##### Table of Contents





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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    October 1,
    2010ORo

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

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 þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    Documents
    Incorporated by Reference
  Form 10-K.




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FORWARD-LOOKING
    STATEMENTS
    
    our expectations regarding the market share of our products,
    growth in the markets we serve and our market opportunities;
    our expectations regarding price and product competition;
    our expectations regarding continued demand and future growth in
    demand for our products in the communications, PC and consumer
    markets we serve;
    our expectations regarding the declines in our legacy products;
    our plans and expectations regarding the transition of our
    semiconductor products to smaller line width geometries;
    our expectation that we will be able to sustain the
    recoverability of our goodwill, intangible and tangible
    long-term assets;
    our product development plans;
    our expectations regarding the sale of our real property in
    Newport Beach;
    our expectation that our largest customers will continue to
    account for a substantial portion of our revenue;
    our 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);
    our expectations, subject to the qualifications expressed,
    regarding the sufficiency of our existing sources of liquidity,
    together with cash expected to be generated from operations, to
    fund our operations, research and development, anticipated
    capital expenditures, and working capital for at least the next
    twelve months;
    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; and
    our expectations that we will be able to use our net operating
    losses and other tax attributes to offset future taxable income.  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.

Reserved


22PART IIItem 5.

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


22Item 6.

Selected Financial Data


24Item 7.

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


26Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


39Item 8.

Financial Statements and Supplementary Data


41Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


74Item 9A.

Controls and Procedures


74Item 9B.

Other Information


76PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


77Item 11.

Executive Compensation


77Item 12.

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


77Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


77Item 14.

Principal Accountant Fees and Services


77PART IVItem 15.

Exhibits and Financial Statement Schedules


78EX-10.23EX-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.
    Divestitures
      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. 3




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
    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 and 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
  Embedded-Modem Applications. point-of-sale
  Video Applications.
 4




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Research
    and Development
        Manufacturing
        Quality
    and Reliability
  9001-2000
   5




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
    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
        Fiscal Year Ended2010


2009


2008United States


6
%


3
%


3
%Other Americas


2
%


1
%


3
%China


60
%


64
%


64
%Taiwan


10
%


7
%


6
%Other Asia-Pacific


21
%


24
%


22
%Europe, Middle East and Africa


1
%


1
%


2
%Total foreign


94
%


97
%


97
%100
%


100
%


100
%    6




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Backlog
    Competition
      Intellectual
    Property and Proprietary Rights
    Environmental
    Regulation
   7




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




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Item 1A.
    Risk
    Factors      We are
    a much smaller company than in the recent past and dependent on
    fewer products for our success.
    Our
    success depends on our ability to timely develop competitive new
    products to offset declines in our legacy products, increase
    market share, and reduce costs.
    
    anticipate customer and market requirements and changes in
    technology and industry standards;
    define accurately 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.    The
    average selling prices of our established legacy products in our
    markets have historically decreased rapidly and will likely do
    so in the future, which could harm our revenue and gross
    profits.
   9




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We are
    subject to intense competition.
    
    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
    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.
   10




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Since
    we have limited visibility as to the volume of sales of our
    products by our customers and inventory levels of our products
    held by our customers, our ability to forecast accurately future
    demand for and sales of our products is limited.
    Our
    products typically have lengthy sales cycles. A customer may
    decide to cancel or change its product plans, which could cause
    us to lose anticipated sales and we may incur significant
    expenses before we generate any revenues
    We
    will continue to expend substantial resources developing
    products for new applications or markets and may never achieve
    the sales volume that we anticipate for these products, which
    may limit our future growth and harm our results of
    operations.
   11




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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. In
    addition, if a second source supplier becomes available to a key
    customer for whom we are the sole supplier, our revenue from
    that key customer 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 small size, our cost-savings efforts and any future
    liquidity constraints may limit our ability to develop and
    deliver new products to customers.     12




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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;
    evolving industry standards; and
    constant 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.    If
    OEMs of 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.
    Our
    operating and financial flexibility is limited by the terms of
    the agreement governing our accounts receivable financing
    facility and the terms of the indenture governing our senior
    secured notes due 2015.
   13




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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;
    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.      Our
    success depends, in part, on our ability to effect suitable
    investments, alliances, acquisitions and where appropriate,
    divestitures and restructurings.
      
    write-offs of in-process research and development;
    the incurrence of substantial debt and assumption of unknown
    liabilities; 14




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
    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.      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
    testing of our products.
     15




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start-up
  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.     16




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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.  The
    price of our common stock may fluctuate significantly, which may
    make it difficult for you to resell your common stock when you
    want or at prices you find attractive.
    
    our operating and financial performance and prospects;
    the depth and liquidity of the market for our common stock;
    investor perception of us and the industry in which we operate;
    the level of research coverage of our common stock;
    changes in earnings estimates or buy/sell recommendations by
    analysts;
    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.   17




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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.
    We
    have historically incurred substantial losses and may incur
    additional future losses.
    The
    value of our warrant to purchase 6.1 million shares of
    Mindspeed common stock is subject to material increases and
    decreases in value based on factors beyond our
    control.
     18




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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.
    If any
    of the tax holidays or favorable tax incentives under which we
    operated in certain foreign jurisdictions are disallowed, our
    results of operations may be materially and adversely
    affected.
    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.
   19




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In the
    event of a change of control, we may not be able to repurchase
    our outstanding debt as required by the applicable indenture,
    which would result in a default under the
    indenture.
    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.
      Our
    revenues, cash flow from operations and results of operations
    have fluctuated in the past and may fluctuate in the future,
    particularly given uncertain 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
    uncertain 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; 20




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


OwnedSquare


SquareFootage


Footage


TotalUnited States:Newport Beach, California


106



51



157Waltham, MA


29







29135



51



186India


20







20China


27







27Other Asia


37







37Europe


3







3222



51



273     and/or
 21




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Item 3.
    Legal
    Proceedings    Item 4.
    Reserved 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 1, 2010:Fourth quarter

$
2.48


$
1.38Third quarter


4.20



2.02Second quarter


5.17



2.30First quarter


3.31



2.04Fiscal year ended October 2, 2009:Fourth quarter

$
3.95


$
1.11Third quarter


1.74



0.68Second quarter


0.86



0.26First quarter


3.35



0.64      22




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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 9/30/05 in stock or index, including
    reinvestment of dividends.
    Fiscal year ending Friday nearest to September 30 of each
    year.Copyright©

    2010 S&P, a division of The McGraw-Hill Companies Inc. All
    rights reserved.  9/05


9/06


9/07


9/08


9/09


9/10Conexant Systems, Inc.



