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<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left"> </div> <div align="center" style="font-size: 10pt"><b></b></div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>1. Organization and Summary of Significant Accounting Policies</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Organization and Basis of Presentation</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are a leading worldwide developer and supplier of custom-designed user interface solutions that enable people to interact more easily and intuitively with a wide variety of mobile computing, communications, entertainment, and other electronic devices. We currently target the personal computer, or PC, market, primarily notebook computers, the markets for digital lifestyle products, including mobile smartphones and feature phones, the tablet market, and other select electronic device markets with our customized human interface solutions. Our original equipment manufacturer, or OEM, customers include most of the tier one PC OEMs and many of the world’s largest OEMs for mobile smartphones and feature phones. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The consolidated financial statements include our financial statements and those of our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. The fiscal years presented in this report were 52-week periods ended June 25, 2011, June 26, 2010, and June 27, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock Split</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July 31, 2008, we announced a 3-for-2 stock split to be effected as a stock dividend. The stock dividend was effective for stockholders of record on August 15, 2008 and was paid on August 29, 2008. All share and per share amounts contained herein for each period presented prior to the stock dividend date have been retroactively adjusted to reflect the stock split, except for treasury shares. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Use of Estimates</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or U.S. GAAP, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, cost of revenue, inventories, product warranty, share-based compensation costs, provision for income taxes, deferred income tax asset valuation allowances, uncertain tax positions, tax contingencies, goodwill, intangible assets, investments, and contingencies. We base our estimates on historical experience, applicable laws, and regulations, and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Cash Equivalents and Investments</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Cash equivalents consist of highly liquid investments with original maturities of three months or less. Our non-current investments are reported at fair value, with unrealized gains and losses excluded from earnings and shown separately as a component of accumulated other comprehensive income within stockholders’ equity. We charge other-than-temporary declines in the fair value of a debt security to earnings if the decline is due to a credit loss or if we intend to or need to sell at a loss. We charge other-than-temporary declines in the fair value of a debt security to other comprehensive income if the decline is due to a noncredit loss, resulting in the establishment of a new cost basis for the debt security. We charge other-than-temporary declines in the fair value of equity securities to earnings. We include interest earned on securities in interest income. We determine realized gains and losses on the sale of securities using the specific identification method. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Investments in available-for-sale securities and cash equivalents as of the end of fiscal 2011 and 2010 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="44%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000">2011</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Gross</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Gross</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Estimated</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Amortized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Gains</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Losses</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Money market </div></td> <td> </td> <td align="left">$</td> <td align="right">243,966</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">243,966</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Auction rate securities </div></td> <td> </td> <td> </td> <td align="right">23,356</td> <td> </td> <td> </td> <td> </td> <td align="right">2,520</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">25,876</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total available-for-sale securities </div></td> <td> </td> <td align="left">$</td> <td align="right">267,322</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,520</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">269,842</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="44%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Gross</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Gross</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Estimated</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Amortized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Gains</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Losses</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Money market </div></td> <td> </td> <td align="left">$</td> <td align="right">208,040</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">208,040</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Auction rate securities </div></td> <td> </td> <td> </td> <td align="right">26,497</td> <td> </td> <td> </td> <td> </td> <td align="right">1,515</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total available-for-sale securities </div></td> <td> </td> <td align="left">$</td> <td align="right">234,537</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,515</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">236,052</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Weighted average interest rates, amortized costs, and estimated fair values of our money market investments as of the end of fiscal 2011 and 2010 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Weighted</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Weighted</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Average</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Estimated</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Average</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Estimated</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Interest</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Amortized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Interest</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Amortized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Rate</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Rate</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Less than one year </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">0.2</td> <td nowrap="nowrap">%</td> <td> </td> <td align="left">$</td> <td align="right">243,966</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">243,966</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">0.2</td> <td nowrap="nowrap">%</td> <td> </td> <td align="left">$</td> <td align="right">208,040</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">208,040</td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Fair Values of Cash Equivalents and Investments</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We measure financial assets at fair value. When we measure fair value on either a recurring or nonrecurring basis, inputs used in valuation techniques are assigned a hierarchical level as follows: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">Level 1 inputs are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">Level 2 inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">Level 3 inputs are unobservable inputs reflecting our assumptions, which are incorporated into valuation techniques and models used to determine fair value. The assumptions are consistent with market participant assumptions that are reasonably available. Our Level 3 assets consist of non-current auction rate securities, or ARS, investments. We estimated the fair value of our ARS investments based on, among other factors, the following: (i) the collateral underlying the security investments; (ii) creditworthiness of the counterparty; (iii) timing of expected future cash flows; (iv) the probability of a successful auction in a future period; (v) the underlying structure of each investment; (vi) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (vii) consideration of the probabilities of default, passing a future auction, or repurchase at par for each period; and (viii) estimates of the recovery rates in the event of default for each investment. See Note 3 — Auction Rate Securities. </div></td> </tr> </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div style="margin-top: 10pt"> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Financial assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the end of fiscal 2011 and 2010 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="44%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 3</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 1</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Level 3</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Money market </div></td> <td> </td> <td align="left">$</td> <td align="right">243,966</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">208,040</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Auction rate securities </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">25,876</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total available-for-sale securities </div></td> <td> </td> <td align="left">$</td> <td align="right">243,966</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">25,876</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">208,040</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Money market balances are included in cash and cash equivalents as of the end of fiscal 2011 and 2010. ARS investments are included in non-current investments as of the end of fiscal 2011 and 2010. There were no Level 2 financial assets as of the end of fiscal 2011 or 2010. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Changes in fair value of our Level 3 financial assets for fiscal 2011 and 2010 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Beginning balance </div></td> <td> </td> <td align="left">$</td> <td align="right">28,012</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28,767</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net unrealized gain </div></td> <td> </td> <td> </td> <td align="right">1,005</td> <td> </td> <td> </td> <td> </td> <td align="right">1,463</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Impairment (loss)/recovery on investments, net </div></td> <td> </td> <td> </td> <td align="right">59</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(443</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Redemptions </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,200</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,775</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Ending balance </div></td> <td> </td> <td align="left">$</td> <td align="right">25,876</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">There were no transfers in or out of our Level 1, 2, or 3 assets during fiscal 2011 or 2010. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair values of our cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their carrying values because of the short-term nature of those instruments. We base the fair value of our ARS investments on a discounted cash flow model. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Concentration of Credit Risk</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, investments, and trade accounts receivable. Our investment policy, which is predicated on capital preservation and liquidity, limits investments to U.S. government treasuries and agency issues, taxable securities, and municipal issued securities with a minimum rating of A1 (Moody’s) or P1 (Standard and Poor’s) or equivalent. Included within our investment portfolio are investments in ARS investments, which met our investment guidelines at the time of our investment. Our ARS investments are currently not liquid as a result of continued auction failures. If the issuers are not able to meet their payment obligations or if we sell our ARS investments before they recover, we may lose some or all of our principal invested or may be required to further reduce the carrying value. We do not intend to sell our ARS investments for less than par value. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We sell our products primarily to contract manufacturers that provide manufacturing services for OEMs. We extend credit based on an evaluation of a customer’s financial condition, and we generally do not require collateral. To date, credit losses on our accounts receivable have been insignificant, and we believe that an adequate allowance for doubtful accounts has been provided. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following customers accounted for more than 10% of our accounts receivable balance as the end of fiscal 2011 and 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Customer A </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">12</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">15</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Customer B </div></td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">15</td> <td nowrap="nowrap">%</td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr style="font-size: 6pt"> <td width="3%"> </td> <td width="1%"> </td> <td width="96%"> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td> <div style="text-align: justify">Less than 10% </div></td> </tr> </table>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Other Concentrations</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our products include certain components that are currently single sourced. We believe other vendors would be able to provide similar components; however, the qualification of such vendors may require start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical single-sourced components. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Revenue Recognition</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We recognize revenue from product sales when there is persuasive evidence that an arrangement exists, delivery has occurred and title has transferred, the price is fixed or determinable, and collection is reasonably assured, which is generally upon shipment. We accrue for estimated sales returns and other allowances, based on historical experience, at the time we recognize revenue. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Allowance for Doubtful Accounts</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We maintain allowances for doubtful accounts for estimated losses resulting from the inability of customers to meet their financial obligations. On an ongoing basis, we evaluate the collectability of accounts receivable based on a combination of factors. In circumstances in which we are aware of a specific customer’s potential inability to meet its financial obligation, we record a specific reserve of the bad debt against amounts due. In addition, we make judgments and estimates on the collectability of accounts receivable based on our historical bad debt experience, customers’ creditworthiness, current economic trends, recent changes in customers’ payment trends, and deterioration in customers’ operating results or financial position. If circumstances change adversely, additional bad debt allowances may be required. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Cost of Revenue</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our cost of revenue includes the cost of products shipped to our customers, which primarily includes the cost of products built to our specifications by our contract manufacturers, the cost of silicon wafers supplied by independent wafer foundries, and the related assembly, package, and test costs of our die and packaged ASICs. Also included in our cost of revenue are personnel and related costs, including share-based compensation, for quality assurance, and manufacturing support; logistics costs; depreciation of equipment supporting manufacturing; license amortization; provisions for excess and obsolete inventories;and warranty costs. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Inventories</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Inventories are stated at the lower of cost (first-in, first-out method) or market (estimated net realizable value) as of the end of fiscal 2011 and 2010 and consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Raw materials </div></td> <td> </td> <td align="left">$</td> <td align="right">22,607</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12,251</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Finished goods </div></td> <td> </td> <td> </td> <td align="right">6,243</td> <td> </td> <td> </td> <td> </td> <td align="right">6,416</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">28,850</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">18,667</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Periodically, we purchase inventory from our contract manufacturers when a customer delays its delivery schedule or cancels its order. In those circumstances in which our customer has cancelled its order and we purchase inventory from our contract manufacturers, we consider a write-down to reduce the carrying value of the inventory purchased to its net realizable value. We charge write-downs to reduce the carrying value of obsolete, slow moving, and non-usable inventory to net realizable value to cost of revenue. The effect of these write-downs is to establish a new cost basis in the related inventory, which we do not subsequently write up. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Property and Equipment</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We state property and equipment at cost less accumulated depreciation and amortization. We compute depreciation using the straight-line method over the estimated useful lives of the assets. We apply estimated useful lives of three to seven years to our computer equipment and software; estimated useful lives ranging from one to five years to our manufacturing equipment; estimated useful lives of three to five years to our furniture and fixtures; and an estimated useful life of 35 years to our building. We amortize leasehold improvements over the shorter of the lease term or the useful life of the asset. For fiscal 2011 and 2010, we retired fully depreciated equipment and furniture with an original cost of $1.9 million and zero, respectively. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Foreign Currency Translation</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The U.S. dollar is our functional and reporting currency. We remeasure our monetary assets and liabilities not denominated in the functional currency into U.S. dollar equivalents at the rate of exchange in effect on the balance sheet date. We measure and record non-monetary balance sheet accounts at the historical rate in effect at the date of translation. All of our revenue and approximately 93% of our consolidated costs are denominated in U.S. dollars. We translate certain expenses at the weighted average exchange rate in the month that the transaction occurred. Remeasurement of monetary assets and liabilities that are not denominated in the functional currency are included currently in operating results. Translation losses included in operating results for fiscal 2011, 2010, and 2009 were not material. To date, we have not undertaken hedging transactions related to foreign currency exposure. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Goodwill</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We review the carrying value of goodwill at least annually for impairment as of the fiscal year-end balance sheet date. The frequency of our review is dictated by events or changes in circumstances indicating that the carrying value may be impaired. Based on our latest review, we determined there was no impairment of the carrying value of goodwill. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Impairment of Long-Lived Assets</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We evaluate long-lived assets, such as property and equipment and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We measure recoverability of assets to be held and used by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, we recognize an impairment charge in an amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet. There were no events during the fiscal year that would trigger an impairment of our long-lived assets. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Segment Information</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We operate in one segment: the development, marketing, and sale of intuitive user interface solutions for electronic devices and products. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Share-Based Compensation Costs</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We utilize the Black-Scholes option pricing model to estimate the grant date fair value of employee share-based compensatory awards, which requires the input of highly subjective assumptions, including expected volatility and expected life. Historical and implied volatilities were used in estimating the fair value of our share-based awards. The expected life for our options was previously estimated based on historical trends since our initial public offering. In fiscal 2011, we began to grant options with a contractual life of seven years rather than 10 years and now use the simplified method of establishing the expected life as we do not have any history of options with seven-year lives. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. Further, we estimate forfeitures for share-based awards that are not expected to vest. We charge estimated fair value less estimated forfeitures to earnings on a straight-line basis over the vesting period of the underlying awards, which is generally four years for our stock option and deferred stock unit, or DSU, awards and up to two years for our employee stock purchase plan. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Product Warranties</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We generally warrant our products for a period of 12 months or more from the date of sale and estimate probable product warranty costs at the time we recognize revenue. Factors that affect our warranty liability include historical and anticipated rates of warranty claims, materials usage, rework, and delivery costs. However, we assess the adequacy of our warranty obligations periodically and adjust the accrued warranty liability on the basis of our estimates. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Changes in our warranty liability (included in other accrued liabilities)for fiscal 2011 and 2010 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Beginning accrued warranty </div></td> <td> </td> <td align="left">$</td> <td align="right">2,096</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">693</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Provision for product warranties </div></td> <td> </td> <td> </td> <td align="right">5,963</td> <td> </td> <td> </td> <td> </td> <td align="right">3,986</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Cost of warranty claims and settlements </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,075</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2,583</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Ending accrued warranty </div></td> <td> </td> <td align="left">$</td> <td align="right">2,984</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,096</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Comprehensive Income</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our comprehensive income generally consists of net income plus the effect of unrealized gains and losses on our investments primarily due to changes in market value of certain of our ARS investments. In addition, we recognize the noncredit portion of other-than-temporary impairment on debt securities in comprehensive income. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Income Taxes</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We account for income taxes under the asset and liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We recognize the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date. We establish valuation allowances when necessary to reduce deferred tax assets to the amounts expected to be realized. We consider the operating earnings of our foreign subsidiaries to be indefinitely invested outside the United States. Accordingly, no provision has been made for the U.S. federal, state, or foreign taxes that may result from future remittances of undistributed earnings of our foreign subsidiaries. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We use a two-step approach to recognizing and measuring uncertain tax positions. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement with a taxing authority. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of highly complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our consolidated financial position, results of operations, and cash flows. We believe we have adequately provided for reasonably foreseeable outcomes in connection with the resolution of income tax uncertainties. However, our results have in the past, and could in the future, include favorable and unfavorable adjustments to our estimated tax liabilities in the period a determination of such estimated tax liability is made or resolved, upon the filing of an amended return, upon a change in facts, circumstances, or interpretation, or upon the expiration of a statute of limitation. Accordingly, our effective tax rate could fluctuate materially from period to period. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Research and Development</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We expense costs to develop our products, which include the costs incurred to design interface solutions for customers prior to the customers incorporating those solutions into their products. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Net Income Per Share</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Basic net income per share amounts for each period presented have been computed using the weighted average number of shares of common stock outstanding. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Diluted net income per share amounts for each period presented have been computed (1) using the weighted average number of potentially dilutive shares issuable in connection with our share-based compensation plans under the treasury stock method, and (2) using the weighted average number of potentially dilutive shares issuable in connection with our convertible debt under the treasury stock method, when dilutive. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>2. Net Income Per Share</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The computation of basic and diluted net income per share for fiscal 2011, 2010, and 2009 was as follows (in thousands, except per share amounts): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Numerator: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Net income </div></td> <td> </td> <td align="left">$</td> <td align="right">63,796</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">52,965</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">48,079</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Denominator: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Shares, basic </div></td> <td> </td> <td> </td> <td align="right">34,042</td> <td> </td> <td> </td> <td> </td> <td align="right">33,836</td> <td> </td> <td> </td> <td> </td> <td align="right">33,981</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Effect of dilutive share-based awards </div></td> <td> </td> <td> </td> <td align="right">1,412</td> <td> </td> <td> </td> <td> </td> <td align="right">1,587</td> <td> </td> <td> </td> <td> </td> <td align="right">1,596</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Shares, diluted </div></td> <td> </td> <td> </td> <td align="right">35,454</td> <td> </td> <td> </td> <td> </td> <td align="right">35,423</td> <td> </td> <td> </td> <td> </td> <td align="right">35,577</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net income per share: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Basic </div></td> <td> </td> <td align="left">$</td> <td align="right">1.87</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1.57</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1.41</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Diluted </div></td> <td> </td> <td align="left">$</td> <td align="right">1.80</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1.50</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1.35</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Diluted net income per share does not include the effect of share-based awards for fiscal 2011, 2010, and 2009 as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Share-based awards </div></td> <td> </td> <td> </td> <td align="right">3,584</td> <td> </td> <td> </td> <td> </td> <td align="right">3,468</td> <td> </td> <td> </td> <td> </td> <td align="right">2,556</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">These share-based awards were not included in the computation of diluted net income per share because the proceeds received, if any, from such share-based awards combined with the average unamortized compensation costs adjusted for the hypothetical tax benefit or deficiency creditable or chargeable, respectively, to additional paid-in capital, were greater than the average market price of our common stock, and therefore, their effect would have been antidilutive. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our basic net income per share amounts for each period presented have been computed using the weighted average number of shares of common stock outstanding. Our diluted net income per share amounts for each period presented include the weighted average effect of potentially dilutive shares. We used the “treasury stock” method to determine the dilutive effect of our stock options, DSUs, and convertible notes. Under the treasury stock method, shares associated with our convertible notes are included in the calculation of diluted net income per share only if the weighted average price of our common stock exceeds $33.69 during the reporting period. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>3. Auction Rate Securities</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our ARS investments, which are included in non-current investments, have failed to settle in auctions beginning in 2007. These investments are not liquid, and in the event we need to access these funds, we will not be able to do so without a loss of principal, unless redeemed by the issuers or a future auction on these investments is successful. During fiscal 2011, 2010, and 2009, $3.2 million,$1.8 million, and $4.9 million, respectively, of our ARS investments were redeemed at par, and we recognized a gain of $59,000, $6,000, and $160,000, respectively, on the redemption of these investments, which is included in impairment of investments, net on the accompanying consolidated statements of income. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As there are currently no active markets for our various failed ARS investments, we have estimated the fair value of these investments as of the end of fiscal 2011 using a trinomial discounted cash flow analysis. The analysis considered, among others, the following factors: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">the collateral underlying the security investments; </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">creditworthiness of the counterparty; </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">timing of expected future cash flows; </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">the probability of a successful auction in a future period; </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">the underlying structure of each investment; </div></td> </tr> <tr> <td style="font-size: 8pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">consideration of the probabilities of default, passing a future auction, or redemption at par for each period; and </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">estimates of the recovery rates in the event of default for each investment. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">When possible, our failed ARS investments were compared to other observable market data or securities with similar characteristics. Our estimate of the fair value of our ARS investments could fluctuate materially from period to period depending on future market conditions. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Contractual maturities for our ARS investments are generally greater than five years, with fair value of $9.9 million maturing from 2016 to 2018, $8.7 million maturing from 2034 to 2045, and $7.3 million maturing thereafter or having no stated maturity. Of our ARS investments, $19.0 million are investment grade and the remaining $18.5 million par value is below investment grade. In fiscal 2011, 2010, and 2009, we recorded $59,000, ($443,000), and ($9.2) million, respectively, related to other-than-temporary impairment (loss)/recovery on investments, net. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Upon our adoption of the recognition and presentation of other-than-temporary impairments accounting standard in fiscal 2009, we reclassified $2.4 million from retained earnings to accumulated other comprehensive income to reflect the cumulative effect adjustment as of the beginning of the period of adoption to reclassify the noncredit component of a previously recognized other-than-temporary impairment. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The various types of failed ARS investments we held as of the end of fiscal 2011, including the original cost basis, other-than-temporary impairment included in other comprehensive income, other-than-temporary impairment included in retained earnings, new cost basis, unrealized gain, and fair value consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">Cumulative Other-than-</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">temporary Impairment</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Original</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">New</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Comprehensive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Retained</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Gain</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Student loans </div></td> <td> </td> <td align="left">$</td> <td align="right">9,150</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(593</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(242</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">8,315</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">344</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8,659</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Closed end municipal and corporate funds </div></td> <td> </td> <td> </td> <td align="right">7,850</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(823</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(54</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">6,973</td> <td> </td> <td> </td> <td> </td> <td align="right">356</td> <td> </td> <td> </td> <td> </td> <td align="right">7,329</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Credit linked notes </div></td> <td> </td> <td> </td> <td align="right">13,500</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(156</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,765</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">4,579</td> <td> </td> <td> </td> <td> </td> <td align="right">3,447</td> <td> </td> <td> </td> <td> </td> <td align="right">8,026</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Preferred stock </div></td> <td> </td> <td> </td> <td align="right">5,000</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,000</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Municipals </div></td> <td> </td> <td> </td> <td align="right">2,000</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(203</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(83</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">1,714</td> <td> </td> <td> </td> <td> </td> <td align="right">148</td> <td> </td> <td> </td> <td> </td> <td align="right">1,862</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total ARS </div></td> <td> </td> <td align="left">$</td> <td align="right">37,500</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,775</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(14,144</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">21,581</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,295</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">25,876</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The various types of failed ARS investments we held as of the end of fiscal 2010, including the original cost basis, other-than-temporary impairment included in other comprehensive income, other-than-temporary impairment included in retained earnings, new cost basis, unrealized gain, and fair value consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">Cumulative Other-than-</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">temporary Impairment</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Original</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">New</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Comprehensive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Retained</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Gain</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Student loans </div></td> <td> </td> <td align="left">$</td> <td align="right">9,550</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(617</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(262</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">8,671</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">251</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8,922</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Closed end municipal and corporate funds </div></td> <td> </td> <td> </td> <td align="right">10,650</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,112</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(93</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">9,445</td> <td> </td> <td> </td> <td> </td> <td align="right">293</td> <td> </td> <td> </td> <td> </td> <td align="right">9,738</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Credit linked notes </div></td> <td> </td> <td> </td> <td align="right">13,500</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(156</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,765</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">4,579</td> <td> </td> <td> </td> <td> </td> <td align="right">2,952</td> <td> </td> <td> </td> <td> </td> <td align="right">7,531</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Preferred stock </div></td> <td> </td> <td> </td> <td align="right">5,000</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,000</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Municipals </div></td> <td> </td> <td> </td> <td align="right">2,000</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(203</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(83</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">1,714</td> <td> </td> <td> </td> <td> </td> <td align="right">107</td> <td> </td> <td> </td> <td> </td> <td align="right">1,821</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total ARS </div></td> <td> </td> <td align="left">$</td> <td align="right">40,700</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(2,088</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(14,203</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">24,409</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,603</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have accounted for all of our ARS investments as non-current as we are not able to reasonably determine when the ARS markets will recover or be restructured. Based on our ability to access our cash and cash equivalents, our expected operating cash flows, and our other sources of cash, we have the intent and ability to hold these investments until the value recovers or the investments mature. We will continue to monitor our ARS investments and evaluate our accounting for these investments quarterly. Subsequent to recording other-than-temporary impairment charges, certain of our ARS investments have increased in value above their new cost bases, and this increase is included as unrealized gain above and in accumulated other comprehensive income in the accompanying consolidated balance sheet. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>4. Property and Equipment</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Property and equipment as of the end of fiscal 2011 and 2010 consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Life</td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Land </div></td> <td> </td> <td align="center" valign="top">—</td> <td> </td> <td align="left">$</td> <td align="right">2,500</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,500</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Building and building improvements </div></td> <td> </td> <td align="center" valign="top">35 years</td> <td> </td> <td> </td> <td align="right">11,144</td> <td> </td> <td> </td> <td> </td> <td align="right">10,835</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Equipment, tooling, and leasehold improvements </div></td> <td> </td> <td align="center" valign="top" nowrap="nowrap">1 year to 5 years</td> <td> </td> <td> </td> <td align="right">30,113</td> <td> </td> <td> </td> <td> </td> <td align="right">22,668</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Furniture </div></td> <td> </td> <td align="center" valign="top" nowrap="nowrap"> 3 years to 5 years </td> <td> </td> <td> </td> <td align="right">392</td> <td> </td> <td> </td> <td> </td> <td align="right">483</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Capitalized software </div></td> <td> </td> <td align="center" valign="top">3 years to 7 years</td> <td> </td> <td> </td> <td align="right">11,516</td> <td> </td> <td> </td> <td> </td> <td align="right">9,591</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"> </td> <td> </td> <td> </td> <td align="right">55,665</td> <td> </td> <td> </td> <td> </td> <td align="right">46,077</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accumulated depreciation and amortization </div></td> <td> </td> <td align="center" valign="top"> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(29,443</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(20,256</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Property and equipment, net </div></td> <td> </td> <td align="center" valign="top"> </td> <td> </td> <td align="left">$</td> <td align="right">26,222</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">25,821</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="center" valign="top"> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>5. Leases, Other Commitments, and Contingencies</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Leases</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We maintain office facilities in various locations under operating leases with expiration dates from fiscal 2012 to fiscal 2015, some of which have renewal options of two to three years. Our leased office facilities are located in China, Finland, Hong Kong, Japan, Korea, Switzerland, Taiwan, and the United States. We recognized rent expense on a straight-line basis of $4.0 million, $3.4 million, and $2.4 million for fiscal 2011, 2010, and 2009, respectively. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The aggregate future minimum rental commitments as of the end of fiscal 2011 for noncancelable operating leases with initial or remaining terms in excess of one year were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="86%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Operating</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Lease</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Fiscal Year</td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Payments</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">2012 </div></td> <td> </td> <td align="left">$</td> <td align="right">2,905</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">2013 </div></td> <td> </td> <td> </td> <td align="right">2,047</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">2014 </div></td> <td> </td> <td> </td> <td align="right">541</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">2015 </div></td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total minimum operating lease payments </div></td> <td> </td> <td align="left">$</td> <td align="right">5,501</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Contingencies</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We may receive notices from third parties that claim our products infringe their rights. From time to time, we receive notice from third parties alleging infringement of their intellectual property rights. We cannot be certain that our technologies and products do not and will not infringe issued patents or other proprietary rights of third parties. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Any infringement claims, with or without merit, could result in significant litigation costs and diversion of management and financial resources, including the payment of damages, which could have a material adverse effect on our business, financial condition, and results of operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Indemnifications</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with certain third-party agreements we have executed in the past, we are obligated to indemnify the third party in connection with any technology infringement by us. We have also entered into indemnification agreements with our officers and directors. Maximum potential future payments cannot be estimated because these agreements do not have a maximum stated liability. However, historical costs related to these indemnification provisions have not been significant. We have not recorded any liability in our consolidated financial statements for such indemnification obligations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Line of Credit</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have an unsecured $50.0 million working capital line of credit with Wells Fargo Bank. The Wells Fargo Bank revolving line of credit, which expires on September 1, 2012, has an interest rate equal to the prime lending rate or 250 basis points above LIBOR, depending on whether we choose a variable or fixed rate, respectively. We did not borrow any amounts under the line of credit during fiscal 2011. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>6. Convertible Senior Subordinated Notes</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In December 2004, we issued an aggregate of $125.0 million of convertible notes in a private offering pursuant to Rule 144A under the Securities Act of 1933, as amended. In connection with issuing the convertible notes, we incurred issuance costs of $4.3 million, consisting primarily of the initial purchasers’ discount and costs related to legal, accounting, and printing. We used the net proceeds for working capital and general corporate purposes. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In fiscal 2009, we repurchased and retired $59.7 million of our outstanding notes at a discount of approximately 7%, which resulted in a $1.1 million net loss on retirement of debt after deducting the associated unamortized discount and issuance costs. In fiscal 2010, we repurchased and retired $63.0 million par value of our notes when investors exercised their rights to require us to repurchase their notes. As of the end of fiscal 2011, $2.3 million par value of our notes remained outstanding and have been classified as long-term as the next date noteholders can require us to repurchase all or a portion of their notes is in December 2014. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the first quarter of fiscal 2010, we adopted the accounting standard on convertible debt that can be settled in cash. The adoption of this accounting standard, which must be applied on a retrospective basis, results in a non-cash interest charge for all periods presented in our financial statements during which the notes were outstanding. This standard requires issuers of convertible notes that can be settled in cash to separately account for the liability and equity components of such convertible notes in a manner that reflects the entity’s nonconvertible debt borrowing rate. Prior to the application of the standard, the liability of the notes was carried at their par value, and only the contractual interest and amortization of debt issuance costs were recognized in our condensed consolidated statements of income. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Upon adoption of the new standard, and effective as of the issuance date of the notes, we recorded $39.4 million of the principal amount to equity, representing the debt discount for the difference between our estimated nonconvertible debt borrowing rate of 8.5% at the time of issuance and the 0.75% coupon rate of the notes using a five-year life, which coincides with the initial put rights of the noteholders. In addition, we allocated the $4.3 million of issuance costs pro-rata to the equity and debt components of the notes, or $1.4 million and $2.9 million, respectively. The discount and the issuance costs allocated to the debt component were amortized as interest expense using the effective interest method over five years and were fully amortized as of December 31, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The liability and equity components of the notes as of the end of fiscal 2011 and 2010 consisted of $2.3 million and $727,000, respectively. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The contractual interest expense and amortization of issuance costs and discount for the notes for fiscal 2011, 2010, and 2009 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest expense </div></td> <td> </td> <td align="left">$</td> <td align="right">17</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">213</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">661</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of issuance costs </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">118</td> <td> </td> <td> </td> <td> </td> <td align="right">368</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of discount </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">2,069</td> <td> </td> <td> </td> <td> </td> <td align="right">6,024</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total interest </div></td> <td> </td> <td align="left">$</td> <td align="right">17</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,400</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,053</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>7. Stockholders’ Equity</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have a Stockholders’ Rights Plan that may have the effect of deterring, delaying, or preventing a change in control that might otherwise be in the best interests of our stockholders. In general, stock purchase rights issued under the plan become exercisable when a person or group acquires 15% or more of our common stock or when a tender offer or exchange offer for 15% or more of our common stock is announced or commenced. After any such event, our other stockholders may purchase additional shares of our common stock at 50% of the then-current market price. The rights will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our board of directors. The rights should not interfere with any merger or other business combination approved by our board of directors. The rights expire in August 2012. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Preferred Stock</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are authorized, subject to limitations imposed by Delaware law, to issue up to a total of 10,000,000 shares of preferred stock in one or more series without stockholder approval. Our board of directors has the power to establish from time to time the number of shares to be included in each series and to fix the rights, preferences, and privileges of the shares of each wholly unissued series and any of its qualifications, limitations, or restrictions. Our board of directors can also increase or decrease the number of shares of a series, but not below the number of shares of that series then outstanding, without any further vote or action by the stockholders. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could harm the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in control of our company and might harm the market price of our common stock and the voting power and other rights of the holders of common stock. As of the end of fiscal 2011, there were no shares of preferred stock outstanding and we have no current plans to issue any shares of preferred stock. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Shares Reserved for Future Issuance</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Shares of common stock reserved for future issuance as of the end of fiscal 2011 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="86%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Stock options outstanding </div></td> <td> </td> <td> </td> <td align="right">7,835,499</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Deferred stock units outstanding </div></td> <td> </td> <td> </td> <td align="right">871,362</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Awards available for grant under all share-based compensation plans </div></td> <td> </td> <td> </td> <td align="right">4,351,131</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Reserved for future issuance </div></td> <td> </td> <td> </td> <td align="right">13,057,992</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Treasury Stock</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In April 2010, our board of directors approved an additional $100.0 million for the stock repurchase program, expiring in April 2012, bringing the cumulative authorization to $420.0 million. The program authorizes us to repurchase our common stock in the open market or in privately negotiated transactions depending upon market conditions and other factors. The number of shares repurchased and the timing of repurchases is based on the level of our cash balances, general business and market conditions, and other factors, including alternative investment opportunities. Common stock repurchased under this program is held as treasury stock. As of the end of fiscal 2011, we had $67.9 million remaining under our common stock repurchase program. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>8. Share-Based Compensation</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The purpose of our various share-based compensation plans is to attract, motivate, retain, and reward high-quality employees, directors, and consultants by enabling such persons to acquire or increase their proprietary interest in our common stock in order to strengthen the mutuality of interests between such persons and our stockholders and to provide such persons with annual and long-term performance incentives to focus their best efforts in the creation of stockholder value. Consequently, we determine share-based compensatory awards issued subsequent to the initial award to our employees and consultants primarily on individual performance. Our share-based compensation plans with outstanding awards consist of our 1996 Stock Option Plan, or our 1996 Plan, our 2001 Incentive Compensation Plan, as amended, or our 2001 Plan, our 2010 Incentive Compensation Plan, or our 2010 Plan, and our 2010 Employee Stock Purchase Plan, or our 2010 ESPP. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Share-based compensation awards available for grant or issuance for each plan as of the beginning of the fiscal year, including changes in the balance of awards available for grant for fiscal 2011, were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Awards</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2001</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Available</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2000</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2001</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Employee</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Employee</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Under All</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Nonstatutory</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Incentive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Stock</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Incentive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Stock</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Share-Based</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Stock Option</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Compensation</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Purchase</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Compensation</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Purchase</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Award Plans</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 2010 </div></td> <td> </td> <td> </td> <td align="right">5,761,516</td> <td> </td> <td> </td> <td> </td> <td align="right">56,376</td> <td> </td> <td> </td> <td> </td> <td align="right">4,849,225</td> <td> </td> <td> </td> <td> </td> <td align="right">855,915</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Additional shares authorized </div></td> <td> </td> <td> </td> <td align="right">1,368,667</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">1,028,462</td> <td> </td> <td> </td> <td> </td> <td align="right">340,205</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Transfer of shares </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,499,415</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(650,000</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">5,499,415</td> <td> </td> <td> </td> <td> </td> <td align="right">650,000</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Stock options granted </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,941,631</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(588,395</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,353,236</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Deferred stock units granted </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(518,630</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(145,668</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(372,962</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Purchases under employee stock purchase plan </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(397,204</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(320,745</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(76,459</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Forfeited </div></td> <td> </td> <td> </td> <td align="right">674,476</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">670,103</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">4,373</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Plan shares expired </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(596,063</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(56,376</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(314,312</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(225,375</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 2011 </div></td> <td> </td> <td> </td> <td align="right">4,351,131</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">3,777,590</td> <td> </td> <td> </td> <td> </td> <td align="right">573,541</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our 1996 Plan expired in December 2006. Accordingly, no new grants can be issued under our 1996 Plan. Option awards that are currently outstanding under our 1996 Plan will remain outstanding until exercised, forfeited, or cancelled under the terms of the option grant agreements. Our 2001 Plan, which expired in March 2011, was replaced by our 2010 Plan. Option awards and DSUs that are currently outstanding under our 2001 Plan will remain outstanding until exercised, delivered, forfeited, or cancelled under the terms of the grant agreements. Our 2001 ESPP expired in December 2010, and was replaced by our 2010 ESPP. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Share-based compensation and the related tax benefit recognized in our consolidated statement of income for fiscal 2011,2010, and 2009 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cost of revenue </div></td> <td> </td> <td align="left">$</td> <td align="right">1,294</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,307</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,680</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Research and development </div></td> <td> </td> <td> </td> <td align="right">13,823</td> <td> </td> <td> </td> <td> </td> <td align="right">14,330</td> <td> </td> <td> </td> <td> </td> <td align="right">8,897</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Selling, general, and administrative </div></td> <td> </td> <td> </td> <td align="right">18,808</td> <td> </td> <td> </td> <td> </td> <td align="right">18,739</td> <td> </td> <td> </td> <td> </td> <td align="right">13,843</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total </div></td> <td> </td> <td align="left">$</td> <td align="right">33,925</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">35,376</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">24,420</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income tax benefit on share-based compensation </div></td> <td> </td> <td align="left">$</td> <td align="right">9,745</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">9,642</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,972</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We utilize the Black-Scholes option pricing model to estimate the grant date fair value of certain employee share-based compensatory awards, which requires the input of highly subjective assumptions, including expected volatility and expected life. Historical and implied volatilities were used in estimating the fair value of our share-based awards. The expected life for our options was previously estimated based on historical trends since our initial public offering. In fiscal 2011, we began to grant options with a contractual life of seven years rather than 10 years and now use the simplified method of establishing the expected life as we do not have any history of options with seven-year lives. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based awards. Further, as required under accounting standards, we estimate forfeitures for share-based awards that are not expected to vest. We charge the estimated fair value less estimated forfeitures to earnings on a straight-line basis over the vesting period of the underlying awards, which is generally four years for our stock option and DSU awards and up to two years for our employee stock purchase plan. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options having no vesting restrictions and being fully transferable. As our stock option and employee stock purchase plan awards have characteristics that differ significantly from traded options and, as changes in the subjective assumptions can materially affect the estimated value, our estimate of fair value may not accurately represent the value assigned by a third party in an arms’-length transaction. While our estimate of fair value and the associated charge to earnings materially affects our results of operations, it has no impact on our cash position. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We recognize tax benefit upon expensing certain share-based awards associated with our share-based compensation plans, including nonqualified stock options and DSU awards, but under current accounting standards we cannot recognize tax benefit concurrent with the recognition of share-based compensation expenses associated with incentive stock options and employee stock purchase plan shares (qualified stock options). For qualified stock options that vested after our adoption of the accounting standards, we recognize tax benefit only in the period when disqualifying dispositions of the underlying stock occur, which historically has been up to several years after vesting and in a period when our stock price substantially increases. For qualified stock options that vested prior to our adoption of the accounting standards, the tax benefit is recorded directly to additional paid-in capital. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We determine excess tax benefit using the long-haul method in which we compare the actual tax benefit associated with the tax deduction from share-based award activity to the hypothetical tax benefit on the grant date fair values of the corresponding share-based awards. Tax benefit associated with excess tax deduction creditable to additional paid-in capital is not recognized until the deduction reduces taxes payable. During fiscal 2011, 2010, and 2009, we recognized $1.7 million, $7.1 million, and $9.4 million, respectively, of net excess tax benefit as additional paid-in capital. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Historically, we have issued new shares in connection with our share-based compensation plans; however, treasury shares were also available for issuance as of the end of fiscal 2011. Any additional shares repurchased under our common stock repurchase program would be available for issuance under our share-based compensation plans. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock Options</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our share-based compensation plans with outstanding stock option awards include our 1996 Plan, our 2001 Plan, and our 2010 Plan. Under our 2010 Plan, we may grant employees, consultants, and directors incentive stock options or nonqualified stock options to purchase shares of our common stock at not less than 100% of the fair market value, or FMV, on the date of grant. Stock options granted to our employees generally are incentive stock options, or qualified options, under the Internal Revenue Code, subject to calendar year vesting limitations with any balance being nonqualified stock options. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Options granted under the 2010 Plan generally vest over four years from the vesting commencement date and expire seven years after the date of grant if not exercised. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Certain stock option activity for fiscal 2011 and balances as of the end of fiscal 2011 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Stock</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Weighted</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Option</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Average</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Intrinsic</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Awards</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Exercise</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Value</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Outstanding</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Price</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(In thousands)</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 2010 </div></td> <td> </td> <td> </td> <td align="right">7,748,570</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">22.43</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Granted </div></td> <td> </td> <td> </td> <td align="right">1,941,631</td> <td> </td> <td> </td> <td> </td> <td align="right">28.97</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Exercised </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,267,751</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">15.34</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Forfeited </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(586,951</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">28.97</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 2011 </div></td> <td> </td> <td> </td> <td align="right">7,835,499</td> <td> </td> <td> </td> <td> </td> <td align="right">24.71</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">21,814</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Exercisable at June 2011 </div></td> <td> </td> <td> </td> <td align="right">4,758,094</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">22.64</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">20,275</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The aggregate intrinsic value was determined using the closing price of our common stock on the last trading day of fiscal 2011, or June 24, 2011, of $25.02 and excludes the impact of options that were not in-the-money. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At the end of fiscal 2011, we estimated fully vested options and options expected to vest to be 7.6 million with an aggregate intrinsic value of $21.8 million, having a weighted average exercise price of $24.67 and a weighted average remaining contractual term of seven years. The weighted average remaining contractual term for the options exercisable is approximately six years. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Cash received and the aggregate intrinsic value of stock options exercised for fiscal 2011, 2010, and 2009 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash received </div></td> <td> </td> <td align="left">$</td> <td align="right">19,445</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">9,469</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">13,305</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Aggregate intrinsic value </div></td> <td> </td> <td align="left">$</td> <td align="right">17,684</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8,306</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">17,548</td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of each award granted from our plans for fiscal 2011, 2010, and 2009 was estimated at the date of grant using the Black-Scholes option pricing model, assuming no expected dividends and the following range of assumptions: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected volatility </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> 42.7% – 47.0% </td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">44.2% – 62.2%</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">56.9% – 65.4%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Expected life in years </div></td> <td> </td> <td align="center" valign="bottom">4.6 – 5.1</td> <td> </td> <td align="center" valign="bottom">4.7 – 5.1</td> <td> </td> <td align="center" valign="bottom">4.5 – 4.7</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Risk-free interest rate </div></td> <td> </td> <td align="center" valign="bottom">1.2% – 2.1%</td> <td> </td> <td align="center" valign="bottom">1.9% – 2.7%</td> <td> </td> <td align="center" valign="bottom">1.7% – 3.2%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Fair value per award </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">$10.00 – $12.58</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">$12.19 – $13.58</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $10.06 – $17.32 </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unrecognized share-based compensation costs for stock options granted under our various plans were approximately $39.7 million as of the end of fiscal 2011 to be recognized over a weighted average period of approximately 2.3 years. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During fiscal 2011, we modified the vesting provisions of our former Chief Executive Officer’s share-based awards and recorded an additional $1.4 million of share-based compensation expense in connection with the modification of the awards. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Deferred Stock Units</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our 2001 Plan, which expired in March 2011, provided for the grant of DSU awards to our employees, consultants, and directors. Currently, our 2010 Plan provides for the grant of DSU awards to our employees, consultants, and directors. A DSU is a promise to deliver shares of our common stock at a future date in accordance with the terms of the DSU grant agreement. We began granting DSUs in January 2006. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">DSUs granted under our 2010 Plan generally vest 25% over four years from the vesting commencement date. Delivery of shares under the plan takes place on the quarterly vesting dates. At the delivery date, we withhold shares to cover statutory minimum tax withholding by delivering a net quantity of shares. Until delivery of shares, the grantee has no rights as a stockholder. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">An election to defer delivery of the underlying shares for unvested DSUs can be made by the grantee provided the deferral election is made at least one year before vesting and the deferral period is at least five years from the scheduled delivery date. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">DSU activity, including DSUs granted, delivered, and forfeited in fiscal 2011, and the balance and aggregate intrinsic value of DSUs as of the end of fiscal 2011 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Aggregate</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Weighted</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Intrinsic</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Average</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">DSU Awards</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Value</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Grant Date</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Outstanding</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(in thousands)</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 30, 2010 </div></td> <td> </td> <td> </td> <td align="right">821,146</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">26.92</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Granted </div></td> <td> </td> <td> </td> <td align="right">518,630</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">28.83</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Delivered </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(384,226</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">28.83</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Forfeited </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(87,525</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">27.93</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 30, 2011 </div></td> <td> </td> <td> </td> <td align="right">868,025</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">21,718</td> <td> </td> <td> </td> <td> </td> <td align="right">27.74</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Of the shares delivered, 108,807 shares valued at $3.2 million were withheld to meet statutory minimum tax withholding requirements. The aggregate intrinsic value was determined using the closing price of our common stock on the last trading day of fiscal 2011, or June 24, 2011, of $25.02. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unrecognized share-based compensation cost for DSUs granted under the 2001 Plan and the 2010 Plan was approximately $24.6 million as of the end of fiscal 2011, which will be recognized over a weighted average period of approximately 2.6 years. The aggregate market value of DSUs delivered in fiscal 2011, 2010, and 2009 was $11.1 million, $7.7 million, and $6.1 million, respectively. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Employee Stock Purchase Plan</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our 2001 Employee Stock Purchase Plan, or our 2001 ESPP, became effective on January 29, 2002, the effective date of the registration statement for our initial public offering. Our 2010 ESPP became effective on January 1, 2011 and replaced our 2001 ESPP, which expired in December 2010. The 2010 ESPP allows employees to designate up to 15% of their base compensation, subject to legal restrictions and limitations, to purchase shares of common stock at 85% of the lesser of the FMV at the beginning of the offering period or the exercise date. The offering period extends for up to two years and includes four exercise dates occurring at six-month intervals. Under the terms of our 2010 ESPP, if the FMV at an exercise date is less than the FMV at the beginning of the offering period, the current offering period will terminate and a new two-year offering period will commence. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Shares purchased, weighted average purchase price, cash received, and the aggregate intrinsic value for employee stock purchase plan purchases in fiscal 2011, 2010, and 2009 were as follows (in thousands, except shares purchased and weighted average purchase price): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Shares purchased </div></td> <td> </td> <td> </td> <td align="right">397,204</td> <td> </td> <td> </td> <td> </td> <td align="right">301,215</td> <td> </td> <td> </td> <td> </td> <td align="right">185,604</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average purchase price </div></td> <td> </td> <td align="left">$</td> <td align="right">17.57</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">15.15</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">16.84</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash received </div></td> <td> </td> <td align="left">$</td> <td align="right">6,978</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,562</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,122</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Aggregate intrinsic value </div></td> <td> </td> <td align="left">$</td> <td align="right">4,327</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5,901</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">592</td> <td> </td> </tr>  </table> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In accordance with accounting standards related to the accounting for employee stock purchase plans with a look-back option, the early termination of an offering period followed by the commencement of a new offering period represents a modification to the terms of the related awards. Under the terms of our 2010 ESPP, the offering period that commenced on January 3, 2011 was terminated on May 13, 2011 and a new offering period commenced on May 16, 2011. The May 16, 2011 modification affected approximately 437 employees and resulted in incremental compensation costs, which are not material and which will be recognized on a straight-line basis over the two-year period ending May 15, 2013. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the terms of our 2001 ESPP, the offering period that commenced on July 1, 2007 was terminated on December 31, 2008 and a new offering period commenced on January 1, 2009. The December 31, 2008 modification affected approximately 275 employees and resulted in incremental compensation costs, which are not material and which were recognized on a straight-line basis over the two-year period ended December 31, 2010. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of each award granted under our 2001 ESPP and 2010 ESPP for fiscal 2011, 2010, and 2009 was estimated using the Black-Scholes option pricing model, assuming no expected dividends and the following range of assumptions: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected volatility </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">32.5% – 48.6%</td> <td> </td> <td align="center" valign="bottom">56.6% – 63.2%</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">53.3% – 73.0%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Expected life in years </div></td> <td> </td> <td align="center" valign="bottom">0.5 – 2.0</td> <td> </td> <td align="center" valign="bottom">0.5 – 2.0</td> <td> </td> <td align="center" valign="bottom">0.5 – 2.0</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Risk-free interest rate </div></td> <td> </td> <td align="center" valign="bottom">0.1% – 0.6%</td> <td> </td> <td align="center" valign="bottom">0.2% – 1.1%</td> <td> </td> <td align="center" valign="bottom">0.3% – 2.4%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Fair value per award </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $6.77 – $11.56 </td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $10.05 – $18.81 </td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $6.01 – $10.44 </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The expected volatility is based on either implied volatility or a weighting of implied and historical volatility; the expected life is based on each period that begins with the enrollment date until each purchase date remaining in the offering period at the date of enrollment in the plan; and the risk free interest rate is based on U.S. Treasury yields or yield curve in effect for each expected life. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Unrecognized share-based compensation costs for awards granted under our 2010 ESPP at the end of fiscal 2011 were approximately $4.8 million to be amortized over the next 22 months. </div> </div>

