0.5 | ) |              |   | 0.0  |              |  |   | 0.0  |  
|Settlements                                                 |  |               |     |   |              |   |     |              |  |   | (0.3 | )
|                                                            |  |               |      |   |              |   |      |              |  |   |      |  
|Ending balance                                              |  | $             | 16.2 |   |              | $ | 15.4 |              |  | $ | 14.3 |  
|                                                            |  |               |      |   |              |   |      |              |  |   |      |  

We are subject to income tax in the United States and a number of state and foreign jurisdictions. The
tax years ended June 2007 forward remain open to examination by major taxing jurisdictions in which we operate which include the United States, The State of California, Puerto Rico and Germany. We are not currently under examination in any major tax
jurisdiction.

Note 6Stockholders Equity

Stock Options and Awards

Symmetricom has equity benefit plans under which
employees, directors and consultants may be granted non-qualified and incentive options to purchase shares of our common stock and restricted stock. Stock options granted under these plans have contractual terms ranging from 5-10 years. One of these
plans was amended in



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



fiscal 2003 to effectively provide that restricted stock could be granted and repurchased for no cash purchase price. Stock appreciation rights may also be granted under this plan; however, none
have been granted to date. All options have been granted at the fair market value of our common stock on the date of grant and generally vest over three or four years.

For October 2008 our shareholders approved an update to the 2006 Incentive Award Plan that included an additional 5.5 million shares for future issuance. Our right to repurchase restricted
shares generally lapses over the same three or four-year term as the vesting period applicable to the stock options. The estimated future annual forfeiture rate used to record stock-based compensation expense was 8%, 8%, and 10% for fiscal 2011,
2010, and 2009, respectively. At July 3, 2011, the total future compensation cost related to unvested stock-based awards granted to employees, directors and consultants under the Companys stock option plans was approximately $5.5 million,
net of estimated forfeitures of $1.3 million. This cost will be amortized on an accelerated basis over a period of approximately 1.2 years and will be adjusted for subsequent changes in estimated forfeitures.

The following table shows total stock-based compensation expense included in the consolidated statements of operations:



|                                         |  |                |       |  |              |   |       |              |  |   |       | 
|---------------------------------------- |  | -------------- | ----- |  | ------------ | - | ----- | ------------ |  | - | ----- | 
|                                         |  | Year ended     |      
|                                         |  | July 3,2011    |       |  | June 27,2010 |   |       | June 28,2009 | 
|                                         |  | (In thousands) |      
|Cost of sales                            |  | $              | 802   |  |              | $ | 802   |              |  | $ | 630   | 
|Research and development                 |  |                | 870   |  |              |   | 758   |              |  |   | 627   | 
|Selling, general and administrative      |  |                | 3,126 |  |              |   | 2,154 |              |  |   | 2,035 | 
|                                         |  |                |       |  |              |   |       |              |  |   |       | 
|Pre-tax stock-based compensation expense |  |                | 4,798 |  |              |   | 3,714 |              |  |   | 3,292 | 
|Less: Income Tax effect                  |  |                | 1,775 |  |              |   | 1,374 |              |  |   | 1,218 | 
|                                         |  |                |       |  |              |   |       |              |  |   |       | 
|Net Stock-based compensation expense     |  | $              | 3,023 |  |              | $ | 2,340 |              |  | $ | 2,074 | 
|                                         |  |                |       |  |              |   |       |              |  |   |       | 



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SYMMETRICOM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes stock option and award activity for fiscal years 2011,
2010 and 2009:



|                                 |  |                                          |        |   |                                          |  |        |                                      |  |   |                             |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|-------------------------------- |  | ---------------------------------------- | ------ | - | ---------------------------------------- |  | ------ | ------------------------------------ |  | - | --------------------------- |  |  | ---------------------------- | ---- | - | -------------- | - | ---- | ----------------------------------- |  |  | ---- | - |  | - | ---- | 
|                                 |  |                                          |        |   | Non Performance-based OptionsOutstanding |  |        | Performance-basedOptions Outstanding |  |   | Restricted StockOutstanding | 
|                                 |  | SharesAvailableFor Grant                 |        |   | NumberofShares                           |  |        | WeightedAverageExercisePrice         |  |   | NumberofShares              |  |  | WeightedAverageExercisePrice |      |   | NumberofShares |   |      | WeightedAverageGrant-DateFair Value | 
|                                 |  | (In thousands, except per share amounts) |       
|Balances at June 30, 2008        |  |                                          | 2,183  |   |                                          |  | 4,964  |                                      |  | $ | 7.10                        |  |  |                              | 195  |   |                | $ | 8.53 |                                     |  |  | 994  |   |  | $ | 6.62 | 
|Update of 2006 Plan              |  |                                          | 5,500  |   |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  |     |   |  |   |     | 
|Grantedoptions                  |  |                                          | (1,486 | ) |                                          |  | 1,486  |                                      |  |   | 4.58                        |  |  |                              |     |   |                |   |     |                                     |  |  |     |   |  |   |     | 
|Grantedrestricted shares        |  |                                          | (60    | ) |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  | 30   |   |  |   | 3.80 | 
|Exercised                        |  |                                          |       |   |                                          |  | (151   | )                                    |  |   | 3.95                        |  |  |                              |     |   |                |   |     |                                     |  |  |     |   |  |   |     | 
|Vested                           |  |                                          |       |   |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  | (350 | ) |  |   | 6.92 | 
|Canceled                         |  |                                          | 1,079  |   |                                          |  | (1,009 | )                                    |  |   | 6.88                        |  |  |                              | (70  | ) |                |   | 8.53 |                                     |  |  | (134 | ) |  |   | 6.84 | 
|Expired                          |  |                                          | (65    | ) |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  |     |   |  |   |     | 
|                                 |  |                                          |        |   |                                          |  |        |                                      |  |   |                             |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|Balances at June 28, 2009        |  |                                          | 7,151  |   |                                          |  | 5,290  |                                      |  | $ | 6.53                        |  |  |                              | 125  |   |                | $ | 8.53 |                                     |  |  | 540  |   |  | $ | 6.22 | 
|Grantedoptions                  |  |                                          | (2,683 | ) |                                          |  | 2,683  |                                      |  |   | 4.98                        |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|Grantedrestricted shares        |  |                                          | (254   | ) |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  | 127  |   |  |   | 5.25 | 
|Exercised                        |  |                                          |       |   |                                          |  | (439   | )                                    |  |   | 4.48                        |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|Vested                           |  |                                          |       |   |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  | (373 | ) |  |   | 6.69 | 
|Canceled                         |  |                                          | 1,655  |   |                                          |  | (1,491 | )                                    |  |   | 7.12                        |  |  |                              | (125 | ) |                |   | 8.53 |                                     |  |  | (75  | ) |  |   | 5.24 | 
|Expired                          |  |                                          | (172   | ) |                                          |  |       |                                      |  |   |                             |  |  |                              |      |   |                |   |      |                                     |  |  |     |   |  |   |     | 
|                                 |  |                                          |        |   |                                          |  |        |                                      |  |   |                             |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|Balances at June 27, 2010        |  |                                          | 5,697  |   |                                          |  | 6,043  |                                      |  | $ | 5.84                        |  |  |                              |     |   |                | $ |     |                                     |  |  | 219  |   |  | $ | 5.20 | 
|Grantedoptions                  |  |                                          | (2,193 | ) |                                          |  | 2,193  |                                      |  |   | 6.20                        |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|Grantedrestricted shares        |  |                                          | (422   | ) |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  | 211  |   |  |   | 6.55 | 
|Exercised                        |  |                                          |       |   |                                          |  | (462   | )                                    |  |   | 4.69                        |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|Vested                           |  |                                          |       |   |                                          |  |       |                                      |  |   |                            |  |  |                              |     |   |                |   |     |                                     |  |  | (175 | ) |  |   | 5.19 | 
|Canceled & Expired               |  |                                          | 1,457  |   |                                          |  | (1,240 | )                                    |  |   | 7.22                        |  |  |                              |     |   |                |   |     |                                     |  |  | (27  | ) |  |   | 5.78 | 
|Expired from plans prior to 1999 |  |                                          | (76    | ) |                                          |  |       |                                      |  |   |                             |  |  |                              |      |   |                |   |      |                                     |  |  |     |   |  |   |     | 
|                                 |  |                                          |        |   |                                          |  |        |                                      |  |   |                             |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 
|Balances at July 3, 2011         |  |                                          | 4,463  |   |                                          |  | 6,534  |                                      |  | $ | 5.78                        |  |  |                              |     |   |                | $ |     |                                     |  |  | 228  |   |  | $ | 6.39 | 
|                                 |  |                                          |        |   |                                          |  |        |                                      |  |   |                             |  |  |                              |      |   |                |   |      |                                     |  |  |      |   |  |   |      | 

