##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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 2, 2009ORo

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




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##### Table of Contents





FORWARD-LOOKING
    STATEMENTS
    
    our beliefs, subject to the qualifications expressed, 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 for at least
    the next 12 months and whether we will be able to
    repatriate cash from our foreign operations on a timely and
    cost-effective basis;
    our belief that we will be able to sustain the recoverability of
    our goodwill, intangible and tangible long-term assets;
    expectations that we will have sufficient capital to repay our
    indebtedness as it becomes due and to finance our ongoing
    business and operations;
    expectations that we will be able to continue to meet NASDAQ
    listing requirements;
    expectations regarding the market share of our products, growth
    in the markets we serve and our market opportunities;
    expectations regarding price and product competition;
    continued demand and future growth in demand for our products in
    the communications, PC and consumer markets we serve;
    our plans and expectations regarding the transition of our
    semiconductor products to smaller line width geometries;
    our product development plans;
    our expectation that our largest customers will continue to
    account for a substantial portion of our revenue;
    expectations regarding our contractual obligations and
    commitments;
    our expectation that we will be able to protect our products and
    services with proprietary technology and intellectual property
    protection;
    our expectation that we will be able to meet our lease
    obligations (and other financial commitments); and
    our 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, 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


23PART 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


46Item 8.

Financial Statements and Supplementary Data


48Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


98Item 9A.

Controls and Procedures


98Item 9B.

Other Information


98PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


100Item 11.

Executive Compensation


100Item 12.

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


100Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


100Item 14.

Principal Accountant Fees and Services


100PART IVItem 15.

Exhibits and Financial Statement Schedules


101EX-21EX-23EX-24EX-31.1EX-31.2EX-32   2




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PART I  Item 1.
    Business  General
  speakers-on-a-chip voice-over-IP point-of-sale
  949-483-4600. sm
    Divestitures:
  
    On August 24, 2009, we completed the sale of certain assets
    related to our Broadband Access (BBA) business to
    Ikanos Communications, Inc. (Ikanos) for an
    aggregate of approximately $54 million, of which
    $7 million was deposited into an escrow account. The escrow
    account will remain in place for 12 months following the
    closing of the BBA transaction to satisfy potential
    indemnification claims by Ikanos. Assets sold pursuant to the
    asset purchase agreement with Ikanos include specified
    intellectual property, inventory, contracts, and tangible
    assets. Ikanos assumed certain liabilities, including
    obligations under transferred contracts and certain
    employee-related liabilities. We also granted to Ikanos a
    license to use certain of the Companys retained technology
    assets in connection with Ikanos current and future
    products in certain fields of use, along with a patent license
    covering certain of the Companys retained patents to make,
    use, and sell such products (or, in some cases, components of
    such products).
    On August 8, 2008, we completed the sale of certain assets
    related to our Broadband Media Processing (BMP)
    business to NXP B.V. (NXP) for an aggregate
    consideration of approximately $110 million. Assets sold
    pursuant to the agreement with NXP include, among other things,
    specified patents, inventory, contracts and intangible assets.
    NXP assumed certain liabilities, including obligations under
    transferred contracts and certain employee-related liabilities.
    We also granted NXP a license to use certain of the
    Companys retained technology assets in connection with
    NXPs current and future products in certain fields of use,
    along with a patent license covering certain of the
    Companys retained patents to make, use and sell such
    products (or, in some cases, components of such products).
    In February 2007, the Company sold its approximate 42% ownership
    interest in Jazz Semiconductor to Acquicor Technology Inc.
    (Acquicor), which was renamed Jazz Technologies,
    Inc. (Jazz) after the transaction, and Jazz
    Semiconductor became a wholly-owned subsidiary of Jazz. The
    Company received proceeds of $105.6 million for the sale. 3




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Strategy
    
    Focus our product portfolio on targeted markets and growth
    opportunities where we can leverage our core expertise in analog
    and mixed-signal design, digital signal processing (DSP),
    firmware and software development, and our extensive
    applications knowledge to strengthen our market positions and
    expand market share.
    Capitalize on the depth of our global engineering talent and
    strength of our sales and marketing channels to expand into
    adjacent markets and provide innovative solutions to capture
    additional semiconductor content.
    Leverage our strong customer base. Expand strategic
    relationships with industry-leading OEMs/ODMs to maximize design
    wins.  Products
    and Markets
    Imaging Applications. system-on-chip
  Audio Applications. tm Class-D speakers-on-a-chip
 4




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Embedded-Modem Applications. point-of-sale
  Video Applications.
    Research
    and Development
        Manufacturing
     5




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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
     6




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Fiscal Year Ended2009


2008


2007Americas


4
%


6
%


6
%China


64
%


64
%


60
%Asia-Pacific


31
%


28
%


32
%Europe, Middle East and Africa


1
%


2
%


2
%100
%


100
%


100
%         Backlog
    Competition
      Intellectual
    Property and Proprietary Rights
   7




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Environmental
    Regulation
    Employees
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K Form 10-K.
 8




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Item 1A.
    Risk
    Factors  Risk
    Factors
      We
    face a risk that capital needed for our business and to repay
    our debt obligations will not be available when we need
    it.
         9




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There
    could be a negative effect on the price of our common stock if
    we issue equity securities to raise capital or in connection
    with a restructuring of any or all of our convertible
    subordinated notes.
    We are
    a much smaller company than in the recent past and dependent on
    fewer products for our success.
    We are
    subject to the risks of doing business
    internationally.
    
    difficulty in obtaining distribution and support;
    local economic and political conditions;
    limitations on our ability under local laws to protect our
    intellectual property;
    currency exchange rate fluctuations;
    disruptions of commerce and capital or trading markets due to or
    related to terrorist activity, armed conflict, or natural
    disasters;
    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 U.S. 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.    check-the-box
 10




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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.
    We are
    subject to intense competition.
   11




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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.      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 and expenses
    related to carrying vacant property.
  sub-leased sub-leased
 12




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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.
    Our
    ability to use our net operating losses (NOLs) and
    other tax attributes to offset future taxable income could be
    limited by an ownership change and/or decisions by California
    and other states to suspend the use of NOLs.
   13




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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; and
    coordinate product development efforts between and among our
    sites, particularly in India and China, to manage the
    development of products at remote geographic locations.     14




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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;
    our customers perceptions of our liquidity and viability
    may have a negative impact on their decisions to incorporate our
    products into their own 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;
    some of our customers offer or may offer products that compete
    with our products;
    some of our customers liquidity may be negatively affected
    by continued uncertainty in global economic conditions; and
    our smaller size after selling our BBA business, our
    cost-savings efforts and any future liquidity constraints may
    limit our ability to develop and deliver new products to
    customers. 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, which we may not be successful in developing; 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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##### Table of Contents



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.    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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##### Table of Contents



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.
    Litigation
    could be costly and harmful to our business.
    We
    currently operate under tax holidays and favorable tax
    incentives in certain foreign jurisdictions.
    The
    price of our common stock may fluctuate
    significantly.
    
    our operating and financial performance and prospects;
    our ability to repay or restructure our debt;
    the depth and liquidity of the market for our common stock;
    investor perception of us and the industry in which we operate;
    investor perception of us as a going concern and of our ability
    to operate successfully as a company with a smaller cash flow
    and with significant debt obligations;
    the level of research coverage of our common stock;
    changes in earnings estimates or buy/sell recommendations by
    analysts;
    general financial, domestic, international, economic and other
    market conditions;
    proposed acquisitions by us or our competitors;
    the hiring or departure of key personnel; and
    adverse judgments or settlements obligating us to pay damages.   20




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Leased


OwnedSquare


SquareFootage


Footage


TotalUnited States:Newport Beach, California


145



51



196Waltham, MA


29







29174



51



225India


20







20China


27







27Other Asia


37







37Europe


3







3261



51



312   sub-leased sub-leased
  and/or
   21




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Item 3.
    Legal
    Proceedings  IPO Litigation
  Class Action Suit
  Wi-Lan
    Litigation Wi-Lan, (Wi-Lan) Wi-Lan Wi-Lan
 22




---



##### Table of Contents



Wi-Lan
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   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 2, 2009:Fourth quarter

$
3.95


$
1.11Third quarter


1.74



0.68Second quarter


0.86



0.26First quarter


3.35



0.64Fiscal year ended October 3, 2008:Fourth quarter

$
6.48


$
2.68Third quarter


6.60



4.30Second quarter


9.00



3.50First quarter


14.80



8.20      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
  
     *
    
    $100 invested on 9/30/04 in stock or index, including
    reinvestment of dividends.
    Fiscal year ending September 30.Copyright©

    2009 S&P, a division of The McGraw-Hill Companies Inc. All
    rights reserved.  9/04


9/05


9/06


9/07


9/08


9/09Conexant Systems, Inc.