<div align="center"> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>9. Employee Benefit Plans</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>401(k) Plan</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have a 401(k) Retirement Savings Plan for full-time employees. Under the plan, eligible employees may contribute a maximum of 30% of their net compensation or the annual limit of $16,500. The annual limit for employees who are 50 years or older is $22,000. In fiscal 2011, we provided matching funds of 25% of the employee’s contribution up to a maximum of $4,125 per employee. We made matching contributions of $1.0 million, $943,000, and $783,000 in fiscal 2011, 2010, and 2009, respectively. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>10. Income Taxes</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Income (loss) before provision for income taxes for fiscal 2011, 2010, and 2009 consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">U.S </div></td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(915</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(16,077</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(13,469</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign </div></td> <td> </td> <td> </td> <td align="right">74,386</td> <td> </td> <td> </td> <td> </td> <td align="right">76,334</td> <td> </td> <td> </td> <td> </td> <td align="right">68,811</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Income before provision for income taxes </div></td> <td> </td> <td align="left">$</td> <td align="right">73,471</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">60,257</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">55,342</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The provision for income taxes for fiscal 2011, 2010, and 2009 consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current tax expense </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Federal </div></td> <td> </td> <td align="left">$</td> <td align="right">2,573</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,101</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">13,170</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">State </div></td> <td> </td> <td> </td> <td align="right">152</td> <td> </td> <td> </td> <td> </td> <td align="right">453</td> <td> </td> <td> </td> <td> </td> <td align="right">1,200</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Foreign </div></td> <td> </td> <td> </td> <td align="right">10,616</td> <td> </td> <td> </td> <td> </td> <td align="right">9,272</td> <td> </td> <td> </td> <td> </td> <td align="right">6,809</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right">13,341</td> <td> </td> <td> </td> <td> </td> <td align="right">13,826</td> <td> </td> <td> </td> <td> </td> <td align="right">21,179</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Deferred tax expense </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Federal </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,579</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(9,058</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(11,927</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">State </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">2,619</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,980</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Foreign </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(87</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(95</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(9</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,666</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(6,534</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(13,916</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Provision for income taxes </div></td> <td> </td> <td align="left">$</td> <td align="right">9,675</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,292</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,263</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The provision for income taxes differs from the federal statutory rate for fiscal 2011, 2010, and 2009 as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Provision at U.S. federal statutory rate </div></td> <td> </td> <td align="left">$</td> <td align="right">25,715</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">21,088</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">19,370</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">State income taxes </div></td> <td> </td> <td> </td> <td align="right">390</td> <td> </td> <td> </td> <td> </td> <td align="right">2,650</td> <td> </td> <td> </td> <td> </td> <td align="right">550</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Qualified stock options </div></td> <td> </td> <td> </td> <td align="right">2,129</td> <td> </td> <td> </td> <td> </td> <td align="right">2,474</td> <td> </td> <td> </td> <td> </td> <td align="right">1,700</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Business credits </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2,910</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(846</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2,749</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign tax differential </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(15,818</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(16,994</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(13,957</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Tax exempt interest </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(18</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(106</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(479</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Change in valuation allowance </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(21</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">155</td> <td> </td> <td> </td> <td> </td> <td align="right">3,237</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Tax benefit from NOL carryback </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,804</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other differences </div></td> <td> </td> <td> </td> <td align="right">208</td> <td> </td> <td> </td> <td> </td> <td align="right">675</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(409</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Provision for income taxes </div></td> <td> </td> <td align="left">$</td> <td align="right">9,675</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,292</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,263</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Net deferred tax assets as of the end of fiscal 2011 and 2010 consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current deferred tax assets </div></td> <td> </td> <td align="left">$</td> <td align="right">1,143</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,387</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Non-current deferred tax assets </div></td> <td> </td> <td> </td> <td align="right">16,514</td> <td> </td> <td> </td> <td> </td> <td align="right">12,604</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Net deferred tax assets </div></td> <td> </td> <td align="left">$</td> <td align="right">17,657</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">13,991</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Current deferred tax assets and non-current deferred tax assets are included in prepaid expenses and other current assets, and other assets, respectively, in the accompanying consolidated balance sheets. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Significant components of our deferred tax assets (liabilities) as of the end of fiscal 2011 and 2010 consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Deferred tax assets: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Investment writedowns </div></td> <td> </td> <td align="left">$</td> <td align="right">7,253</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,375</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Capital Loss carryforward </div></td> <td> </td> <td> </td> <td align="right">2,066</td> <td> </td> <td> </td> <td> </td> <td align="right">2,094</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Inventory writedowns </div></td> <td> </td> <td> </td> <td align="right">334</td> <td> </td> <td> </td> <td> </td> <td align="right">246</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Depreciation and amortization </div></td> <td> </td> <td> </td> <td align="right">651</td> <td> </td> <td> </td> <td> </td> <td align="right">1,433</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Accrued compensation </div></td> <td> </td> <td> </td> <td align="right">924</td> <td> </td> <td> </td> <td> </td> <td align="right">980</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Share-based compensation </div></td> <td> </td> <td> </td> <td align="right">15,996</td> <td> </td> <td> </td> <td> </td> <td align="right">14,146</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Business credit carryforward </div></td> <td> </td> <td> </td> <td align="right">13,958</td> <td> </td> <td> </td> <td> </td> <td align="right">9,990</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Other accruals </div></td> <td> </td> <td> </td> <td align="right">274</td> <td> </td> <td> </td> <td> </td> <td align="right">451</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right">41,456</td> <td> </td> <td> </td> <td> </td> <td align="right">36,715</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Valuation allowance </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(15,058</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(14,058</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right">26,398</td> <td> </td> <td> </td> <td> </td> <td align="right">22,657</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Deferred tax liabilities: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Interest deduction </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,741</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,666</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,741</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,666</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net deferred tax assets </div></td> <td> </td> <td align="left">$</td> <td align="right">17,657</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">13,991</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Realization of deferred tax assets depends on our generating sufficient U.S. and certain foreign taxable income in future years to obtain benefit from the reversal of deferred tax assets. Accordingly, the amount of deferred tax assets considered realizable may increase or decrease when we reevaluate the underlying basis for our estimates of future U.S. and foreign taxable income. As of the end of fiscal 2011, a valuation allowance of $15.1 million had been established to reduce deferred tax assets to levels that we believe are more than likely than not to be realized through future taxable income. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Undistributed operating earnings of our foreign subsidiaries were approximately $280.2 million as of the end of fiscal 2011 and are all considered to be indefinitely reinvested overseas, and no U.S. income taxes have been provided for on these earnings. The potential deferred tax liability associated with undistributed operating earnings of our foreign subsidiaries was approximately $70.7 million. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of the end of fiscal 2011, we had state net operating loss carryforwards of approximately $31.6 million. The state net operating loss carryforwards were attributable to share-based award deductions. The benefit of these net operating losses will be recorded directly to additional paid-in capital when realized. In addition, we had $7.7 million and $6.7 million of federal and state research tax credit carryforwards, respectively. The federal research tax credit carryforward begins to expire in 2027 and the state research tax credit can be carried forward indefinitely. We also had $1.7 million of federal alternative minimum tax credit carryforward available to offset future federal tax liabilities with no expiration. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the current tax law, net operating loss and tax credit carryforwards available to offset future income or income taxes may be limited by statute or upon the occurrence of certain events, including significant changes in ownership. The state net operating loss will begin to expire in fiscal 2017, if not utilized. The federal and state capital losses begin to expire in fiscal 2013. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The total liability for gross unrecognized tax benefits, included in other liabilities in our consolidated balance sheet, increased $1.2 million to $20.2 million in fiscal 2011 from $19.0 million in fiscal 2010. All of this amount would affect the effective tax rate on income from continuing operations, if recognized. A reconciliation of the beginning and ending balance of gross unrecognized tax benefits consisted of the following (in millions): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="86%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of June 2010 </div></td> <td> </td> <td align="left">$</td> <td align="right">19.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Increase in unrecognized tax benefits related to current year tax positions </div></td> <td> </td> <td> </td> <td align="right">2.8</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Decrease due to statue expiration </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1.6</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance as of June 2011 </div></td> <td> </td> <td align="left">$</td> <td align="right">20.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Accrued interest and penalties increased by $438,000 to $1.6 million at the end of fiscal 2011 from $1.2 million at the end of fiscal 2010. Our policy to classify interest and penalties, if any, as components of income tax expense did not change. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In May 2011, we were notified by the Internal Revenue Service that our fiscal 2003 through 2006 and fiscal 2008 through 2010 will be subject to an audit. The early periods are being audited in connection with the mandatory Joint Committee Review for a refund in excess of $2.0 million when we carried back our fiscal 2008 net operating loss. The audit is ongoing, and no tax assessment has been proposed. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">It is reasonably possible that the amount of the liability for unrecognized tax benefits may change within the next 12 months and an estimate of the range of possible changes cannot be made at this time due to the high uncertainty of the resolution of our tax positions with the tax authorities in various jurisdictions in which we operate. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our major tax jurisdictions are the United States, California, and Hong Kong SAR and fiscal 2003 onward remain subject to examination by one or more of these jurisdictions. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, or the Act. The Act in part retroactively reinstated the research credit to January 1, 2010. Accordingly, our current quarterly and year-to-date effective tax rates for fiscal 2011 include the benefit of the retroactive reinstatement. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>11. Segment, Customers, and Geographic Information</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We operate in one segment: the development, marketing, and sale of interactive user interface solutions for electronic devices and products. We generate our revenue from two broad product categories: the PC market and digital lifestyle product markets. The PC market accounted for 48%, 59%, and 57%of our net revenue for fiscal 2011, 2010, and 2009, respectively. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Net revenue within geographic areas based on our customers’ locations for fiscal 2011, 2010, and 2009 consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">China </div></td> <td> </td> <td align="left">$</td> <td align="right">399,798</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">389,499</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">307,813</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Taiwan </div></td> <td> </td> <td> </td> <td align="right">76,631</td> <td> </td> <td> </td> <td> </td> <td align="right">56,096</td> <td> </td> <td> </td> <td> </td> <td align="right">46,899</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Korea </div></td> <td> </td> <td> </td> <td align="right">24,523</td> <td> </td> <td> </td> <td> </td> <td align="right">32,496</td> <td> </td> <td> </td> <td> </td> <td align="right">70,661</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Japan </div></td> <td> </td> <td> </td> <td align="right">65,548</td> <td> </td> <td> </td> <td> </td> <td align="right">35,838</td> <td> </td> <td> </td> <td> </td> <td align="right">35,811</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">United States </div></td> <td> </td> <td> </td> <td align="right">6,314</td> <td> </td> <td> </td> <td> </td> <td align="right">430</td> <td> </td> <td> </td> <td> </td> <td align="right">3,531</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right">25,724</td> <td> </td> <td> </td> <td> </td> <td align="right">531</td> <td> </td> <td> </td> <td> </td> <td align="right">8,587</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">598,538</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">514,890</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">473,302</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Long-lived assets within geographic areas as of the end of fiscal 2011 and 2010 consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">United States </div></td> <td> </td> <td align="left">$</td> <td align="right">19,730</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">19,887</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Asia/Pacific </div></td> <td> </td> <td> </td> <td align="right">6,492</td> <td> </td> <td> </td> <td> </td> <td align="right">5,934</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">26,222</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">25,821</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our goodwill of $1.9 million represents a corporate asset arising primarily from an acquisition of an Asian subsidiary in a prior year. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Major customers as a percentage of net revenue for fiscal 2011, 2010, and 2009 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Customer A </div></td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">11</td> <td nowrap="nowrap">%</td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Customer B </div></td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">10</td> <td nowrap="nowrap">%</td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Customer C </div></td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">14</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Customer D </div></td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> <td> </td> <td> </td> <td align="right">*</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">11</td> <td nowrap="nowrap">%</td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr style="font-size: 6pt"> <td width="3%"> </td> <td width="1%"> </td> <td width="96%"> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td> <div style="text-align: justify">Less than 10% </div></td> </tr> </table> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Stock Split</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July 31, 2008, we announced a 3-for-2 stock split to be effected as a stock dividend. The stock dividend was effective for stockholders of record on August 15, 2008 and was paid on August 29, 2008. All share and per share amounts contained herein for each period presented prior to the stock dividend date have been retroactively adjusted to reflect the stock split, except for treasury shares. </div> </div> </div>   <div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Use of Estimates</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or U.S. GAAP, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, cost of revenue, inventories, product warranty, share-based compensation costs, provision for income taxes, deferred income tax asset valuation allowances, uncertain tax positions, tax contingencies, goodwill, intangible assets, investments, and contingencies. We base our estimates on historical experience, applicable laws, and regulations, and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. </div> </div> </div>   <div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Cash Equivalents and Investments</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Cash equivalents consist of highly liquid investments with original maturities of three months or less. Our non-current investments are reported at fair value, with unrealized gains and losses excluded from earnings and shown separately as a component of accumulated other comprehensive income within stockholders’ equity. We charge other-than-temporary declines in the fair value of a debt security to earnings if the decline is due to a credit loss or if we intend to or need to sell at a loss. We charge other-than-temporary declines in the fair value of a debt security to other comprehensive income if the decline is due to a noncredit loss, resulting in the establishment of a new cost basis for the debt security. We charge other-than-temporary declines in the fair value of equity securities to earnings. We include interest earned on securities in interest income. We determine realized gains and losses on the sale of securities using the specific identification method. </div> </div> </div>   <div align="right" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Fair Values of Cash Equivalents and Investments</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We measure financial assets at fair value. When we measure fair value on either a recurring or nonrecurring basis, inputs used in valuation techniques are assigned a hierarchical level as follows: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">Level 1 inputs are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">Level 2 inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td> <div style="text-align: justify">Level 3 inputs are unobservable inputs reflecting our assumptions, which are incorporated into valuation techniques and models used to determine fair value. The assumptions are consistent with market participant assumptions that are reasonably available. Our Level 3 assets consist of non-current auction rate securities, or ARS, investments. We estimated the fair value of our ARS investments based on, among other factors, the following: (i) the collateral underlying the security investments; (ii) creditworthiness of the counterparty; (iii) timing of expected future cash flows; (iv) the probability of a successful auction in a future period; (v) the underlying structure of each investment; (vi) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (vii) consideration of the probabilities of default, passing a future auction, or repurchase at par for each period; and (viii) estimates of the recovery rates in the event of default for each investment. See Note 3 — Auction Rate Securities. </div></td> </tr> </table> </div> </div> </div>   <div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Concentration of Credit Risk</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, investments, and trade accounts receivable. Our investment policy, which is predicated on capital preservation and liquidity, limits investments to U.S. government treasuries and agency issues, taxable securities, and municipal issued securities with a minimum rating of A1 (Moody’s) or P1 (Standard and Poor’s) or equivalent. Included within our investment portfolio are investments in ARS investments, which met our investment guidelines at the time of our investment. Our ARS investments are currently not liquid as a result of continued auction failures. If the issuers are not able to meet their payment obligations or if we sell our ARS investments before they recover, we may lose some or all of our principal invested or may be required to further reduce the carrying value. We do not intend to sell our ARS investments for less than par value. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We sell our products primarily to contract manufacturers that provide manufacturing services for OEMs. We extend credit based on an evaluation of a customer’s financial condition, and we generally do not require collateral. To date, credit losses on our accounts receivable have been insignificant, and we believe that an adequate allowance for doubtful accounts has been provided. </div> </div> </div>   <div align="left" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Other Concentrations</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our products include certain components that are currently single sourced. We believe other vendors would be able to provide similar components; however, the qualification of such vendors may require start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical single-sourced components. </div> </div> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><i>Foreign Currency Translation</i> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The U.S. dollar is our functional and reporting currency. We remeasure our monetary assets and liabilities not denominated in the functional currency into U.S. dollar equivalents at the rate of exchange in effect on the balance sheet date. We measure and record non-monetary balance sheet accounts at the historical rate in effect at the date of translation. All of our revenue and approximately 93% of our consolidated costs are denominated in U.S. dollars. We translate certain expenses at the weighted average exchange rate in the month that the transaction occurred. Remeasurement of monetary assets and liabilities that are not denominated in the functional currency are included currently in operating results. Translation losses included in operating results for fiscal 2011, 2010, and 2009 were not material. To date, we have not undertaken hedging transactions related to foreign currency exposure. </div> </div> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Changes in fair value of our Level 3 financial assets for fiscal 2011 and 2010 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Beginning balance </div></td> <td> </td> <td align="left">$</td> <td align="right">28,012</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28,767</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net unrealized gain </div></td> <td> </td> <td> </td> <td align="right">1,005</td> <td> </td> <td> </td> <td> </td> <td align="right">1,463</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Impairment (loss)/recovery on investments, net </div></td> <td> </td> <td> </td> <td align="right">59</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(443</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Redemptions </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3,200</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,775</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Ending balance </div></td> <td> </td> <td align="left">$</td> <td align="right">25,876</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> </div>