Options outstanding vested and expected to vest, and exercisable as of July 3, 2011 were as follows:



|                            |  |                 |       |  |                                         |  |      |                               |  |   |                         |  |  |   |       | 
|--------------------------- |  | --------------- | ----- |  | --------------------------------------- |  | ---- | ----------------------------- |  | - | ----------------------- |  |  | - | ----- | 
|Option                      |  | Number ofShares |       |  | WeightedAverageRemainingContractualLife |  |      | WeightedAverageExercise Price |  |   | AggregateIntrinsicValue | 
|                            |  | (In thousands)  |       |  | (In years)                              |  |      |                               |  |   | (In thousands)          | 
|Outstanding                 |  |                 | 6,534 |  |                                         |  | 4.54 |                               |  | $ | 5.78                    |  |  | $ | 3,706 | 
|Vested and expected to vest |  |                 | 6,177 |  |                                         |  | 4.46 |                               |  | $ | 5.79                    |  |  | $ | 3,587 | 
|Exercisable                 |  |                 | 2,772 |  |                                         |  | 3.12 |                               |  | $ | 6.02                    |  |  | $ | 1,998 | 

The aggregate intrinsic value in the preceding table represents the total pre-tax value of stock options
outstanding as of July 3, 2011, based on our common stock closing price of $5.83 on July 3, 2011, which would have been received by the option holders had all option holders exercised and sold their options as of that date.

As of July 3, 2011, June 27, 2010, and June 28, 2009, the number of shares and weighted average exercise prices of
exercisable options were 2.8 million at $6.02; 2.5 million at $7.26, and 3.2 million at $7.49, respectively.



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The total intrinsic value of options exercised during fiscal 2011, 2010, and 2009, was
$0.6 million, $0.6 million, and $0.2 million, respectively.

The weighted average grant-date fair value of options granted was
$3.06 in 2011, $2.46 in 2010 and $1.87 in 2009. Our calculations were made using the Black-Scholes option-pricing model. The fair value of our stock-based awards to employees was estimated assuming no expected dividend and the following
weighted-average assumptions for fiscal 2011, 2010 and 2009:



|                         |  |             |      |   |              |  |      |              |  |  |      |  
|------------------------ |  | ----------- | ---- | - | ------------ |  | ---- | ------------ |  |  | ---- | -
|                         |  | Year ended  |     
|                         |  | July 3,2011 |      |   | June 27,2010 |  |      | June 28,2009 | 
|Expected life (in years) |  |             | 5.1  |   |              |  | 4.9  |              |  |  | 3.8  |  
|Risk-free interest rate  |  |             | 1.2  | % |              |  | 1.9  | %            |  |  | 1.7  | %
|Volatility               |  |             | 56.6 | % |              |  | 56.6 | %            |  |  | 52.3 | %

Performance Awards

During fiscal 2007, we granted 0.3 million shares of performance stock options to certain employees. Of this amount, 0.2 million were cancelled due to employee terminations. As of
June 28, 2009, none of the targets for the performance stock options outstanding were expected to be met and all previously recorded compensation expense had been reversed. In the first quarter of fiscal 2010, the options were cancelled.

Restricted Stock Awards

Our restricted stock awards are grants that entitle the holder to acquire shares of restricted common stock with certain designated prices or at no cost on a time or performance basis. The shares of
restricted stock cannot be sold, pledged, or otherwise disposed of until the award vests and any unvested shares may be reacquired by us following the awardees termination of service. The restricted stock awards typically vest on the first,
second or third anniversary of the grant date or on a graded vesting schedule over the designated service period with certain conditions and restrictions.

In fiscal 2011, we repurchased 61,000 shares for an aggregate price of approximately $0.3 million as income tax withholding on vested restricted stock for the recipients.