100.00




111.88




125.00




75.00




25.06




17.13S&P 500



100.00




112.25




124.37




144.81




112.99




105.18NASDAQ Electronic Components



100.00




118.95




112.83




137.42




95.53




98.63  24




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##### Table of Contents



Item 6.
    Selected
    Financial Data        Fiscal Year Ended2009


2008


2007


2006


2005(In thousands, except per share amounts)Statement of Operations Data:Net revenues

$
208,427


$
331,504


$
360,703


$
485,571


$
428,134Cost of goods sold(1)(2)


86,674



137,251



161,972



223,809



260,644Gain on cancellation of supply agreement(3)














(17,500
)


Gross margin


121,753



194,253



198,731



279,262



167,490Operating expenses:Research and development(2)


51,351



58,439



91,885



101,274



127,990Selling, general and administrative(2)


62,740



77,905



80,893



89,863



85,169Amortization of intangible assets


2,976



3,652



9,555



18,450



19,769Gain on sale of intellectual property(4)


(12,858
)














Asset impairments(5)


5,672



277



225,380



85



3,761Special charges(6)


18,983



18,682



8,360



3,731



27,501Total operating expenses


128,864



158,955



416,073



213,403



264,190Operating (loss) income


(7,111
)


35,298



(217,342
)


65,859



(96,700
)Interest expense


21,148



27,804



36,953



32,567



28,123Other (income) expense, net


(5,025
)


9,223



(36,505
)


14,281



(106,080
)(Loss) income from continuing operations before income taxes and
    (loss) gain on equity method investments


(23,234
)


(1,729
)


(217,790
)


19,011



(18,743
)Provision for income taxes


871



849



798



889



1,203(Loss) income from continuing operations before (loss) gain on
    equity method investments


(24,105
)


(2,578
)


(218,588
)


18,122



(19,946
)(Loss) gain on equity method investments


(2,807
)


2,804



51,182



(8,164
)


(10,642
)(Loss) income from continuing operations


(26,912
)


226



(167,406
)


9,958



(30,588
)Gain on sale of discontinued operations, net of tax(7)


39,170



6,268











Loss from discontinued operations, net of tax(2)(7)


(17,521
)


(306,670
)


(235,056
)


(132,549
)


(145,402
)Net loss

$
(5,263
)

$
(300,176
)

$
(402,462
)

$
(122,591
)

$
(175,990
) 25




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##### Table of Contents



Fiscal Year Ended2009


2008


2007


2006


2005(In thousands, except per share amounts)(Loss) income per share from continuing operations 
    basic

$
(0.54
)

$
0.00


$
(3.42
)

$
0.21


$
(0.65
)(Loss) income per share from continuing operations 
    diluted

$
(0.54
)

$
0.00


$
(3.42
)

$
0.20


$
(0.65
)Gain per share from sale of discontinued operations 
    basic and diluted

$
0.78


$
0.13


$
0.00


$
0.00


$
0.00Loss per share from discontinued operations  basic

$
(0.35
)

$
(6.21
)

$
(4.80
)

$
(2.77
)

$
(3.09
)Loss per share from discontinued operations  diluted

$
(0.35
)

$
(6.18
)

$
(4.80
)

$
(2.71
)

$
(3.09
)Net loss per share  basic

$
(0.11
)

$
(6.08
)

$
(8.22
)

$
(2.56
)

$
(3.74
)Net loss per share  diluted

$
(0.11
)

$
(6.05
)

$
(8.22
)

$
(2.51
)

$
(3.74
)Balance Sheet Data at Fiscal Year End:Working capital(8)

$
42,047


$
115,617


$
318,360


$
127,635


$
125,856Total assets


350,850



446,403



985,969



1,573,625



1,581,524Short-term debt


28,653



40,117



80,000



80,000



Current portion of long-term debt(9)


61,400



17,707



58,000



188,375



196,825Long-term obligations(9)


312,089



430,034



523,422



601,189



599,007Shareholders (deficit) equity


(118,551
)


(136,734
)


146,515



510,098



569,093     (1)
    
    In fiscal 2005, in response to lower market prices and reduced
    end-customer demand for our products, we recorded
    $32.3 million of inventory charges to establish additional
    excess and obsolete inventory reserves and a write-down of
    inventory to lower of cost or market.(2)
    
    We adopted FASB ASC
    718-10
    (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 2009, 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 Ended2009

2008

2007

2006

2005Cost of goods sold

$
247


$
370


$
426


$
382


$
Research and development


869



2,725



6,157



9,249



3,027Selling, general and administrative


3,736



9,185



7,271



19,312



1,881Loss from discontinued operations, net of tax


868



3,589



5,897



16,632



7,142   (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 2009, we recorded a $12.9 million gain on sale of
    intellectual property.(5)
    
    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
    products. 26




---



##### Table of Contents



(6)
    
    Special charges include the following related to the settlement
    of legal matters and restructuring charges (in thousands):  Fiscal Year Ended2009

2008

2007

2006

2005Legal settlements

$
3,475


$



$
1,497


$



$
3,255Restructuring charges


15,116



11,539



7,227



3,641



18,707   (7)
    
    As a result of our decision to sell certain assets and
    liabilities of the BMP and BBA business units in fiscal 2008 and
    2009, respectively, the results of the BMP and BBA business and
    the gain on sale of the BMP business are reported as
    discontinued operations for all periods presented.(8)
    
    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, 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, as
    required by the Segment Reporting topics of the FASB ASC
    470-10 (SFAS
    No. 6, Classification of Short-Term Obligations
    Expected to Be Refinanced).Subsequent to October 2, 2009, the Company issued a
    redemption notice announcing that it will redeem all of the
    remaining $61.4 million senior secured notes on
    December 18, 2009. The redemption price will be equal to
    101% of the principal amount of the senior secured notes plus
    accrued and unpaid interest to the redemption date. Accordingly,
    the remaining $61.4 million senior secured notes have been
    classified as current in the Companys consolidated balance
    sheets as of October 2, 2009.(9)
    
    As discussed in note (8) 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, as required by the
    Segment Reporting topics of the FASB ASC
    470-10
    (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
 27




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##### Table of Contents



Overview
  speakers-on-a-chip voice-over-IP point-of-sale
    Business
    Enterprise Segments
  280-10
    Results
    of Operations
  Net
    Revenues
  605-15
       28




---



##### Table of Contents



quarter-over-quarter
    Gross
    Margin
         29




---



##### Table of Contents



Fiscal Year Ended2009


2008E&O reserves, beginning of period

$
12,579


$
11,986Additions


2,159



7,309Release upon sales of product


(2,904
)


(1,733
)Scrap


(5,669
)


(4,003
)Standards adjustments and other


227



(980
)E&O reserves, end of period

$
6,392


$
12,579         Research
    and Development
        Selling,
    General and Administrative
   30




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##### Table of Contents



Amortization
    of Intangible Assets
        Asset
    Impairments
           31




---



##### Table of Contents



Special
    Charges
  Fiscal Year EndedOctober 2,


October 3,


September 28,2009


2008


2007(In thousands)Litigation charges

$
3,475


$



$
1,497Restructuring charges


15,116



11,539



7,227Voluntary Early Retirement Plan (VERP) settlement
    charge






6,294



Loss on disposal of property


392



961



Other special charges






(112
)


(364
)$
18,983


$
18,682


$
8,360         Interest
    Expense
      Other
    (Income) Expense, Net
  Fiscal Year Ended2009


2008


2007Investment and interest income

$
(1,747
)

$
(7,237
)

$
(13,833
)(Increase) decrease in the fair value of derivative instruments


(4,508
)


14,974



952Impairment of equity securities


2,770







Loss on rental property






1,435



Loss on swap termination


1,087







Gains on investments in equity securities


(1,856
)


(896
)


(17,016
)Other


(771
)


947



(6,608
)Other (income) expense, net

$
(5,025
)

