10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 28, 2010.
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                   .
Commission File Number: 1-6453

National Semiconductor Corporation

(Exact name of registrant as specified in its charter)

DELAWARE	95-2095071
(State of Incorporation)	(I.R.S. Employer Identification No.)

2900 SEMICONDUCTOR DRIVE, P.O. BOX 58090
SANTA CLARA, CALIFORNIA
(Address of principal executive offices) 95052-8090 (Zip Code)

(408) 721-5000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of Each Class	Outstanding at November 28, 2010
Common stock, par value $0.50 per share	241,141,890

NATIONAL SEMICONDUCTOR CORPORATION

INDEX

	Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended November 28, 2010 and November 29, 2009	3
Condensed Consolidated Balance Sheets (Unaudited) as of November 28, 2010 and May 30, 2010	4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended November 28, 2010 and November 29, 2009	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6-24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25-35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	37
Part II. Other Information
Item 1. Legal Proceedings	38
Item 1A. Risk Factors	39-45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6. Exhibits	47
Signature	48

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NATIONAL SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Six Months Ended
(In Millions, Except Per Share Amounts)	Nov. 28, 2010			Nov. 29, 2009			Nov. 28, 2010			Nov. 29, 2009
	(Unaudited)						(Unaudited)
Net sales	$	390.4		$	344.6		$	802.4		$	659.0
Cost of sales	121.5			119.6			241.5			241.8
Gross margin	268.9			225.0			560.9			417.2
Research and development	69.5			68.2			140.8			133.5
Selling, general and administrative	69.4			81.0			139.4			154.0
Severance and restructuring expenses, net	6.5			0.7			16.3			6.4
Other operating expense (income), net	—			1.1			0.1			(0.9		)
Operating expenses, net	145.4			151.0			296.6			293.0
Operating income	123.5			74.0			264.3			124.2
Interest income	0.6			0.4			1.2			0.9
Interest expense	(13.8		)	(15.0		)	(26.8		)	(30.7		)
Other non-operating income, net	3.3			2.0			0.9			5.3
Income before taxes	113.6			61.4			239.6			99.7
Income tax expense	30.1			14.4			67.3			22.9
Net income	$	83.5		$	47.0		$	172.3		$	76.8
Earnings per share:
Basic	$	0.35		$	0.20		$	0.72		$	0.33
Diluted	$	0.34		$	0.20		$	0.70		$	0.32
Weighted-average common and potential common shares outstanding:
Basic	239.9			236.6			239.3			235.1
Diluted	244.8			241.0			244.7			239.5

See accompanying Notes to Condensed Consolidated Financial Statements

3

NATIONAL SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Millions, Except Share Amounts)	Nov. 28, 2010			May 30, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	878.8		$	1,027.0
Receivables, less allowances of $33.7 in fiscal 2011 and $30.0 in fiscal 2010	99.8			98.2
Inventories	136.4			118.6
Deferred tax assets	69.7			70.3
Other current assets	147.0			156.8
Total current assets	1,331.7			1,470.9
Property, plant and equipment, net	407.6			390.1
Goodwill	68.3			66.1
Deferred tax assets, net	239.6			245.5
Other assets	105.9			102.2
Total assets	$	2,153.1		$	2,274.8
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—		$	276.5
Accounts payable	60.9			49.8
Accrued liabilities	142.7			204.5
Income taxes payable	3.2			17.6
Total current liabilities	206.8			548.4
Long-term debt	1,044.4			1,001.0
Long-term income taxes payable	181.4			175.3
Other non-current liabilities	134.1			124.2
Total liabilities	1,566.7			1,848.9
Commitments and contingencies
Shareholders’ equity:
Common stock of $0.50 par value. Authorized 850,000,000 shares. Issued and outstanding: 241,141,890 in fiscal 2011 and 239,071,512 in fiscal 2010	120.6			119.5
Additional paid-in-capital	219.0			188.3
Retained earnings	379.5			250.3
Accumulated other comprehensive loss	(132.7		)	(132.2		)
Total shareholders’ equity	586.4			425.9
Total liabilities and shareholders’ equity	$	2,153.1		$	2,274.8