Employee Stock Purchase Plan

On August 13, 2010, the Board of Directors approved an employee stock purchase plan (the ESPP) and reserved 1.4 million shares for issuance under the ESPP. The ESPP allows eligible
employees to purchase shares of the Companys stock at a discount through payroll deductions. The ESPP consists of six-month offering periods commencing on the first trading day of March and September each year. Employees purchase shares in the
purchase period at 85% of the market value of the Companys common stock at either the beginning of the offering period or the end of the offering period, whichever price is lower. The first six month offering period commenced on March 1,
2011 and ends on August 31, 2011; accordingly no shares were issued under the ESPP in fiscal 2011.

Stock Repurchase
Program

On October 28, 2010, the Companys Board of Directors authorized management to repurchase an additional
1.6 million shares of Symmetricom common stock in addition to the remaining shares available for repurchase under previously approved programs. As of July 3, 2011, the total number of shares available for repurchase under the repurchase
program was approximately 1.6 million.



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During fiscal 2011, we repurchased 1.3 million shares of common stock pursuant to
our repurchase program for an aggregate price of approximately $7.7 million. The repurchased shares were recorded as a reduction of our common stock and resulted in a reduction of stockholders equity.

Preferred Stock

We have 500,000 shares of $0.0001 par value preferred stock authorized, of which 200,000 shares have been reserved for issuance in connection with our preferred stock rights plan. The right entitles the
holder to purchase from the Company one one-thousandth of a share of Series A Participating Preferred Stock at a price of $72.82. The rights were distributed at the rate of one right for each share of common stock as a non-taxable dividend and
exercisable only in the event that a person or group acquires 15% or more of our outstanding common stock. The rights expired in August 2011.

Note 7Commitments

Operating Leases

We lease certain facilities and equipment under operating lease agreements. Net rental expense charged to operations was $3.7 million in 2011, $3.9 million in 2010 and $3.3 million in 2009. Future minimum
lease payments as of July 3, 2011 are as follows:



|                             |  |                 |        | 
|---------------------------- |  | --------------- | ------ | 
|                             |  | Operating Lease |       
|                             |  | (In thousands)  |       
|For the fiscal year:         |  |                 |        | 
|2012                         |  |                 | 4,361  | 
|2013                         |  |                 | 4,303  | 
|2014                         |  |                 | 4,363  | 
|2015                         |  |                 | 4,196  | 
|2016                         |  |                 | 3,005  | 
|Thereafter                   |  |                 | 85     | 
|                             |  |                 |        | 
|Total minimum lease payments |  | $               | 20,313 | 
|                             |  |                 |        | 

Lease loss liabilities were recorded as a result of facility consolidations related to our restructuring
activities and discontinued operations. As of July 3, 2011 and June 27, 2010, the accrued lease loss liabilities were approximately $2.4 million and $5.9 million, respectively. The total of minimal rentals to be received in the future
under non-cancelable subleases as of July 3, 2011 was $1.7 million.

Purchase Orders

We had $29.8 million in non-cancelable purchase commitments with our suppliers as of July 3, 2011.

Note 8Litigation and Contingencies

LitigationThe Company is or was a party to the following material litigations:

Former Texas Facility Environmental Cleanup

We formerly leased a tract of
land in Texas for our operations. Those operations involved the use of solvents and, at the end of the lease, we remediated an area where the solvents had been deposited on the ground and obtained regulatory approval for that remedial
activity. In 1996, an environmental investigation of the property



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detected those same contaminants in groundwater in excess of then current regulatory standards. The groundwater contamination has migrated to some adjacent properties. We have entered
into the Texas Natural Resource Conservation Commissions Voluntary Cleanup Program (the Voluntary Cleanup Program) to obtain regulatory approval for closure of this site and a release from liability to the State of Texas for
subsequent landowners and lenders. We have notified adjacent property owners affected by the contamination of participation in the Voluntary Cleanup Program. On May 20, 2004, we received a demand from the owner of several adjacent lots for
damages in the amount of $1.3 million, as well as seeking an indemnity for the contamination and a promise to remediate the contamination. On March 14, 2006, the adjacent property owner filed suit in Probate Court No. 1,
Travis County, Texas (Anna B. Miller, Individually and as Executrix of the Estate of Robert L. Miller, et al. vs. Austron, Inc., et al.), seeking damages. Symmetricom has not yet been served in this matter, but we intend to
defend this lawsuit vigorously. We are continuing to work on the remediation of the formerly leased site as well as the adjacent properties, and have also taken steps to begin work on the Miller property. As of July 3,
2011, we had an accrual of $50,000 for remediation costs and other ongoing monitoring costs which has been included within other accrued liabilities on our consolidated balance sheet.

Michael E. McNeil, et al. vs. Jason Book, et al.

On or around May 25, 2010, Symmetricom was served with the first amended complaint in the case of Michael E. McNeil, et al. vs. Jason Book, et al. (Case No. CV165643) filed in Santa Cruz County
Superior Court, California. The first amended complaint added Symmetricom and several other parties to the lawsuit, which had been originally filed in 2009 by plaintiffs against their former attorney for legal malpractice in connection with
certain settlement agreements in 1999 between plaintiffs and Datum (a company acquired by Symmetricom) in which they assigned to Datum certain intellectual property rights. The complaint has since been amended for the second time and Symmetricom was
served with the second amended complaint on or around January 7, 2011. The second amended complaint alleges several causes of action, including claims against Symmetricom for contract rescission, breach of contract, conversion and unjust
enrichment, and seeks unspecified monetary damages along with equitable relief. Management believes that this lawsuit has no merit or basis and intends to defend this lawsuit vigorously. Management believes the final outcome of this matter
will not have a material adverse effect on our financial position and results of operations.

General

We are also a party to certain other claims in the normal course of our operations. While the results of these claims cannot be predicted
with any certainty, we believe that the final outcome of these matters will not have a material adverse effect on our consolidated financial position and results of operations.

Under the indemnification provisions of our standard sales contracts, we agree to defend the customer against third party claims
asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets, and to pay for any judgments entered on such claims against the reseller/customer. The exposure to us under these
indemnification provisions is generally limited to the total amount paid by the customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose us to losses in excess of the amount received
under the agreement. To date, there have been no claims under such indemnification provisions. We believe the estimated fair value of these indemnification agreements is not material.