$
9,223


$
(36,505
)  32




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##### Table of Contents



Provision
    for Income Taxes
    805-10
  740-10 740-10 740-10
  740-10
 33




---



##### Table of Contents



Gain
    (Loss) on Equity Method Investments
        Loss
    from Discontinued Operations, net of tax
    October 2,


October 3,


September 28,2009


2008


2007Net revenues

$
116,590


$
351,179


$
448,166Cost of goods sold


59,680



212,823



288,565Gross margin


56,910



138,356



159,601Operating expenses:Research and development


40,085



141,395



186,800Selling, general and administrative


4,863



18,429



26,137Amortization of intangible assets


4,430



12,492



12,544Asset impairments


5,164



262,177



132,363Special charges


14,518



2,791



20,844Total operating expenses


69,060



437,284



378,688Operating loss


(12,150
)


(298,928
)


(219,087
)Interest expense


2,741



12,836



12,033Other expense (income), net


1,132



(9,682
)


357Loss from continuing operations before income taxes


(16,023
)


(302,082
)


(231,477
)Provision for income taxes


1,498



4,588



3,579Loss from discontinued operations, net of tax

$
(17,521
)

$
(306,670
)

$
(235,056
)  34




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##### Table of Contents



Liquidity
    and Capital Resources
               35




---



##### Table of Contents



Fiscal Year EndedOctober 2,


October 3,


September 282009


2008


2007Net cash provided by (used in) operating activities

$
8,476


$
(18,350
)

$
(11,851
)Net cash provided by investing activities


85,404



63,515



205,179Net cash used in financing activities


(74,378
)


(174,887
)


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

$
19,502


$
(129,722
)

$
9,979  36




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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

$
250,000


$



$
250,000


$



$



$
Short-term debt


90,053



90,053















Interest on debt


15,960



10,960



5,000











Operating leases


111,957



19,446



15,661



13,704



27,950



35,196Purchase commitments


13,496



10,083



1,834



1,579







$
481,466


$
130,542


$
272,495


$
15,283


$
27,950


$
35,196    37




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##### Table of Contents



740-10
  Off-Balance
    Sheet Arrangements
      Special
    Purpose Entities
      Recently
    Adopted Accounting Pronouncements
  815-10 815-10 815-10 815-10
 38




---



##### Table of Contents



820-10 820-10
  820-10 820-10 820-10
  
    Level 1:  Quoted prices in active markets
    for identical assets or liabilities.
    Level 2:  Observable inputs other than
    Level 1 prices, such as quoted prices for similar assets or
    liabilities; quoted prices in markets that are not active; or
    other inputs that are observable or can be corroborated by
    observable market data for substantially the full term of the
    related assets or liabilities.
    Level 3:  Unobservable inputs that are
    supported by little or no market activity and that are
    significant to the fair value of the assets or liabilities.  820-10
  820-10 FAS 157-2, 820-10 820-10 820-10 FAS 157-2)
  825-10 320-15 825-10
  825-10 FAS 107-1, 270-10 28-1, 820-10 825-10 FAS 107-1) 270-10 (APB 28-1)
  820-10 FAS 157-4, 820-10 820-10 FAS 157-4)
  855-10
   39




---



##### Table of Contents



Recently
    Issued Accounting Pronouncements
  805-10 805-10 805-10 805-10
  350-30 FAS 142-3, 350-30 FAS 142-3) 350-10 350-10 805-10 350-30 FAS 142-3) 350-30 FAS 142-3)
  470-20 14-1, 470-20 14-1) 470-20 14-1) 470-20 14-1)
   40




---



##### Table of Contents



No. 2009-5, No. 2009-05). 2009-05 2009-05 and/or 2009-05 2009-05 2009-05
  Critical
    Accounting Policies
    Business
    combinations
    Revenue
    recognition
   41




---



##### Table of Contents



605-15
      Allowance
    for doubtful accounts
    Derivatives
  815-10
  Inventories
   42




---



##### Table of Contents



Long-lived
    assets
  and/or
  Goodwill
      Fair Value based on Quoted Market price
    Analysis:
  Fair Value based on Market Multiple
    Analysis:
   43




---



##### Table of Contents



Income
    Taxes
  740-10 Accounting for Income Taxes
  740-10 Accounting for Uncertainty in Income
    Taxes  An Interpretation of FASB Statement
    No. 109 740-10 740-10 740-10 740-10 740-10 740-10
  450-20 Accounting for Contingencies
  Deferred
    income taxes
    Valuation
    of equity securities
   44




---



##### Table of Contents



Stock-based
    compensation
  718-10 718-10 718-10 718-10
  718-10 718-10 718-10
  718-10 718-10 catch-up
    718-10
  No. SFAS 123R-3, Transition Election Related to Accounting for Tax Effects of
    Share-Based Payment Awards SFAS 123R-3. SFAS 123R-3 718-10 718-10
 45




---



##### Table of Contents



Restructuring
    charges
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk        364-day 7-day
     46




---



##### Table of Contents



CarryingValue

Fair Value(In thousands)Cash and cash equivalents

$
125,385


$
125,385Restricted cash


8,500



8,500Other equity securities


4,805



4,805Mindspeed warrant


5,053



5,053Long-term restricted cash


6,423



6,423Short-term debt(1)


28,653



28,653Short-term debt: senior secured notes


61,400



61,400Long-term debt: convertible subordinated notes


250,000



211,875     (1)
    
    The difference between the carrying value and the fair value of
    the short-term debt is immaterial due to the short remaining
    term to maturity of the debt and current market rates.  Exchange
    Rate Risk
     47




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  October 2,


October 3,2009


2008(In thousands, except par value)ASSETSCurrent assets:Cash and cash equivalents

$
125,385


$
105,883Restricted cash


8,500



26,800Receivables, net of allowances for doubtful accounts of $453 and
    $834, respectively


30,110



48,997Inventories, net


9,216



19,372Other current assets


26,148



37,938Assets held for sale






29,730Total current assets


199,359



268,720Property, plant and equipment, net


15,299



17,410Goodwill


109,908



110,412Other assets


26,284



49,861Total assets

$
350,850


$
446,403LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt

$
61,400


$
17,707Short-term debt


28,653



40,117Accounts payable


24,553



34,894Accrued compensation and benefits


8,728



13,201Other current liabilities


33,978



43,189Liabilities to be assumed






3,995Total current liabilities


157,312



153,103Long-term debt


250,000



373,693Other liabilities


62,089



56,341Total liabilities


469,401



583,137Commitments and contingencies (Note 8)Shareholders deficit:Preferred and junior preferred stock: 20,000 and
    5,000 shares authorized, respectively






Common stock, $0.01 par value: 100,000 shares
    authorized; 56,917 and 49,601 shares issued and outstanding at
    October 2, 2009 and October 3, 2008, respectively


570



496Additional paid-in capital


4,767,874



4,744,140Accumulated deficit


(4,884,471
)


(4,879,208
)Accumulated other comprehensive loss


(2,524
)


(2,083
)Shareholder notes receivable






(79
)Total shareholders deficit


(118,551
)


(136,734
)Total liabilities and shareholders deficit

$
350,850


$
446,403    48




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##### Table of Contents



CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Fiscal Year EndedOctober 2,


October 3,


September 282009


2008


2007(In thousands, except per share amounts)Net revenues

$
208,427


$
331,504


$
360,703Cost of goods sold(1)


86,674



137,251



161,972Gross margin


121,753



194,253



198,731Operating expenses:Research and development(1)


51,351



58,439



91,885Selling, general and administrative(1)


62,740



77,905



80,893Amortization of intangible assets


2,976



3,652



9,555Gain on sale of intellectual property


(12,858
)






Asset impairments


5,672



277



225,380Special charges


18,983



18,682



8,360Total operating expenses


128,864



158,955



416,073Operating (loss) income


(7,111
)


35,298



(217,342
)Interest expense


21,148



27,804



36,953Other (income) expense, net


(5,025
)


9,223



(36,505
)Loss from continuing operations before income taxes and (loss)
    gain on equity method investments


(23,234
)


(1,729
)


(217,790
)Provision for income taxes


871



849



798Loss from continuing operations before (loss) gain on equity
    method investments


(24,105
)


(2,578
)


(218,588
)(Loss) gain on equity method investments


(2,807
)


2,804



51,182(Loss) income from continuing operations


(26,912
)


