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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    October 3, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file number:
    000-24923
  CONEXANT SYSTEMS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State of
    incorporation)

25-1799439(I.R.S. Employer
    Identification No.)4000 MacArthur Boulevard
    Newport Beach, California(Address of principal
    executive offices)

92660-3095(Zip code)   Registrants telephone number, including area code:(949) 483-4600
 Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class:

Name of Each Exchange on Which Registered:Common Stock, $0.01 Par Value Per Share
    (including associated Preferred Share Purchase Rights)

The Nasdaq Stock Market, LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    Documents
    Incorporated by Reference
  Form 10-K.




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FORWARD-LOOKING
    STATEMENTS
    
    continued demand and future growth in demand for our products in
    the communications, PC and consumer markets we serve;
    our product development plans;
    expectations regarding the market share of our products, growth
    in the markets we serve and our market opportunities;
    expectations regarding price and product competition;
    our plans and expectations regarding the transition of our
    semiconductor products to smaller line width geometries;
    our expectation that our largest customers will continue to
    account for a substantial portion of our revenue;
    expectations regarding our income tax provision;
    expectations regarding our contractual obligations and
    commitments; and
    our beliefs regarding the sufficiency of our existing sources of
    liquidity and cash to fund our operations, research and
    development, anticipated capital expenditures and our working
    capital needs and that we will be able to repatriate cash from
    our foreign operations on a timely and cost effective basis.
    expectations that we will have sufficient capital needed to
    remain in business and repay our indebtedness as it becomes due;
    expectation that we will be able to meet our lease obligations
    (and other financial commitments);
    expectation that we will be able to continue to meet NASDAQ
    listing requirements;
    expectation that we will be able to protect our products and
    services with proprietary technology and intellectual property
    protection;
    expectation that we will be able to continue to rely on third
    party manufacturers to manufacture, assemble and test our
    products to meet our customers demands;  Form 10-K,
 1




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##### 



CONEXANT
    SYSTEMS, INC.
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


21Item 2.


Properties


21Item 3.


Legal Proceedings


22Item 4.


Submission of Matters to a Vote of Security
    Holders


22PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


23Item 6.


Selected Financial Data


25Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


27Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


43Item 8.


Financial Statements and Supplementary Data


45Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


94Item 9A.


Controls and Procedures


94PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


96Item 11.


Executive Compensation


96Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


96Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


96Item 14.


Principal Accountant Fees and Services


96PART IVItem 15.


Exhibits and Financial Statement Schedules


97Exhibit 10.24.5EX-12EX-21EX-23EX-24EX-31.1EX-31.2EX-32   2




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PART I  Item 1.
    Business  General
  dial-up
  949-483-4600. sm
    Divestiture:
  
    On August 11, 2008, we completed the sale of certain assets
    related to our Broadband Media Processing (BMP) business to NXP
    B.V. (NXP) for an aggregate of approximately $110 million,
    of which $11 million was deposited into an escrow account.
    The escrow account will remain in place for 12 months
    following the closing to satisfy potential indemnification
    claims by NXP. We may also receive up to $35 million of
    additional cash consideration contingent on the achievement of
    certain financial milestones through the end of the 2009
    calendar year.    Strategy
    
    Employ a market-focused business model allowing us to
    concentrate our resources on large and growing targeted markets; 3




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
    Expand strategic relationships with industry-leading OEMs/ODMs
    and maximize design wins and
    share-of-wallet
    (SOW);
    Focus our product portfolio on our key technologies and
    competencies which include digital signal processing (DSP),
    analog and mixed-signal (AMS),
    system-on-a-chip
    (SoC), and software/firmware to enable our customers
    applications;
    Capitalize on the depth of our global engineering talent to
    create innovative solutions that provide enhanced functionality
    and accelerate the adoption of our products by being in close
    geographic proximity to our customers;
    Operate as a fabless semiconductor company, which allows us to
    focus our resources on designing, developing and marketing our
    products, while minimizing operating infrastructure costs and
    capital expenditures; and
    Enter targeted markets with compelling solutions combining
    silicon and software that will reduce the
    time-to-market
    for our customers.  Market
    Focused Product Lines
    Imaging
    and PC Media Products
  point-of-sale
  dial-up
  PC-type
   4




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Class-D Class-D speakers-on-a-chip
    bill-of-material
    Broadband
    Access Products
    end-to-end, end-to-end
 5




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voice-over-IP time-to-market
  time-to-market.
      fiber-to-the-neighborhood
    Research
    and Development
       6




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Manufacturing
        Quality
    and Reliability
  9001-2000
      
    determine the quality, reliability and performance objectives
    for new products;
    provide program/project management, resource identification and
    facilities;
    ensure verification and validation activities;
    provide criteria for acceptability; and
    clearly define records that are necessary to provide confidence
    of conformity of the processes and resulting product to our
    quality system requirements.    Customers,
    Marketing and Sales
   7




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Fiscal Year Ended2008


2007


2006Americas


7
%


6
%


6
%China


63
%


62
%


55
%Asia-Pacific


25
%


27
%


33
%Europe, Middle East and Africa


5
%


5
%


6
%100
%


100
%


100
%       Backlog
    Competition
      Intellectual
    Property and Proprietary Rights
   8




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Environmental
    Regulation
    Employees
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K Form 10-K.
  Item 1A.
    Risk
    Factors      We
    operate in the highly cyclical semiconductor industry, which is
    subject to significant downturns that may negatively impact our
    business, financial condition, cash flow and results of
    operations.
   9




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We
    face a risk that capital needed for our business and to repay
    our debt obligations will not be available when we need
    it.
    364-day
      We are
    subject to intense competition.
   10




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
    time-to-market;
    product quality, reliability and performance;
    level of integration;
    price and total system cost;
    compliance with industry standards;
    design and engineering capabilities;
    strategic relationships with customers;
    customer support;
    new product innovation; and
    access to manufacturing capacity.      Our
    operating and financing flexibility is limited by the terms of
    our senior notes and our credit facility.
    We own
    or lease a significant amount of space in which we do not
    conduct operations and doing so exposes us to the financial
    risks of default by our tenants and subtenants.
   11




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If we
    fail to continue to meet all applicable continued listing
    requirements of The NASDAQ Global Market and NASDAQ determines
    to delist our common stock, the market liquidity and market
    price of our common stock could decline.
    Our
    success depends on our ability to timely develop competitive new
    products and reduce costs.
    
    anticipate customer and market requirements and changes in
    technology and industry standards;
    accurately define new products;
    complete development of new products and bring our products to
    market on a timely basis;
    differentiate our products from offerings of our competitors;
    achieve overall market acceptance of our products; 12




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
    coordinate product development efforts between and among our
    sites, particularly in India and China, to manage the
    development of products at remote geographic locations.      Our
    revenues, cash flow from operations and results of operations
    have fluctuated in the past and may fluctuate in the future,
    particularly given adverse domestic and global economic
    conditions.
    
    changes in end-user demand for the products manufactured and
    sold by our customers;
    the timing of receipt, reduction or cancellation of significant
    orders by customers;
    adverse economic conditions, including the unavailability or
    high cost of credit to our customers;
    the inability of our customers to forecast demand based on
    adverse economic conditions;
    seasonal customer demand;
    the gain or loss of significant customers;
    market acceptance of our products and our customers
    products;
    our ability to develop, introduce and market new products and
    technologies on a timely basis;
    the timing and extent of product development costs;
    new product and technology introductions by competitors;
    changes in the mix of products we develop and sell;
    fluctuations in manufacturing yields;
    availability and cost of products from our suppliers;
    intellectual property disputes; and
    the effect of competitive pricing pressures, including decreases
    in average selling prices of our products.    We
    have recently incurred substantial losses and may incur
    additional future losses.
   13




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We
    have significant goodwill and intangible assets, and future
    impairment of our goodwill and intangible assets could have a
    material negative impact on our financial condition and results
    of operations.
    The
    loss of a key customer could seriously impact our revenue levels
    and harm our business. In addition, if we are unable to continue
    to sell existing and new products to our key customers in
    significant quantities or to attract new significant customers,
    our future operating results could be adversely
    affected.
      
    most of our customers can stop incorporating our products into
    their own products with limited notice to us and suffer little
    or no penalty;
    our agreements with our customers typically do not require them
    to purchase a minimum quantity of our products;
    many of our customers have pre-existing or concurrent
    relationships with our current or potential competitors that may
    affect the customers decisions to purchase our products;
    our customers face intense competition from other manufacturers
    that do not use our products; and
    some of our customers offer or may offer products that compete
    with our products.
    some of our customers liquidity may be negatively affected
    by the recent domestic and global credit crisis   14




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We are
    subject to the risks of doing business
    internationally.
    
    difficulty in obtaining distribution and support;
    limitations on our ability under local laws to protect our
    intellectual property;
    currency exchange rate fluctuations;
    local economic and political conditions;
    disruptions of commerce and capital or trading markets due to or
    related to terrorist activity or armed conflict;
    restrictive governmental actions, such as restrictions on the
    transfer or repatriation of funds and trade protection measures,
    including export duties and quotas and customs duties and
    tariffs;
    changes in legal or regulatory requirements;
    the laws and policies of the United States and other countries
    affecting trade, foreign investment and loans, and import or
    export licensing requirements; and
    tax laws, including the cost of services provided and products
    sold between us and our subsidiaries which are subject to review
    by taxing authorities.       15




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We may
    not be able to keep abreast of the rapid technological changes
    in our markets.
    
    rapid technological developments;
    rapid changes in customer requirements;
    frequent new product introductions and enhancements;
    short product life cycles with declining prices over the life
    cycle of the products; and
    evolving industry standards.    We may
    be subject to claims of infringement of third-party intellectual
    property rights or demands that we license third-party
    technology, which could result in significant expense and loss
    of our ability to use, make, sell, export or import our products
    or one or more components comprising our products.
    
    pay substantial damages;
    cease the manufacture, use or sale of infringing products,
    processes or technologies;
    discontinue the use of infringing technology;
    expend significant resources to develop non-infringing
    technology; or
    license technology from the third party claiming infringement,
    which license may not be available on commercially reasonable
    terms, or at all. 16




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If
    OEMs of communications electronics products do not design our
    products into their equipment, we will be unable to sell those
    products. Moreover, a design win from a customer does not
    guarantee future sales to that customer.
    Because
    of the lengthy sales cycles of many of our products, we may
    incur significant expenses before we generate any revenues
    related to those products.
    Uncertainties
    involving the ordering and shipment of our products could
    adversely affect our business.
    We are
    dependent upon third parties for the manufacture, assembly and
    test of our products.
   17




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start-up
  We may
    experience difficulties in transitioning to smaller geometry
    process technologies or in achieving higher levels of design
    integration, which may result in reduced manufacturing yields,
    delays in product deliveries, increased expenses and loss of
    design wins to our competitors.
  product-by-product
 18




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If we
    are not successful in protecting our intellectual property
    rights, it may harm our ability to compete.
    
    the steps we take to prevent misappropriation or infringement of
    our intellectual property or the intellectual property of our
    customers will be successful;
    any existing or future patents will not be challenged,
    invalidated or circumvented; or
    any of the measures described above would provide meaningful
    protection.    Uncertainties
    involving litigation could adversely affect our
    business.
    Our
    success depends, in part, on our ability to effect suitable
    investments, alliances, acquisitions and where appropriate,
    divestitures and restructurings.
      
    large initial one-time write-offs of in-process research and
    development;
    the incurrence of substantial debt and assumption of unknown
    liabilities;
    the potential loss of key employees from the acquired company;
    amortization expenses related to intangible assets; and
    the diversion of managements attention from other business
    concerns.   19




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We are
    required to use proceeds of certain asset dispositions to offer
    to repurchase our Floating Rate Senior Secured Notes due
    November 2010 if we do not use the proceeds within 360 days
    to invest in assets (other than current assets), and this
    requirement limits our ability to use asset sale proceeds to
    fund our operations.
    The
    value of our common stock may be adversely affected by market
    volatility and other factors.
    
    our operating and financial performance and prospects;
    our ability to repay our debt;
    the depth and liquidity of the market for our common stock;
    investor perception of us and the industry and markets in which
    we operate;
    our inclusion in, or removal from, any equity market indices;
    the level of research coverage of our common stock;
    changes in earnings estimates or buy/sell recommendations by
    analysts;
    judgments favorable or adverse to us; and
    general financial, domestic, international, economic and other
    market conditions  We may
    not be able to attract and retain qualified management,
    technical and other personnel necessary for the design,
    development and sale of our products. Our success could be
    negatively affected if key personnel leave.
   20




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We
    currently operate under tax holidays and favorable tax
    incentives in certain foreign jurisdictions.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Leased Square


Owned SquareFootage


Footage


TotalUnited States:Newport Beach, California


142



67



209Red Bank, New Jersey


100







100Other


57







57299



67



366India


95







95China


72







72Other Asia


41







41Europe


13







13520



67



587   sub-leased sub-leased
  and/or
   21




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Item 3.
    Legal
    Proceedings  IPO Litigation
  Class Action Suit Graden v. Conexant, et al.
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   22




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  intra-day
  High


LowFiscal year ended October 3, 2008:Fourth quarter

$
6.48


$
2.68Third quarter


6.60



4.30Second quarter


9.00



3.50First quarter


14.80



8.20Fiscal year ended September 28, 2007:Fourth quarter

$
15.70


$
10.50Third quarter


16.80



12.30Second quarter


22.00



16.10First quarter


23.60



17.10      23




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Shareowner
    Return Performance Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among Conexant Systems, Inc., The S&P 500 Index
    And The NASDAQ Electronic Components Index
  
  9/03



9/04



9/05



9/06



9/07



9/08Conexant Systems, Inc.