Note 9Restructuring Charges

During 2011, we incurred approximately
$8.1 million (net) in charges for: severance, manufacturing transfer consulting services, lease loss charges, and additional depreciation on leasehold improvements. These expenses included $8.7 million of severance, consulting, additional
depreciation and other charges for our Puerto Rico



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facility closure and $1.7 million of severance, consulting and other charges related to the plan to move the Government business units engineering and manufacturing teams from our Santa
Rosa facility to San Jose and other facilities. The lease loss accrual was reduced by $2.3 million due to re-occupation of a section of our San Jose facility that was previously not used and the sub-lease of a section of our Santa Rosa facility. The
lease loss accruals are subject to periodic revisions based on current market estimates. The balance of these lease loss accruals will be paid over the next five years.

The following tables show the details of the restructuring cost accruals, which consist of facilities and severance costs, for the years ended July 3, 2011 and June 27, 2010:



|                                              |  |                        |       |  |                  |   |        |          |  |   |                        |   |  |   |       | 
|--------------------------------------------- |  | ---------------------- | ----- |  | ---------------- | - | ------ | -------- |  | - | ---------------------- | - |  | - | ----- | 
|                                              |  | Balance atJune 27,2010 |       |  | ExpenseAdditions |   |        | Payments |  |   | Balance atJuly 3,2011  |  
|                                              |  | (in thousands)         |      
|Lease loss accrual (fiscal 2004)              |  | $                      | 198   |  |                  | $ | 1      |          |  | $ | (38                    | ) |  | $ | 161   | 
|All other restructuring changes (fiscal 2004) |  |                        | 85    |  |                  |   | 35     |          |  |   | (70                    | ) |  |   | 50    | 
|Lease loss accrual (fiscal 2009)              |  |                        | 5,330 |  |                  |   | (2,770 | )        |  |   | (763                   | ) |  |   | 1,797 | 
|Additional depreciation charges (fiscal 2009) |  |                        |      |  |                  |   | 945    |          |  |   | (945                   | ) |  |   |      | 
|Lease loss accrual (fiscal 2010)              |  |                        | 304   |  |                  |   | 173    |          |  |   | (477                   | ) |  |   |      | 
|All other restructuring changes (fiscal 2010) |  |                        | 2,604 |  |                  |   | 7,516  |          |  |   | (9,711                 | ) |  |   | 409   | 
|Lease loss accrual (fiscal 2011)              |  |                        |      |  |                  |   | 435    |          |  |   | (32                    | ) |  |   | 403   | 
|All other restructuring changes (fiscal 2011) |  |                        |      |  |                  |   | 1,722  |          |  |   | (743                   | ) |  |   | 979   | 
|                                              |  |                        |       |  |                  |   |        |          |  |   |                        |   |  |   |       | 
|Total                                         |  | $                      | 8,521 |  |                  | $ | 8,057  |          |  | $ | (12,779                | ) |  | $ | 3,799 | 
|                                              |  |                        |       |  |                  |   |        |          |  |   |                        |   |  |   |       | 
|                                              |  |                        |       | 
|                                              |  | Balance atJune 28,2009 |       |  | ExpenseAdditions |   |        | Payments |  |   | Balance atJune 27,2010 |  
|                                              |  | (in thousands)         |      
|Lease loss accrual (fiscal 2004)              |  | $                      | 216   |  |                  | $ | 20     |          |  | $ | (38                    | ) |  | $ | 198   | 
|All other restructuring changes (fiscal 2004) |  |                        | 181   |  |                  |   | 24     |          |  |   | (120                   | ) |  |   | 85    | 
|Lease loss accrual (fiscal 2009)              |  |                        | 2,267 |  |                  |   | 3,867  |          |  |   | (804                   | ) |  |   | 5,330 | 
|Additional depreciation charges (fiscal 2009) |  |                        |      |  |                  |   | 948    |          |  |   | (948                   | ) |  |   |      | 
|All other restructuring changes (fiscal 2009) |  |                        | 2,900 |  |                  |   | 4,962  |          |  |   | (5,258                 | ) |  |   | 2,604 | 
|Lease loss accrual (fiscal 2010)              |  |                        |      |  |                  |   | 470    |          |  |   | (166                   | ) |  |   | 304   | 
|                                              |  |                        |       |  |                  |   |        |          |  |   |                        |   |  |   |       | 
|Total                                         |  | $                      | 5,564 |  |                  | $ | 10,291 |          |  | $ | (7,334                 | ) |  | $ | 8,521 | 
|                                              |  |                        |       |  |                  |   |        |          |  |   |                        |   |  |   |       | 

Over the next twelve months, we expect to incur remaining restructuring charges amounting to $1.6
million, including approximately $1.2 million in lease loss and facility related charges and approximately $0.4 million in one-time termination benefits and other restructuring related charges related to our planned closure of the Santa Rosa
manufacturing and engineering facility.

Note 10Benefit Plans

401(k) Plan

The Company has a 401(k) plan (the Plan) that allows eligible U.S. employees to contribute up to 50 percent of their annual compensation to the Plan, subject to certain limitations. Each
employee directs the investment of the funds across a series of mutual funds. Effective in fiscal 2004, Symmetricom matched up to $0.50 per $1.00 deferred up to 3% of eligible compensation. Employee contributions vest immediately. Employer



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matching contributions vest 25 %, 25% and 50% at end of first, second and third year, respectively. Symmetricom made matching contribution payments of $0.7 million in each fiscal year for
2011, 2010, and 2009 respectively.

Deferred Compensation Plan

The Company has a deferred compensation plan that allows outside directors and certain U.S. employees to contribute up to 100% of their
compensation, provided that their contributions do not reduce their salary to an amount that is less than the amount necessary to pay applicable employment taxes and other withholding obligations. The Board of Directors is authorized to make
discretionary contributions to the accounts of participants. No discretionary contributions were made in fiscal 2011, 2010 and 2009.

Note
11Discontinued Operations

During the third quarter of fiscal 2010, we completed the sale of our video QoE business
to Cheetah Technologies, L.P. (Cheetah). Cheetah acquired the assets related to the QoE product line and hired the remaining QoE employees. The total purchase price was $2.3 million, including $0.4 million held in escrow as of March 28, 2010.
The escrowed funds were subject to forfeiture to satisfy indemnification and other obligations, if any, to Cheetah. The period of escrow for the $0.4 million expired on July 1, 2011 and we recorded a gain of $0.4 million on release of the funds
in fiscal 2011. In fiscal 2010, we recognized a gain on sale of discontinued operations of $0.9 million, net of income taxes. This gain reflected $1.9 million in cash received in the third quarter of fiscal 2010, less transaction costs, the net
carrying value of assets and liabilities transferred, and other related costs, resulting in a $1.4 million gain on sales of discontinued operations, before income taxes. During fiscal year 2010, we also recognized a loss of $1.5 million on the
operating results of QoE during this period. In addition, QoE was no longer shown as a reportable segment within continuing operations and all comparative information from prior periods was updated to reflect this change in fiscal 2010.