<div align="right" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Diluted net income per share does not include the effect of share-based awards for fiscal 2011, 2010, and 2009 as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Share-based awards </div></td> <td> </td> <td> </td> <td align="right">3,584</td> <td> </td> <td> </td> <td> </td> <td align="right">3,468</td> <td> </td> <td> </td> <td> </td> <td align="right">2,556</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The various types of failed ARS investments we held as of the end of fiscal 2011, including the original cost basis, other-than-temporary impairment included in other comprehensive income, other-than-temporary impairment included in retained earnings, new cost basis, unrealized gain, and fair value consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">Cumulative Other-than-</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">temporary Impairment</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Original</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">New</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Comprehensive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Retained</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Gain</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Student loans </div></td> <td> </td> <td align="left">$</td> <td align="right">9,150</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(593</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(242</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">8,315</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">344</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8,659</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Closed end municipal and corporate funds </div></td> <td> </td> <td> </td> <td align="right">7,850</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(823</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(54</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">6,973</td> <td> </td> <td> </td> <td> </td> <td align="right">356</td> <td> </td> <td> </td> <td> </td> <td align="right">7,329</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Credit linked notes </div></td> <td> </td> <td> </td> <td align="right">13,500</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(156</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,765</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">4,579</td> <td> </td> <td> </td> <td> </td> <td align="right">3,447</td> <td> </td> <td> </td> <td> </td> <td align="right">8,026</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Preferred stock </div></td> <td> </td> <td> </td> <td align="right">5,000</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,000</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Municipals </div></td> <td> </td> <td> </td> <td align="right">2,000</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(203</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(83</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">1,714</td> <td> </td> <td> </td> <td> </td> <td align="right">148</td> <td> </td> <td> </td> <td> </td> <td align="right">1,862</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total ARS </div></td> <td> </td> <td align="left">$</td> <td align="right">37,500</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(1,775</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(14,144</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">21,581</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,295</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">25,876</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The various types of failed ARS investments we held as of the end of fiscal 2010, including the original cost basis, other-than-temporary impairment included in other comprehensive income, other-than-temporary impairment included in retained earnings, new cost basis, unrealized gain, and fair value consisted of the following (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">Cumulative Other-than-</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">temporary Impairment</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Included</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Original</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in Other</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">in</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">New</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Comprehensive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Retained</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Cost</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Unrealized</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Fair</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Basis</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Gain</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Student loans </div></td> <td> </td> <td align="left">$</td> <td align="right">9,550</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(617</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(262</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">8,671</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">251</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8,922</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Closed end municipal and corporate funds </div></td> <td> </td> <td> </td> <td align="right">10,650</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,112</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(93</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">9,445</td> <td> </td> <td> </td> <td> </td> <td align="right">293</td> <td> </td> <td> </td> <td> </td> <td align="right">9,738</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Credit linked notes </div></td> <td> </td> <td> </td> <td align="right">13,500</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(156</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(8,765</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">4,579</td> <td> </td> <td> </td> <td> </td> <td align="right">2,952</td> <td> </td> <td> </td> <td> </td> <td align="right">7,531</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Preferred stock </div></td> <td> </td> <td> </td> <td align="right">5,000</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,000</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Municipals </div></td> <td> </td> <td> </td> <td align="right">2,000</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(203</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(83</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">1,714</td> <td> </td> <td> </td> <td> </td> <td align="right">107</td> <td> </td> <td> </td> <td> </td> <td align="right">1,821</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total ARS </div></td> <td> </td> <td align="left">$</td> <td align="right">40,700</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(2,088</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(14,203</td> <td nowrap="nowrap">)</td> <td> </td> <td align="left">$</td> <td align="right">24,409</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,603</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28,012</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The contractual interest expense and amortization of issuance costs and discount for the notes for fiscal 2011, 2010, and 2009 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Interest expense </div></td> <td> </td> <td align="left">$</td> <td align="right">17</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">213</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">661</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of issuance costs </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">118</td> <td> </td> <td> </td> <td> </td> <td align="right">368</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of discount </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">2,069</td> <td> </td> <td> </td> <td> </td> <td align="right">6,024</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total interest </div></td> <td> </td> <td align="left">$</td> <td align="right">17</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,400</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,053</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> </div>   <div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Shares of common stock reserved for future issuance as of the end of fiscal 2011 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="86%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Stock options outstanding </div></td> <td> </td> <td> </td> <td align="right">7,835,499</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Deferred stock units outstanding </div></td> <td> </td> <td> </td> <td align="right">871,362</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Awards available for grant under all share-based compensation plans </div></td> <td> </td> <td> </td> <td align="right">4,351,131</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Reserved for future issuance </div></td> <td> </td> <td> </td> <td align="right">13,057,992</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> </div>   <div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Share-based compensation awards available for grant or issuance for each plan as of the beginning of the fiscal year, including changes in the balance of awards available for grant for fiscal 2011, were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="7%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Awards</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2001</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2010</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Available</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2000</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2001</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Employee</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Employee</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Under All</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Nonstatutory</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Incentive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Stock</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Incentive</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Stock</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Share-Based</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Stock Option</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Compensation</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Purchase</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Compensation</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">Purchase</td> <td> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Award Plans</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Plan</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 2010 </div></td> <td> </td> <td> </td> <td align="right">5,761,516</td> <td> </td> <td> </td> <td> </td> <td align="right">56,376</td> <td> </td> <td> </td> <td> </td> <td align="right">4,849,225</td> <td> </td> <td> </td> <td> </td> <td align="right">855,915</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Additional shares authorized </div></td> <td> </td> <td> </td> <td align="right">1,368,667</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">1,028,462</td> <td> </td> <td> </td> <td> </td> <td align="right">340,205</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Transfer of shares </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5,499,415</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(650,000</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">5,499,415</td> <td> </td> <td> </td> <td> </td> <td align="right">650,000</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Stock options granted </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,941,631</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(588,395</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,353,236</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Deferred stock units granted </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(518,630</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(145,668</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(372,962</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Purchases under employee stock purchase plan </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(397,204</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(320,745</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(76,459</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Forfeited </div></td> <td> </td> <td> </td> <td align="right">674,476</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">670,103</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">4,373</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Plan shares expired </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(596,063</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(56,376</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(314,312</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(225,375</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance at June 2011 </div></td> <td> </td> <td> </td> <td align="right">4,351,131</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">3,777,590</td> <td> </td> <td> </td> <td> </td> <td align="right">573,541</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Share-based compensation and the related tax benefit recognized in our consolidated statement of income for fiscal 2011,2010, and 2009 were as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cost of revenue </div></td> <td> </td> <td align="left">$</td> <td align="right">1,294</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2,307</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,680</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Research and development </div></td> <td> </td> <td> </td> <td align="right">13,823</td> <td> </td> <td> </td> <td> </td> <td align="right">14,330</td> <td> </td> <td> </td> <td> </td> <td align="right">8,897</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Selling, general, and administrative </div></td> <td> </td> <td> </td> <td align="right">18,808</td> <td> </td> <td> </td> <td> </td> <td align="right">18,739</td> <td> </td> <td> </td> <td> </td> <td align="right">13,843</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Total </div></td> <td> </td> <td align="left">$</td> <td align="right">33,925</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">35,376</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">24,420</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income tax benefit on share-based compensation </div></td> <td> </td> <td align="left">$</td> <td align="right">9,745</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">9,642</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7,972</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> </div>