100.00




28.27




31.63




35.34




21.20




7.08S&P 500



100.00




113.87




127.82




141.62




164.90




128.66NASDAQ Electronic Components



100.00




80.82




97.22




93.26




114.21




79.72   *
    
    $100 invested on 9/30/03 in stock & index-including
    reinvestment of dividends. Fiscal year ending September 30.  ©
 24




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Item 6.
    Selected
    Financial Data      Fiscal Year Ended2008


2007


2006


2005


2004(In thousands, except per share amounts)Statement of Operations Data:Net revenues

$
502,660


$
573,576


$
753,227


$
620,342


$
772,772Cost of goods sold(1)(2)


233,779



295,464



397,789



427,104



440,079Gain on cancellation of supply agreement(3)










(17,500
)






Gross margin


268,881



278,112



372,938



193,238



332,693Operating expenses:Research and development(2)


125,162



173,520



189,071



209,849



192,768Selling, general and administrative(2)


86,146



91,429



119,000



106,618



114,902Amortization of intangible assets


15,514



21,259



29,865



31,184



19,559In-process research and development(4)


















160,818Asset impairments(5)


120,769



226,113



85



3,761



Special charges(6)


17,631



30,397



73,159



42,216



32,801Total operating expenses


365,222



542,718



411,180



393,628



520,848Operating loss


(96,341
)


(264,606
)


(38,242
)


(200,390
)


(188,155
)Interest expense


31,598



40,783



34,377



29,935



26,952Other income (expense), net


(3,809
)


36,148



(14,472
)


106,055



(83,522
)Loss before income taxes and gain (loss) on equity method
    investments


(131,748
)


(269,241
)


(87,091
)


(124,270
)


(298,629
)Provision for income taxes(7)


4,418



3,131



1,811



1,919



243,227Loss from continuing operations before gain (loss) on equity
    method investments


(136,166
)


(272,372
)


(88,902
)


(126,189
)


(541,856
)Gain (loss) on equity method investments


2,804



51,182



(8,164
)


(10,642
)


14,422Loss from continuing operations


(133,362
)


(221,190
)


(97,066
)


(136,831
)


(527,434
)Gain on sale of discontinued operations(8)


6,268















Loss from discontinued operations(8)


(173,082
)


(181,272
)


(25,525
)


(39,159
)


(17,215
)Net loss

$
(300,176
)

$
(402,462
)

$
(122,591
)

$
(175,990
)

$
(544,649
)Loss from continuing operations per share  basic and
    diluted

$
(2.70
)

$
(4.52
)

$
(2.03
)

$
(2.91
)

$
(13.54
)Gain on sale of discontinued operations

$
0.13


$



$



$



$
Loss from discontinued operations per share  basic
    and diluted

$
(3.51
)

$
(3.70
)

$
(0.53
)

$
(0.83
)

$
(0.44
)Net loss per share  basic and diluted

$
(6.08
)

$
(8.22
)

$
(2.56
)

$
(3.74
)

$
(13.98
)Balance Sheet Data at Fiscal Year End:Working capital(9)

$
104,564


$
93,394


$
89,640


$
142,796


$
444,272Total assets


446,403



985,969



1,573,625



1,581,524



1,880,522Short-term debt


40,117



80,000



80,000







Current portion of long-term debt(10)


17,707



58,000



188,375



196,825



Long-term obligations(10)


431,045



523,422



601,189



615,947



790,178Shareholders (deficit) equity


(136,734
)


146,515



510,098



569,093



828,387     (1)
    
    In fiscal 2005, in response to lower market prices and reduced
    end-customer demand for our products, we recorded
    $44.1 million of inventory charges to establish additional
    excess and obsolete inventory reserves and lower of cost or
    market inventory reserves. 25




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(2)
    
    We adopted Statement of Financial Accounting Standards (SFAS)
    No. 123(R), Share-Based Payment, on
    October 1, 2005. As a result, stock-based compensation
    expense included within cost of goods sold, research and
    development expense, and selling, general and administrative
    expense in fiscal 2008, 2007 and 2006 is based on the fair value
    of all stock options, stock awards and employee stock purchase
    plan shares. Stock-based compensation expense for earlier
    periods is based on the intrinsic value of acquired or exchanged
    unvested stock options in business combinations, which is in
    accordance with previous accounting standards. Non-cash employee
    stock-based compensation expense included in our consolidated
    statements of operations was as follows (in thousands):  Fiscal Year Ended2008


2007


2006


2005


2004Cost of goods sold

$
303


$
473


$
494


$



$
Research and development


4,363



8,070



18,829



9,001



5,298Selling, general and administrative


9,819



8,021



23,290



2,976



1,773   (3)
    
    In fiscal 2006, Conexant and Jazz Semiconductor, Inc. (Jazz)
    terminated a wafer supply and services agreement. In lieu of
    credits towards future purchases of product from Jazz, we
    received additional shares of Jazz common stock and recorded a
    gain of $17.5 million.(4)
    
    In fiscal 2004, we recorded $160.8 million of in-process
    research and development expenses related to the merger with
    GlobespanVirata, Inc.(5)
    
    In fiscal 2008, we recorded $108.8 million of goodwill
    impairment charges, $1.9 million of intangible impairment
    charges, $6.5 million related to property, plant and
    equipment impairment charges and $3.4 million of electronic
    design automation tools impairment charges as a result of the
    current challenges in the DSL market rendering the net book
    value of certain assets within the BBA business unit not
    considered fully recoverable. In fiscal 2007, we recorded
    $184.7 million of goodwill impairment charges,
    $30.3 million of intangible impairment charges and
    $6.1 million of property, plant and equipment impairment
    charges associated with our Embedded Wireless Network product
    lines.(6)
    
    Special charges include the following related to the settlement
    of legal matters and restructuring charges (in thousands):  Fiscal Year Ended2008


2007


2006


2005


2004Legal settlements

$



$
20,047


$
70,000


$
3,255


$
3,000Restructuring charges


12,366



9,909



3,259



28,049



9,264   (7)
    
    In fiscal 2004, we recorded a $255.7 million charge to
    increase the valuation allowance for our deferred tax assets.(8)
    
    As a result of our decision to sell certain assets and
    liabilities of the BMP business unit in fiscal 2008, the results
    and the gain on sale of the BMP business are reported as
    discontinued operations for all periods presented.(9)
    
    Working capital is defined as current assets minus current
    liabilities.Beginning in March 2006, we consider our
    available-for-sale
    portfolio as available for use in our current operations.
    Accordingly, from that date we have classified all marketable
    securities as short-term, even though the stated maturity dates
    may be more than one year beyond the current balance sheet date.
    Prior to March 2006, short-term marketable securities
    consisted of debt securities with remaining maturity dates of
    one year or less and equity securities of publicly-traded
    companies, and long-term marketable securities consisted of debt
    securities with remaining maturity dates of greater than one
    year. For periods prior to March 2006, long-term marketable
    securities are excluded from the calculation of working capital.Beginning in March 2006, we reclassified the long-term portion
    of our restructuring accruals, principally consisting of future
    rental commitments under operating leases, from current
    liabilities to other long-term liabilities on our consolidated
    balance sheet. The long-term portion of restructuring accruals
    for all prior periods have been similarly reclassified. These
    reclassifications did not affect our total assets, total
    liabilities, 26




---



##### Table of Contents



total shareholders equity, results of operations or cash
    flows and did not have a material impact on current liabilities,
    long-term liabilities or the calculation of working capital for
    any period presented.In November 2006, we issued $275.0 million aggregate
    principal amount of floating rate senior secured notes due
    November 2010. Proceeds from this issuance, net of fees, were
    approximately $268.1 million. We used the net proceeds of
    this offering, together with available cash, cash equivalents
    and marketable securities on hand, to retire our outstanding
    $456.5 million aggregate principal amount of convertible
    subordinated notes in February 2007. Because the net proceeds
    from this offering were used to repay at maturity a portion of
    the convertible subordinated notes due February 2007,
    $268.1 million of the $456.5 million convertible
    subordinated notes has been reclassified as long-term debt on
    our consolidated balance sheet as of September 29, 2006, in
    accordance with SFAS No. 6, Classification of
    Short-Term Obligations Expected to Be Refinanced.(10)
    
    As discussed in note (9) above, $268.1 million of the
    $456.5 million convertible subordinated notes due February
    2007 were reclassified as long-term debt on our consolidated
    balance sheet as of September 29, 2006, in accordance with
    SFAS No. 6, Classification of Short-Term
    Obligations Expected to Be Refinanced.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  You should read the following discussion and analysis in
    conjunction with our Consolidated Financial Statements and
    related Notes thereto included in Part II, Item 8 of
    this Report and the Risk Factors included in Part I,
    Item 1A of this report, as well as other cautionary
    statements and risks described elsewhere in this report
  Overview
  dial-up
    Business
    Enterprise Segments
      
    the nature of products and services;
    the nature of the production processes;
    the type or class of customer for their products and
    services; and
    the methods used to distribute their products or provide their
    services. 27




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##### Table of Contents




    the sale of semiconductor products is the only material source
    of revenue for each of our two operating segments;
    the products sold by each of our operating segments use the same
    standard manufacturing process;
    the products marketed by each of our operating segments are sold
    to similar customers; and
    all of our products are sold through our internal sales force
    and common distributors.        Fiscal Year Ended2008


2007


2006Imaging and PC Media

$
276,942


$
311,275


$
397,635Broadband Access Products


225,718



262,301



355,592$
502,660


$
573,576


$
753,227   Results
    of Operations
  Net
    Revenues
       28




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##### Table of Contents



Gross
    Margin
          Fiscal Year Ended2008


2007E&O reserves, beginning of period

$
17,139


$
32,245Additions


8,369



6,834Release upon sales of product


(2,750
)


(9,671
)Scrap


(5,079
)


(12,413
)Standards adjustments and other


(100
)


144E&O reserves, end of period

$
17,579


$
17,139  29




---



##### Table of Contents



Research
    and Development
        Selling,
    General and Administrative
       30




---



##### Table of Contents



Amortization
    of Intangible Assets
        Asset
    Impairments
      Special
    Charges
  Fiscal Year Ended2008


2007


2006(In thousands)Litigation charges

$



$
20,047


$
70,000Restructuring charges


12,366



9,909



3,259Voluntary Early Retirement Plan (VERP) settlement
    charge


6,294







Other special charges


(1,029
)


441



(100
)$
17,631


$
30,397


$
73,159      31




---



##### Table of Contents



Interest
    Expense
      Other
    Income (Expense), Net
  Fiscal Year Ended2008


2007


2006(In thousands)Investment and interest income

$
7,237


$
13,833


$
17,921Decrease in the fair value of derivative instruments


(14,974
)


(952
)


(16,666
)Impairment of equity securities










(19,872
)Loss on rental property


(1,435
)






Gain on sale of property


5,414







Gains on investments in equity securities


896



17,016



4,414Other


(947
)


6,251



(269
)$
(3,809
)

$
36,148


$
(14,472
)       other-than-temporary
  Provision
    for Income Taxes
   32




---



##### Table of Contents



Gain
    (Loss) on Equity Method Investments
     33




---



##### Table of Contents



Liquidity
    and Capital Resources
            364-day
   34




---



##### Table of Contents



Fiscal Year Ended2008


2007


2006Net cash used in operating activities

$
(18,350
)

$
(11,851
)

$
(68,325
)Net cash provided by investing activities


63,515



205,179



2,647Net cash (used in) provided by financing activities


(174,887
)


(183,349
)


88,600Net (decrease) increase in cash and cash equivalents

$
(129,722
)

$
9,979


$
22,922          35




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##### Table of Contents



Contractual
    Obligations and Commitments
    Payments Due by PeriodLess than











More thanTotal


1 Year


1 Year


2 Years


3-5 Years


5 Years(In thousands)Long-term debt

$
391,400


$
17,707


$



$
373,693


$



$
Short-term debt


40,117



40,117















Interest on debt


43,613



19,571



18,107



5,935







Operating leases


127,700



23,004



20,385



15,379



25,447



43,485Purchase commitments


31,589



23,409



2,732



2,724



2,724



$
634,419


$
123,808


$
41,224


$
397,731


$
26,075


$
43,485         Off-Balance
    Sheet Arrangements
   36




---



##### Table of Contents



Special
    Purpose Entities
      Recent
    Accounting Pronouncements
  FAS 157-2 FAS 157-2) FAS 157-
       37




---



##### Table of Contents



FAS 142-3, (FSP 142-3). FSP 142-3 FSP 142-3 FSP 142-3
  14-1, 14-1). 14-1 14-1 14-1
  EITF 03-6-1, EITF 03-6-1). EITF 03-6-1 states EITF 03-6, EITF 03-6-1, EITF 03-6-1 EITF 03-6-1
  Critical
    Accounting Policies
   38




---



##### Table of Contents



Business
    combinations
    Revenue
    recognition
         39




---



##### Table of Contents



Allowance
    for doubtful accounts
    Inventories
    Long-lived
    assets
  and/or
  Goodwill
   40