Selected financial information related to discontinued operations follows:



|                                                     |  |                |     |  |               |   |        |               |  |   |        |  
|---------------------------------------------------- |  | -------------- | --- |  | ------------- | - | ------ | ------------- |  | - | ------ | -
|                                                     |  | Year Ended     |    
|                                                     |  | July 3, 2011   |     |  | June 27, 2010 |   |        | June 28, 2009 | 
|                                                     |  | (In thousands) |    
|Revenue                                              |  | $              |    |  |               | $ | 691    |               |  | $ | 1,085  |  
|Loss on discontinued operations                      |  |                |    |  |               |   | (1,454 | )             |  |   | (3,184 | )
|Gain on sale of discontinued operations              |  |                | 398 |  |               |   | 1,423  |               |  |   |       |  
|                                                     |  |                |     |  |               |   |        |               |  |   |        |  
|Income (loss) before income taxes                    |  |                | 398 |  |               |   | (31    | )             |  |   | (3,184 | )
|Income tax provision (benefit)                       |  |                | 144 |  |               |   | (11    | )             |  |   | (1,233 | )
|                                                     |  |                |     |  |               |   |        |               |  |   |        |  
|Income (loss) on discontinued operations, net of tax |  | $              | 254 |  |               | $ | (20    | )             |  | $ | (1,951 | )
|                                                     |  |                |     |  |               |   |        |               |  |   |        |  

Note 12Business Segment Information

Symmetricom is organized into two operating segments corresponding to our two divisions: Communications and Government. These two operating segments are our reporting segments. The Chief Operating
Decision Maker (CODM), as defined by authoritative accounting guidance on Segment Reporting, is our President and Chief Executive Officer (CEO). Our CEO allocates resources to and assesses the performance of each operating segment using information
about its revenue and operating income (loss) before interest and taxes.

In fiscal 2011, the Company changed its method of
allocating revenue between its two reporting segments. Such revenue is now allocated based on the nature of the product sold versus the end customer. As a result of this change, the Company has revised the applicable segment financial information of
fiscal 2010 and fiscal 2009 to be presented on a consistent basis.



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With the exception of intangible assets, we do not identify or allocate assets by
operating segment, nor does our CEO evaluate operating segments using discrete asset information. We do not allocate integration and restructuring charges, interest and other income, interest expense, or income taxes to operating segments.

The following describes our two reporting segments:

Communications

Our Communications business supplies timing technologies
and services for worldwide communications infrastructure. Products include primary reference sources, synchronization distribution systems, embedded components and software, and test and measurement equipment, all of which support the timing and
synchronization requirements of communications networks and equipment.

Government

Our Government business provides timing technology products for aerospace/defense, IT infrastructure and science and metrology
applications. Precision time and frequency systems enable a range of critical operations, including the international time scale, global navigation, the management of power grids, synchronization of complex control systems, and signals intelligence
for securing communications in remote and hostile environments.

Segment revenue, gross profit and operating income (loss)
were as follows during the periods presented:

Year ended July 3, 2011



|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|------------------------ |  | -------------- | ------- |  | ---------- | - | ------ | --------- |  | - | ------- | - |  | - | ------- | -
|                         |  | Communications |         |  | Government |   |        | Corporate |  |   | Total   |  
|                         |  | (In thousands) |        
|Net revenue              |  | $              | 119,104 |  |            | $ | 89,042 |           |  | $ |        |   |  | $ | 208,146 |  
|Cost of sales            |  |                | 60,112  |  |            |   | 48,951 |           |  |   | 9,351   |   |  |   | 118,414 |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|Gross profit             |  |                | 58,992  |  |            |   | 40,091 |           |  |   | (9,351  | ) |  |   | 89,732  |  
|Operating expenses       |  |                | 36,302  |  |            |   | 24,251 |           |  |   | 22,048  |   |  |   | 82,601  |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|Operating income (loss)  |  | $              | 22,690  |  |            | $ | 15,840 |           |  | $ | (31,399 | ) |  | $ | 7,131   |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|                         |  |                |         | 
|Year ended June 27, 2010 |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|                         |  | Communications |         |  | Government |   |        | Corporate |  |   | Total   |  
|                         |  | (In thousands) |        
|Net revenue              |  | $              | 139,079 |  |            | $ | 82,237 |           |  | $ |        |   |  | $ | 221,316 |  
|Cost of sales            |  |                | 69,945  |  |            |   | 48,226 |           |  |   | 5,625   |   |  |   | 123,796 |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|Gross profit             |  |                | 69,134  |  |            |   | 34,011 |           |  |   | (5,625  | ) |  |   | 97,520  |  
|Operating expenses       |  |                | 37,137  |  |            |   | 21,366 |           |  |   | 26,888  |   |  |   | 85,391  |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|Operating income (loss)  |  | $              | 31,997  |  |            | $ | 12,645 |           |  | $ | (32,513 | ) |  | $ | 12,129  |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|                         |  |                |         | 
|Year ended June 28, 2009 |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|                         |  | Communications |         |  | Government |   |        | Corporate |  |   | Total   |  
|                         |  | (In thousands) |        
|Net revenue              |  | $              | 138,534 |  |            | $ | 81,212 |           |  | $ |        |   |  | $ | 219,746 |  
|Cost of sales            |  |                | 67,320  |  |            |   | 45,338 |           |  |   | 3,866   |   |  |   | 116,524 |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|Gross profit             |  |                | 71,214  |  |            |   | 35,874 |           |  |   | (3,866  | ) |  |   | 103,222 |  
|Operating expenses       |  |                | 66,548  |  |            |   | 41,011 |           |  |   | 28,376  |   |  |   | 135,935 |  
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  
|Operating income (loss)  |  | $              | 4,666   |  |            | $ | (5,137 | )         |  | $ | (32,242 | ) |  | $ | (32,713 | )
|                         |  |                |         |  |            |   |        |           |  |   |         |   |  |   |         |  