100.00




111.73




67.04




22.40




15.31




9.16S&P 500



100.00




110.79




129.01




100.66




93.70




103.22NASDAQ Electronic Components



100.00




95.01




114.47




80.09




86.57




91.20  23




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Item 6.
    Selected
    Financial Data        Fiscal Year Ended2010


2009


2008


2007


2006(In thousands, except per share amounts)Statement of Operations Data:Net revenues

$
240,726


$
208,427


$
331,504


$
360,703


$
485,571Cost of goods sold(1)


94,157



86,674



137,251



161,972



223,809Gain on cancellation of supply agreement(2)


















(17,500
)Gross margin


146,569



121,753



194,253



198,731



279,262Operating expenses:Research and development(1)


55,745



51,351



58,439



91,885



101,274Selling, general and administrative(1)


48,249



62,740



77,905



80,893



89,863Amortization of intangible assets


1,249



2,976



3,652



9,555



18,450Gain on sale of intellectual property(3)






(12,858
)










Asset impairments(4)






5,672



277



225,380



85Special charges(5)


837



18,983



18,682



8,360



3,731Total operating expenses


106,080



128,864



158,955



416,073



213,403Operating income (loss)


40,489



(7,111
)


35,298



(217,342
)


65,859Interest expense


30,072



34,693



40,713



48,798



39,540Other (income) expense, net


(12,455
)


(5,025
)


9,223



(36,505
)


14,281Income (loss) from continuing operations before income taxes and
    (loss) gain on equity method investments


22,872



(36,779
)


(14,638
)


(229,635
)


12,038Provision for income taxes


567



871



849



798



889Income (loss) from continuing operations before (loss) gain on
    equity method investments


22,305



(37,650
)


(15,487
)


(230,433
)


11,149(Loss) gain on equity method investments


(66
)


(2,807
)


2,804



51,182



(8,164
)Income (loss) from continuing operations


22,239



(40,457
)


(12,683
)


(179,251
)


2,985Gain on sale of discontinued operations, net of tax(6)






39,170



6,268







Loss from discontinued operations, net of tax(1)(6)


(2,005
)


(17,521
)


(306,670
)


(235,056
)


(132,549
)Net income (loss)

$
20,234


$
(18,808
)

$
(313,085
)

$
(414,307
)

$
(129,564
) 24




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Fiscal Year Ended2010


2009


2008


2007


2006(In thousands, except per share amounts)Income (loss) per share from continuing operations 
    basic

$
0.31


$
(0.81
)

$
(0.26
)

$
(3.67
)

$
0.06Income (loss) per share from continuing operations 
    diluted

$
0.30


$
(0.81
)

$
(0.26
)

$
(3.67
)

$
0.06Gain per share from sale of discontinued operations 
    basic and diluted

$
0.00


$
0.78


$
0.13


$
0.00


$
0.00Loss per share from discontinued operations  basic

$
(0.03
)

$
(0.35
)

$
(6.21
)

$
(4.80
)

$
(2.76
)Loss per share from discontinued operations  diluted

$
(0.03
)

$
(0.35
)

$
(6.21
)

$
(4.80
)

$
(2.71
)Net income (loss) per share  basic

$
0.28


$
(0.38
)

$
(6.34
)

$
(8.47
)

$
(2.70
)Net income (loss) per share  diluted

$
0.27


$
(0.38
)

$
(6.34
)

$
(8.47
)

$
(2.65
)   Balance
    Sheet Data at Fiscal Year End:
  2010

2009

2008

2007

2006(In thousands)Working capital(7)

$
79,472


$
42,047


$
115,617


$
318,360


$
127,635Total assets


305,844



350,201



445,284



984,365



1,571,544Short-term debt


10,978



28,653



40,117



80,000



80,000Current portion of long-term debt






61,400



17,707



58,000



188,375Long-term obligations


230,740



290,667



394,597



474,591



540,035Shareholders equity (deficit)


12,092



(97,778
)


(102,416
)


193,742



569,170     (1)
    
    Stock-based compensation expense included within cost of goods
    sold, research and development expense, and selling, general and
    administrative expense in fiscal 2010, 2009, 2008, 2007 and 2006
    is based on the fair value of all stock options, stock awards
    and employee stock purchase plan shares. Non-cash employee
    stock-based compensation expense included in our consolidated
    statements of operations was as follows (in thousands):  Fiscal Year Ended2010

2009

2008

2007

2006(In thousands)Cost of goods sold

$
298


$
247


$
370


$
426


$
382Research and development


1,681



869



2,725



6,157



9,249Selling, general and administrative


4,700



3,736



9,185



7,271



19,312Loss from discontinued operations, net of tax


(30
)


868



3,589



5,897



16,632    (2)
    
    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.(3)
    
    In fiscal 2009, we recorded a $12.9 million gain on sale of
    intellectual property.(4)
    
    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. 25




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(5)
    
    Special charges include the following related to the settlement
    of legal matters and restructuring charges, among others (in
    thousands):  Fiscal Year Ended2010

2009

2008

2007

2006(In thousands)Legal settlements

$
589


$
3,475


$



$
1,497


$
Restructuring charges


(282
)


15,116



11,539



7,227



3,641    (6)
    
    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.(7)
    
    Working capital is defined as current assets minus current
    liabilities.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  You should read the following discussion and analysis in
    conjunction with our Consolidated Financial Statements and
    related Notes thereto included in Part II, Item 8 of
    this report and the Risk Factors included in Part I,
    Item 1A of this report, as well as other cautionary
    statements and risks described elsewhere in this report
  Overview
  speakers-on-a-chip voice-over-IP point-of-sale
  Fiscal
    Year
    Sale of
    Property
  25-acre
  Discontinued
    Operations
  Broadband
    Access Business
   26




---



##### Table of Contents



Broadband
    Media Processing Business
      Business
    Enterprise Segments
    Critical
    Accounting Policies
    Revenue
    recognition
      Allowance
    for doubtful accounts
   27




---



##### Table of Contents



Derivatives
    Inventories
    Long-lived
    assets
  and/or
  Goodwill
   28




---



##### Table of Contents



Income
    Taxes
           29




---



##### Table of Contents



Valuation
    of equity securities
  other-than-temporary other-than-temporary,
  Stock-based
    compensation
  catch-up
     30




---



##### Table of Contents



Restructuring
    charges
    Results
    of Operations
  Net
    Revenues
          Gross
    Margin
       31




---



##### Table of Contents



Research
    and Development
        Selling,
    General and Administrative
        Amortization
    of Intangible Assets
        Gain
    on Sale of Intellectual Property
    Asset
    Impairments
   32