226



(167,406
)Gain on sale of discontinued operations, net of tax


39,170



6,268



Loss from discontinued operations, net of tax(1)


(17,521
)


(306,670
)


(235,056
)Net loss

$
(5,263
)

$
(300,176
)

$
(402,462
)(Loss) income per share from continuing operations 
    basic and diluted

$
(0.54
)

$
0.00


$
(3.42
)Gain per share from sale of discontinued operations 
    basic and diluted

$
0.78


$
0.13


$
0.00Loss per share from discontinued operations  basic

$
(0.35
)

$
(6.21
)

$
(4.80
)Loss per share from discontinued operations  diluted

$
(0.35
)

$
(6.18
)

$
(4.80
)Net loss per share  basic

$
(0.11
)

$
(6.08
)

$
(8.22
)Net loss per share  diluted

$
(0.11
)

$
(6.05
)

$
(8.22
)Shares used in basic per-share computations


49,856



49,394



48,940Shares used in diluted per-share computations


49,856



49,653



48,940     (1)
    
    These captions include non-cash employee stock-based
    compensation expense as follows:  Fiscal Year EndedOctober 2,

October 3,

September 28,2009

2008

2007Cost of goods sold

$
247


$
370


$
426Research and development


869



2,725



6,157Selling, general and administrative


3,736



9,185



7,271Loss from discontinued operations, net of tax


868



3,589



5,897    49




---



##### Table of Contents



CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Fiscal Year EndedOctober 2,


October 3,


September 282009


2008


2007(In thousands)Cash flows from operating activitiesNet loss

$
(5,263
)

$
(300,176
)

$
(402,462
)Adjustments to reconcile net loss to net cash used in operating
    activities, net of effects of acquisitions:Depreciation


8,198



19,311



25,091Gain on sale of business


(39,170
)


(6,268
)


Amortization of intangible assets


7,406



16,144



22,099Asset impairments


10,835



263,535



350,913Impairment of marketable and non-marketable securities


2,770







(Reversal of) charges for provision for bad debts, net


(325
)


(751
)


20(Reversal of) charges for inventory provisions, net


(806
)


7,253



(606
)Loss on termination of defined benefit plan






6,294



Deferred income taxes


(15
)


(39
)


231Stock-based compensation


5,720



15,869



19,751(Increase) decrease in fair value of derivative instruments


(4,002
)


14,881



952Realized loss on termination of swap


1,087







Losses (gains) on equity method investments


3,798



(2,804
)


(51,182
)Loss on resolution of divestiture/acquisition related escrows,
    net


1,575







Gain on sales of equity securities, investments and other assets


(1,856
)


(896
)


(17,016
)Gain on sale of intellectual property


(12,858
)






Other items, net


4,619



4,506



(4,920
)Changes in assets and liabilities:Receivables


19,212



32,633



42,099Inventories


15,871



9,326



36,131Accounts payable


(10,341
)


(45,010
)


(30,732
)Accrued expenses and other current liabilities


(17,080
)


(36,210
)


3,710Other, net


19,101



(15,948
)


(5,930
)Net cash provided by (used in) operating activities


8,476



(18,350
)


(11,851
)Cash flows from investing activitiesProceeds from sale of equity securities and other assets


2,310







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










100,573Purchases of marketable securities










(27,029
)Purchases of property, plant and equipment


(686
)


(5,958
)


(30,322
)Proceeds from sales of property, plant and equipment


134



8,949



Proceeds from sale of intellectual property, net of expenses of
    $132


14,548







Payments for acquisitions, net of cash acquired


(4,207
)


(16,088
)


(5,029
)Purchases of equity securities






(755
)


(1,200
)Restricted cash


18,300



(18,000
)


Proceeds from resolution of divestiture/acquisition related
    escrows, net


10,446







Net proceeds from sale of business


44,559



95,367



Net cash provided by investing activities


85,404



63,515



205,179Cash flows from financing activities(Repayment) proceeds from short-term debt, net of expenses of
    $901, $1,118 and $1,198, respectively


(12,365
)


(39,883
)


(1,198
)Proceeds from long-term debt, net of expenses of $10,240










264,760Repurchases and retirements of long-term debt


(80,000
)


(133,600
)


(456,500
)Proceeds from common stock offering, net of expenses of $1,514


18,436







Proceeds from issuance of common stock under employee stock plans


28



1,088



9,568Employee income tax paid related to vesting of restricted stock
    units


(258
)






Interest rate swap security deposit


2,517



(2,517
)


Payment for swap termination


(2,815
)






Repayment of shareholder notes receivable


79



25



21Net cash used in financing activities


(74,378
)


(174,887
)


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


19,502



(129,722
)


9,979Cash and cash equivalents at beginning of year


105,883



235,605



225,626Cash and cash equivalents at end of year

$
125,385


$
105,883


$
235,605    50




---



##### Table of Contents



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


Notes





TotalAdditional





Comprehensive


Receivable





ShareholdersCommon Stock


Paid-In


Accumulated


(Loss) Income


from Stock


Treasury


EquityShares


Amount


Capital


Deficit


(Net of Tax)


Sales


Stock


(Deficit)(In thousands)Balance 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
)Net loss














(5,263
)














(5,263
)Currency translation adjustment


















(1,104
)










(1,104
)Change in unrealized gain on derivative contracts


















(3,017
)










(3,017
)Loss on termination of derivative contracts


















1,746











1,746Change in unrealized losses on available-for-sale securities


















650











650Other than temporary loss on available-for-sale securities


















1,986











1,986Sale of available-for-sale securities


















(702
)










(702
)Comprehensive loss






























(5,704
)Common stock issued in offering


7,000



70



18,366



















18,436Common stock issued related to employee stock plans


316



4



(234
)


















(230
)Settlement of notes receivable






















79







79Employee stock-based compensation expense










5,602



















5,602Balance at October 2, 2009


56,917


$
570


$
4,767,874


$
(4,884,471
)

$
(2,524
)

$



$



$
(118,551
)    51




---



##### Table of Contents



1.
    Basis of
    Presentation and Significant Accounting Policies  speakers-on-a-chip voice-over-IP point-of-sale
  Basis of Presentation 
  Fiscal Year 
  Use of Estimates 
  Revenue Recognition  605-15
      Research and Development 
 52




---



##### Table of Contents



Shipping and Handling  605-45 No. 00-10,
  Cash and Cash Equivalents 
  Restricted Cash 
    Liquidity 
     53




---



##### Table of Contents



Inventories 
  Property, Plant and Equipment 
  Investments  other-than-temporary
  Long-Lived Assets  and/or
  Goodwill  350-10 350-10
   54




---



##### Table of Contents



Fair Value based on Quoted Market price
    Analysis:
  Fair Value based on Market Multiple
    Analysis:
          Foreign Currency Translation and Remeasurement 
 55




---



##### Table of Contents



Interest Rate Swaps  815-10
      Net Loss Per Share  260-10
    Fiscal Year Ended2009


2008


2007Stock options and warrants


5,624



8,576



8,1194.00% convertible subordinated notes due February 2007










4894.00% convertible subordinated notes due March 2026


5,081



5,081



5,08110,705



13,657



13,689  56




---



##### Table of Contents



Stock-Based Compensation  718-10 718-10 718-10 718-10 718-10
  718-10 718-10 718-10
  718-10 718-10 catch-up
  718-10
  Income Taxes  740-10
    740-10 740-10
 57




---



##### Table of Contents



740-10
    Concentrations
      Supplemental Cash Flow Information 
  Accumulated Other Comprehensive Loss 
  October 2,


October 3,2009


2008Foreign currency translation adjustments

$
(796
)

$
308Unrealized losses on marketable securities






(1,934
)Unrealized (losses) gains on derivative instruments


(1,728
)


(457
)Accumulated other comprehensive (loss) income

$
(2,524
)

$
(2,083
)  58




---



##### Table of Contents



Business
    Enterprise Segments
  280-10
  Recently
    Adopted Accounting Pronouncements
  815-10 815-10 815-10 815-10
  820-10 820-10
  820-10 820-10 820-10
  