<div align="right" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of each award granted from our plans for fiscal 2011, 2010, and 2009 was estimated at the date of grant using the Black-Scholes option pricing model, assuming no expected dividends and the following range of assumptions: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected volatility </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> 42.7% – 47.0% </td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">44.2% – 62.2%</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">56.9% – 65.4%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Expected life in years </div></td> <td> </td> <td align="center" valign="bottom">4.6 – 5.1</td> <td> </td> <td align="center" valign="bottom">4.7 – 5.1</td> <td> </td> <td align="center" valign="bottom">4.5 – 4.7</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Risk-free interest rate </div></td> <td> </td> <td align="center" valign="bottom">1.2% – 2.1%</td> <td> </td> <td align="center" valign="bottom">1.9% – 2.7%</td> <td> </td> <td align="center" valign="bottom">1.7% – 3.2%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Fair value per award </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">$10.00 – $12.58</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">$12.19 – $13.58</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $10.06 – $17.32 </td> </tr>  </table> </div> </div> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Shares purchased, weighted average purchase price, cash received, and the aggregate intrinsic value for employee stock purchase plan purchases in fiscal 2011, 2010, and 2009 were as follows (in thousands, except shares purchased and weighted average purchase price): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Shares purchased </div></td> <td> </td> <td> </td> <td align="right">397,204</td> <td> </td> <td> </td> <td> </td> <td align="right">301,215</td> <td> </td> <td> </td> <td> </td> <td align="right">185,604</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average purchase price </div></td> <td> </td> <td align="left">$</td> <td align="right">17.57</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">15.15</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">16.84</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash received </div></td> <td> </td> <td align="left">$</td> <td align="right">6,978</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4,562</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3,122</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Aggregate intrinsic value </div></td> <td> </td> <td align="left">$</td> <td align="right">4,327</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5,901</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">592</td> <td> </td> </tr>  </table> </div> </div>