---



##### Table of Contents



Special
    Charges
  Fiscal Year Ended2010


2009


2008(In thousands)Settlements

$
589


$
3,475


$
Other special charges


530







(112
)Restructuring charges


(282
)


15,116



11,539Voluntary Early Retirement Plan (VERP) settlement
    charge










6,294Loss on disposal of property






392



961$
837


$
18,983


$
18,682         Interest
    Expense
   33




---



##### Table of Contents



Other
    (Income) Expense, Net
  Fiscal Year Ended2010


2009


2008(In thousands)Investment and interest income

$
(265
)

$
(1,747
)

$
(7,237
)Gain on sale of investments


(16,054
)


(1,856
)


(896
)Loss on extinguishment of debt


18,583







(Increase) decrease in the fair value of derivative instruments


(15,632
)


(4,508
)


14,974Impairment of equity securities






2,770



Loss on rental property










1,435Loss on swap termination






1,087



Other


913



(771
)


947Other (income) expense, net

$
(12,455
)

$
(5,025
)

$
9,223         Provision
    for Income Taxes
    Gain
    (Loss) on Equity Method Investments
     34




---



##### Table of Contents



Loss
    from Discontinued Operations, net of tax
    Fiscal Year Ended2010


2009


2008(In thousands)Net revenues

$
1,428


$
116,590


$
351,179Cost of goods sold


54



59,680



212,823Gross margin


1,374



56,910



138,356Operating expenses:Research and development


45



40,085



141,395Selling, general and administrative


108



4,863



18,429Amortization of intangible assets






4,430



12,492Asset impairments






5,164



262,177Special charges


2,157



14,518



2,791Total operating expenses


2,310



69,060



437,284Operating loss


(936
)


(12,150
)


(298,928
)Interest expense






2,741



12,836Other expense (income), net


988



1,132



(9,682
)Loss from continuing operations before income taxes


(1,924
)


(16,023
)


(302,082
)Provision for income taxes


81



1,498



4,588Loss from discontinued operations, net of tax

$
(2,005
)

$
(17,521
)

$
(306,670
)   Liquidity
    and Capital Resources
        Fiscal Year Ended2010


2009


2008(In thousands)Net cash provided by (used in) operating activities

$
4,478


$
8,476


$
(18,350
)Net cash provided by investing activities


11,451



85,404



63,515Net cash used in financing activities


(86,848
)


(74,378
)


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

$
(70,919
)

$
19,502


$
(129,722
)   Operating
    Activities
   35




---



##### Table of Contents



Investing
    Activities
      Financing
    Activities
      Recent
    Financing Transactions
         36




---



##### Table of Contents



25-acre
    Contractual
    Obligations and Commitments
    Payments Due by PeriodLess Than











More ThanTotal


1 Year


1 Year


2 Years


3-5 Years


5 YearsLong-term debt


175,000


$



$



$



$
175,000


$
Short-term debt


11,218



11,218















Interest on debt


88,878



19,972



19,688



19,688



29,531



Operating leases


81,344



14,582



12,672



12,703



30,585



10,802Other purchase commitments


19,792



13,754



4,422



1,616







$
376,232


$
59,526


$
36,782


$
34,007


$
235,116


$
10,802      37




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
        Special
    Purpose Entities
         38




---



##### Table of Contents



364-day
    Recently
    Adopted Accounting Pronouncements
  Form 8-K
  Recently
    Issued Accounting Pronouncements
      Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk       39




---



##### Table of Contents



CarryingValue


Fair ValueCash and cash equivalents

$
54,466


$
54,466Marketable securities


20,059



20,059Mindspeed warrant


20,685



20,685Long-term restricted cash


5,600



5,600Short-term debt: convertible subordinated notes


11,218



11,232Long-term debt: senior secured notes


175,000



168,000   Exchange
    Rate Risk
   40




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  October 1,


October 2,2010


2009(In thousands, except par value)ASSETSCurrent assets:Cash and cash equivalents

$
54,466


$
125,385Marketable securities


20,059



Restricted cash






8,500Receivables, net of allowances of $368 and $453 at
    October 1, 2010 and October 2, 2009, respectively


31,463



30,110Inventories, net


8,747



9,216Other current assets


14,690



26,148Assets held for sale


13,059



Total current assets


142,484



199,359Property, plant and equipment, net of accumulated depreciation
    of $30,050 and $70,139 at October 1, 2010 and
    October 2, 2009, respectively


6,080



15,299Goodwill


109,908



109,908Other assets


47,372



25,635Total assets

$
305,844


$
350,201LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current liabilities:Current portion of long-term debt

$



$
61,400Short-term debt


10,978



28,653Accounts payable


12,516



24,553Accrued compensation and benefits


7,682



8,728Other current liabilities


31,836



33,978Total current liabilities


63,012



157,312Long-term debt


173,543



228,578Other liabilities


57,197



62,089Total liabilities


293,752



447,979Commitments and contingencies (Note 6)Shareholders equity (deficit):Preferred and junior preferred stock: 20,000 and
    5,000 shares authorized, respectively






Common stock, $0.01 par value: 200,000 shares
    authorized; 81,273 and 56,917 shares issued and outstanding at
    October 1, 2010 and October 2, 2009, respectively


813



570Additional paid-in capital


4,919,582



4,833,919Accumulated deficit


(4,909,509
)


(4,929,743
)Accumulated other comprehensive income (loss)


1,206



(2,524
)Total shareholders equity (deficit)


12,092



(97,778
)Total liabilities and shareholders equity

$
305,844


$
350,201    41




---



##### Table of Contents



CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Fiscal Year EndedOctober 1,


October 2,


October 3,2010


2009


2008(In thousands, except per share amounts)Net revenues

$
240,726


$
208,427


$
331,504Cost of goods sold


94,157



86,674



137,251Gross margin


146,569



121,753



194,253Operating expenses:Research and development


55,745



51,351



58,439Selling, general and administrative


48,249



62,740



77,905Amortization of intangible assets


1,249



2,976



3,652Gain on sale of intellectual property






(12,858
)


Asset impairments






5,672



277Special charges


837



18,983



18,682Total operating expenses


106,080



128,864



158,955Operating income (loss)


40,489



(7,111
)


35,298Interest expense


30,072



34,693



40,713Other (income) expense, net


(12,455
)


(5,025
)


9,223Income (loss) from continuing operations before income taxes and
    (loss) gain on equity method investments


22,872



(36,779
)