---



##### Table of Contents



Income
    Taxes
  Accounting for Income
    Taxes,
  Accounting for Uncertainty in Income
    Taxes  An Interpretation of FASB Statement
    No. 109
  Accounting for
    Contingencies
  Deferred
    income taxes
    Valuation
    of warrants
    Valuation
    of equity securities
  other-than-temporary
 41




---



##### Table of Contents



other-than-temporary,
  Stock-based
    compensation
      catch-up
      No. SFAS 123R-3, Transition Election Related to Accounting for Tax Effects of
    Share-Based Payment Awards SFAS 123R-3.
 42




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##### Table of Contents



SFAS 123R-3 Intraperiod Tax Allocation of the Tax Effect of Pretax Income
    from Continuing Operations
  Restructuring
    charges
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk        364-day 7-day 7-day
   43




---



##### Table of Contents



Carrying Value


Fair Value(In thousands)Cash and cash equivalents

$
105,883


$
105,883Mindspeed warrant


545



545Short-term debt


40,117



40,117Long-term debt: senior secured notes


141,400



143,168Long-term debt: convertible subordinated notes


250,000



161,250    44




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  October 3,


September 28,2008


2007(In thousands, except par value)ASSETSCurrent assets:Cash and cash equivalents

$
105,883


$
234,147Restricted cash


26,800



8,800Receivables, net of allowances of $834 and $1,659, respectively


48,997



80,856Inventories, net


36,439



42,007Other current assets


38,537



18,131Current assets held for sale






250,451Total current assets


256,656



634,392Property, plant and equipment, net


24,912



46,676Goodwill


110,412



214,635Intangible assets, net


14,971



24,597Other assets


39,452



65,669Total assets

$
446,403


$
985,969LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
17,707


$
58,000Short-term debt


40,117



80,000Accounts payable


34,894



80,571Accrued compensation and benefits


14,989



23,191Other current liabilities


44,385



70,345Current liabilities to be assumed






3,925Total current liabilities


152,092



316,032Long-term debt


373,693



467,000Other liabilities


57,352



56,422Total liabilities


583,137



839,454Commitments and contingencies (Note 7)Shareholders (deficit) equity:Preferred and junior preferred stock






Common stock, $0.01 par value: 100,000 shares
    authorized; 49,601 and 49,236 shares issued and outstanding


496



493Additional paid-in capital


4,744,140



4,725,729Accumulated deficit


(4,879,208
)


(4,578,219
)Accumulated other comprehensive loss


(2,083
)


(1,385
)Shareholder notes receivable


(79
)


(103
)Total shareholders (deficit) equity


(136,734
)


146,515Total liabilities and shareholders (deficit) equity

$
446,403


$
985,969    45




---



##### Table of Contents



CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Fiscal Year EndedOctober 3,


September 28,


September 29,2008


2007


2006(In thousands, except per share amounts)Net revenues

$
502,660


$
573,576


$
753,227Cost of goods sold(1)


233,779



295,464



397,789Gain on cancellation of supply agreement










(17,500
)Gross margin


268,881



278,112



372,938Operating expenses:Research and development(1)


125,162



173,520



189,071Selling, general and administrative(1)


86,146



91,429



119,000Amortization of intangible assets


15,514



21,259



29,865Asset impairments


120,769



226,113



85Special charges


17,631



30,397



73,159Total operating expenses


365,222



542,718



411,180Operating loss


(96,341
)


(264,606
)


(38,242
)Interest expense


31,598



40,783



34,377Other expense (income), net


3,809



(36,148
)


14,472Loss from continuing operations before income taxes and gain
    (loss) on equity method investments


(131,748
)


(269,241
)


(87,091
)Provision for income taxes


4,418



3,131



1,811Loss from continuing operations before gain (loss) on equity
    method investments


(136,166
)


(272,372
)


(88,902
)Gain (loss) on equity method investments


2,804



51,182



(8,164
)Loss from continuing operations


(133,362
)


(221,190
)


(97,066
)Gain on sale of discontinued operations, net of tax


6,268







Loss from discontinued operations, net of tax


(173,082
)


(181,272
)


(25,525
)Net loss

$
(300,176
)

$
(402,462
)

$
(122,591
)Loss per share from continuing operations  basic and
    diluted

$
(2.70
)

$
(4.52
)

$
(2.03
)Gain per share from sale of discontinued operations 
    basic and diluted

$
0.13


$



$
Loss per share from discontinued operations  basic
    and diluted

$
(3.51
)

$
(3.70
)

$
(0.53
)Net loss per share  basic and diluted

$
(6.08
)

$
(8.22
)

$
(2.56
)Shares used in basic and diluted per-share computations


49,394



48,940



47,933     (1)
    
    These captions include non-cash employee stock-based
    compensation expense as follows (see Note 8):  Fiscal Year EndedOctober 3,

September 28,

September 29,2008

2007

2006Cost of goods sold

$
303


$
473


$
494Research and development


4,363



8,070



18,829Selling, general and administrative


9,819



8,021



23,290    46




---



##### Table of Contents



CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Fiscal Year EndedOctober 3,


September 28,


September 29,2008


2007


2006(In thousands)Cash flows from operating activitiesNet loss

$
(300,176
)

$
(402,462
)

$
(122,591
)Adjustments to reconcile net loss to net cash used in operating
    activities, net of effects of acquisitions:Depreciation


19,311



25,091



19,670Amortization of intangible assets


16,144



22,099



30,705Asset impairments


263,535



350,913



Gain on sale of business


(6,268
)






Loss on termination of defined benefit plan


6,294







Impairment of marketable and non-marketable securities










20,286(Reversal of) provision for bad debts, net


(751
)


20



(2,192
)Charges for (reversal of) inventory provisions, net


7,253



(606
)


(1,884
)Deferred income taxes


(39
)


231



(792
)Stock-based compensation


15,869



19,751



44,945Decrease in fair value of derivative instruments


14,881



952



16,666(Gains) losses on equity method investments


(2,804
)


(51,182
)


8,164Gain on cancellation of supply agreement










(17,500
)Gain on sales of equity securities, investments and other assets


(896
)


(17,016
)


(5,659
)Other items, net


4,506



(4,920
)


(2,813
)Changes in assets and liabilities:Receivables


32,633



42,099



(33,593
)Inventories


9,326



36,131



(576
)Accounts payable


(45,010
)


(30,732
)


2,774Accrued expenses and other current liabilities


(36,210
)


3,710



(15,795
)Other, net


(15,948
)


(5,930
)


(8,140
)Net cash used in operating activities


(18,350
)


(11,851
)


(68,325
)Cash flows from investing activitiesProceeds from sale of equity securities and other assets






168,186



6,870Proceeds from sales and maturities of marketable debt securities






100,573



146,219Purchases of marketable securities






(27,029
)


(93,646
)Purchases of property, plant and equipment


(5,958
)


(30,322
)


(34,011
)Proceeds from sales of property, plant and equipment


8,949







Payments for acquisitions, net of cash acquired


(16,088
)


(5,029
)


(11,531
)Purchases of equity securities


(755
)


(1,200
)


(2,454
)Restricted cash


(18,000
)






(8,800
)Net proceeds from sale of business


95,367







Net cash provided by investing activities


63,515



205,179



2,647Cash flows from financing activities(Repayment) proceeds from short-term debt, net of expenses of
    $1,124, $1,198 and $1,541


(39,883
)


(1,198
)


78,459Proceeds from long-term debt, net of expenses of $10,240 and
    $6,417






264,760



243,583Repurchases and retirements of long-term debt


(133,600
)


(456,500
)


(254,684
)Proceeds from issuance of common stock


1,087



9,568



21,050Interest rate swap security deposit


(2,516
)






Repayment of shareholder notes receivable


25



21



192Net cash (used in) provided by financing activities


(174,887
)


(183,349
)


88,600Net (decrease) increase in cash and cash equivalents


(129,722
)


9,979



22,922Cash and cash equivalents at beginning of year


235,605



225,626



202,704Cash and cash equivalents at end of year

$
105,883


$
235,605


$
225,626    47




---



##### Table of Contents



CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
 AND
    COMPREHENSIVE LOSS
  Accumulated


NotesAdditional





Other


Receivable








TotalCommon Stock


Paid-In


Accumulated


Comprehensive


from


Treasury


Unearned


ShareholdersShares


Amount


Capital


Deficit


(Loss) Income


Stock Sales


Stock


Compensation


Equity (Deficit)(In thousands)Balance at October 1, 2005


47,468


$
475


$
4,662,173


$
(4,053,166
)

$
(22,012
)

$
(304
)

$
(5,584
)

$
(12,489
)

$
569,093Net loss














(122,591
)


















(122,591
)Currency translation adjustment


















(376
)














(376
)Change in unrealized gain on derivative contracts


















180















180Impairment of marketable securities


















18,870















18,870Change in unrealized losses on available-for-sale securities


















(11,007
)














(11,007
)Minimum pension liability adjustment


















2,249















2,249Comprehensive loss


































(112,675
)Adoption of SFAS 123R










(20,691
)


















12,489



(8,202
)Issuance of common stock


1,180



12



21,612























21,624Purchase of treasury stock


























(239
)






(239
)Interest earned on notes receivable






















(9
)










(9
)Settlement of notes receivable






















192











192Payment of acquisition-related share price guarantee










(4,631
)






















(4,631
)Employee stock-based compensation expense










44,945























44,945Balance at September 29, 2006


48,648



487



4,703,408



(4,175,757
)


(12,096
)


(121
)


(5,823
)






510,098Net loss














(402,462
)


















(402,462
)Currency translation adjustment


















5,790















5,790Change in unrealized gain on derivative contracts


















200















200Change in unrealized losses on available-for-sale securities


















1,855















1,855Minimum pension liability adjustment


















2,866















2,866Comprehensive loss


































(391,751
)Issuance of common stock


716



7



9,930























9,937Cancellation of treasury stock


(128
)


(1
)


(5,822
)














5,823







Interest earned on notes receivable






















(4
)










(4
)Settlement of notes receivable






















22











22Employee stock-based compensation expense










18,213























18,213Balance at September 28, 2007


49,236



493



4,725,729



(4,578,219
)


(1,385
)


(103
)










146,515Net loss














(300,176
)


















(300,176
)Currency translation adjustment


















(1,686
)














(1,686
)Change in unrealized gain on derivative contracts


















(837
)














(837
)Change in unrealized losses on available-for-sale securities


















(1,934
)














(1,934
)Minimum pension liability adjustment


















3,759















3,759Comprehensive loss


































(300,874
)Issuance of common stock


365



3



1,084























1,087Reclassification to equity award










1,458























1,458Adoption of FIN 48














(813
)


















(813
)Settlement of notes receivable






















24











24Employee stock-based compensation expense










15,869























15,869Balance at October 3, 2008


49,601


$
496


$
4,744,140


$
(4,879,208
)

$
(2,083
)

$
(79
)

$



$



$
(136,734
)    48




---



##### Table of Contents



1.
    Basis of
    Presentation and Significant Accounting Policies  dial-up
  Basis of Presentation 
  Fiscal Year 
  Use of Estimates 
  Common Stock  1-for-10
  Revenue Recognition 
   49




---



##### Table of Contents



Research and Development 
    Shipping and Handling  No. 00-10,
  Cash and Cash Equivalents 
  Restricted Cash 
    Liquidity  364-day
 50




---



##### Table of Contents



Inventories 
  Property, Plant and Equipment 
  Investments 
  Long-Lived Assets  and/or
  Goodwill 
 51




---



##### Table of Contents



Foreign Currency Translation and Remeasurement 
  Derivative Financial Instruments 
  Foreign currency forward exchange contracts
 52




---



##### Table of Contents



Interest Rate Swaps 
    Net Loss Per Share 
    Fiscal Year Ended2008


2007


2006Stock options and warrants


259



259



8885.25% convertible subordinated notes due May 2006










3634.25% convertible subordinated notes due May 2006










4294.00% convertible subordinated notes due February 2007






489



1,1364.00% convertible subordinated notes due March 2026


5,081



5,081



2,7115,340



5,829



5,527   Stock-Based Compensation 
 53




---



##### Table of Contents



catch-up
    Income Taxes 
 54




---



##### Table of Contents



Concentrations
     55




---



##### Table of Contents



Non-cash Investing Activity 
  Non-cash Financing Activity 
  Supplemental Cash Flow Information 
  Accumulated Other Comprehensive Loss 
  October 3,


September 28,2008


2007Foreign currency translation adjustments

$
308


$
1,994Unrealized losses on marketable securities


(1,934
)


Unrealized (losses) gains on derivative instruments


(457
)


380Minimum pension liability adjustments






(3,759
)Accumulated other comprehensive loss

$
(2,083
)

$
(1,385
)   Business Enterprise Segments 
    
    the nature of products and services;
    the nature of the production processes;
    the type or class of customer for their products and
    services; and
    the methods used to distribute their products or provide their
    services.    
    the sale of semiconductor products is the only material source
    of revenue for each of the Companys two operating segments;
    the products sold by each of the Companys operating
    segments use the same standard manufacturing process;
    the products marketed by each of the Companys operating
    segments are sold to similar customers; and
    all of the Companys products are sold through its internal
    sales force and common distributors.   56




---



##### Table of Contents



Recent
    Accounting Pronouncements
  FAS 157-2 FAS 157-2) FAS 157-2.
          FAS 142-3, (FSP 142-3). FSP 142-3
 57