<div align="justify" style="font-size: 10pt; font-family: 'Times New Roman',Times,serif"> <div align="center"> <div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of each award granted under our 2001 ESPP and 2010 ESPP for fiscal 2011, 2010, and 2009 was estimated using the Black-Scholes option pricing model, assuming no expected dividends and the following range of assumptions: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="58%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="11%"> </td> </tr> <tr style="font-size: 10pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2011</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected volatility </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">32.5% – 48.6%</td> <td> </td> <td align="center" valign="bottom">56.6% – 63.2%</td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap">53.3% – 73.0%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Expected life in years </div></td> <td> </td> <td align="center" valign="bottom">0.5 – 2.0</td> <td> </td> <td align="center" valign="bottom">0.5 – 2.0</td> <td> </td> <td align="center" valign="bottom">0.5 – 2.0</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Risk-free interest rate </div></td> <td> </td> <td align="center" valign="bottom">0.1% – 0.6%</td> <td> </td> <td align="center" valign="bottom">0.2% – 1.1%</td> <td> </td> <td align="center" valign="bottom">0.3% – 2.4%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Fair value per award </div></td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $6.77 – $11.56 </td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $10.05 – $18.81 </td> <td> </td> <td align="center" valign="bottom" nowrap="nowrap"> $6.01 – $10.44 </td> </tr>  </table> </div> </div> </div>