(14,638
)Provision for income taxes


567



871



849Income (loss) from continuing operations before (loss) gain on
    equity method investments


22,305



(37,650
)


(15,487
)(Loss) gain on equity method investments


(66
)


(2,807
)


2,804Income (loss) from continuing operations


22,239



(40,457
)


(12,683
)Gain on sale of discontinued operations, net of tax






39,170



6,268Loss from discontinued operations, net of tax


(2,005
)


(17,521
)


(306,670
)Net income (loss)

$
20,234


$
(18,808
)

$
(313,085
)Income (loss) per share from continuing operations 
    basic

$
0.31


$
(0.81
)

$
(0.26
)Income (loss) per share from continuing operations 
    diluted

$
0.30


$
(0.81
)

$
(0.26
)Gain per share from sale of discontinued operations 
    basic and diluted

$
0.00


$
0.78


$
0.13Loss per share from discontinued operations  basic
    and diluted

$
(0.03
)

$
(0.35
)

$
(6.21
)Net income (loss) per share  basic

$
0.28


$
(0.38
)

$
(6.34
)Net income (loss) per share  diluted

$
0.27


$
(0.38
)

$
(6.34
)Shares used in basic per-share computations


72,903



49,856



49,394Shares used in diluted per-share computations


73,708



49,856



49,394    42




---



##### Table of Contents



CONEXANT
    SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Fiscal Year EndedOctober 1,


October 2,


October 3,2010


2009


2008(In thousands)Cash flows from operating activitiesNet income (loss)

$
20,234


$
(18,808
)

$
(313,085
)Adjustments to reconcile net loss to net cash used in operating
    activities, net of effects of acquisitions:Depreciation


3,409



8,198



19,311Gain on sale of business






(39,170
)


(6,268
)Amortization of intangible assets


1,249



7,406



16,144Reversal of provision for bad debts, net


(85
)


(325
)


(751
)Charges for (reversal of) inventory provisions, net


80



(806
)


7,253Amortization of debt discount


8,008



14,015



13,394Asset impairments






10,835



263,535Other-than-temporary
    impairment of marketable and non-marketable securities






2,770



Loss on termination of defined benefit plan










6,294Deferred income taxes


(1,981
)


(15
)


(39
)Stock-based compensation


6,649



5,720



15,869(Increase) decrease in fair value of derivative instruments


(15,632
)


(4,002
)


14,881Loss on termination of swap


1,728



1,087



Loss on extinguishment of debt


18,583







Losses (gains) on equity method investments


172



3,798



(2,804
)Loss on resolution of pre-acquisition contingency






1,575



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


(16,054
)


(1,856
)


(896
)Gain on sale of intellectual property






(12,858
)


Currency translation adjustment recognized in net income


1,304







Other items, net


(1,221
)


4,149



4,021Changes in assets and liabilities:Receivables


(1,268
)


19,212



32,633Inventories


389



15,871



9,326Accounts payable


(12,122
)


(10,341
)


(45,010
)Accrued expenses and other current liabilities


(4,531
)


(17,080
)


(36,210
)Other, net


(4,433
)


19,101



(15,948
)Net cash provided by (used in) operating activities


4,478



8,476



(18,350
)Cash flows from investing activitiesPurchases of property, plant and equipment


(2,041
)


(686
)


(5,958
)Proceeds from sales of property, plant and equipment


741



134



8,949Proceeds from resolution of divestiture/acquisition contingencies


6,750



10,446



Payments for acquisitions, net of cash acquired


(625
)


(4,207
)


(16,088
)Proceeds from sales of marketable securities


91,889



2,310



Purchases of marketable securities


(95,334
)






Proceeds from sale of intellectual property






14,548



Purchases of equity securities










(755
)Restricted cash


9,323



18,300



(18,000
)Net proceeds from sale of business






44,559



95,367Return of capital from equity method investments


748







Net cash provided by investing activities


11,451



85,404



63,515Cash flows from financing activitiesRepayment of short-term debt


(29,136
)


(12,365
)


(39,883
)Extinguishment of debt


(288,748
)


(80,000
)


(133,600
)Proceeds from common stock offerings, net of offering costs of
    $4,881 and $1,514


62,510



18,436



Proceeds from issuance of senior secured notes, net of offering
    costs of $4,920


168,440







Proceeds from issuance of common stock under employee stock plans


124



28



1,088Employee income tax paid related to vesting of restricted stock
    units


(38
)


(258
)


Interest rate swap security deposit






2,517



(2,517
)Payment for swap termination






(2,815
)


Repayment of shareholder notes receivable






79



25Net cash used in financing activities


(86,848
)


(74,378
)


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


(70,919
)


19,502



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


125,385



105,883



235,605Cash and cash equivalents at end of year

$
54,466


$
125,385


$
105,883    43




---



##### Table of Contents



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


Notes


TotalAdditional





Comprehensive


Receivable


ShareholdersCommon Stock


Paid-In


Accumulated


Income (Loss)


from Stock


EquityShares


Amount


Capital


Deficit


(Net of Tax)


Sales


(Deficit)(In thousands)Balance at September 28, 2007


49,236


$
493


$
4,791,774


$
(4,597,037
)

$
(1,385
)

$
(103
)

$
193,742Net loss














(313,085
)










(313,085
)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


























(313,783
)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



4,810,185



(4,910,935
)


(2,083
)


(79
)


(102,416
)Net loss














(18,808
)










(18,808
)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


























(19,249
)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



4,833,919



(4,929,743
)


(2,524
)






(97,778
)Net income














20,234











20,234Currency translation adjustment


















685







685Currency translation adjustment recognized in net income


















1,304







1,304Loss on termination of derivative contracts


















1,728







1,728Change in unrealized gain (loss) on
    available-for-sale
    securities


















9,733







9,733Sale of
    available-for-sale
    securities


















(9,720
)






(9,720
)Comprehensive income


























23,964Common stock issued in offering


17,150



171



62,339















62,510Common stock issued in exchange for debt


7,063



71



16,590















16,661Common stock issued related to employee stock plans


143



1



123















124Employee stock-based compensation expense










6,611















6,611Balance at October 1, 2010


81,273


$
813


$
4,919,582


$
(4,909,509
)

$
1,206


$



$
12,092    44




---



##### 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 
    Research and Development 
 45




---



##### Table of Contents



Shipping and Handling 
  Cash and Cash Equivalents 
  Marketable Securities
  available-for-sale available-for-sale
  Restricted Cash 
  Inventories 
  Property, Plant and Equipment 
  Investments  other-than-temporary
  Long-Lived Assets 
 46