---



##### Table of Contents



FSP 142-3 FSP 142-3
    14-1, 14-1). 14-1 14-1 14-1
  EITF 03-6-1, EITF 03-6-1). EITF 03-6-1 states EITF 03-6, EITF 03-6-1, EITF 03-6-1 EITF 03-6-1
 58




---



##### Table of Contents



2.
    Sales of
    Assets  Fiscal
    2008
      Cash and cash equivalents

$
3,104Accounts receivable


27Inventories


12,953Other current assets


431Total current assets


16,515Property, plant and equipment, net


10,268Goodwill


72,028Intangible assets, net


840Other assets


1,000Total assets

$
100,651Accrued compensation and benefits

$
1,476Other current liabilities


382Total current liabilities


1,858Other liabilities


25Total liabilities

$
1,883   Accounting for the Impairment or Disposal of
    Long-Lived Assets No. 87-24, Allocation of Interest to Discontinued Operations
 59




---



##### Table of Contents



Fiscal
    2007
    3.
    Business
    Combinations  Fiscal
    2008
  No. 86-14
  Fiscal
    2007
      4.
    Supplemental
    Balance Sheet Data  Inventories
    October 3,


September 28,2008


2007Work-in-process

$
16,082


$
15,173Finished goods


20,357



26,834$
36,439


$
42,007    60




---



##### Table of Contents



Property,
    Plant and Equipment
    October 3,


September 28,2008


2007Land

$
1,662


$
2,007Land and leasehold improvements


9,933



7,913Buildings


19,830



22,092Machinery and equipment


93,245



128,286Construction in progress


127



2,197124,797



162,495Accumulated depreciation and amortization


(99,885
)


(115,819
)$
24,912


$
46,676       Goodwill
    Fiscal Year Ended2008


2007Goodwill at beginning of period

$
214,635


$
394,302Additions


4,997



2,675Impairments


(108,750
)


(184,700
)Other adjustments


(470
)


2,358Goodwill at end of period

$
110,412


$
214,635   Impairments
   61




---



##### Table of Contents



Additions
      Intangible
    Assets
    October 3, 2008


September 28, 2007Gross








GrossCarrying


Accumulated


Book


Carrying


Accumulated


BookAmount


Amortization


Value


Amount


Amortization


ValueDeveloped technology

$
67,724


$
(62,285
)

$
5,439


$
71,665


$
(51,875
)

$
19,790Product licenses


11,032



(7,105
)


3,927



9,327



(6,547
)


2,780Other intangible assets


8,240



(2,635
)


5,605



6,015



(3,988
)


2,027$
86,996


$
(72,025
)

$
14,971


$
87,007


$
(62,410
)

$
24,597     Fiscal Year Ending2009

2010

2011

2012

2013

ThereafterAmortization expense

$
8,148


$
2,037


$
1,500


$
1,237


$
1,032


$
1,017       Mindspeed
    Warrant
   62




---



##### Table of Contents



Other
    Current Assets
    October 3,


September 28,2008


2007Other receivables

$
11,645


$
4,214Deferred tax asset


375



1,042Prepaid technical licenses


10,052



3,186Other prepaid expenses


8,138



4,811Other current assets


8,327



4,878$
38,537


$
18,131   Other
    Assets
    October 3,


September 28,2008


2007Mindspeed warrant

$
545


$
15,519Technology license


8,310



Non current letters of credit


6,759



5,570Electronic design automation tools


4,223



4,317Deferred debt issuance costs


6,205



12,796Investments


8,822



14,804Other non-current assets


4,588



12,663$
39,452


$
65,669   Other
    Current Liabilities
    October 3,


September 28,2008


2007Accrued legal settlements

$



$
20,047Restructuring and reorganization liabilities


10,974



13,835Accrued technical licenses


12,475



Other


20,936



36,463$
44,385


$
70,345  63




---



##### Table of Contents



5.
    Income
    Taxes    Fiscal Year Ended2008


2007


2006Current:United States

$
(46
)

$



$
Foreign


4,477



2,768



2,474State and local


26



131



129Total current


4,457



2,899



2,603Deferred:United States










Foreign


(39
)


232



(792
)Total deferred


(39
)


232



(792
)$
4,418


$
3,131


$
1,811     October 3,


September 28,2008


2007Deferred tax assets:Intangible assets

$
154,377


$
151,377Capitalized research and development


316,545



312,314Net operating losses


474,783



484,304Research and development and investment credits


152,869



153,976Other, net


171,189



203,150Valuation allowance


(1,213,944
)


(1,246,553
)Total deferred tax assets


55,819



58,568Deferred tax liabilities:Deferred state taxes


(55,510
)


(58,007
)Total deferred tax liabilities


(55,510
)


(58,007
)$
309


$
561        64




---



##### Table of Contents



Fiscal Year Ended2008


2007


2006U.S. Federal statutory tax at 35%

$
(46,112
)

$
(94,234
)

$
(30,482
)State taxes, net of federal effect


1,134



5,473



4,533U.S. and foreign income taxes on foreign earnings


6,158



2,534



2,110Research and development credits


(3,702
)


(5,229
)


(1,715
)Valuation allowance


4,499



26,587



36,914Detriment/(benefit) from discontinued operations and equity
    method investments, net of impairments


12,669



386



(12,188
)Asset impairments


25,789



63,012



Stock options


3,126



2,743



3,386Other


857



1,859



(747
)Provision for income taxes

$
4,418


$
3,131


$
1,811       Fiscal Year Ended2008


2007


2006United States

$
(140,034
)

$
(273,272
)

$
(94,146
)Foreign


8,286



4,031



7,055$
(131,748
)

$
(269,241
)

$
(87,091
)      65




---



##### Table of Contents



2008September 29, 2007

$
74,370Increases related to current year tax positions


4,279Expiration of the statute of limitation for the assessment of
    taxes


(1,504
)Other


159October 3, 2008

$
77,304         6.
    Debt  Short-Term
    Debt
    7-day 364-day 7-day 7-day
 66




---



##### Table of Contents



Long-Term
    Debt
    October 3,


September 28,2008


2007Floating rate senior secured notes due November 2010

$
141,400


$
275,0004.00% convertible subordinated notes due March 2026


250,000



250,000Total


391,400



525,000Less: current portion of long-term debt


(17,707
)


(58,000
)Long-term debt

$
373,693


$
467,000   Floating rate senior secured notes due November
    2010 
     67




---



##### Table of Contents



4.00% convertible subordinated notes due March
    2026 
    4.00% convertible subordinated notes due February
    2007 
  7.
    Commitments
    and Contingencies  Lease
    Commitments
   68




---



##### Table of Contents



Fiscal Year Ending

Lease Payments


Sublease Income


Net Obligation2009

$
23,004



(8,038
)

$
14,9662010


20,385



(6,704
)


13,6812011


15,379



(2,606
)


12,7742012


12,651



(1,703
)


10,9482013


12,796



(1,474
)


11,322Thereafter


43,485



(2,209
)


41,275Total future minimum lease payments

$
127,700


$
(22,734
)

$
104,966       Legal
    Matters
    IPO Litigation
 69




---



##### Table of Contents



Class Action Suit Graden v. Conexant, et al.
  Guarantees
    and Indemnifications
      Other
  Tax Matter 
    8.
    Shareholders
    Equity    th
 70




---



##### Table of Contents



th
  Stock
    Option Plans
        Fiscal Year Ended2008


2007


2006Stock option plans:Expected dividend yield


0
%


0
%


0
%Expected stock price volatility


67
%


68
%


76
%Risk-free interest rate


3.2
%


4.6
%


4.5
%Average expected life (in years)


5.25



4.93



5.25Stock purchase plan:Expected dividend yield


0
%


0
%


0
%Expected stock price volatility


69
%


60
%


76
%Risk-free interest rate


3.1
%


4.8
%


4.4
%Average expected life (in years)


0.50



0.50



0.50    71




---



##### Table of Contents



2008Weighted-Number


Averageof


ExerciseShares


PriceOutstanding at beginning of year


10,081


$
23.90Granted


329



7.41Exercised


(2
)


5.26Forfeited or expired


(3,051
)


23.17Outstanding at end of year


7,357



23.54Shares vested and expected to vest


7,026


$
23.89Exercisable at end of year


6,209



24.92     Directors
    Stock Plan
    Employee
    Stock Purchase Plan
     72




---



##### Table of Contents



2001
    Performance Share Plan and 2004 New Hire Equity Incentive
    Plan
    Performance
    Plan
    WeightedAverage GrantShares


Date Fair ValueOutstanding, September 28, 2007


90


$
22.90Granted


400



6.49Forfeited


(90
)


20.88Outstanding, October 3, 2008


400


$
6.49     2004 New
    Hire Plan
    WeightedAverage GrantShares


Date Fair ValueOutstanding, September 28, 2007


311


$
11.50Granted


25



4.50Vested


(162
)


15.18Forfeited


(100
)


15.30Outstanding, October 3, 2008


74


$
10.59  73




---



##### Table of Contents



9.
    Employee
    Benefit Plans  Retirement
    Savings Plan
    Retirement
    Medical Plan
   74




---



##### Table of Contents



Fiscal Year Ended2008


2007Change in benefit obligation:Benefit obligation at beginning of year

$
86


$
375Interest cost






14Plan participants contributions


308



709Actuarial gain


32



(234
)Benefits paid


(426
)


(778
)Benefit obligation at end of year

$



$
86Change in plan assets:Fair value of plan assets at beginning of year

$



$
Employer contributions


118



69Plan participants contributions


308



709Benefits paid, including expenses


(426
)


(778
)Fair value of plan assets at end of year

$



$
Reconciliation of funded status to accrued benefit cost:Funded status

$



$
(86
)Net actuarial loss






245Net prior service credit






(1,393
)Adjustment for fourth quarter contributions






43Accrued benefit cost

$



$
(1,191
)Weighted average assumptions for benefit obligations:Measurement date


06/30/08



06/30/07Discount rate






Expected return on plan assets


N/A



N/ARate of compensation increase


N/A



N/AWeighted average assumptions for net periodic benefit
    costs:Discount rate


0.0
%


6.25
%Expected return on plan assets


N/A



N/ARate of compensation increase


N/A



N/AComponents of net periodic benefit cost:Interest cost

$



$
14Amortization of prior service costs


(1,393
)


(5,574
)Recognized net actuarial loss


278



1,771Net periodic benefit cost

$
(1,115
)

$
(3,789
)   Pension
    Plans
  non-U.S. employees
 75




---



##### Table of Contents



Effective ofPrior to Adopting

AdoptingSFAS No. 158

SFAS No. 158

As ReportedCurrent liabilities

$
807


$



$
807Accumulated other comprehensive income

$
4,906


$



$
4,906     Fiscal Year Ended2008


2007Change in benefit obligation:Benefit obligation at beginning of year

$
20,464


$
21,215Interest cost


1,011



1,261Actuarial gain






(155
)Benefits paid


(1,515
)


(1,857
)Settlement payments


(20,989
)


Settlement loss


1,029



Benefit obligation at end of year

$



$
20,464Change in plan assets:Fair value of plan assets at beginning of year

$
19,122


$
16,533Actual return on plan assets


826



2,478Employer contributions


2,556



1,968Benefits paid, including expenses


(1,515
)


(1,857
)Settlement payments


(20,989
)


Fair value of plan assets at end of year

$



$
19,122Reconciliation of funded status to net amounts recognized:Funded status

$



$
(1,342
)Unrecognized net actuarial loss






Adjustment for fourth quarter expenses






Adjustment for fourth quarter contributions






535Net amount recognized

$



$
(807
) 76




---



##### Table of Contents



Fiscal Year Ended2008


2007Amounts recognized in the statement of financial position:Accrued benefit liability

$



$
(807
)Accumulated other comprehensive loss






4,906Net amount recognized

$



$
4,099Information for plans with accumulated benefit obligation in
    excess of plan assets:Projected benefit obligation

$



$
20,464Accumulated benefit obligation






20,464Fair value of plan assets at end of year






19,122Weighted average assumptions for benefit obligations:Measurement date


06/30/08



06/30/07Discount rate


6.20
%


6.20
%Expected long-term return on plan assets


8.6
%


7.00
%Rate of compensation increase


N/A



N/AWeighted average assumptions for net periodic benefit
    costs:Discount rate


6.20
%


6.23
%Expected return on plan assets


8.60
%


7.00
%Rate of compensation increase


N/A



N/AComponents of net periodic benefit cost recognized in other
    comprehensive income:Interest cost

$
1,023


$
1,261Expected return on plan assets


(1,247
)


(1,121
)Recognized net actuarial loss


141



221Settlement adjustment


4,820



Net periodic benefit cost recognized in other comprehensive
    income

$
4,737


$
361Weighted average asset allocation:Equity securities






75.0
%Debt securities






20.0
%Other






5.0
%Total






100.0
%     10.
    Asset
    Impairments    Broadband
    Access
   77




---



##### Table of Contents



Broadband
    Media Processing
    Electronic
    Design Automation Tools
          11.
    Special
    Charges    Fiscal Year Ended2008


2007


2006Litigation charges

$



$
20,047


$
70,000Restructuring charges


12,366



9,909



3,259VERP settlement charge


6,294







Other special (credits) charges


(1,029
)