    Level 1:Quoted prices in active markets
    for identical assets or liabilities.
    Level 2:Observable inputs other than
    Level 1 prices, such as quoted prices for similar assets or
    liabilities; quoted prices in markets that are not active; or
    other inputs that are observable or can be corroborated by
    observable market data for substantially the full term of the
    related assets or liabilities.
    Level 3:Unobservable inputs that are
    supported by little or no market activity and that are
    significant to the fair value of the assets or liabilities.  820-10
  820-10 FAS 157-2, 820-10 820-10 820-10 FAS 157-2)
  825-10 320-15 825-10
 59




---



##### Table of Contents



825-10 FAS 107-1, 270-10 28-1, 820-10 825-10 FAS 107-1) 270-10 (APB 28-1)
  820-10 FAS 157-4, 820-10 820-10 FAS 157-4)
            Recently
    Issued Accounting Pronouncements
  805-10 805-10 805-10 805-10
  350-30 FAS 142-3, 350-30 FAS 142-3) 350-10 350-10 805-10 350-30 FAS 142-3)
 60




---



##### Table of Contents



350-30 FAS 142-3)
  470-20 14-1, 470-20 14-1) 470-20 14-1) 470-20 14-1)
      No. 2009-5, No. 2009-05). 2009-05 2009-05 and/or 2009-05 2009-05 2009-05
  2.
    Sales of
    Assets  Fiscal
    2009
   61




---



##### Table of Contents



Inventories, net

$
13,056Total current assets


13,056Goodwill


1,000Total assets

$
14,056Accrued compensation and benefits

$
1,732Other current liabilities


456Total liabilities

$
2,188   360-10 Accounting for the Impairment or
    Disposal of Long-Lived Assets 205-20 (EITF 87-24, Allocation of Interest to Discontinued Operations
      Fiscal
    2008
     62




---



##### Table of Contents



Cash and cash equivalents

$
3,104Accounts receivable


27Inventories, net


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     360-10 Accounting for the Impairment or Disposal of Long-Lived
    Assets 205-20 No. 87-24, Allocation of Interest to Discontinued Operations
    Fiscal
    2007
    3.
    Business
    Combinations  Fiscal
    2009
   63




---



##### Table of Contents



Fiscal
    2008
  No. 86-14
  Fiscal
    2007
    805-10
  4.
    Fair
    Value of Certain Financial Assets and Liabilities  820-10
  Level 1


Level 2


TotalAssets:Cash and cash equivalents

$
125,385


$



$
125,385Restricted cash


8,500







8,500Mindspeed warrant






5,053



5,053Long-term restricted cash


6,423







6,423Total Assets

$
140,308


$
5,053


$
145,361        64




---



##### Table of Contents



TotalShort-term debt: senior secured notes

$
61,400Short-term debt


28,653Long-term debt: convertible subordinated notes


211,875$
301,928     5.
    Supplemental
    Balance Sheet Data  Inventories
   October 2,


October 3,2009


2008Work-in-process

$
5,002


$
8,413Finished goods


4,214



10,959Total inventories, net

$
9,216


$
19,372     Property,
    Plant and Equipment
   October 2,


October 3,2009


2008Land

$
1,662


$
1,662Land and leasehold improvements


6,887



6,406Buildings


19,824



19,823Machinery and equipment


56,979



67,738Construction in progress


86



12785,438



95,756Accumulated depreciation and amortization


(70,139
)


(78,346
)$
15,299


$
17,410    65




---



##### Table of Contents



Goodwill
    Fiscal Year Ended2009


2008Goodwill at beginning of period

$
110,412


$
106,065Additions


1,000



4,997Disposals


(1,000
)


Impairments






(180
)Other adjustments


(504
)


(470
)Goodwill at end of period

$
109,908


$
110,412   Impairments
          Additions
     66




---



##### Table of Contents



Other
    Current Assets
   October 2,


October 3,2009


2008Other receivables

$
6,988


$
11,642Deferred tax asset


327



375Prepaid technical licenses


3,775



10,042Other prepaid expenses


5,026



7,584Other current assets


10,032



8,295$
26,148


$
37,938   Other
    Assets
   October 2,


October 3,2009


2008Mindspeed warrant

$
5,053


$
545Technology license






8,310Non-current letters of credit


6,423



6,759Electronic design automation tools


1,136



4,223Deferred debt issuance costs


2,619



6,205Investments


4,805



8,822Intangible assets


5,557



10,611Other non-current assets


691



4,386$
26,284


$
49,861   Mindspeed
    Warrant
      Technology
    License
   67




---



##### Table of Contents



Intangible
    Assets
    October 2, 2009


October 3, 2008Gross








GrossCarrying


Accumulated


Book


Carrying


Accumulated


BookAmount


Amortization


Value


Amount


Amortization


ValueDeveloped technology

$



$



$



$
11,042


$
(9,963
)

$
1,079Product licenses


2,400



(628
)


1,772



11,032



(7,105
)


3,927Other intangible assets


6,830



(3,045
)


3,785



8,240



(2,635
)


5,605$
9,230


$
(3,673
)

$
5,557


$
30,314


$
(19,703
)

$
10,611     Fiscal Year Ending2010

2011

2012

2013

2014

ThereafterAmortization expense

$
1,250


$
1,137


$
1,137


$
1,017


$
446


$
570           Other
    Current Liabilities
    October 2,


October 3,2009


2008Restructuring and reorganization liabilities


9,197



10,422Accrued technical licenses


5,552



12,475Taxes payable


3,909



1,865Other


15,320



18,427$
33,978


$
43,189  68




---



##### Table of Contents



Other
    Liabilities
    October 2,


October 3,2009


2008Restructuring and reorganization liabilities


33,533



17,933Deferred gain on sale of building


13,205



16,108Taxes payable


6,411



7,201Accrued technical licenses


3,413



8,472Other


5,527



6,627$
62,089


$
56,341   6.
    Income
    Taxes    Fiscal Year Ended2009


2008


2007Current:United States

$
(149
)

$
(33
)

$
Foreign


269



886



605State and local


(10
)


19



97Total current


110



872



702Deferred:United States










Foreign


761



(23
)


96Total deferred


761



(23
)


96$
871


$
849


$
798     October 2,


October 3,2009


2008Deferred tax assets:Intangible assets

$
139,377


$
154,377Capitalized research and development


270,426



316,545Net operating losses


581,786



474,783Research and development and investment credits


153,938



152,869Other, net


108,948



171,189Valuation allowance


(1,199,860
)


(1,213,944
)Total deferred tax assets


54,615



55,819Deferred tax liabilities:Deferred state taxes


(55,066
)


(55,510
)Total deferred tax liabilities


(55,066
)


(55,510
)$
(451
)

$
309  69




---



##### Table of Contents



740-10
  740-10
  740-10 805-10
  718-10
    Fiscal Year EndedOctober 2,


October 3,


September 22009


2008


2007U.S. Federal statutory tax at 35%

$
(8,132
)

$
(605
)

$
(76,227
)State taxes, net of federal effect


711



(844
)


5,508U.S. and foreign income taxes on foreign earnings


7,863



6,346



2,466Research and development credits


(939
)


(3,655
)


(5,229
)Valuation allowance


(13,911
)


4,499



26,587Detriment/(benefit) from discontinued operations and equity
    method investments, net of impairments


6,670



(7,986
)


(19,131
)Asset impairments


4,494







63,012Stock options


3,189



2,271



2,022Other


926



823



1,790Provision for income taxes

$
871


$
849


$
798  70




---



##### Table of Contents



Fiscal Year EndedOctober 2,


October 3,


September 22009


2008


2007United States

$
(19,192
)

$
733


$
(215,449
)Foreign


(4,042
)


(2,462
)


(2,341
)$
(23,234
)

$
(1,729
)

$
(217,790
)       740-10
    2009


2008Beginning balance

$
77,304


$
74,370Increases related to current year tax positions


730



4,279Expiration of the statue of limitations for the assessment of
    taxes


(4,429
)


(1,504
)Other


232



159Ending balance

$
73,837


$
77,304   805-10 805-10
     71




---



##### Table of Contents



7.
    Debt  Short-Term
    Debt
    7-day
    Long-Term
    Debt
    October 2,


October 3,2009


2008Floating rate senior secured notes due November 2010

$
61,400


$
141,4004.00% convertible subordinated notes due March 2026


250,000



250,000Total


311,400



391,400Less: current portion of long-term debt


(61,400
)