---



##### Table of Contents



and/or
  Goodwill 
        Assets Held for Sale
  Foreign Currency Translation and Remeasurement 
 47




---



##### Table of Contents



Net Income (loss) Per Share 
    Fiscal Year Ended2010


2009


2008Stock awards


4,350



5,624



8,5764.00% convertible subordinated notes due March 2026


228



5,081



5,0814,578



10,705



13,657   Stock-Based Compensation 
  catch-up
  Income Taxes 
     48




---



##### Table of Contents



Concentrations
    Supplemental Cash Flow Information 
  Accumulated Other Comprehensive Loss 
  October 1,


October 2,2010


2009Foreign currency translation adjustments

$
1,193


$
(796
)Unrealized gains on marketable securities


13



Unrealized losses on derivative instruments






(1,728
)Accumulated other comprehensive income (loss)

$
1,206


$
(2,524
)   Business
    Enterprise Segments
   49




---



##### Table of Contents



Recently
    Adopted Accounting Pronouncements
  Form 8-K
  Recently
    Issued Accounting Pronouncements
      2.
    Sales of
    Assets  Fiscal
    2010
  Assets
    Held for Sale
  25-acre
 50




---



##### Table of Contents



October 1,2010Land

$
1,662Land and leasehold improvements, net


307Buildings, net


5,312Machinery and equipment, net


268Site development costs


5,510$
13,059     Fiscal
    2009
            Fiscal
    2008
   51




---



##### Table of Contents



3.
    Business
    Combinations  Fiscal
    2009
    Fiscal
    2008
     52




---



##### Table of Contents



4.
    Fair
    Value of Certain Financial Assets and Liabilities    Level 2Assets:Marketable securities

$
20,059Mindspeed warrant


20,685Total Assets

$
40,744             GrossAmortized

UnrealizedCost

Gain

Fair ValueOctober 1, 2010U.S. Treaury obligations

$
20,046


$
13


$
20,059   5.
    Supplemental
    Balance Sheet Data  Inventories
    October 1,


October 2,2010


2009Work-in-process

$
4,840


$
5,002Finished goods


3,907



4,214Total inventories, net

$
8,747


$
9,216    53




---



##### Table of Contents



Property,
    Plant and Equipment
    October 1,


October 2,2010


2009Land

$



$
1,662Land and leasheold improvements


4,721



6,887Buildings


2,540



19,824Machinery and equipment


28,857



56,979Construction in progress


12



8636,130



85,438Accumulated depreciation and amortization


(30,050
)


(70,139
)$
6,080


$
15,299        54




---



##### Table of Contents



Goodwill
    Fiscal Year Ended2010


2009Goodwill at beginning of period

$
109,908


$
110,412Additions






1,000Disposals






(1,000
)Impairments






Other adjustments






(504
)Goodwill at end of period

$
109,908


$
109,908   Impairments
      Additions
    Other
    Current Assets
    October 1,


October 2,2010


2009Other receivables

$
678


$
6,988Deferred tax asset


121



327Prepaid technical licenses


4,180



3,775Other prepaid expenses


6,402



5,026Other current assets


3,309



10,032$
14,690


$
26,148  55




---



##### Table of Contents



Other
    Assets
    October 1,


October 2,2010


2009Mindspeed warrant

$
20,685


$
5,053Long-term restricted cash


5,600



6,423Electronic design automation tools


6,830



1,136Deferred debt issuance costs


4,386



1,970Investments


3,290



4,805Intangible assets


4,308



5,557Deferred tax asset


1,408



Other non-current assets


865



691$
47,372


$
25,635   Mindspeed
    Warrant
    Technology
    License
    Intangible
    Assets
    October 1, 2010


October 2, 2009Gross








GrossCarrying


Accumulated


Book


Carrying


Accumulated


BookAmount


Amortization


Value


Amount


Amortization


ValueProduct licenses

$
2,400


$
(1,004
)

$
1,396


$
2,400


$
(628
)

$
1,772Other intangible assets


6,830



(3,918
)


2,912



6,830



(3,045
)


3,785$
9,230


$
(4,922
)

$
4,308


$
9,230


$
(3,673
)

$
5,557     Fiscal Year Ending2011


2012


2013


2014


2015


ThereafterAmortization expense

$
1,137


$
1,137


$
1,017


$
446


$
150


$
421  56




---



##### Table of Contents



Other
    Current Liabilities
    October 1,


October 2,2010


2009Restructuring and reorganization liabilities


6,088



9,197Accrued technical licenses


5,139



5,552Income tax liabilities


488



3,909Other


20,121



15,320$
31,836


$
33,978   Other
    Liabilities
    October 1,


October 2,2010


2009Restructuring and reorganization liabilities


27,733



33,533Deferred gain on sale of building


6,887



13,205Income tax liabilities


9,186



6,411Accrued technical licenses


6,038



3,413Other


7,353



5,527$
57,197


$
62,089   6.
    Income
    Taxes    Fiscal Year Ended2010


2009


2008Current:United States

$
(54
)

$
(149
)

$
(33
)Foreign


2,591



269



886State and local


11



(10
)


19Total current


2,548



110



872Deferred:United States










Foreign


(1,981
)


761



(23
)Total deferred


(1,981
)


761



(23
)$
567


$
871


$
849  57




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##### Table of Contents



October 1,


October 2,2010


2009Deferred tax assets:Intangible assets

$
121,009


$
139,377Capitalized research and development


232,709



270,426Net operating losses


628,359



581,786Research and development and investment credits


153,905



153,938Other, net


95,052



100,824Valuation allowance


(1,175,361
)


(1,192,035
)Total deferred tax assets


55,673



54,316Deferred tax liabilities:Deferred state taxes


(54,143
)


(54,767
)Total deferred tax liabilities


(54,143
)


(54,767
)$
1,530


$
(451
)            58




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##### Table of Contents



Fiscal Year Ended2010


2009


2008U.S. Federal statutory tax at 35%

$
8,005


$
(12,873
)

$
(5,123
)State taxes, net of federal effect


1,165



348



(1,190
)U.S. and foreign income taxes on foreign earnings


(1,197
)


7,863



6,346Research and development credits


(186
)


(939
)


(3,655
)Valuation allowance


(16,658
)


(8,808
)


9,363Detriment/(benefit) from discontinued operations and equity
    method investments, net of impairments


4,614



6,670



(7,986
)Asset impairments






4,494



Stock options


4,440



3,189



2,271Other


384



927



823Provision for income taxes

$
567


$
871


$
849     Fiscal Year Ended2010


2009


2008United States

$
20,073


$
(32,737
)