false --06-25 FY 2011 2011-06-25 10-K 0000817720 32919759 Yes Large Accelerated Filer 723264826 SYNAPTICS INC No Yes Less than 10% Less than 10% 100000000 1400000 25020000 592000 5901000 4327000 6100000 7700000 11100000 19000000 18500000 7300000 8700000 9900000 3603000 251000 107000 293000 2952000 4295000 3447000 356000 148000 344000 0.002 0.002 2749000 846000 2910000 Greater than five years 783000 943000 1000000 0.93 420000000 -2088000 -1112000 -203000 -617000 -156000 -1775000 -823000 -593000 -203000 -156000 -14203000 -262000 -5000000 -8765000 -93000 -83000 -14144000 -83000 -242000 -5000000 -54000 -8765000 727000 2300000 0.0075 2900000 1400000 871362 7375000 7253000 1433000 651000 16500 22000 0.07 Two to three years 0.85 0.15 0.15 0.12 0.00 0.14 0.11 0.10 0.11 Less than 10% Less than 10% Less than 10% Less than 10% Less than 10% Less than 10% Less than 10% Less than 10% 22668000 30113000 0.085 Expire in fiscal 2013 438000 1278476 1112823 1940374 16427000 1000 16426000 14031000 14030000 1000 26423000 2000 26421000 25821000 26222000 4125 More than 0.5 P5Y P1Y Not less than par value Not less than par value P12M 33.69 24409000 4579000 9445000 8671000 1714000 21581000 8315000 1714000 4579000 6973000 275 Up to two years 40700000 9550000 13500000 5000000 10650000 2000000 37500000000 7850000 2000000 5000000 13500000 9150000 0 1900000 1801000 1801000 2374000 2374000 3147000 3147000 1801000 2374000 3147000 1 0.50 0.30 0.25 0.57 0.59 0.48 0.25 P22M 39400000 4900000 1775000 3200000 1700000 2474000 2129000 2400000 67900000 1 372962 145668 518630 1028462 340205 1368667 vest over four years from the vesting commencement date and expire seven years after the date of grant if not exercised 76459 320745 397204 27.93 10.06 17.32 6.01 10.44 10.05 12.19 13.58 18.81 10 6.77 11.56 12.58 P7Y P10Y -56376 -225375 -314312 -596063 -650000 5499415 650000 -5499415 16.84 15.15 17.57 21718000 20275000 28.97 28.97 3200000 108807 Expire in fiscal 2017 April 2012 15 % or more 15 % or more 0.15 3-for-2 stock split 9374000 7066000 1690000 0 0 280200000