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The information in the Corporate category above represents corporate-related costs that
are not allocated to either of our two segments for the purpose of evaluating their performance. The following table outlines our major corporate-related costs:



|                                          |  |                |        |  |               |   |        |               |  |   |        | 
|----------------------------------------- |  | -------------- | ------ |  | ------------- | - | ------ | ------------- |  | - | ------ | 
|                                          |  | Year ended     |       
|                                          |  | July 3, 2011   |        |  | June 27, 2010 |   |        | June 28, 2009 | 
|                                          |  | (In thousands) |       
|Selling, general and administrative costs |  | $              | 23,342 |  |               | $ | 22,222 |               |  | $ | 22,536 | 
|Restructuring charges                     |  |                | 8,057  |  |               |   | 10,291 |               |  |   | 9,706  | 
|                                          |  |                |        |  |               |   |        |               |  |   |        | 
|Corporate-related total                   |  | $              | 31,399 |  |               | $ | 32,513 |               |  | $ | 32,242 | 
|                                          |  |                |        |  |               |   |        |               |  |   |        | 

Our export sales, based on the location of the customer, accounted for 35%, 33%, and 36%, of our net
revenue in fiscal 2011, 2010, and 2009 respectively. The geographical components of revenue are as follows:



|                  |  |              |    |   |               |  |    |               |  |  |    |  
|----------------- |  | ------------ | -- | - | ------------- |  | -- | ------------- |  |  | -- | -
|                  |  | Year ended   |   
|                  |  | July 3, 2011 |    |   | June 27, 2010 |  |    | June 28, 2009 | 
|United States     |  |              | 65 | % |               |  | 67 | %             |  |  | 64 | %
|International:    |  |              |    |   |               |  |    |               |  |  |    |  
|Asia              |  |              | 11 | % |               |  | 11 | %             |  |  | 10 | %
|Europe            |  |              | 17 | % |               |  | 15 | %             |  |  | 16 | %
|Canada            |  |              | 3  | % |               |  | 2  | %             |  |  | 4  | %
|Latin America     |  |              | 4  | % |               |  | 3  | %             |  |  | 4  | %
|Rest of the world |  |              | 0  | % |               |  | 2  | %             |  |  | 2  | %

With the exception of property, plant and equipment, we do not identify or allocate our long-lived assets
by geographic area. No material amount of property, plant and equipment exists outside the United States.

In fiscal 2011,
2010 and 2009, no customer accounted for 10% or more of our net revenue.



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|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

Not applicable.



|Item 9A. | Controls and Procedures
|-------- | -----------------------

Evaluation of Disclosure Controls and Procedures

Our management, with the
participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the
end of this period, our disclosure controls and procedures are effective (i) in recording, processing, summarizing and reporting information required to be disclosed in the reports that we file or submit under the Exchange Act within the time period
specified by the SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in the Companys internal control over financial reporting that occurred during the quarter ended July 3,
2011 that have affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Managements Report on Internal Control Over Financial Reporting

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of the Companys management, including our principal executive officer and principal financial officer, the Company
conducted an evaluation of the effectiveness of its internal control over financial reporting based on criteria established in the framework in Internal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on this evaluation, the Companys management concluded that its internal control over financial reporting was effective as of July 3, 2011.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of our internal control over financial reporting as of July 3, 2011 has been audited by Deloitte & Touche
LLP, our Independent Registered Public Accounting Firm, as stated in their report dated September 15, 2011.



|Item 9B. | Other Information
|-------- | -----------------

None



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Symmetricom Inc.

San Jose, California

We have audited the internal control over financial reporting of Symmetricom, Inc. and subsidiaries (the Company) as of
July 3, 2011, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Companys management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.

We conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive
and principal financial officers, or persons performing similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override
of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to
the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 3, 2011, based on the criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited,
in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended July 3, 2011 of the Company and our report
dated September 15, 2011 expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph relating to the change in the Companys method for recognizing revenue for
multiple element arrangements.

/s/ Deloitte & Touche LLP

San Jose, California

September 15, 2011



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PART III



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------



|(a) | Executive Officers
|--- | ------------------

See the
section entitled Executive Officers of Symmetricom in Part I of this report.



|(b) | Directors
|--- | ---------

The information
required by this item is incorporated by reference from the information under the caption Election of Directors contained in the Companys Proxy Statement to be filed with the Securities and Exchange Commission (the SEC)
in connection with the solicitation of proxies for the Companys 2011 Annual Meeting of Shareholders to be held on October 28, 2011 (the Proxy Statement).



|(c) | Section 16(a) Beneficial Ownership Reporting Compliance
|--- | -------------------------------------------------------

Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), requires a companys directors, officers and beneficial owners of more than 10% of any class
of equity securities of the company registered pursuant to Section 12 of the Exchange Act to file with the SEC initial reports of beneficial ownership and reports of changes in ownership of Common Stock and other equity securities of
Symmetricom registered pursuant to Section 12 of the Exchange Act. Information regarding Section 16 reporting compliance is contained in the section called Other InformationSection 16(a) Beneficial Ownership Reporting
Compliance in the Proxy Statement and is incorporated herein by reference.



|(d) | Code of Ethics
|--- | --------------

We have adopted
a written code of ethics that applies to all of our employees and to our Board of Directors. A copy of the code is available on our website at http://www.symmetricom.com. If any amendments are made to the Code of Ethics or if any waiver,
including any implicit waiver, from a provision of the Code of Ethics is granted to the Companys Principal Executive Officer, Principal Financial Officer, or Principal Accounting Officer, we intend to disclose the nature of such amendment or
waiver on our website.



|(e) | Corporate Governance
|--- | --------------------

The
information required by this item is incorporated by reference from the information under the captions Election of DirectorsAudit Committee and Election of DirectorsNominating and Governance Committee contained in
the Proxy Statement.



|Item 11. | Executive Compensation
|-------- | ----------------------

The information required by this item is incorporated by reference from the information under the captions Election of DirectorsNominees, Election of DirectorsDirector
Compensation, Executive Compensation and Related Information, Report of the Compensation Committee of the Board of Directors, Employment Contracts, Termination of Employment, Change-in-Control Arrangements
and Certain Relationships and Related Party Transactions contained in the Proxy Statement.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
|-------- | -----------------------------------------------------------------------------------------------

The information required by this item is incorporated by reference from the information under the caption Other
InformationShare Ownership by Principal Stockholders and Management and Securities Authorized for Issuance Under Equity Compensation Plans contained in the Proxy Statement.