441



(100
)$
17,631


$
30,397


$
73,159   Litigation
    Charges
   78




---



##### Table of Contents



Restructuring
    Charges
    Accounting for Costs Associated with Exit or Disposal
    Activities
  Fiscal 2008 Restructuring Actions
    Workforce


FacilityReductions


and Other


TotalCharged to costs and expenses

$
6,254


$
1,762


$
8,016Cash payments


(6,161
)


(731
)


(6,892
)Restructuring balance, October 3, 2008

$
93


$
1,031


$
1,124   Fiscal 2007 Restructuring Actions
 79




---



##### Table of Contents



Workforce


FacilityReductions


and Other


TotalCharged to costs and expenses

$
9,477


$
2,040


$
11,517Non-cash items






4,868



4,868Cash payments


(5,841
)


(268
)


(6,109
)Restructuring balance, September 28, 2007


3,636



6,640



10,276Charged to costs and expenses


11



6,312



6,323Non-cash items






8,039



8,039Cash payments


(3,631
)


(4,309
)


(7,940
)Restructuring balance, October 3, 2008

$
16


$
16,682


$
16,689   Fiscal 2006 and 2005 Restructuring Actions
    Workforce


FacilityReductions


and Other


TotalRestructuring balance, October 1, 2005

$
3,609


$
25,220


$
28,829Charged to costs and expenses


1,852



1,407



3,259Reclassification from accrued compensation and benefits and other


1,844



55



1,899Cash payments


(5,893
)


(8,031
)


(13,924
)Restructuring balance, September 29, 2006


1,412



18,651



20,063Reclassification to other current liabilities and other
    liabilities






(2,687
)


(2,687
)Charged to costs and expenses


55



559



614Cash payments


(1,336
)


(4,007
)


(5,343
)Restructuring balance, September 28, 2007


131



12,516



12,647Reclassification from other current liabilities and other
    liabilities






3,359



3,359Charged to costs and expenses


(130
)


285



155Cash payments


(1
)


(5,123
)


(5,124
)Restructuring balance, October 3, 2008

$



$
11,037


$
11,037  80




---



##### Table of Contents



12.
    Other
    Income (Expense), Net    Fiscal Year Ended2008


2007


2006Investment and interest income

$
7,237


$
13,833


$
17,921Decrease in the fair value of derivative instruments


(14,974
)


(952
)


(16,666
)Impairment of equity securities










(19,872
)Loss on rental property


(1,435
)






Gain on sale of property


5,414







Realized gains on sales of equity securities


896



17,016



4,414Other, net


(947
)


6,251



(269
)$
(3,809
)

$
36,148


$
(14,472
)         13.
    Related
    Party Transactions  Mindspeed
    Technologies, Inc.
    Lease Agreement
  Skyworks
    Solutions, Inc. (Skyworks)
    Inventory Purchases
 81




---



##### Table of Contents



Jazz
    Semiconductor, Inc. (Jazz)
    Wafer and Probe Services Purchases
    14.
    Segment
    Information  Geographic
    Regions:
    Fiscal Year Ended2008


2007


2006United States

$
25,160


$
26,287


$
34,339Other Americas


10,098



10,664



9,645Total Americas


35,258



36,951



43,984China


318,968



356,281



415,160South Korea


8,385



17,640



26,143Taiwan


28,350



42,110



90,217Other Asia-Pacific


86,340



94,686



133,082Total Asia-Pacific


442,043



510,717



664,602Europe, Middle East and Africa


25,359



25,908



44,641$
502,660


$
573,576


$
753,227    82




---



##### Table of Contents



October 3,


September 28,2008


2007United States

$
52,515


$
79,281India


4,499



10,544Other Asia-Pacific


6,766



6,280Europe, Middle East and Africa


34



721$
63,814


$
96,826   Product
    Lines
    Fiscal Year Ended2008


2007


2006Imaging and PC Media

$
276,942


$
311,275


$
397,635Broadband Access Products


225,718



262,301



355,592$
502,660


$
573,576


$
753,227   15.
    Quarterly
    Results of Operations (Unaudited)    Fiscal Quarter EndedFiscal 2008

Oct. 3, 2008

Jun. 27, 2008

Mar. 28, 2008

Dec. 28, 2007Net revenues

$
122,615


$
115,594


$
118,518


$
145,933Gross margin


66,315



58,408



62,037



82,121Net (loss) income from continuing operations


(2,227
)


(126,419
)


(8,197
)


3,481Gain on sale of discontinued operations


6,268











Net loss from discontinued operations


(3,124
)


(23,452
)


(133,807
)


(12,699
)Net income (loss)


917



(149,871
)


(142,004
)


(9,218
)Net (loss) income per share from continuing operations, basic
    and fully diluted


(0.04
)


(2.56
)


(0.17
)


0.07Net gain per share from sale of discontinued operations, basic
    and fully diluted


0.13











Net loss per share from discontinued operations, basic and fully
    diluted


(0.07
)


(0.47
)


(2.71
)


(0.26
)Net loss per share, basic and fully diluted


0.02



(3.03
)


(2.88
)


(0.19
)   83




---



##### Table of Contents



Fiscal Quarter EndedFiscal 2007

Sep. 28, 2007

Jun. 29, 2007

Mar. 30, 2007

Dec. 30, 2006Net revenues

$
138,933


$
134,252


$
136,084


$
164,307Gross margin


66,097



63,705



65,143



83,167Net (loss) income from continuing operations


(90,616
)


(12,738
)


(124,342
)


6,506Net loss from discontinued operations


(144,149
)


(22,489
)


(9,104
)


(5,530
)Net (loss) income


(234,765
)


(35,227
)


(133,446
)


976Net (loss) income per share from continuing operations, basic
    and fully diluted


(1.84
)


(0.26
)


(2.54
)


0.13Net loss per share from discontinued operations, basic and fully
    diluted


(2.93
)


(0.43
)


(0.19
)


(0.15
)Net loss per share, basic and fully diluted


(4.77
)


(0.72
)


(2.73
)


(0.02
)   16.
    Supplemental
    Guarantor Financial Information        Regulation S-X, Rule 3-10(f).
 84




---



##### Table of Contents



October 3, 2008Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedCurrent assets:Cash and cash equivalents

$
69,738


$



$
36,145


$



$
105,883Restricted cash


18,000







8,800







26,800Receivables






169,158



57,584



(177,745
)


48,997Inventories


36,439















36,439Other current assets


33,543



3



4,991







38,537Total current assets


157,720



169,161



107,520



(177,745
)


256,656Property and equipment, net


14,366







10,546







24,912Goodwill


17,911



89,404



3,097







110,412Intangible assets, net


8,527



5,992



452







14,971Other assets


36,955







2,497







39,452Investments in subsidiaries


291,511



19,188







(310,699
)


Total assets

$
526,990


$
283,745


$
124,112


$
(488,444
)

$
446,403Current liabilities:Current portion of long-term debt

$
17,707


$



$



$



$
17,707Short-term debt










40,117







40,117Accounts payable


164,057







48,582



(177,745
)


34,894Accrued compensation and benefits


12,078







2,911







14,989Other current liabilities


40,479



932



2,974







44,385Total current liabilities


234,321



932



94,584



(177,745
)


152,092Long-term debt


373,693















373,693Other liabilities


55,710







1,642







57,352Total liabilities


663,724



932



96,226



(177,745
)


583,137Shareholders equity


(136,734
)


282,813



27,886



(310,699
)


(136,734
)Total liabilities and equity

$
526,990


$
283,745


$
124,112


$
(488,444
)

$
446,403   85




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##### Table of Contents



September 28, 2007Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedCurrent assets:Cash and cash equivalents

$
199,263


$



$
34,884


$



$
234,147Restricted cash










8,800







8,800Receivables






169,158



90,957



(179,259
)


80,856Inventories


42,007















42,007Other current assets


11,957



2



6,172







18,131Current assets held for sale


42,060



173,640



34,751







250,451Total current assets


295,287



342,800



175,564



(179,259
)


634,392Property and equipment, net


29,833







16,843







46,676Goodwill


68,834



133,411



12,390







214,635Intangible assets, net


5,764



18,244



589







24,597Other assets


63,554







2,115







65,669Investments in subsidiaries


530,107



11,563







(541,670
)


Total assets

$
993,379


$
506,018


$
207,501


$
(720,929
)

$
985,969Current liabilities:Current portion of long-term debt

$
58,000


$



$



$



$
58,000Short-term debt










80,000







80,000Accounts payable


183,940







75,890



(179,259
)


80,571Accrued compensation and benefits


16,941







6,250







23,191Other current liabilities


65,778



931



3,636







70,345Current liabilities to be assumed


1,979







1,946







3,925Total current liabilities


326,638



931



167,722



(179,259
)


316,032Long-term debt


467,000















467,000Other liabilities


53,226







3,196







56,422Total liabilities


846,864



931



170,918



(179,259
)


839,454Shareholders equity


146,515



505,087



36,583



(541,670
)


146,515Total liabilities and equity

$
993,379


$
506,018


$
207,501


$
(720,929
)

$
985,969  86




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##### Table of Contents



Year Ended October 3, 2008Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet revenues

$
457,617


$
35,765


$
45,043


$
(35,765
)

$
502,660Cost of goods sold


195,765







38,014







233,779Gross margin


261,852



35,765



7,029



(35,765
)


268,881Operating expenses:Research and development


125,162















125,162Selling, general and administrative


78,585







7,561







86,146Amortization of intangible assets


2,495



12,252



767







15,514Asset impairments


28,039



92,730











120,769Special charges


15,357







2,274







17,631Total operating expenses


249,638



104,982



10,602







365,222Operating loss


12,214



(69,217
)


(3,573
)


(35,765
)


(96,341
)Equity in (loss) income of subsidiaries


(201,449
)


7,623







193,826



Interest expense


(27,105
)






(4,493
)






(31,598
)Other (expense) income, net


(34,197
)






30,388







(3,809
)(Loss) income before income taxes and gain on equity method
    investments


(250,537
)


(61,594
)


22,322



158,061



(131,748
)Provision for income taxes


337







4,081







4,418(Loss) income before gain on equity method investments


(250,874
)


(61,594
)


18,241



158,061



(136,166
)Gain on equity method investments


2,804















2,804(Loss) income from continuing operations


(248,070
)


(61,594
)


18,241



158,061



(133,362
)Gain on sale of discontinued operations, net of tax


1,777



1,609



2,882







6,268(Loss) gain from discontinued operations, net of tax


(53,883
)


(119,600
)


401







(173,082
)Net (loss) income

$
(300,176
)

$
(179,585
)

$
21,524


$
158,061


$
(300,176
)   87




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##### Table of Contents



Year Ended September 28, 2007Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet revenues

$
449,139


$
34,908


$
124,437


$
(34,908
)

$
573,576Cost of goods sold


189,117







106,347







295,464Gross margin


260,022



34,908



18,090



(34,908
)


278,112Operating expenses:Research and development


171,330







2,190







173,520Selling, general and administrative


78,508







12,921







91,429Amortization of intangible assets


2,038



18,234



987







21,259Asset impairments


11,141



214,972











226,113Special charges


27,266







3,131







30,397Total operating expenses


290,283



233,206



19,229







542,718Operating loss


(30,261
)


(198,298
)


(1,139
)


(34,908
)


(264,606
)Equity in (loss) income of subsidiaries


(347,095
)


334







346,761



Interest expense


(34,193
)






(6,590
)






(40,783
)Other income


15,151







20,997







36,148(Loss) income before income taxes and gain on equity method
    investments


(396,398
)


(197,964
)


13,268



311,853



(269,241
)Provision for (benefit from) income taxes


774







2,357







3,131(Loss) income before gain on equity method investments


(397,172
)


(197,964
)


10,911



311,853



(272,372
)Gain on equity method investments


51,182















51,182(Loss) gain from continuing operations


(345,990
)


(197,964
)


10,911



311,853



(221,190
)Loss from discontinued operations, net of tax


(56,472
)


(124,800
)










(181,272
)Net (loss) income

$
(402,462
)

$
(322,764
)

$
10,911


$
311,853


$
(402,462
)   88




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##### Table of Contents



Year Ended September 29, 2006Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet revenues

$
600,389


$
275,666


$
152,838


$
(275,666
)

$
753,227Cost of goods sold


297,865



219,310



135,116



(254,502
)


397,789Gain on cancellation of supply agreement


(17,500
)














(17,500
)Gross margin


320,024



56,356



17,722



(21,164
)


372,938Operating expenses:Research and development


186,980



18,992



2,081



(18,982
)


189,071Selling, general and administrative


94,728



13,424



13,279



(2,431
)


119,000Amortization of intangible assets


1,861



26,851



1,153







29,865Asset impairments


85















85Special charges


3,159



70,000











73,159Total operating expenses


286,813



129,267



16,513



(21,413
)


411,180Operating income (loss)


33,211



(72,911
)


1,209



249



(38,242
)Equity in (loss) income of subsidiaries


(63,269
)


1,101







62,168



Interest expense


(24,980
)


(4,254
)


(5,143
)






(34,377
)Other (expense) income, net


(33,261
)






18,789







(14,472
)(Loss) income before income taxes and loss on equity method
    investments


(88,299
)


(76,064
)


14,855



62,417



(87,091
)Provision for income taxes


603







1,208







1,811(Loss) income before loss on equity method investments


(88,902
)


(76,064
)


13,647



62,417



(88,902
)Loss on equity method investments


(8,164
)














(8,164
)(Loss) income from continuing operations


(97,066
)