(17,707
)Long-term debt

$
250,000


$
373,693    72




---



##### Table of Contents



4.00% convertible subordinated notes due March
    2026 
 73




---



##### Table of Contents



8.
    Commitments
    and Contingencies  Lease
    Commitments
      Lease


Sublease


NetFiscal Year Ending

Payments


Income


Obligations2010

$
19,446


$
(4,827
)

$
14,6192011


15,661



(2,352
)


13,3092012


13,704



(1,746
)


11,9582013


13,941



(1,510
)


12,4312014


14,009



(1,212
)


12,797Thereafter


35,196



(2,269
)


32,927Total future minimum lease payments

$
111,957


$
(13,916
)

$
98,041       Legal
    Matters
    IPO Litigation
 74




---



##### Table of Contents



Class Action Suit 
  Wi-Lan
    Litigation Wi-Lan, (Wi-Lan) Wi-Lan Wi-Lan Wi-Lan
  Guarantees
    and Indemnifications
   75




---



##### Table of Contents



Other
  Tax Matter 
  740-10
  9.
    Shareholders
    Equity    Stock
    Option Plans
    718-10 718-10
 76




---



##### Table of Contents



Fiscal Year EndedOctober 2,

October 3,

September 28,2009

2008

2007Stock option plans:Expected dividend yield

$



$



$
Expected stock price volatility


79
%


67
%


68
%Risk free interest rate


2.12
%


3.20
%


4.60
%Average expected life (in years)


4.87



5.25



4.93Stock purchase plans:Expected dividend yield

$



$



$
Expected stock price volatility


74
%


69
%


60
%Risk free interest rate


3.14
%


3.10
%


4.80
%Average expected life (in years)


0.50



0.50



0.50      WeightedAverageExerciseShares


PriceOutstanding, October 3, 2008


7,357


$
23.54Granted


77



1.07Exercised






Forfeited


(3,224
)


23.45Outstanding, October 2, 2009


4,210



23.20Shares vested and expected to vest, October 2, 2009


4,159



23.33Exercisable, October 2, 2009


3,840


$
24.24       WeightedAverageGrant DateShares

Fair ValueOutstanding, October 3, 2008





$
Granted


136



2.38Vested






Forfeited






Outstanding, October 2, 2009


136


$
2.38  77




---



##### Table of Contents



1999
    Long Term Incentive Plan, 2001 Performance Share Plan and 2004
    New Hire Equity Incentive Plan
    1999
    Long Term Incentive Plan
    WeightedAverageGrant DateShares

Fair ValueOutstanding, October 3, 2008


225


$
5.31Granted






Vested


(213
)


5.30Forfeited






Outstanding, October 2, 2009


12


$
5.67     2001
    Performance Share Plan
    WeightedAverageGrant DateShares


Fair ValueOutstanding, October 3, 2008


175


$
8.00Granted






Vested


(175
)


8.00Forfeited






Outstanding, October 2, 2009





$
    78




---



##### Table of Contents



2004
    New Hire Plan
    WeightedAverageGrant DateShares


Fair ValueOutstanding, October 3, 2008


74


$
10.59Granted






Vested


(32
)


11.33Forfeited


(25
)


13.70Outstanding, October 2, 2009


17


$
4.50     Employee
    Stock Purchase Plan
    Directors
    Stock Plan
    10.
    Employee
    Benefit Plans  Retirement
    Savings Plan
   79




---



##### Table of Contents



Retirement
    Medical Plan
    Pension
    Plans
  non-U.S. employees
    11.
    Gain on
    Sale of Intellectual Property    12.
    Asset
    Impairments  Fiscal
    2009
    Fiscal
    2008
     80




---



##### Table of Contents



Fiscal
    2007
    13.
    Special
    Charges    Fiscal Year EndedOctober 2,


October 3,


September2009


2008


2007(In thousands)Litigation charges

$
3,475


$



$
1,497Restructuring charges


15,116



11,539



7,227Voluntary Early Retirement Plan (VERP) settlement
    charge






6,294



Loss on disposal of property


392



961



Other special charges






(112
)


(364
)$
18,983


$
18,682


$
8,360   Litigation
    Charges
    Restructuring
    Charges
    420-10 Accounting for Costs
    Associated with Exit or Disposal Activities
  Fiscal 2009 Restructuring Actions 
 81




---



##### Table of Contents



WorkforceReductionsCharged to costs and expenses

$
4,893Cash payments


(3,311
)Restructuring balance, October 2, 2009

$
1,582   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



1,124Charged to costs and expenses


580



36



616Reclassification to other current liabilities and other
    liabilities






(127
)


(127
)Cash payments


(673
)


(876
)


(1,549
)Restructuring balance, October 2, 2009

$



$
64


$
64   Fiscal 2007 Restructuring Actions 
   82




---



##### 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



16,698Charged to costs and expenses


(1
)


16,130



16,129Cash payments


(15
)


(5,579
)


(5,594
)Restructuring balance, October 2, 2009

$



$
27,233


$
27,233   Fiscal 2006 and 2005 Restructuring Actions  sub-tenants
 83




---



##### Table of Contents



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



11,037Charged to costs and expenses






4,989



4,989Cash payments






(2,175
)


(2,175
)Restructuring balance, October 2, 2009

$



$
13,851


$
13,851   14.
    Other
    (Income) Expense, Net    Fiscal Year Ended2009


2008


2007Investment and interest income

$
(1,747
)

$
(7,237
)

$
(13,833
)(Increase) decrease in the fair value of derivative
    instruments


(4,508
)


14,974



952Impairment of equity securities


2,770







Loss on rental property






1,435



Loss on swap termination


1,087







Realized gains on sales of equity securities


(1,856
)


(896
)


(17,016
)Other


(771
)


947



(6,608
)Other (income) expense, net

$
(5,025
)

$
9,223


$
(36,505
)        84




---



##### Table of Contents



15.
    Related
    Party Transactions  Mindspeed
    Technologies, Inc.
    Lease Agreement
  Skyworks
    Solutions, Inc. (Skyworks)
    Inventory Purchases
  16.
    Segment
    Information  Geographic
    Regions:
    Fiscal Year Ended2009


2008


2007United States

$
5,983


$
9,139


$
12,515Other Americas


3,101



9,761



10,375Total Americas


9,084



18,900



22,890China


132,827



213,847



214,265Asia-Pacific


63,709



91,988



114,618Total Asia-Pacific


196,536



305,835



328,883Europe, Middle East and Africa


2,807



6,769



8,930$
208,427


$
331,504


$
360,703   third-party
 85




---



##### Table of Contents



October 2,


October 3,2009


2008United States

$
26,064


$
49,240India


1,971



2,627Other Asia-Pacific


2,919



4,209Europe, Middle East and Africa


18



34$
30,972


$
56,110   17.
    Quarterly
    Results of Operations (Unaudited)  Fiscal Quarter EndedFiscal 2009

Oct. 2, 2009


Jul. 3, 2009


Apr. 3, 2009


Jan. 2, 2009Net revenues

$
56,155


$
50,844


$
43,965


$
57,463Gross margin


33,890



30,311



25,035



32,517Net loss from continuing operations


(7,747
)


(831
)


(12,618
)


(5,716
)Gain on sale of discontinued operations


39,170











Net (loss) income from discontinued operations


(7,967
)


3,557



(1,138
)


(11,973
)Net income (loss)


23,456



2,726



(13,756
)


(17,689
)Net loss per share from continuing operations, basic and fully
    diluted


(0.15
)


(0.02
)


(0.26
)


(0.12
)Net gain per share from sale of discontinued operations, basic
    and fully diluted


0.78











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


(0.16
)


0.07



(0.02
)


(0.24
)Net income (loss) per share, basic and fully diluted


0.47



0.05



(0.28
)


(0.36
)   Fiscal Quarter EndedFiscal 2008

Oct. 3, 2008


Jun. 27, 2008


Mar. 28, 2008


Dec. 28, 2007Net revenues

$
81,115


$
73,902


$
76,238


$
100,249Gross margin


46,954



41,593



44,059



61,647Net (loss) income from continuing operations


(1,457
)


(3,500
)


(2,467
)


7,650Gain on sale of discontinued operations


6,268











Net loss from discontinued operations


(3,894
)


(146,371
)


(139,537
)


(16,868
)Net income (loss)


917



(149,871
)


(142,004
)


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


(0.03
)


(0.07
)


(0.05
)


0.16Net 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


(0.08
)


(2.96
)


(2.83
)