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|Item 13. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------

The information required by this item is incorporated by reference from the information under the captions Certain Relationships and
Related Party Transactions and Election of DirectorsThe Board of Directors and its Committees contained in the Proxy Statement.



|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------

The information required by this item is included in Ratification of Appointment of Independent Registered Public Accounting Firm of the Company contained in the Proxy Statement.



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PART IV



|Item 15. | Exhibits and Financial Statement Schedules
|-------- | ------------------------------------------



| | (a) | Financial Statements and Financial Statement Schedules
| | --- | ------------------------------------------------------

1.    Financial Statements.Reference is made to the Index to Consolidated Statements of Symmetricom, Inc. under Item 8 of Part II
hereof.

2.    Financial Statement Schedules.    The following financial
statement schedule of Symmetricom for the years ended July 3, 2011, June 27, 2010, and June 28, 2009 is filed as part of this report on Form 10-K and should be read in conjunction with the financial statements: Schedule
IIValuation and Qualifying Accounts and Reserves. All other schedules have been omitted because they are not applicable, not required, or the required information is included in the Consolidated Financial Statements or notes thereto.

3.    Exhibits.See Item 15(b) below. Each management
contract or compensatory plan or arrangement required to be filed has been identified.



| | (b) | Exhibits
| | --- | --------



|            |  |                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibits                                                                                                                                                                                                                                                                                                                                        
|3.1(i)      |  | Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference from Exhibit 3.1 to the Registrants current report on Form 8-K (file
no. 000-02287) filed January 9, 2002).                                                                                                                                                    
|            | 
|3.1(ii)     |  | Amended and Restated By-Laws of the Registrant (incorporated by reference from Exhibit 99.1 to the Registrants current report on Form 8-K (file no. 000-02287) filed
February 9, 2009).                                                                                                                                                                       
|            | 
|4.1         |  | Form of Common Stock Certificate (incorporated by reference from Exhibit 4.1 to the Registrants annual report on Form 10-K (file no. 000-02287) filed
August 30, 2002).                                                                                                                                                                                       
|            | 
|10.1#       |  | 1999 Director Stock Option Plan, as amended through December 28, 2005, and forms of agreements thereunder (incorporated by reference from Exhibit 99.3 to the
Registrants 1999 proxy statement (file no. 000-02287) filed September 23, 1999 and Exhibit 10.2 to the Registrants quarterly report on Form 10-Q (file no. 000-02287) filed February 13, 2001).
|            | 
|10.2#       |  | Amendment to the Symmetricom, Inc. 1999 Director Stock Option Plan effective December 28, 2005 and form of option agreement thereunder (incorporated by reference from
Exhibits 10.1 and 10.2 to the Registrants quarterly report on Form 10-Q (file no. 000-02287) filed February 8, 2006).                                                                  
|            | 
|10.3#       |  | 1999 Employee Stock Option Plan, as amended through October 23, 2001, and forms of agreements thereunder (incorporated by reference from Exhibit 99.1 to the
Registrants proxy statement (file no. 000-02287) filed September 23, 1999 and Exhibit 10.1 to the Registrants quarterly report on Form 10-Q (file no. 000-02287) filed February 13, 2001).      
|            | 
|10.4#       |  | Amendment to the Symmetricom, Inc. 1999 Employee Stock Option Plan effective May 28, 2003 (incorporated by reference from Exhibit (d)(6) to the Registrants
tender offer statement on Schedule TO (file no. 000-02287) filed May 28, 2003).                                                                                                                   
|            | 
|10.5#       |  | 2002 Stock Option Plan (incorporated by reference from Exhibit 4.1 to Registrants registration statement on Form S-8 (file no. 333-97599) filed August 2,
2002).                                                                                                                                                                                              
|            | 
|10.6        |  | Lease Agreement by and between the Registrant and Nexus Equity, Inc. dated June 10, 1996 (incorporated by reference from Exhibit 10.14 to the Registrants annual
report on Form 10-K (file no. 000-02287) filed September 17, 1996).                                                                                                                          



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.7        |  | First Amendment to Lease by and between the Registrant and Nexus Equity II LLC, as successor in interest to Nexus Equity, Inc., dated November 18, 2005, effective as of
October 27, 2005 (incorporated by reference from Exhibit 10.2 to the Registrants current report on Form 8-K (file no. 000-02287) filed November 22, 2005).                                                                                                                                                                              
|            | 
|10.8        |  | Form of Indemnification Agreement (incorporated by reference from Exhibit 10.6 to the Registrants annual report on Form 10-K (file no. 000-02287) filed
August 30, 2002).                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.9#       |  | Symmetricom, Inc. Deferred Compensation Plan effective October 1, 1999 (incorporated by reference from Exhibit 10.4 to the Registrants quarterly report on
Form 10-Q (file no. 000-02287) filed May 15, 2001).                                                                                                                                                                                                                                                                                                   
|            | 
|10.10#      |  | Amended and Restated Employment and Executive Severance Agreement between the Registrant and Thomas W. Steipp dated October 30, 2008 (incorporated by reference from
Exhibit 10.3 to the Registrants quarterly report on Form 10-Q (file no. 000-02287) filed February 6, 2009).                                                                                                                                                                                                                                 
|            | 
|10.12#      |  | Employment Offer Letter between the Registrant and Justin Spencer dated September 25, 2008 (incorporated by reference from Exhibit 10.1 to the Registrants current report on
Form 8-K (file no. 000-02287) filed October 2, 2008).                                                                                                                                                                                                                                                                               
|            | 
|10.13#      |  | Form of Second Amended and Restated Executive Severance Benefits Agreement between the Registrant and executive officers party to those certain Amended and Restated Executive
Severance Benefits Agreements, dated September 11, 2007 (incorporated by reference from Exhibit 10.1 to the Registrants quarterly report on Form 10-Q (file no. 000-02287) filed February 6, 2009).                                                                                                                               
|            | 
|10.14#      |  | Form of Executive Severance Benefits Agreement between the Registrant and certain executive officers of the Registrant (incorporated by reference from Exhibit 10.1 to the
Registrants quarterly report on Form 10-Q (file no. 000-02287) filed February 5, 2010).                                                                                                                                                                                                                                               
|            | 
|10.15#      |  | Form of Restricted Stock Award Agreement (incorporated by reference from Schedule A to Exhibit (a)(1)(ii) to the Registrants tender offer statement on Schedule
TO (file no. 000-02287) filed May 28, 2003).                                                                                                                                                                                                                                                                                                     
|            | 
|10.16#      |  | Form of Restricted Stock Award Agreement under the Registrants 1999 Employee Stock Option Plan, amended effective August 4, 2005 (incorporated by reference from
Exhibit 10.21 to the Registrants annual report on Form 10-K (file no. 000-02287) filed September 13, 2006).                                                                                                                                                                                                                                    
|            | 
|10.24#      |  | Amended and Restated 2006 Incentive Award Plan (incorporated by reference from the Registrants quarterly report on Form 10-Q (file no. 000-02287) filed November 6, 2008) and
forms of agreements thereunder (incorporated by reference from Exhibit 4.4 to the Registrants registration statement on Form S-8 (file no. 333-155566) filed November 21, 2008).                                                                                                                                                  
|            | 
|10.25#      |  | Employment Offer Letter, dated as of July 17, 2009, by and between the Registrant and David G. Côté (incorporated by reference from Exhibit 10.1 to the
Registrants current report on Form 8-K (file no. 000-02287) filed on July 27, 2009).                                                                                                                                                                                                                                                                     
|            | 
|10.26*      |  | Manufacturing Service Agreement, dated March 12, 2010, by and between the Registrant and Sanmina-SCI Corporation (Sanmina-SCI); Addendum 1 to Manufacturing Service
Agreement, dated September 19, 2009, by and between the Registrant and Sanmina-SCI; Addendum 2 to Manufacturing Service Agreement, dated March 22, 2010, by and between the Registrant and Sanmina-SCI, and Amendment 1 to Addendum 2 to Manufacturing
Service Agreement, dated May 20, 2010, by and between the Registrant and Sanmina-SCI.
|            | 
|10.27#      |  | Symmetricom, Inc. 2010 Employee Stock Purchase plan, as amended and restated as of April 29, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                