$
(12,176
)Foreign


2,799



(4,042
)


(2,462
)$
22,872


$
(36,779
)

$
(14,638
)         2010


2009Beginning balance

$
73,837


$
77,304Increases related to current year tax positions


2,822



730Expiration of the statue of limitations for the assessment of
    taxes


(9,130
)


(4,429
)Other


492



232Ending balance

$
68,021


$
73,837      59




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##### Table of Contents



7.
    Debt  October 1,


October 2,2010


20094.00% convertible subordinated notes due March 2026, net of debt
    discount of $0.2 million

$
10,978


$
Accounts receivable financing facility






28,653Current portion of long-term debt






61,400Short-term debt

$
10,978


$
90,053Floating rate senior secured notes due November 2010

$



$
61,4004.00% convertible subordinated notes due March 2026, net of debt
    discount of $21.4 million






228,57811.25% senior secured notes due March 2015, net of discount
    of $1,457


173,543



Total


173,543



289,978Less: current portion of long-term debt






(61,400
)Long-term debt

$
173,543


$
228,578   11.25% senior secured notes due
    2015
 60




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##### Table of Contents



Floating rate senior secured notes due November
    2010
  4.00% convertible subordinated notes due March
    2026
    October 1,


October 2,2010


2009Principal of the liability component of 4.00% convertible
    subordinated notes

$
11,218


$
250,000Unamortized debt discount


(240
)


(21,422
)Net carrying amount of liability component of 4.00% convertible
    subordinated notes

$
10,978


$
228,578     Fiscal Year Ended2010


2009


2008Contractual interest coupon

$
5,383


$
10,000


$
10,000Amortization of the debt discount on the liability component


7,825



14,015



13,394Total

$
13,208


$
24,015


$
23,394Effective interest rate for the liability component for the
    period


9.87
%


9.61
%


9.36
%     Accounts Receivable Financing
    Facility
 61




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##### Table of Contents



364-day
        Fiscal Year Ending2011


2012


2013


2014


2015


TotalPayments due

$
11,218


$



$



$



$
175,000


$
186,218   8.
    Commitments
    and Contingencies  Lease
    Commitments
   62




---



##### Table of Contents



Lease


Sublease


NetFiscal Year Ending

Payments


Income


Obligations2011

$
14,582


$
(5,242
)

$
9,3402012


12,672



(4,457
)


8,2152013


12,703



(4,129
)


8,5742014


12,784



(3,898
)


8,8862015


10,590



(2,789
)


7,801Thereafter


18,013



(1,755
)


16,258Total future minimum lease payments

$
81,344


$
(22,270
)

$
59,074     Legal
    Matters
    Guarantees
    and Indemnifications
       63




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##### Table of Contents



Other
  Tax Matter 
  9.
    Shareholders
    Equity  Common
    and Preferred Stock
        Stock-Based
    Award Plans
    Stock
    Options
    Fiscal Year EndedOctober 1,

October 2,

October 3,2010

2009

2008Stock option plans:Expected dividend yield

$



$



$
Expected stock price volatility






79
%


67
%Risk free interest rate






2.12
%


3.20
%Average expected life (in years)






4.87



5.25    64




---



##### Table of Contents



WeightedAverageExerciseShares


PriceOutstanding, October 2, 2009


4,210


$
23.20Granted






Exercised


(30
)


0.59Forfeited


(1,884
)


25.69Outstanding, October 1, 2010


2,296



21.45Shares vested and expected to vest, October 1, 2010


2,295



21.46Exercisable, October 1, 2010


2,222


$
21.96       Restricted
    Stock Units
      WeightedAverageGrant DateShares


Fair ValueOutstanding, October 2, 2009


165


$
2.82Granted


4,790



2.71Vested


(72
)


3.77Forfeited


(110
)


2.79Outstanding, October 1, 2010


4,773


$
2.69    65




---



##### Table of Contents



Employee
    Stock Purchase Plan
    Fiscal Year EndedOctober 1,

October 2,

October 3,2010

2009

2008Stock purchase plans:Expected dividend yield

$



$



$
Expected stock price volatility


82
%


74
%


69
%Risk free interest rate


0.18
%


3.14
%


3.10
%Average expected life (in years)


0.50



0.50



0.50       10.
    Employee
    Benefit Plans  Retirement
    Savings Plan
    Retirement
    Medical Plan
   66




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##### Table of Contents



Pension
    Plans
  non-U.S. employees
    11.
    Gain on
    Sale of Intellectual Property    12.
    Asset
    Impairments  Fiscal
    2009
    Fiscal
    2008
     67




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##### Table of Contents



13.
    Special
    Charges    Fiscal Year Ended2010


2009


2008Settlements

$
589


$
3,475


$
Other special charges


530







(112
)Restructuring charges


(282
)


15,116



11,539Voluntary Early Retirement Plan (VERP) settlement
    charge










6,294Loss on disposal of property






392



961$
837


$
18,983


$
18,682   Settlement
    Charges
    Other
    Special Charges
    Restructuring
    Charges
    Restructuring Accruals 
  Fiscal 2009 Restructuring Actions 
 68




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##### Table of Contents



WorkforceReductionsRestructuring balance, October 2, 2009

$
1,582Charged to costs and expenses


26Cash payments


(1,555
)Restructuring balance, October 1, 2010

$
53   Fiscal 2008 Restructuring Actions
    Facilityand OtherRestructuring balance, October 2, 2009

$
64Charged to costs and expenses


115Cash payments


(105
)Restructuring balance, October 1, 2010

$
74   Fiscal 2007 Restructuring Actions 
      Facilityand OtherRestructuring balance, October 2, 2009

$
27,233Charged to costs and expenses


2,211Cash payments


(6,599
)Restructuring balance, October 1, 2010

$
22,845   Fiscal 2006 and 2005 Restructuring Actions 
  sub-lease
 69




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##### Table of Contents



Facilityand OtherRestructuring balance, October 2, 2009

$
13,851Charged to costs and expenses


(936
)Cash payments


(2,066
)Restructuring balance, October 1, 2010

$
10,849   14.
    Other
    (Income) Expense, Net    Fiscal Year Ended2010


2009


2008Investment and interest income

$
(265
)

$
(1,747
)

$
(7,237
)Gain on sale of investments


(16,054
)


(1,856
)


(896
)Loss on extinguishment of debt


18,583







(Increase) decrease in the fair value of derivative instruments


(15,632
)


(4,508
)


14,974Impairment of equity securities






2,770



Loss on rental property










1,435Loss on swap termination






1,087



Other


913



(771
)