(0.34
)Net income (loss) per share, basic and fully diluted


0.02



(3.03
)


(2.88
)


(0.19
)  86




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##### Table of Contents



18.
    Supplemental
    Guarantor Financial Information         87




---



##### Table of Contents



October 2, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedCurrent assets:Cash and cash equivalents

$
98,120


$



$
27,265


$



$
125,385Restricted cash










8,500







8,500Receivables, net






169,158



32,060



(171,108
)


30,110Inventories


9,216















9,216Other current assets


21,114







5,034







26,148Total current assets


128,450



169,158



72,859



(171,108
)


199,359Property and equipment, net


10,865







4,434







15,299Goodwill


17,910



88,901



3,097







109,908Other assets


24,895







1,389







26,284Investments in subsidiaries


275,273



25,093







(300,366
)


Total assets

$
457,393


$
283,152


$
81,779


$
(471,474
)

$
350,850Current liabilities:Current portion of long-term debt

$
61,400


$



$



$



$
61,400Short-term debt










28,653







28,653Accounts payable


167,991







27,670



(171,108
)


24,553Accrued compensation and benefits


5,620







3,108







8,728Other current liabilities


30,628



932



2,418







33,978Total current liabilities


265,639



932



61,849



(171,108
)


157,312Long-term debt


250,000















250,000Other liabilities


60,305







1,784







62,089Total liabilities


575,944



932



63,633



(171,108
)


469,401Shareholders (deficit) equity


(118,551
)


282,220



18,146



(300,366
)


(118,551
)Total liabilities and equity (deficit)

$
457,393


$
283,152


$
81,779


$
(471,474
)

$
350,850   88




---



##### 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


19,372















19,372Other current assets


32,998



3



4,937







37,938Current assets held for sale


25,248







4,482







29,730Total current assets


165,356



169,161



111,948



(177,745
)


268,720Property and equipment, net


11,292







6,118







17,410Goodwill


17,911



89,404



3,097







110,412Intangible assets, net


4,167



5,992



452







10,611Other assets


36,753







2,497







39,250Investments in subsidiaries


291,511



26,694







(318,205
)


Total assets

$
526,990


$
291,251


$
124,112


$
(495,950
)

$
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


10,841







2,360







13,201Other current liabilities


39,592



932



2,665







43,189Current liabilities to be assumed


3,135







860







3,995Total current liabilities


235,332



932



94,584



(177,745
)


153,103Long-term debt


373,693















373,693Other liabilities


54,699







1,642







56,341Total liabilities


663,724



932



96,226



(177,745
)


583,137Shareholders (deficit) equity


(136,734
)


290,319



27,886



(318,205
)


(136,734
)Total liabilities and equity (deficit)

$
526,990


$
291,251


$
124,112


$
(495,950
)

$
446,403  89




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##### Table of Contents



Fiscal Year Ended October 2, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet revenues

$
183,456


$
2,784


$
22,187


$



$
208,427Cost of goods sold


67,296







19,378







86,674Gross margin


116,160



2,784



2,809







121,753Operating expenses:Research and development


51,351















51,351Selling, general and administrative


59,031







3,709







62,740Amortization of intangible assets


2,976















2,976Gain on sale of intellectual property


(12,858
)














(12,858
)Asset impairments


4,492







1,180







5,672Special charges


16,872







2,111







18,983Total operating expenses


121,864







7,000







128,864Operating income (loss)


(5,704
)


2,784



(4,191
)






(7,111
)Equity (loss) in income of subsidiaries


2,300



1,449







(3,749
)


Interest expense


19,338







1,810







21,148Other (income) expense, net


6,384







(11,409
)






(5,025
)(Loss) income from continuing operations before income taxes and
    loss on equity method investments


(29,126
)


4,233



5,408



(3,749
)


(23,234
)Provision for income taxes


(689
)






1,560







871(Loss) income from continuing operations before loss on equity
    method investments


(28,437
)


4,233



3,848



(3,749
)


(24,105
)Loss on equity method investments


(2,807
)














(2,807
)(Loss) income from continuing operations


(31,244
)


4,233



3,848



(3,749
)


(26,912
)Gain on sale of discontinued operations


39,045







125







39,170(Loss) income from discontinued operations


(13,064
)


(4,302
)


(155
)






(17,521
)Net income (loss)

$
(5,263
)

$
(69
)

$
3,818


$
(3,749
)

$
(5,263
)   90




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##### Table of Contents



Fiscal Year Ended October 3, 2008Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet revenues

$
298,265


$
8,180


$
25,059


$



$
331,504Cost of goods sold


117,226







20,025







137,251Gross margin


181,039



8,180



5,034







194,253Operating expenses:Research and development


58,439















58,439Selling, general and administrative


70,344







7,561







77,905Amortization of intangible assets


2,885







767







3,652Asset impairments


255







22







277Special charges


14,784







3,898







18,682Total operating expenses


146,707







12,248







158,955Operating (loss) income


34,332



8,180



(7,214
)






35,298(Loss) equity in income of subsidiaries


(201,224
)


7,493







193,731



Interest expense


23,311







4,493







27,804Other expense (income), net


34,789







(25,566
)






9,223(Loss) income from continuting operations before income taxes
    and gain on equity method investments


(224,992
)


15,673



13,859



193,731



(1,729
)Provision for income taxes


(1,007
)






1,856







849(Loss) income from continuting operations before gain on equity
    method investments


(223,985
)


15,673



12,003



193,731



(2,578
)Gain on equity method investments


2,804















2,804(Loss) income from continuing operations


(221,181
)


15,673



12,003



193,731



226Gain on sale of discontinued operations


1,777



1,609



2,882







6,268(Loss) income from discontinued operations


(80,772
)


(226,923
)


1,025







(306,670
)Net (loss) income

$
(300,176
)

$
(209,641
)

$
15,910


$
193,731


$
(300,176
)   91




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##### Table of Contents



Fiscal Year Ended September 28 2007Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet revenues

$
298,906


$
6,549


$
55,248


$



$
360,703Cost of goods sold


117,897







44,075







161,972Gross margin


181,009



6,549



11,173







198,731Operating expenses:Research and development


89,694







2,191







91,885Selling, general and administrative


67,972



3



12,918







80,893Amortization of intangible assets


8,569







986







9,555Asset impairments


10,252



214,972



156







225,380Special charges


4,864







3,496







8,360Total operating expenses


181,351



214,975



19,747







416,073Operating loss


(342
)


(208,426
)


(8,574
)






(217,342
)(Loss) equity in income of subsidiaries


(331,771
)


799







330,972



Interest expense


30,363







6,590







36,953Other expense (income), net


706



8



(37,219
)






(36,505
)(Loss) income from continuing operations before income taxes and
    loss on equity method investments


(363,182
)


(207,635
)


22,055



330,972



(217,790
)Provision for income taxes


(1,559
)






2,357







798(Loss) income from continuing operations before loss on equity
    method investments


(361,623
)


(207,635
)


19,698



330,972



(218,588
)Loss on equity method investments


51,182















51,182(Loss) income from continuing operations


(310,441
)


(207,635
)


19,698



330,972



(167,406
)Loss from discontinued operations


(92,021
)


(143,035
)










(235,056
)Net (loss) income

$
(402,462
)

$
(350,670
)

$
19,698


$
330,972


$
(402,462
)  92




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##### Table of Contents



Year Ended October 2, 2009Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet cash (used in) provided by operating activities

$
(14,805
)

$
9,619


$
(12,624
)

$
26,286


$
8,476Cash flows from investing activities:Proceeds from sales of equity securities


2,310















2,310Purchases of property, plant and equipment


(333
)






(353
)






(686
)Sales of property, plant and equipment


110







24







134Proceeds from sale of intellectual property, net


14,548















14,548Payments for acquisitions


(4,207
)














(4,207
)Purchases of accounts receivable










(239,820
)


239,820



Proceeds from collection of purchased accounts receivable










266,106



(266,106
)


Release of restricted cash


18,000







300







18,300Proceeds from resolution of pre-acquisition contingencies


10,446















10,446Net proceeds from sale of business


44,522







37







44,559Net cash provided by (used in) investing activities


85,396







26,294



(26,286
)


85,404Cash flows from financing activities:Repayment of short-term debt, net of expenses










(12,365
)






(12,365
)Repurchases and retirements of long-term debt


(80,000
)