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|            |  |                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibits                                                                                                        
|21.1        |  | Subsidiaries of the Registrant.                                                                                                
|            | 
|23.1        |  | Consent of Independent Registered Public Accounting Firm.                                                                      
|            | 
|24.1        |  | Power of Attorney (see signature page to this annual report on Form 10-K).                                                     
|            | 
|31          |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|            | 
|32          |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                       



|# | Management contract or compensatory plan or arrangement
|- | -------------------------------------------------------

|* | Confidential treatment has been granted with respect to certain portions of this agreement.
|- | -------------------------------------------------------------------------------------------



| | (c) | Financial Statement Schedules
| | --- | -----------------------------

See Item 15(a)(2) above.



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SCHEDULE II

SYMMETRICOM, INC.

VALUATION AND QUALIFYING ACCOUNTS

(In thousands)



|                                |  |                            |       |  |                             |   |       |               |  |   |                      |  |  |   |       | 
|------------------------------- |  | -------------------------- | ----- |  | --------------------------- | - | ----- | ------------- |  | - | -------------------- |  |  | - | ----- | 
|                                |  | Balance atBeginningof Year |       |  | Charged toCosts andExpenses |   |       | Deductions(1) |  |   | Balanceat Endof Year | 
|Year ended July 3, 2011:        |  |                            |       |  |                             |   |       |               |  |   |                      |  |  |   |       | 
|Accrued warranty expense        |  | $                          | 2,900 |  |                             | $ | 1,097 |               |  | $ | 2,396                |  |  | $ | 1,601 | 
|Allowance for doubtful accounts |  | $                          | 427   |  |                             | $ | 102   |               |  | $ | 214                  |  |  | $ | 315   | 
|Year ended June 27, 2010:       |  |                            |       |  |                             |   |       |               |  |   |                      |  |  |   |       | 
|Accrued warranty expense        |  | $                          | 3,737 |  |                             | $ | 1,557 |               |  | $ | 2,394                |  |  | $ | 2,900 | 
|Allowance for doubtful accounts |  | $                          | 361   |  |                             | $ | 178   |               |  | $ | 112                  |  |  | $ | 427   | 
|Year ended June 28, 2009:       |  |                            |       |  |                             |   |       |               |  |   |                      |  |  |   |       | 
|Accrued warranty expense        |  | $                          | 3,801 |  |                             | $ | 2,854 |               |  | $ | 2,918                |  |  | $ | 3,737 | 
|Allowance for doubtful accounts |  | $                          | 731   |  |                             | $ | (328  | )             |  | $ | 42                   |  |  | $ | 361   | 



|(1) | Deductions represent costs charged or amounts written off against the reserve or allowance.
|--- | -------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                         |  |     |  |                                                                    
|------------------------ |  | --- |  | -------------------------------------------------------------------
|                         |  |     |  | SYMMETRICOM, INC.                                                  
|                         |  |    
|Date: September 15, 2011 |  | By: |  | /s/    DAVID G.
CÔTÉ                                               
|                         |  |     |  | David G. Côté
Chief Executive Officer (Principal Executive Officer)

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
David G. Côté and Justin R. Spencer, and each of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any amendments to this report on Form 10-K and to
file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause
to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                         |  |                                                                                                                                          |  |                   
|-------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------
|Signatures                                               |  | Title                                                                                                                                    |  | Date              
|                                                         |  |                                                                                                                                         
|/s/    DAVID G.
CÔTÉ David G.
Côté                       |  | Chief Executive Officer (Principal Executive Officer) and Director                                                                       |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    JUSTIN R.
SPENCER Justin R. Spencer               |  | Executive Vice President Finance and Administration, Chief Financial Officer, and Secretary (Principal Financial and Accounting
Officer) |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    ROBERT T.
CLARKSON Robert T. Clarkson             |  | Chairman of the Board                                                                                                                    |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    ALFRED
BOSCHULTE Alfred Boschulte                 |  | Director                                                                                                                                 |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    JAMES
CHIDDIX James Chiddix                       |  | Director                                                                                                                                 |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    ELIZABETH A.
FETTER Elizabeth A. Fetter           |  | Director                                                                                                                                 |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    ROBERT M. NEUMEISTER
JR. Robert M. Neumeister Jr. |  | Director                                                                                                                                 |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    RICHARD W.
OLIVER Richard W. Oliver               |  | Director                                                                                                                                 |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    RICHARD N.
SNYDER Richard N. Snyder               |  | Director                                                                                                                                 |  | September 15, 2011
|                                                         |  |                                                                                                                                         
|/s/    ROBERT J.
STANZIONE Robert J. Stanzione           |  | Director                                                                                                                                 |  | September 15, 2011



82