See accompanying Notes to Condensed Consolidated Financial Statements

4

NATIONAL SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
(In Millions)	Nov. 28, 2010			Nov. 29, 2009
	(Unaudited)
Cash flows from operating activities:
Net income	$	172.3		$	76.8
Adjustments to reconcile net income with net cash provided by operating activities:
Depreciation and amortization	39.7			46.4
Share-based compensation	27.3			32.7
Excess tax benefit from share-based payment arrangements	(0.5		)	(0.1		)
Tax benefit associated with share-based awards	4.0			(4.4		)
Gain on investments	(3.7		)	(5.3		)
Non-cash restructuring recovery	(0.1		)	(5.7		)
(Gain) loss on disposal of equipment	(0.5		)	0.8
Impairment of equipment and other assets	4.0			—
Other, net	6.3			2.6
Changes in certain assets and liabilities, net:
Receivables	(1.5		)	(17.5		)
Inventories	(17.4		)	17.9
Other current assets	0.2			(5.0		)
Accounts payable and accrued liabilities	(54.9		)	15.8
Current and deferred income taxes	(17.2		)	(10.7		)
Other non-current liabilities	9.7			15.3
Net cash provided by operating activities	167.7			159.6
Cash flows from investing activities:
Purchase of property, plant and equipment	(46.9		)	(14.4		)
Proceeds from sale of property, plant and equipment	4.1			0.1
Business acquisition, net of cash acquired	(4.1		)	(4.8		)
Funding of benefit plan	(3.2		)	(1.1		)
Redemption of benefit plan	0.3			1.3
Other, net	(0.1		)	(1.4		)
Net cash used in investing activities	(49.9		)	(20.3		)
Cash flows from financing activities:
Repayment of debt	(250.0		)	(31.2		)
Proceeds from liquidation of interest rate swap	13.0			—
Payment on software license obligations	(3.4		)	(3.2		)
Excess tax benefit from share-based payment arrangements	0.5			0.1
Minimum tax withholding paid on behalf of employees for net share settlements	(0.2		)	(1.6		)
Issuance of common stock	17.2			56.7
Cash payments in connection with stock option exchange program	—			(1.1		)
Cash dividends paid	(43.1		)	(37.6		)
Net cash used in financing activities	(266.0		)	(17.9		)
Net change in cash and cash equivalents	(148.2		)	121.4
Cash and cash equivalents at beginning of period	1,027.0			700.3
Cash and cash equivalents at end of period	$	878.8		$	821.7

See accompanying Notes to Condensed Consolidated Financial Statements

5

NATIONAL SEMICONDUCTOR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Summary of Significant Accounting Policies

Operations

We design, develop, manufacture and market a wide range of semiconductor products, most of which are analog and mixed-signal integrated circuits. Our goal is to be the premier provider of high-performance energy-efficient analog and mixed-signal solutions. These solutions are marketed under our PowerWise® brand. Energy-efficiency is our overarching theme, and our PowerWise® products enable systems that consume less power, extend battery life and generate less heat. Our leading-edge products include power management circuits and sub-systems, audio and operational amplifiers, communication interface products and data conversion solutions.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position and results of operations of National Semiconductor Corporation and our wholly-owned subsidiaries. You should not expect interim results of operations necessarily to be indicative of the results for the full fiscal year. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions that affect the amounts reported in these unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. This report should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended May 30, 2010.

Recently Adopted Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU) No. 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force.” In the absence of vendor-specific objective evidence (VSOE) or other third party evidence (TPE) of the selling price for the deliverables in a multiple-element arrangement, this ASU requires companies to use an estimated selling price (ESP) for the individual deliverables. Companies are to apply the relative-selling price model for allocating an arrangement’s total consideration to its individual elements. Under this model, the ESP is used for both the delivered and undelivered elements that do not have VSOE or TPE of the selling price. The FASB also issued ASU No. 2009-14, “Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements,” which excludes the software from the scope of software revenue guidance if the software contained in the tangible product is essential to the tangible product’s functionality. Both ASUs are effective for us beginning in our fiscal 2012, with earlier application permitted. We elected to early adopt the accounting requirements in these ASUs during the second quarter of fiscal 2011. Their adoption did not have a material effect on our consolidated financial statements.

6

Earnings Per Share

A reconciliation of the shares used in the computation of basic and diluted earnings per share follows:

	Three Months Ended				Six Months Ended
(In Millions, Except Weighted-Average Exercise Price)	Nov. 28, 2010		Nov. 29, 2009		Nov. 28, 2010		Nov. 29, 2009
Numerator:
Net income	$	83.5	$	47.0	$	172.3	$	76.8
Denominator:
Weighted-average common shares outstanding used for basic earnings per share	239.9		236.6		239.3		235.1
Effect of dilutive securities:
Share-based awards	4.9		4.4		5.4		4.4
Weighted-average common and potential common shares outstanding used for diluted earnings per share	244.8		241.0		244.7		239.5
Anti-dilutive potential common shares:
Stock options:
Number of shares	17.0		40.7		18.0		43.2
Weighted-average exercise price	$	17.86	$	22.01	$	17.96	$	21.86

Anti-dilutive potential common shares are not included in the calculation of diluted earnings per share. For the second quarter and first six months of fiscal 2011 and 2010, the effect of these shares was anti-dilutive because the exercise price of the related stock options exceeded the average market price during the period. Shares related to outstanding stock options at November 28, 2010 that were anti-dilutive could potentially dilute basic earnings per share in the future.