947Other (income) expense, net

$
(12,455
)

$
(5,025
)

$
9,223         15.
    Related
    Party Transactions  Mindspeed
    Technologies, Inc. (Mindspeed)
    Lease Agreement
 70




---



##### Table of Contents



Skyworks
    Solutions, Inc. (Skyworks)
    Inventory Purchases
  16.
    Segment
    Information  Geographic
    Regions:
    Fiscal Year Ended2010


2009


2008United States

$
15,045


$
5,983


$
9,139Other Americas


3,985



3,101



9,761Total Americas


19,030



9,084



18,900China


145,407



132,827



213,847Taiwan


23,187



14,082



18,710Asia-Pacific


50,315



49,627



73,278Total Asia-Pacific


218,909



196,536



305,835Europe, Middle East and Africa


2,787



2,807



6,769$
240,726


$
208,427


$
331,504       October 1,


October 2,


October 3,2010


2009


2008United States

$
24,389


$
25,415


$
48,122India


1,022



1,971



2,627China


546



2,309



3,204Asia-Pacific


1,092



610



1,004Europe, Middle East and Africa


1



18



34$
27,050


$
30,323


$
54,991    71




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##### Table of Contents



17.
    Quarterly
    Results of Operations (Unaudited)  Fiscal Quarter EndedFiscal 2010

Oct. 1, 2010


Jul. 2, 2010


Apr. 1, 2010


Jan. 1, 2010Net revenues

$
56,315


$
60,730


$
61,868


$
61,813Gross margin


34,094



37,085



37,781



37,609Net income (loss) from continuing operations


9,756



(6,998
)


10,784



8,697Net (loss) income from discontinued operations


(1,282
)


(455
)


95



(363
)Net income (loss)


8,474



(7,453
)


10,879



8,334Net income (loss) per share from continuing operations, basic


0.12



(0.09
)


0.16



0.14Net income (loss) per share from continuing operations, diluted


0.12



(0.09
)


0.15



0.14Net loss per share from discontinued operations, basic and
    diluted


(0.02
)










Net income (loss) per share, basic


0.10



(0.09
)


0.16



0.14Net income (loss) per share, diluted


0.10



(0.09
)


0.15



0.14   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


(11,218
)


(4,245
)


(15,975
)


(9,019
)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)


19,985



(688
)


(17,113
)


(20,992
)Net loss per share from continuing operations, basic and fully
    diluted


(0.22
)


(0.08
)


(0.32
)


(0.18
)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


0.40



(0.01
)


(0.34
)


(0.42
)   18.
    Subsequent
    events   72




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            Internal Control  Integrated Framework
  DELOITTE &
    TOUCHE LLP
    73




---



##### 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
   74




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
    DELOITTE &
    TOUCHE LLP
    75




---



##### Table of Contents



Item 9B.
    Other
    Information   76




---



##### 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   77




---



##### 



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


41Consolidated Statements of Operations


42Consolidated Statements of Cash Flows


43Consolidated Statements of Shareholders
    Equity (Deficit) and Comprehensive Loss


44    Supplemental Schedules
   
 Schedule II  Valuation and
    Qualifying Accounts


84      Exhibits
  Exhibits

Description2
.1

Asset Purchase Agreement, dated as of April 21, 2009, by and
    between the Company 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)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, as filed with the Secretary of
    State of the State of Delaware on June 25, 2008 (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
.1.2

Certificate of Amendment of Amended and Restated Certificate of
    Incorporation of the Company, as filed with the Secretary of
    State of the State of Delaware on February 19, 2010
    (incorporated by reference to Exhibit 3.1 of the Companys
    Current Report on Form 8-K filed on February 24, 2010)3
.2

By-Laws of the Company, as amended December 18, 2009
    (incorporated by reference to Exhibit 3.2 of the Companys
    Current Report on Form 8-K filed on December 24, 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
    4.00% 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 March 10, 2010, by and among the Company,
    the subsidiary guarantors party thereto and The Bank of New York
    Mellon Trust Company, N.A., as Trustee and Collateral Trustee,
    including the form of the Companys 11.25% Senior
    Secured Note due 2015 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 11, 2010) 78




---



##### Table of Contents



Exhibits

Description4
.2.1

Blanket Lien Pledge and Security Agreement, dated as of March
    10, 2010, by and among the Company, the subsidiary guarantors
    party thereto and The Bank of New York Mellon Trust Company,
    N.A., as Collateral Trustee (incorporated by reference to
    Exhibit 4.2 of the Companys Current Report on
    Form 8-K filed on March 11, 2010)4
.3

Loan and Security Agreement, dated as of December 22, 2009, by
    and between Silicon Valley Bank and Conexant CF, LLC
    (incorporated by reference to Exhibit 99.2 of the Companys
    Current Report on Form 8-K filed on March 3, 2010)4
.3.1

Amendment No. 1 to Loan and Security Agreement, dated as of
    March 3, 2010, by and between Conexant CF, LLC and Silicon
    Valley Bank (incorporated by reference to Exhibit 10.1 of the
    Companys Current Report on Form 8-K filed on March 5, 2010)*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)) 79




---



##### Table of Contents



Exhibits

Description*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
.6.3

Form of Restricted Stock Unit Award Grant Notice and Restricted
    Stock Unit Award Agreement under the Conexant Systems, Inc. 2000
    Non-Qualified Stock Plan (incorporated by reference to Exhibit
    10.3 of the Companys Quarterly Report on Form 10-Q for the
    quarter ended April 2, 2010)*10
.6.4

Form of Restricted Stock Unit Award Grant Notice and Restricted
    Stock Unit Award Agreement (for Directors) under the Conexant
    Systems, Inc. 2000 Non-Qualified Stock Plan (incorporated by
    reference to Exhibit 10.3.1 of the Companys Quarterly
    Report on Form 10-Q for the quarter ended April 2, 2010)*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))*10
.8

Conexant Systems, Inc. 2004 New-Hire Equity Incentive Plan, as
    amended (incorporated by reference to Exhibit 10.2 of the
    Companys Quarterly Report on Form 10-Q for the quarter
    ended April 2, 2010)*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

Conexant Systems, Inc. 2010 Equity Incentive Plan (incorporated
    by reference to Exhibit 99.1 of the Companys Current
    Report on Form 8-K filed on February 22, 2010)*10
.11.1

Form of Restricted Stock Unit Award Grant Notice and Restricted
    Stock Unit Award Agreement under the Conexant Systems, Inc. 2010
    Equity Incentive Plan (incorporated by reference to Exhibit
    10.1.1 of the Companys Quarterly Report on Form 10-Q for
    the quarter ended April 2, 2010)*10
.11.2