(76,064
)


13,647



62,417



(97,066
)Loss from discontinued operations, net of tax


(25,525
)














(25,525
)Net (loss) income

$
(122,591
)

$
(76,064
)

$
13,647


$
62,417


$
(122,591
)  89




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##### Table of Contents



Year Ended October 3, 2008Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet cash (used in) provided by operating activities

$
(65,165
)

$
(2,922
)

$
39,185


$
10,552


$
(18,350
)Cash flows from investing activities:Proceeds from sale of business


82,035







13,332







95,367Proceeds from sales of property, plant and equipment


574







8,375







8,949Purchases of property and equipment


(3,601
)






(2,357
)






(5,958
)Payments for acquisitions


(16,088
)














(16,088
)Purchases of equity securities


(755
)














(755
)Increase in restricted cash


(18,000
)














(18,000
)Purchases of accounts receivable










(520,643
)


520,643



Collections of accounts receivable










531,195



(531,195
)


Net cash provided by (used in) investing activities


44,165







29,902



(10,552
)


63,515Cash flows from financing activities:Proceeds from short-term debt, net










(39,883
)






(39,883
)Repurchases and retirements of long-term debt


(133,600
)














(133,600
)Proceeds from issuance of common stock


1,087















1,087Repayment of shareholder notes


25















25Interest rate swap security deposit


(2,516
)














(2,516
)Intercompany balances, net


26,479



2,922



(29,401
)






Net cash used in financing activities


(108,525
)


2,922



(69,284
)






(174,887
)Net decrease in cash and cash equivalents


(129,525
)






(197
)






(129,722
)Cash and cash equivalents at beginning of year


199,263







36,342







235,605Cash and cash equivalents at end of year

$
69,738


$



$
36,145


$



$
105,883   90




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##### Table of Contents



Year Ended September 28, 2007Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet cash (used in) provided by operating activities

$
(185,293
)

$
84,155


$
109,973


$
(20,686
)

$
(11,851
)Cash flows from investing activities:Proceeds from sale of equity securities and other assets


168,186















168,186Proceeds from sales and maturities of marketable debt securities


100,573















100,573Purchases of marketable securities


(27,029
)














(27,029
)Purchases of property and equipment


(15,970
)






(14,352
)






(30,322
)Payments for acquisitions


(5,029
)














(5,029
)Purchases of equity securities


(1,200
)














(1,200
)Purchases of accounts receivable










(606,122
)


606,122



Collections of accounts receivable










601,131



(601,131
)


Net cash provided by (used in) investing activities


219,531







(19,343
)


4,991



205,179Cash flows from financing activities:Proceeds from short-term debt, net










(1,198
)






(1,198
)Proceeds from long-term debt, net


264,760















264,760Repurchases and retirements of long-term debt


(456,500
)














(456,500
)Proceeds from issuance of common stock


9,568















9,568Repayment of shareholder notes


21















21Dividends paid










(15,695
)


15,695



Intercompany balances, net


171,778



(84,155
)


(87,623
)






Net cash used in financing activities


(10,373
)


(84,155
)


(104,516
)


15,695



(183,349
)Net increase (decrease) in cash and cash equivalents


23,865







(13,886
)






9,979Cash and cash equivalents at beginning of year


175,398







50,228







225,626Cash and cash equivalents at end of year

$
199,263


$



$
36,342


$



$
235,605   91




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##### Table of Contents



Year Ended September 29, 2006Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet cash provided by (used in) operating activities

$
62,387


$
(63,391
)

$
4,183


$
(71,504
)

$
(68,325
)Cash flows from investing activities:Proceeds from equity securities and other assets


6,870















6,870Proceeds from sales and maturities of marketable securities


146,219















146,219Purchases of marketable securities


(93,646
)














(93,646
)Purchases of property and equipment


(20,146
)






(13,865
)






(34,011
)Payments for acquisitions


(11,531
)














(11,531
)Purchases of equity securities


(2,454
)














(2,454
)Restricted cash










(8,800
)






(8,800
)Purchases of accounts receivable










(574,572
)


574,572



Collections of accounts receivable










503,068



(503,068
)


Net cash provided by (used in) investing activities


25,312







(94,169
)


71,504



2,647Cash flows from financing activities:Proceeds from short-term debt, net










78,459







78,459Proceeds from long-term debt, net


243,583















243,583Repurchases and retirements of long-term debt


(254,684
)














(254,684
)Proceeds from issuance of common stock


21,050















21,050Repayment of shareholder notes


192















192Intercompany balances, net


(93,235
)


63,391



29,844







Net cash provided by financing activities


(83,094
)


63,391



108,303







88,600Net increase in cash and cash equivalents


4,605







18,317







22,922Cash and cash equivalents at beginning of year


170,793







31,911







202,704Cash and cash equivalents at end of year

$
175,398


$



$
50,228


$



$
225,626   17.
    Subsequent
    events  seven-day
 92




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            Internal Control  Integrated Framework
    93




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure   Item 9A.  Controls
    and Procedures  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15(e)
  Changes
    in Internal Control Over Financial Reporting
    Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f). Internal Control 
    Integrated Framework Internal
    Control  Integrated Framework
   94




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
      95




---



##### Table of Contents



PART III    Item 10.
    Directors,
    Executive Officers and Corporate Governance  Executive Officers
  Directors
  Audit Committee and Audit Committee Financial
    Expert
  www.conexant.com
  Section 16(a) Beneficial Ownership Reporting
    Compliance
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   96




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Financial Statements
    PageConsolidated Balance Sheets


45Consolidated Statements of Operations


46Consolidated Statements of Cash Flows


47Consolidated Statements of Shareholders
    Equity and Comprehensive Loss


48   Supplemental Schedules
  PageSchedule II  Valuation and
    Qualifying Accounts


103     Exhibits
  Exhibits

Description2
.1

Asset Purchase Agreement, dated April 29, 2008, by and
    between the Company and NXP B.V. (incorporated by reference to
    Exhibit 10.3 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008)2
.2

Agreement and Plan of Merger, dated as of September 26,
    2006, by and among Acquicor Technology Inc., Joy Acquisition
    Corp., Jazz Semiconductor, Inc. and T.C. Group, L.L.C., as the
    stockholders representative (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed on October 2, 2006)3
.1

Amended and Restated Certificate of Incorporation of the Company
    (incorporated by reference to Exhibit 3.A.1 of the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended March 31, 2004)3
.1.1

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation of the Company (incorporated by reference to
    Exhibit 3.1 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008)3
.2

Amended By-Laws of the Company (incorporated by reference to
    Exhibit 3.1 of the Companys Current Report on
    Form 8-K
    filed on October 20, 2008)4
.1

Rights Agreement, dated as of November 30, 1998, by and
    between the Company and Mellon Investor Services, L.L.C.
    (formerly ChaseMellon Shareholder Services, L.L.C.), as rights
    agent (incorporated by reference to Exhibit 4.4 of the
    Companys Registration Statement on
    Form S-8
    filed on December 11, 1998 (File
    No. 333-68755))4
.1.1

First Amendment to Rights Agreement, dated as of
    December 9, 1999, by and between the Company and Mellon
    Investor Services, L.L.C. (formerly ChaseMellon Shareholder
    Services, L.L.C.), as rights agent (incorporated by reference to
    Exhibit 4.1 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended December 31, 1999)4
.2

Indenture, dated as of March 7, 2006, by and between the
    Company and The Bank of New York Trust Company, N.A., as
    successor to J.P. Morgan Trust Company, National
    Association, as trustee, including the form of the
    Companys 4% Convertible Subordinated Notes due
    March 1, 2026 attached as Exhibit A thereto
    (incorporated by reference to Exhibit 4.1 of the
    Companys Current Report on
    Form 8-K
    filed on March 8, 2006) 97




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##### Table of Contents



Exhibits

Description4
.2.1

Registration Rights Agreement, dated as of March 7, 2006,
    by and between the Company and Lehman Brothers, Inc.
    (incorporated by reference to Exhibit 4.3 of the
    Companys Current Report on
    Form 8-K
    filed on March 8, 2006)4
.3

Indenture, dated as of November 13, 2006, by and among the
    Company, the subsidiary guarantors party thereto, and The Bank
    of New York Trust Company, N.A., as trustee, including the
    form of the Companys Floating Rate Senior Secured Note due
    2010 attached as Exhibit A thereto (incorporated by
    reference to Exhibit 4.1 of the Companys Current
    Report on
    Form 8-K
    filed on November 16, 2006)4
.3.1

Registration Rights Agreement, dated as of November 13,
    2006, by and among the Company, the subsidiary guarantors party
    thereto, and The Bank of New York Trust Company, N.A. (as
    successor to J.P. Morgan Trust Company N.A.)
    (incorporated by reference to Exhibit 4.3 of the
    Companys Current Report on
    Form 8-K
    filed on November 16, 2006)*10
.1

Conexant Systems, Inc. 1999 Long-Term Incentives Plan, as
    amended (incorporated by reference to Exhibit 4.7 of the
    Companys Registration Statement on
    Form S-8
    filed on May 26, 2000 (File
    No. 333-37918))*10
.1.1

Form of Stock Option Agreement under the Conexant Systems, Inc.
    1999 Long-Term Incentives Plan (incorporated by reference to
    Exhibit 10.1 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999)*10
.1.2

Form of Restricted Stock Agreement (Performance Vesting) under
    the Conexant Systems, Inc. 1999 Long-Term Incentives Plan
    (incorporated by reference to Exhibit 10.2 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999)*10
.1.3

Form of Restricted Stock Agreement (Time Vesting) under the
    Conexant Systems, Inc. 1999 Long-Term Incentives Plan
    (incorporated by reference to Exhibit 10.3 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999)*10
.1.4

Copy of resolutions of the Board of Directors of the Company,
    adopted August 13, 1999 amending, among other things, the
    1999 Long-Term Incentives Plan (incorporated by reference to
    Exhibit 10-e-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 1999)*10
.2

Memorandum of Adjustments to Outstanding Options Under the
    Conexant Stock Plans approved and adopted by the Board of
    Directors of the Company on May 9, 2002, as amended
    June 13, 2002, in connection with the Skyworks transaction
    (incorporated by reference to
    Exhibit 10-b-9
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)*10
.2.1

Memorandum of Proposed Amendments to the Conexant Systems, Inc.
    Stock Option Plans adopted by the Board of Directors of the
    Company on June 13, 2002 in connection with the Skyworks
    transaction (incorporated by reference to
    Exhibit 10-b-10
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)*10
.3

Memorandum of Adjustments to Outstanding Options Under the
    Conexant Stock Plans approved and adopted by the Board of
    Directors of the Company on June 5, 2003 in connection with
    the Mindspeed spin-off (incorporated by reference to
    Exhibit 10-b-11
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2003)*10
.3.1

Memorandum of Proposed Amendments to the Conexant Systems, Inc.
    Stock Option Plans adopted by the Board of Directors of the
    Company on June 5, 2003 in connection with the Mindspeed
    spin-off (incorporated by reference to
    Exhibit 10-b-12
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2003)*10
.4

Amended and Restated Conexant Systems, Inc. Retirement Savings
    Plan (incorporated by reference to Exhibit 4.5 of the
    Companys Registration Statement on
    Form S-8
    filed on December 21, 2006 (File
    No. 333-139547))*10
.5

Conexant Systems, Inc. Directors Stock Plan, as amended
    (incorporated by reference to
    Exhibit 10-e-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 28, 2007)*10
.6

Conexant Systems, Inc. 2000 Non-Qualified Stock Plan, as amended
    (incorporated by reference to Exhibit (D)(2) of Amendment
    No. 2 to Schedule TO filed on December 1, 2004) 98




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##### Table of Contents



Exhibits

Description*10
.6.1

Resolutions adopted by the Board of Directors of the Company on
    February 25, 2004 with respect to the use of shares
    available under certain GlobespanVirata, Inc. stock plans for
    future grants under the Conexant Systems, Inc. 2000
    Non-Qualified Stock Plan (incorporated by reference to
    Exhibit 4.5.2 of the Companys Registration Statement
    on
    Form S-8
    filed on March 15, 2004 (File
    No. 333-113595))*10
.6.2

Form of Stock Option Agreement under the Conexant Systems, Inc.
    2000 Non-Qualified Stock Plan, as amended (incorporated by
    reference to
    Exhibit 10-f-3
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2004)*10
.7

GlobespanVirata, Inc. 1999 Equity Incentive Plan, as amended
    (incorporated by reference to Exhibit 4.5.1 to the
    Companys Registration Statement on
    Form S-8
    filed on March 8, 2004 (File
    No. 333-113399))*10
.7.1

GlobespanVirata, Inc. 1999 Supplemental Stock Option Plan, as
    amended (incorporated by reference to Exhibit 4.5.2 to the
    Companys Registration Statement on
    Form S-8
    filed on March 8, 2004 (File
    No. 333-113399))*10
.7.2

Amended and Restated GlobespanVirata, Inc. 1999 Stock Incentive
    Plan, as amended (incorporated by reference to
    Exhibit 4.5.3 to the Companys Registration Statement
    on
    Form S-8
    filed on March 8, 2004 (File
    No. 333-113399))*10
.8

Conexant Systems, Inc. 2001 Performance Share Plan and related
    Performance Share Award Terms and Conditions (incorporated by
    reference to Exhibit 99.1 of the Companys
    Registration Statement on
    Form S-8
    filed on November 21, 2007 (File
    No. 333-73858))*10
.9