(80,000
)Proceeds from issuance of company stock


18,436















18,436Proceeds from issuance of common stock under employee stock plans


28















28Employee income tax paid related to vesting of restricted stock
    units


(258
)














(258
)Intercompany, net


19,804



(9,619
)


(10,185
)






Interest rate swap security deposit


2,517















2,517Payment for swap termination


(2,815
)














(2,815
)Repayment of shareholder note receivable


79















79Net cash provided by (used in) financing activities


(42,209
)


(9,619
)


(22,550
)






(74,378
)Net increase (decrease) in cash and cash equivalents


28,382







(8,880
)






19,502Cash and cash equivalents at beginning of period


69,738







36,145







105,883Cash and cash equivalents at end of period

$
98,120


$



$
27,265


$



$
125,385   93




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##### Table of Contents



Year Months 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 sale of property, plant and equipment


574







8,375







8,949Purchases of property, plant and equipment


(3,601
)






(2,357
)






(5,958
)Payments for acquisitions, net of cash acquired


(16,088
)














(16,088
)Purchases of equity securities


(755
)














(755
)Restricted cash


(18,000
)














(18,000
)Purchases of accounts receivable










(520,643
)


520,643



Collections of accounts receivable










531,195



(531,195
)


Net cash (used in) provided by investing activities


44,165







29,902



(10,552
)


63,515Cash flows from financing activities:Repayment of short-term debt, net of expenses










(39,883
)






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


(133,600
)














(133,600
)Proceeds from issuance of common stock


1,088















1,088Repayment of shareholder notes receivables


25















25Interest rate swap security deposit


(2,517
)














(2,517
)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) increase in cash and cash equivalents


(129,525
)






(197
)






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


199,263







36,342







235,605Cash and cash equivalents at end of period

$
69,738


$



$
36,145


$



$
105,883   94




---



##### Table of Contents



Year Months 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, plant and equipment


(15,970
)






(14,352
)






(30,322
)Payments for acquisitions, net of cash acquired


(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 (used in) provided by investing activities


219,531







(19,343
)


4,991



205,179Cash flows from financing activities:Repayment of short-term debt, net of expenses










(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 receivables


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 (decrease) increase in cash and cash equivalents


23,865







(13,886
)






9,979Cash and cash equivalents at beginning of period


175,398







50,228







225,626Cash and cash equivalents at end of period

$
199,263


$



$
36,342


$



$
235,605   19.
    Subsequent
    events       95




---



##### Table of Contents



96




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            Internal Control  Integrated Framework
  DELOITTE &
    TOUCHE LLP
    97




---



##### 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)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f). Internal Control 
    Integrated Framework Internal
    Control  Integrated Framework
    Changes
    in Internal Control Over Financial Reporting
    Item 9B.
    Other
    Information   98




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
    DELOITTE &
    TOUCHE LLP
    99




---



##### 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   100




---



##### 



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

48Consolidated Statements of Operations

49Consolidated Statements of Cash Flows

50Consolidated Statements of Shareholders
    Equity (Deficit) and Comprehensive Loss

51    Supplemental Schedules
  Schedule II  Valuation and
    Qualifying Accounts


107     Exhibits
  Exhibits

Description2
.1

Asset Purchase Agreement, dated as of April 21, 2009, by
    and between Conexant Systems, Inc. and Ikanos Communications,
    Inc. (incorporated by reference to Exhibit 2.1 of the
    Companys Current Report on
    Form 8-K
    filed on April 24, 2009)2
.2

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
.3

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 99.1 of the Companys Current Report on
    Form 8-K
    filed on July 16, 2009)4
.1

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
.1.1

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
.2

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) 101




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##### Table of Contents



Exhibits

Description4
.2.1

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)*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

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, 2001 (File
    No. 333-73858)) 102




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##### Table of Contents



Exhibits

Description*10
.8

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
.8.1

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
.8.2

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
.9

Conexant Systems, Inc. 2010 Management Incentive Plan
    (incorporated by reference to Exhibit 10.1 of the
    Companys Current Report on
    Form 8-K
    filed on November 3, 2009)*10
.10

Conexant Systems, Inc. 2009 Performance Incentive Plan
    (incorporated by reference to Exhibit 10.1 of the
    Companys Current Report on
    Form 8-K
    filed on November 18, 2008)*10
.11

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
.12

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
.12.1

Amendment to Employment Agreement by and between D. Scott Mercer
    and Conexant Systems, Inc., dated April 22, 2009
    (incorporated by reference to Exhibit 10.1 of the
    Companys Current Report on
    Form 8-K
    filed on April 24, 2009)*10
.13

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
.14

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
.15

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
.15.1

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
.15.2

Separation Agreement and Release dated as of December 18,
    2008 between Conexant Systems, Inc. and Karen L. Roscher
    (incorporated by reference to Exhibit 99.1 of the
    Companys Current Report on
    Form 8-K
    filed on December 30, 2008)*10
.16

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
.16.1

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
.16.2

Amendment to Employment Agreement between Conexant Systems, Inc.
    and Mark Peterson, dated April 22, 2009 (incorporated by
    reference to Exhibit 10.2 of the Companys Current
    Report on
    Form 8-K
    filed on April 24, 2009)*10
.17

Employment Agreement, dated as of December 4, 2008, by and
    between the Company and Dwight W. Decker (incorporated
    by reference to Exhibit 10.1 of the Companys Current
    Report on
    Form 8-K
    filed on December 9, 2008)10
.18

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, 2003 103




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##### Table of Contents



Exhibits

Description10
.18.1

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
.18.2

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
.19

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
.19.1

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
.19.2

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
.19.3

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
.19.4

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
.19.5

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
.20

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
.21

Form of Indemnity Agreement (incorporated by reference to
    Exhibit 10.1 of the Companys Current Report on
    Form 8-K
    filed on February 24, 2009)*10
.22

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
.23

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
.23.1

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
.23.2

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
.23.3

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
.23.4

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
.23.5

Extension Letter Agreement, dated November 24, 2008, by and
    among Wachovia Bank, N.A., the Company and Conexant USA, LLC
    (incorporated by reference to Exhibit 10.24.1 of the
    Companys Annual Report on
    Form 10-K
    for the year ended October 3, 2008) 104




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##### Table of Contents



Exhibits

Description10
.24

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)21


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 105




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##### Table of Contents



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

Title/s/  D.
    SCOTT MERCERD.
    Scott Mercer

Chairman of the Board and Chief Executive Officer (Principal
    Executive Officer)/s/  JEAN
    HUJean
    Hu

Chief Financial Officer and Senior Vice President,
    Business Development
    (Principal Financial and Principal Accounting Officer)/s/  WILLIAM
    E. BENDUSH*William
    E. Bendush

Director/s/  STEVEN
    J. BILODEAU*Steven
    J. Bilodeau

Director/s/  DWIGHT
    W. DECKER*Dwight
    W. Decker

Director/s/  F.
    CRAIG FARRILL*F.
    Craig Farrill

Director/s/  BALAKRISHNAN
    S. IYER*Balakrishnan
    S. Iyer

Director/s/  MATTHEW
    E. MASSENGILL*Matthew
    E. Massengill

Director/s/  JERRE
    L. STEAD*Jerre
    L. Stead

Director* By:

/s/  MARK D. PETERSONMark
    D. Peterson, Attorney-in-fact**     **
    
    By authority of the power of attorney filed as Exhibit 24
    hereto 106




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##### Table of Contents



SCHEDULE II  VALUATION
    AND QUALIFYING ACCOUNTS
  ChargedBalance at


(Credited) toBeginning of


Costs and


Additions


Balance atDescription

Year


Expenses


(Deductions)(1)


End of YearFiscal year ended October 2, 2009:Allowance for doubtful accounts

$
834


$
(325
)

$
(56
)

$
453Reserve for sales returns


2,935



(1,364
)


(481
)


1,090Reserve for pricing allowances














Allowance for excess and obsolete inventories


12,579



(745
)


(5,442
)


6,392Allowance for lower of cost or market inventories














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


11,986



5,575



(4,982
)


12,579Allowance for lower of cost or market inventories


268



(268
)






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


24,333



(8,089
)


(4,258
)


11,986Allowance for lower of cost or market inventories


1,563



(1,043
)


(252
)


268     (1)
    
    Deductions in the allowance for doubtful accounts reflect
    amounts written off. 107