Form of Restricted Stock Unit Award Grant Notice and Restricted
    Stock Unit Award Agreement (for Directors) under the Conexant
    Systems, Inc. 2010 Equity Incentive Plan (incorporated by
    reference to Exhibit 10.1.2 of the Companys Quarterly
    Report on Form 10-Q for the quarter ended April 2, 2010)*10
.11.3

Form of Stock Option Award Grant Notice and Stock Option
    Agreement under the Conexant Systems, Inc. 2010 Equity Incentive
    Plan (incorporated by reference to Exhibit 10.1.3 of the
    Companys Quarterly Report on Form 10-Q for the period
    quarter ended April 2, 2010)*10
.12

Conexant Systems, Inc. 2001 Employee Stock Purchase Plan, as
    amended and restated (incorporated by reference to Exhibit 4.1
    of the Companys Registration Statement on Form S-8 filed
    on March 1, 2010 (File No. 333-165128))*10
.13

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
.14

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
.14.1

Amendment, dated April 22, 2009, to Employment Agreement  dated
    as of April 14, 2008 by and between D. Scott Mercer and Conexant
    Systems, Inc. (incorporated by reference to Exhibit 10.1 of the
    Companys Current Report on Form 8-K filed on April 24,
    2009)*10
.15

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) 80




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##### Table of Contents



Exhibits

Description*10
.15.1

Amendment, dated as of August 27, 2009, to Employment Agreement
    dated as of April 14, 2008 by and between the Company and C.
    Scherp (incorporated by reference to Exhibit 10.13.1 of
    Amendment No. 1 to the Companys Annual Report on Form
    10-K filed on December 22, 2009)*10
.16

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
.16.1

Amendment, dated as of August 27, 2009, to Employment Agreement
    dated as of April 14, 2008 by and between the Company and S.
    Chittipeddi (incorporated by reference to Exhibit 10.14.1 of
    Amendment No. 1 to the Companys Annual Report on Form 10-K
    filed on December 22, 2009)*10
.17

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
.17.1

Amendment, dated as of May 29, 2008, to Employment Agreement
    dated as of February 18, 2008 by and between the Company and
    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
.17.2

Amendment, dated April 22, 2009, to Employment Agreement dated
    February 18, 2008 by and between the Company and Mark Peterson
    (incorporated by reference to Exhibit 10.2 of the Companys
    Current Report on Form 8-K filed on April 24, 2009)*10
.17.3

Amendment, dated as of August 27, 2009, to Employment Agreement
    dated February 18, 2008 by and between the Company and Mark
    Peterson (incorporated by reference to Exhibit 10.16.3 of
    Amendment No. 1 to the Companys Annual Report on Form 10-K
    filed on December 22, 2009)*10
.18

Employment Agreement, dated as of April 25, 2008, by and between
    the Company and Jean Hu (incorporated by reference to Exhibit
    10.25 of Amendment No. 1 to the Companys Annual Report on
    Form 10-K filed on December 22, 2009)*10
.18.1

Amendment, dated as of August 27, 2009, to Employment Agreement
    dated as of April 25, 2008 by and between the Company and Jean
    Hu (incorporated by reference to Exhibit 10.25.1 of Amendment
    No. 1 to the Companys Annual Report on Form 10-K filed on
    December 22, 2009)10
.19.2

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
.20

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
.20.1

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
.20.2

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
.20.3

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
.20.4

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
.20.5

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
.21

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) 81




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##### Table of Contents



Exhibits

Description*10
.22

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
.23

Summary of Non-Employee Director Compensation and Benefits10
.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)10
.25

Purchase and Sale Agreement and Joint Escrow Instructions, dated
    January 12, 2010, by and between the Company and City Ventures,
    LLC (incorporated by reference to Exhibit 10.6 of the
    Companys Quarterly Report on Form 10-Q for the quarter
    ended April 2, 2010)10
.25.1

Amendment to Purchase and Sale Agreement and Joint Escrow
    Instructions, dated February 1, 2010, by and between the Company
    and City Ventures, LLC (incorporated by reference to Exhibit
    10.6.1 of the Companys Quarterly Report on Form 10-Q for
    the quarter ended April 2, 2010)10
.25.2

Second Amendment to Purchase and Sale Agreement and Joint Escrow
    Instructions, dated February 19, 2010, by and between the
    Company and City Ventures, LLC (incorporated by reference to
    Exhibit 10.6.2 of the Companys Quarterly Report on
    Form 10-Q for the quarter ended April 2, 2010)10
.25.3

Third Amendment to Purchase and Sale Agreement and Joint Escrow
    Instructions, dated February 26, 2010, by and between the
    Company and City Ventures, LLC (incorporated by reference to
    Exhibit 10.6.3 of the Companys Quarterly Report on
    Form 10-Q for the quarter ended April 2, 2010)10
.25.4

Fourth Amendment to Purchase and Sale Agreement and Joint Escrow
    Instructions, dated March 12, 2010, by and between the Company
    and City Ventures, LLC (incorporated by reference to
    Exhibit 10.6.4 of the Companys Quarterly Report on
    Form 10-Q for the quarter ended April 2, 2010)10
.25.5

Letter, dated March 24, 2010, concerning termination of Purchase
    and Sale Agreement and Joint Escrow Instructions from City
    Ventures, LLC to the Company (incorporated by reference to
    Exhibit 10.6.5 of the Companys Quarterly Report on
    Form 10-Q for the quarter ended April 2, 2010)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 82




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##### Table of Contents



SIGNATURES
      By:
    /s/  D.
    SCOTT MERCER       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, Treasurer and Senior Vice President,
    Business Development
    (Principal Financial Officer)/s/  MICHAEL
    ELBAZMichael
    Elbaz

Vice President, Finance and Chief Accounting Officer (Principal
    Accounting Officer)/s/  WILLIAM
    E. BENDUSH*William
    E. Bendush

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

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 83




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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 1, 2010:Allowance for doubtful accounts

$
453


$
(85
)

$



$
368Reserve for sales returns


1,090



(572
)






518Fiscal year ended October 2, 2009:Allowance for doubtful accounts

$
834


$
(325
)

$
(56
)

$
453Reserve for sales returns


2,935



(1,364
)


(481
)


1,090Fiscal year ended October 3, 2008:Allowance for doubtful accounts

$
1,659


$
(751
)

$
(74
)

$
834Reserve for sales returns


3,264



(329
)






2,935     (1)
    
    Deductions in the allowance for doubtful accounts reflect
    amounts written off. 84