Conexant Systems, Inc. 2004 New-Hire Equity Incentive Plan
    (incorporated by reference to Exhibit 99.1 of the
    Companys Registration Statement on
    Form S-8
    filed on May 28, 2004 (File
    No. 333-115983))*10
.9.1

Form of Stock Option Agreement under the Conexant Systems, Inc.
    2004 New-Hire Equity Incentive Plan (incorporated by reference
    to
    Exhibit 10-j-2
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2004)*10
.9.2

Form of Restricted Stock Unit Award Agreement under the Conexant
    Systems, Inc. 2004 New-Hire Equity Incentive Plan (incorporated
    by reference to Exhibit 10.2 of the Companys
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 29, 2007)*10
.10

Conexant Systems, Inc. 2007 Peak Performance Incentive Plan
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on November 20, 2006)*10
.11

Conexant Systems, Inc. 2008 Peak Performance Incentive Plan
    (incorporated by reference to Exhibit 10.1 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended December 28, 2007)*10
.12

Deferred Compensation Plan II, effective January 1, 2005
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on January 5, 2006)*10
.13

Employment Agreement, dated as of June 21, 2007, by and
    between the Company and Daniel A. Artusi (incorporated by
    reference to Exhibit 10.1 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 29, 2007)*10
.13.1

Separation Agreement and Release, dated April 21, 2008, by
    and between the Company and Daniel A. Artusi (incorporated by
    reference to Exhibit 10.1 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.14

Employment Agreement, dated as of February 27, 2004, by and
    between the Company and Lewis C. Brewster (incorporated by
    reference to Exhibit 10.2 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2004)*10
.14.1

Separation and Release Agreement dated as of August 8, 2008
    by and between the Company and Lewis C. Brewster (incorporated
    by reference to the Companys Current Report on
    Form 8-K
    filed on September 29, 2008)*10
.15

Employment Agreement, dated as of April 14, 2008, by and
    between the Company and D. Scott Mercer (incorporated by
    reference to Exhibit 10.2 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 28, 2008) 99




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##### Table of Contents



Exhibits

Description*10
.16

Employment Agreement, dated as of April 14, 2008, by and
    between the Company and C. Scherp (incorporated by reference to
    Exhibit 10.3 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.17

Employment Agreement, dated as of April 14, 2008, by and
    between the Company and S. Chittipeddi (incorporated by
    reference to Exhibit 10.4 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.18

Employment Agreement, dated as of August 24, 2007, by and
    between the Company and Karen Roscher (incorporated by reference
    to
    Exhibit 10-k-12
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 28, 2007)*10
.18.1

Amendment dated as of May 29, 2008 to Employment Agreement
    dated as of August 24, 2007 by and between Karen Roscher
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on June 2, 2008)*10
.19

Employment Agreement, dated as of February 18, 2008, by and
    between the Company and Mark Peterson (incorporated by reference
    to Exhibit 10.5 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.19.1

Amendment dated as of May 29, 2008 to Employment Agreement
    dated as of February 18, 2008 by and between Mark Peterson
    (incorporated by reference to Exhibit 99.2 of the
    Companys Current Report on
    Form 8-K
    filed on June 2, 2008)10
.20

Distribution Agreement, dated as of June 25, 2003, by and
    between the Company and Mindspeed Technologies, Inc. (excluding
    schedules) (incorporated by reference to Exhibit 2.1 of the
    Companys Current Report on
    Form 8-K
    filed on July 1, 200310
.20.1

Employee Matters Agreement, dated as of June 27, 2003 by
    and between the Company and Mindspeed Technologies, Inc.
    (excluding schedules) (incorporated by reference to
    Exhibit 2.2 of the Companys Current Report on
    Form 8-K
    filed on July 1, 2003)10
.20.2

Tax Allocation Agreement, dated as of June 27, 2003, by and
    between the Company and Mindspeed Technologies, Inc. (excluding
    schedules) (incorporated by reference to Exhibit 2.3 of the
    Companys Current Report on
    Form 8-K
    filed on July 1, 2003)**10
.21

Capacity & Reservation Deposit Agreement, dated as of
    March 20, 2000, by and between the Company and UMC Group
    (USA) (incorporated by reference to
    Exhibit 10-k-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)10
.21.1

Amendment No. 1 to Capacity & Reservation Deposit
    Agreement, dated as of March 24, 2000, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-2
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.2

Amendment No. 2 to Capacity & Reservation Deposit
    Agreement, dated as of August 1, 2000, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-3
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.3

Amendment No. 3 to Capacity & Reservation Deposit
    Agreement, dated as of May 17, 2001, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-4
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.4

Amendment No. 4 to Capacity & Reservation Deposit
    Agreement, dated as of August 24, 2001, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-5
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.5

Foundry Agreement, dated as of July 27, 2000, by and
    between the Company and UMC Group (USA) (incorporated by
    reference to
    Exhibit 10-k-6
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)*10
.22

Form of Indemnity Agreement between the Company and the
    directors and certain executives of the Company (incorporated by
    reference to
    Exhibit 10-q-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2004)*10
.23

Summary of Non-Employee Director Compensation and Benefits
    (incorporated by reference to Exhibit 10.5 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008) 100




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##### Table of Contents



Exhibits

Description10
.24

Receivables Purchase Agreement, dated as of November 29,
    2005, by and between Conexant USA, LLC and the Company
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on December 1, 2005)10
.24.1

Credit and Security Agreement, dated as of November 29,
    2005, by and between Conexant USA, LLC and Wachovia Bank, N.A.
    (incorporated by reference to Exhibit 99.2 of the
    Companys Current Report on
    Form 8-K
    filed on December 1, 2005)10
.24.2

Servicing Agreement, dated as of November 29, 2005, by and
    between the Company and Conexant USA, LLC (incorporated by
    reference to Exhibit 99.3 of the Companys Current
    Report on
    Form 8-K
    filed on December 1, 2005)10
.24.3

Extension Letter Agreement, dated November 21, 2006, by and
    among Wachovia Bank, N.A., the Company and Conexant USA, LLC
    (incorporated by reference to
    Exhibit 10-r-4
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 29, 2006)10
.24.4

Extension Letter Agreement, dated October 11, 2007, by and
    among Wachovia Bank, N.A., the Company and Conexant USA, LLC
    (incorporated by reference to
    Exhibit 10-r-5
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 28, 2007)10
.24.5

Extension Letter Agreement, dated November 24, 2008, by and
    among Wachovia Bank, N.A., the Company and Conexant USA, LLC10
.25

Stockholder Support Agreement, dated as of September 26,
    2006, by and among Acquicor Technology Inc., the Company, RF
    Micro Devices, Inc., Carlyle Partners III, L.P., CP III
    Coinvestment, L.P. and Carlyle High Yield Partners, L.P.
    (incorporated by reference to Exhibit 10.2 of the
    Companys Current Report on
    Form 8-K
    file on October 2, 2006)10
.26

IP License Agreement, dated as of April 29, 2008, by and
    between the Company and NXP B.V. (incorporated by reference to
    Exhibit 10.4 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008)12


Computation of Ratio of Earnings to Fixed Charges for each of
    the five years ended October 3, 200821


List of Subsidiaries of the Company23


Consent of Independent Registered Public Accounting Firm24


Power of Attorney authorizing certain persons to sign this
    Annual Report on
    Form 10-K
    on behalf of certain directors and officers of the Company31
.1

Certification of Chief Executive Officer of Periodic Report
    Pursuant to
    Rule 13a-15(e)
    or
    Rule 15d-15(e)31
.2

Certification of Chief Financial Officer of Periodic Report
    Pursuant to
    Rule 13a-15(e)
    or
    Rule 15d-15(e)32


Certification by Chief Executive Officer and Chief Financial
    Officer of Periodic Report Pursuant to 18 U.S.C.
    Section 1350     *
    
    Management contract or compensatory plan or arrangement.**
    
    Certain confidential portions of this Exhibit have been omitted
    pursuant to a request for confidential treatment. Omitted
    portions have been filed separately with the Securities and
    Exchange Commission.  Financial Statement Schedules
   101




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##### Table of Contents



SIGNATURES
      By:
    /s/  D.
    SCOTT MERCER   Chairman and Chief Executive Officer
    Signature

TitleD.
    Scott MercerD.
    Scott Mercer

Chairman of the Board and Chief Executive Officer
    (Principal Executive Officer)Christian
    ScherpChristian
    Scherp

PresidentKaren
    Roscher*Karen
    Roscher

Senior Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer)William
    E. Bendush*William
    E. Bendush

DirectorSteven
    J. Bilodeau*Steven
    J. Bilodeau

DirectorDwight
    W. Decker*Dwight
    W. Decker

DirectorF.
    Craig Farrill*F.
    Craig Farrill

DirectorBalakrishnan
    S. Iyer*Balakrishnan
    S. Iyer

DirectorMatthew
    E. Massengill*Matthew
    E. Massengill

DirectorJerre
    L. Stead*Jerre
    L. Stead

Director*By:

/s/  KAREN
    ROSCHERKaren
    Roscher, Attorney-in-fact**   **
    
    By authority of the power of attorney filed as Exhibit 24
    hereto 102




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##### Table of Contents



SCHEDULE II
 VALUATION
    AND QUALIFYING ACCOUNTS  ChargedBalance at

(Credited)

Additions

Balance atBeginning

to Costs and

(Deductions)

End ofDescription

of Year

Expenses

(1)

Year(In thousands)Fiscal year ended October 3, 2008:Allowance for doubtful accounts

$
1,659


$
(751
)

$
(74
)

$
834Reserve for sales returns


3,264



(329
)






2,935Reserve for pricing allowances














Allowance for excess and obsolete inventories


17,139



5,619



(5,179
)


17,579Allowance for lower of cost or market inventories


379



(118
)


(261
)


Fiscal year ended September 28, 2007:Allowance for doubtful accounts

$
842


$
20


$
797


$
1,659Reserve for sales returns


3,248



988



(972
)


3,264Reserve for pricing allowances


500



(500
)






Allowance for excess and obsolete inventories


32,245



(2,837
)


(12,269
)


17,139Allowance for lower of cost or market inventories


1,761



(1,159
)


223



379Fiscal year ended September 29, 2006:Allowance for doubtful accounts

$
3,803


$
(2,192
)

$
(769
)

$
842Reserve for sales returns


5,789



134



(2,675
)


3,248Reserve for pricing allowances


5,400



(4,900
)






500Allowance for excess and obsolete inventories


38,464



1,424



(7,643
)


32,245Allowance for lower of cost or market inventories


6,739



(4,932
)


(46
)


1,761     (1)
    
    Deductions in the allowance for doubtful accounts reflect
    amounts written off. 103




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##### Table of Contents



EXHIBIT INDEX
  Exhibits

Description2
.1

Asset Purchase Agreement, dated April 29, 2008, by and
    between the Company and NXP B.V. (incorporated by reference to
    Exhibit 10.3 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008)2
.2

Agreement and Plan of Merger, dated as of September 26,
    2006, by and among Acquicor Technology Inc., Joy Acquisition
    Corp., Jazz Semiconductor, Inc. and T.C. Group, L.L.C., as the
    stockholders representative (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed on October 2, 2006)3
.1

Amended and Restated Certificate of Incorporation of the Company
    (incorporated by reference to Exhibit 3.A.1 of the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended March 31, 2004)3
.1.1

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation of the Company (incorporated by reference to
    Exhibit 3.1 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008)3
.2

Amended By-Laws of the Company (incorporated by reference to
    Exhibit 3.1 of the Companys Current Report on
    Form 8-K
    filed on October 20, 2008)4
.1

Rights Agreement, dated as of November 30, 1998, by and
    between the Company and Mellon Investor Services, L.L.C.
    (formerly ChaseMellon Shareholder Services, L.L.C.), as rights
    agent (incorporated by reference to Exhibit 4.4 of the
    Companys Registration Statement on
    Form S-8
    filed on December 11, 1998 (File
    No. 333-68755))4
.1.1

First Amendment to Rights Agreement, dated as of
    December 9, 1999, by and between the Company and Mellon
    Investor Services, L.L.C. (formerly ChaseMellon Shareholder
    Services, L.L.C.), as rights agent (incorporated by reference to
    Exhibit 4.1 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended December 31, 1999)4
.2

Indenture, dated as of March 7, 2006, by and between the
    Company and The Bank of New York Trust Company, N.A., as
    successor to J.P. Morgan Trust Company, National
    Association, as trustee, including the form of the
    Companys 4% Convertible Subordinated Notes due
    March 1, 2026 attached as Exhibit A thereto
    (incorporated by reference to Exhibit 4.1 of the
    Companys Current Report on
    Form 8-K
    filed on March 8, 2006)4
.2.1

Registration Rights Agreement, dated as of March 7, 2006,
    by and between the Company and Lehman Brothers, Inc.
    (incorporated by reference to Exhibit 4.3 of the
    Companys Current Report on
    Form 8-K
    filed on March 8, 2006)4
.3

Indenture, dated as of November 13, 2006, by and among the
    Company, the subsidiary guarantors party thereto, and The Bank
    of New York Trust Company, N.A., as trustee, including the
    form of the Companys Floating Rate Senior Secured Note due
    2010 attached as Exhibit A thereto (incorporated by
    reference to Exhibit 4.1 of the Companys Current
    Report on
    Form 8-K
    filed on November 16, 2006)4
.3.1