65618000

44930000

101509000

93808000

10061000

11808000

20256000

29443000

1515000

2520000

347764000

406653000

24420000

35376000

33925000

9374000

7066000

1690000

500000

709000

6024000

2069000

368000

118000

2556000

3468000

3584000

414679000

456201000

334505000

374184000

236052000

28012000

208040000

8922000

7531000

1821000

9738000

269842000

25876000

243966000

8026000

7329000

1862000

8659000

234537000

208040000

26497000

267322000

243966000

23356000

208040000

243966000

208040000

243966000

208040000

28012000

208040000

28012000

243966000

25876000

243966000

25876000

160000

6000

59000

1515000

2520000

28012000

25876000

10835000

11144000

9591000

11516000

96218000

169036000

209858000

247153000

72818000

40822000

37295000

13057992

0.001

60000000

120000000

44891834

46832208

34020521

33465732

45000

47000

52972000

54351000

64801000

2305000

281793000

306188000

352468000

13170000

4101000

2573000

6809000

9272000

10616000

21179000

13826000

13341000

1200000

453000

152000

661000

213000

17000

63000000

125000000

4300000

-11927000

-9058000

-3579000

-9000

-95000

-87000

-13916000

-6534000

-3666000

-1980000

2619000

2094000

2066000

36715000

41456000

246000

334000

13991000

17657000

22657000

26398000

1387000

1143000

12604000

16514000

1700000

9990000

13958000

980000

924000

14146000

15996000

451000

274000

14058000

15058000

8666000

8741000

8666000

8741000

70700000

6338000

8677000

11169000

2012 to 2015

1.41

1.57

1.87

1.35

1.50

1.80

11330000

13210000

13305000

9469000

19445000

39700000

24600000

4800000

2.6

2.3

7972000

9642000

9745000

19887000

19730000

5934000

6492000

3531000

430000

6314000

46899000

35811000

8587000

70661000

307813000

389499000

35838000

531000

56096000

32496000

76631000

25724000

24523000

65548000

399798000

9374000

7066000

2886000

9374000

7066000

2886000

-443000

59000

1463000

1005000

-1775000

-3200000

28767000

28012000

25876000

483000

392000

-1053000

1927000

191509000

208702000

246070000

9243000

443000

-59000

55342000

68811000

-13469000

60257000

-16077000

76334000

73471000

74386000

-915000

5016000

11789000

9574000

7263000

7292000

9675000

3237000

155000

-21000

-13957000

-16994000

-15818000

19370000

21088000

25715000

-409000

675000

208000

-1804000

550000

2650000

390000

479000

106000

18000

4426000

33408000

-20688000

15377000

16770000

-7701000

6744000

2214000

2975000

1940000

2880000

1880000

-6115000

3717000

10183000

2734000

7237000

3873000

6246000

4230000

-332000

354000

128000

146000

1596000

1587000

1412000

7053000

2400000

17000

692000

254000

17000

6416000

6243000

18667000

28850000

12251000

22607000

3222000

977000

911000

2500000

414679000

456201000

105971000

92761000

9/1/2012

Prime Lending Rate

250 basis points above LIBOR

50000000

-31656000

-88820000

-44048000

22883000

15634000

-8370000

81591000

114008000

89713000

48079000

52965000

63796000

-2447000

2447000

122040000

146579000

173552000

69469000

62123000

72518000

5501000

2905000

8000

541000

2047000

2400000

3400000

4000000

31600000

18962000

22813000

24414000

27992000

4893000

1386000

1005000

19892000

21142000

44545000

70210000

25007000

5986000

9310000

9067000

11570000

0.001

10000000

4471000

4373000

16427000

14031000

26423000

52300000

28912000

4900000

1800000

3200000

3122000

4562000

6978000

693000

2096000

2984000

-2583000

-5075000

3986000

5963000

35 years

46077000

55665000

25821000

26222000

55656000

62998000

68026000

86552000

105003000

219119000

282915000

473302000

514890000

598538000

473302000

514890000

598538000

54014000

60027000

68549000

24420000

1680000

13843000

8897000

35376000

2307000

14330000

18739000

33925000

18808000

1294000

13823000

4 years

up to 2 years

4 years

-87525

518630

26.83

821146

868025

26.92

27.74

-384226

28.83

2.0

4.5

4.7

0.5

4.7

0.5

5.1

2.0

0.5

2.0

4.6

5.1

0.654

0.533

0.730

0.569

0.566

0.442

0.622

0.632

0.325

0.486

0.427

0.47

0.017

0.024

0.032

0.003

0.027

0.019

0.011

0.002

0.012

0.021

0.006

0.001

4849225

855915

5761516

56376

4351131

573541

3777590

4351131

4758094

22.64

17548000

8306000

17684000

15.34

-586951

4373

674476

670103

1941631

1353236

588395

1941631

21814000

7748570

7835499

22.43

24.71

21800000

7600000

24.67

437

185604

301215

397204

42500535

43779011

44891834

46832208

121214000

-2317000

245247000

43000

-237387000

115628000

222606000

-237387000

293666000

166154000

129000

44000

286511000

347764000

45000

1515000

219119000

-281932000

339993000

406653000

-352142000

47000

282915000

2520000

-1267751

6700000

7700000

Expires beginning in 2027

10871313

13366476

281932000

352142000

44545000

70210000

19000000

20200000

1200000

1600000

2800000

1200000

-1600000

35577000

35423000

35454000

33981000

33836000

34042000

(1) Amounts reflect the 3-for-2 stock split effected as a stock dividend and paid on August 29, 2008