Registration Rights Agreement, dated as of November 13,
    2006, by and among the Company, the subsidiary guarantors party
    thereto, and The Bank of New York Trust Company, N.A. (as
    successor to J.P. Morgan Trust Company N.A.)
    (incorporated by reference to Exhibit 4.3 of the
    Companys Current Report on
    Form 8-K
    filed on November 16, 2006)*10
.1

Conexant Systems, Inc. 1999 Long-Term Incentives Plan, as
    amended (incorporated by reference to Exhibit 4.7 of the
    Companys Registration Statement on
    Form S-8
    filed on May 26, 2000 (File
    No. 333-37918))*10
.1.1

Form of Stock Option Agreement under the Conexant Systems, Inc.
    1999 Long-Term Incentives Plan (incorporated by reference to
    Exhibit 10.1 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999)*10
.1.2

Form of Restricted Stock Agreement (Performance Vesting) under
    the Conexant Systems, Inc. 1999 Long-Term Incentives Plan
    (incorporated by reference to Exhibit 10.2 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999)*10
.1.3

Form of Restricted Stock Agreement (Time Vesting) under the
    Conexant Systems, Inc. 1999 Long-Term Incentives Plan
    (incorporated by reference to Exhibit 10.3 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999) 104




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##### Table of Contents



Exhibits

Description*10
.1.4

Copy of resolutions of the Board of Directors of the Company,
    adopted August 13, 1999 amending, among other things, the
    1999 Long-Term Incentives Plan (incorporated by reference to
    Exhibit 10-e-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 1999)*10
.2

Memorandum of Adjustments to Outstanding Options Under the
    Conexant Stock Plans approved and adopted by the Board of
    Directors of the Company on May 9, 2002, as amended
    June 13, 2002, in connection with the Skyworks transaction
    (incorporated by reference to
    Exhibit 10-b-9
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)*10
.2.1

Memorandum of Proposed Amendments to the Conexant Systems, Inc.
    Stock Option Plans adopted by the Board of Directors of the
    Company on June 13, 2002 in connection with the Skyworks
    transaction (incorporated by reference to
    Exhibit 10-b-10
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)*10
.3

Memorandum of Adjustments to Outstanding Options Under the
    Conexant Stock Plans approved and adopted by the Board of
    Directors of the Company on June 5, 2003 in connection with
    the Mindspeed spin-off (incorporated by reference to
    Exhibit 10-b-11
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2003)*10
.3.1

Memorandum of Proposed Amendments to the Conexant Systems, Inc.
    Stock Option Plans adopted by the Board of Directors of the
    Company on June 5, 2003 in connection with the Mindspeed
    spin-off (incorporated by reference to
    Exhibit 10-b-12
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2003)*10
.4

Amended and Restated Conexant Systems, Inc. Retirement Savings
    Plan (incorporated by reference to Exhibit 4.5 of the
    Companys Registration Statement on
    Form S-8
    filed on December 21, 2006 (File
    No. 333-139547))*10
.5

Conexant Systems, Inc. Directors Stock Plan, as amended
    (incorporated by reference to
    Exhibit 10-e-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 28, 2007)*10
.6

Conexant Systems, Inc. 2000 Non-Qualified Stock Plan, as amended
    (incorporated by reference to Exhibit (D)(2) of Amendment
    No. 2 to Schedule TO filed on December 1, 2004)*10
.6.1

Resolutions adopted by the Board of Directors of the Company on
    February 25, 2004 with respect to the use of shares
    available under certain GlobespanVirata, Inc. stock plans for
    future grants under the Conexant Systems, Inc. 2000
    Non-Qualified Stock Plan (incorporated by reference to
    Exhibit 4.5.2 of the Companys Registration Statement
    on
    Form S-8
    filed on March 15, 2004 (File
    No. 333-113595))*10
.6.2

Form of Stock Option Agreement under the Conexant Systems, Inc.
    2000 Non-Qualified Stock Plan, as amended (incorporated by
    reference to
    Exhibit 10-f-3
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2004)*10
.7

GlobespanVirata, Inc. 1999 Equity Incentive Plan, as amended
    (incorporated by reference to Exhibit 4.5.1 to the
    Companys Registration Statement on
    Form S-8
    filed on March 8, 2004 (File
    No. 333-113399))*10
.7.1

GlobespanVirata, Inc. 1999 Supplemental Stock Option Plan, as
    amended (incorporated by reference to Exhibit 4.5.2 to the
    Companys Registration Statement on
    Form S-8
    filed on March 8, 2004 (File
    No. 333-113399))*10
.7.2

Amended and Restated GlobespanVirata, Inc. 1999 Stock Incentive
    Plan, as amended (incorporated by reference to
    Exhibit 4.5.3 to the Companys Registration Statement
    on
    Form S-8
    filed on March 8, 2004 (File
    No. 333-113399))*10
.8

Conexant Systems, Inc. 2001 Performance Share Plan and related
    Performance Share Award Terms and Conditions (incorporated by
    reference to Exhibit 99.1 of the Companys
    Registration Statement on
    Form S-8
    filed on November 21, 2007 (File
    No. 333-73858))*10
.9

Conexant Systems, Inc. 2004 New-Hire Equity Incentive Plan
    (incorporated by reference to Exhibit 99.1 of the
    Companys Registration Statement on
    Form S-8
    filed on May 28, 2004 (File
    No. 333-115983))*10
.9.1

Form of Stock Option Agreement under the Conexant Systems, Inc.
    2004 New-Hire Equity Incentive Plan (incorporated by reference
    to
    Exhibit 10-j-2
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2004) 105




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##### Table of Contents



Exhibits

Description*10
.9.2

Form of Restricted Stock Unit Award Agreement under the Conexant
    Systems, Inc. 2004 New-Hire Equity Incentive Plan (incorporated
    by reference to Exhibit 10.2 of the Companys
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 29, 2007)*10
.10

Conexant Systems, Inc. 2007 Peak Performance Incentive Plan
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on November 20, 2006)*10
.11

Conexant Systems, Inc. 2008 Peak Performance Incentive Plan
    (incorporated by reference to Exhibit 10.1 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended December 28, 2007)*10
.12

Deferred Compensation Plan II, effective January 1, 2005
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on January 5, 2006)*10
.13

Employment Agreement, dated as of June 21, 2007, by and
    between the Company and Daniel A. Artusi (incorporated by
    reference to Exhibit 10.1 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 29, 2007)*10
.13.1

Separation Agreement and Release, dated April 21, 2008, by
    and between the Company and Daniel A. Artusi (incorporated by
    reference to Exhibit 10.1 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.14

Employment Agreement, dated as of February 27, 2004, by and
    between the Company and Lewis C. Brewster (incorporated by
    reference to Exhibit 10.2 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 31, 2004)*10
.14.1

Separation and Release Agreement dated as of August 8, 2008
    by and between the Company and Lewis C. Brewster (incorporated
    by reference to the Companys Current Report on
    Form 8-K
    filed on September 29, 2008)*10
.15

Employment Agreement, dated as of April 14, 2008, by and
    between the Company and D. Scott Mercer (incorporated by
    reference to Exhibit 10.2 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.16

Employment Agreement, dated as of April 14, 2008, by and
    between the Company and C. Scherp (incorporated by reference to
    Exhibit 10.3 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.17

Employment Agreement, dated as of April 14, 2008, by and
    between the Company and S. Chittipeddi (incorporated by
    reference to Exhibit 10.4 of the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.18

Employment Agreement, dated as of August 24, 2007, by and
    between the Company and Karen Roscher (incorporated by reference
    to
    Exhibit 10-k-12
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 28, 2007)*10
.18.1

Amendment dated as of May 29, 2008 to Employment Agreement
    dated as of August 24, 2007 by and between Karen Roscher
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on June 2, 2008)*10
.19

Employment Agreement, dated as of February 18, 2008, by and
    between the Company and Mark Peterson (incorporated by reference
    to Exhibit 10.5 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 28, 2008)*10
.19.1

Amendment dated as of May 29, 2008 to Employment Agreement
    dated as of February 18, 2008 by and between Mark Peterson
    (incorporated by reference to Exhibit 99.2 of the
    Companys Current Report on
    Form 8-K
    filed on June 2, 2008)10
.20

Distribution Agreement, dated as of June 25, 2003, by and
    between the Company and Mindspeed Technologies, Inc. (excluding
    schedules) (incorporated by reference to Exhibit 2.1 of the
    Companys Current Report on
    Form 8-K
    filed on July 1, 200310
.20.1

Employee Matters Agreement, dated as of June 27, 2003 by
    and between the Company and Mindspeed Technologies, Inc.
    (excluding schedules) (incorporated by reference to
    Exhibit 2.2 of the Companys Current Report on
    Form 8-K
    filed on July 1, 2003) 106




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##### Table of Contents



Exhibits

Description10
.20.2

Tax Allocation Agreement, dated as of June 27, 2003, by and
    between the Company and Mindspeed Technologies, Inc. (excluding
    schedules) (incorporated by reference to Exhibit 2.3 of the
    Companys Current Report on
    Form 8-K
    filed on July 1, 2003)**10
.21

Capacity & Reservation Deposit Agreement, dated as of
    March 20, 2000, by and between the Company and UMC Group
    (USA) (incorporated by reference to
    Exhibit 10-k-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)10
.21.1

Amendment No. 1 to Capacity & Reservation Deposit
    Agreement, dated as of March 24, 2000, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-2
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.2

Amendment No. 2 to Capacity & Reservation Deposit
    Agreement, dated as of August 1, 2000, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-3
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.3

Amendment No. 3 to Capacity & Reservation Deposit
    Agreement, dated as of May 17, 2001, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-4
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.4

Amendment No. 4 to Capacity & Reservation Deposit
    Agreement, dated as of August 24, 2001, by and between the
    Company and UMC Group (USA) (incorporated by reference to
    Exhibit 10-k-5
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)**10
.21.5

Foundry Agreement, dated as of July 27, 2000, by and
    between the Company and UMC Group (USA) (incorporated by
    reference to
    Exhibit 10-k-6
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2002)*10
.22

Form of Indemnity Agreement between the Company and the
    directors and certain executives of the Company (incorporated by
    reference to
    Exhibit 10-q-1
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 30, 2004)*10
.23

Summary of Non-Employee Director Compensation and Benefits
    (incorporated by reference to Exhibit 10.5 of the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008)10
.24

Receivables Purchase Agreement, dated as of November 29,
    2005, by and between Conexant USA, LLC and the Company
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on December 1, 2005)10
.24.1

Credit and Security Agreement, dated as of November 29,
    2005, by and between Conexant USA, LLC and Wachovia Bank, N.A.
    (incorporated by reference to Exhibit 99.2 of the
    Companys Current Report on
    Form 8-K
    filed on December 1, 2005)10
.24.2

Servicing Agreement, dated as of November 29, 2005, by and
    between the Company and Conexant USA, LLC (incorporated by
    reference to Exhibit 99.3 of the Companys Current
    Report on
    Form 8-K
    filed on December 1, 2005)10
.24.3

Extension Letter Agreement, dated November 21, 2006, by and
    among Wachovia Bank, N.A., the Company and Conexant USA, LLC
    (incorporated by reference to
    Exhibit 10-r-4
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 29, 2006)10
.24.4

Extension Letter Agreement, dated October 11, 2007, by and
    among Wachovia Bank, N.A., the Company and Conexant USA, LLC
    (incorporated by reference to
    Exhibit 10-r-5
    of the Companys Annual Report on
    Form 10-K
    for the year ended September 28, 2007)10
.24.5

Extension Letter Agreement, dated November 24, 2008, by and
    among Wachovia Bank, N.A., the Company and Conexant USA, LLC10
.25

Stockholder Support Agreement, dated as of September 26,
    2006, by and among Acquicor Technology Inc., the Company, RF
    Micro Devices, Inc., Carlyle Partners III, L.P., CP III
    Coinvestment, L.P. and Carlyle High Yield Partners, L.P.
    (incorporated by reference to Exhibit 10.2 of the
    Companys Current Report on
    Form 8-K
    file on October 2, 2006)10
.26

IP License Agreement, dated as of April 29, 2008, by and
    between the Company and NXP B.V. (incorporated by reference to
    Exhibit 10.4 of the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 27, 2008)12


Computation of Ratio of Earnings to Fixed Charges for each of
    the five years ended October 3, 2008 107




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##### Table of Contents



Exhibits

Description21


List of Subsidiaries of the Company23


Consent of Independent Registered Public Accounting Firm24


Power of Attorney authorizing certain persons to sign this
    Annual Report on
    Form 10-K
    on behalf of certain directors and officers of the Company31
.1

Certification of Chief Executive Officer of Periodic Report
    Pursuant to
    Rule 13a-15(e)
    or
    Rule 15d-15(e)31
.2

Certification of Chief Financial Officer of Periodic Report
    Pursuant to
    Rule 13a-15(e)
    or
    Rule 15d-15(e)32


Certification by Chief Executive Officer and Chief Financial
    Officer of Periodic Report Pursuant to 18 U.S.C.
    Section 1350     *
    
    Management contract or compensatory plan or arrangement.**
    
    Certain confidential portions of this Exhibit have been omitted
    pursuant to a request for confidential treatment. Omitted
    portions have been filed separately with the Securities and
    Exchange Commission. 108