7

Share-based Compensation

Share-based compensation expense included in operating results is presented in the following table:

	Three Months Ended						Six Months Ended
(In Millions, Except Per Share Amounts)	Nov. 28, 2010			Nov. 29, 2009			Nov. 28, 2010			Nov. 29, 2009
Cost of sales:
Gross compensation	$	1.9		$	2.6		$	4.0		$	5.3
Capitalized in inventory during the period	(1.9		)	(2.2		)	(3.8		)	(4.1		)
Realized from inventory during the period	1.9			2.2			3.6			4.6
	1.9			2.6			3.8			5.8
Research and development	4.4			5.1			8.3			9.5
Selling, general and administrative	10.0			13.4			18.0			21.9
Total share-based compensation included in income before taxes	16.3			21.1			30.1			37.2
Income tax benefit	(5.5		)	(6.8		)	(10.1		)	(11.5		)
Total share-based compensation, net of tax, included in net income	$	10.8		$	14.3		$	20.0		$	25.7
Share-based compensation effects on earnings per share:
Basic	$	0.05		$	0.06		$	0.08		$	0.11
Diluted	$	0.04		$	0.06		$	0.08		$	0.11
Share-based compensation capitalized in inventory	$	1.2		$	1.0		$	1.2		$	1.0
Total gross share-based compensation	$	16.3		$	21.1		$	30.3		$	36.7

The fair value of share-based awards to employees in connection with equity compensation plans was estimated using a Black-Scholes option pricing model that used the following weighted-average assumptions:

	Three Months Ended				Six Months Ended
	Nov. 28, 2010		Nov. 29, 2009		Nov. 28, 2010		Nov. 29, 2009
Stock Option Plans:
Expected life (in years)	N/A		3.9		3.8		3.8
Expected volatility	N/A		41	%	41	%	46	%
Risk-free interest rate	N/A		1.8	%	1.4	%	1.9	%
Dividend yield	N/A		2.2	%	2.2	%	2.3	%
Stock Purchase Plans:
Expected life (in years)	0.8		0.8		0.8		0.8
Expected volatility	35	%	42	%	35	%	42	%
Risk-free interest rate	0.2	%	0.3	%	0.2	%	0.3	%
Dividend yield	2.3	%	2.3	%	2.3	%	2.3	%

We did not grant any stock options during the second quarter of fiscal 2011. The weighted-average fair value of stock options granted during the first six months of fiscal 2011 was $4.01 per share. The weighted-average fair value of stock options granted during the second quarter and first six months of fiscal 2010 was $4.17 and $4.03 per share, respectively.  The weighted-average fair value of rights granted under the stock purchase plan was $3.41 per share for both the second quarter and first six months of fiscal 2011 since there were no rights granted under the stock purchase plan in the first fiscal quarter. The weighted-average fair value of rights granted under the stock purchase plan was $4.08 per share for both the second quarter and first six months of fiscal 2010.

8

As of November 28, 2010, the fair value of the cash awards in connection with the executive officer retention arrangements was determined to be the amount paid on November 29, 2010, which was based on the average daily closing price of our common stock for the second quarter of fiscal 2011 (see Note 13 to the Condensed Consolidated Financial Statements). For periods prior to the second quarter of fiscal 2011, the fair value of the cash awards was estimated using the Monte Carlo valuation method that used the following closing stock price and weighted-average assumptions as of:

	May 30, 2010
Executive Officer Retention Awards:
Closing stock price	$	14.05
Remaining term (in years)	0.5
Expected volatility	32		%
Risk-free interest rate	0.2		%
Dividend yield	2.3		%

For all options granted after December 31, 2007, we determine expected life based on historical stock option exercise experience for the last four years, adjusted for our expectation of future exercise activity. For options granted prior to January 1, 2008, we use the simplified method specified by the Securities and Exchange Commission’s (SEC’s) Staff Accounting Bulletin (SAB) No. 107 to determine the expected life of stock options. The expected volatility is based on implied volatility, as management has determined that implied volatility better reflects the market’s expectation of future volatility than historical volatility, and is determined based on our traded options, which are actively traded on several exchanges. We derive the implied volatility using the closing prices of traded options during a period that closely matches the timing of the option g rant for the stock option and stock purchase plans, and on the last day of the quarter for the cash awards under the executive officer retention arrangements. The traded options selected for our measurement for the stock option and stock purchase plans are near-the-money and close to the exercise price of the option grants and have terms ranging from one to two years. The traded options selected for our measurement of the cash awards under the executive officer retention arrangements were near-the-money and at the closing price of our common stock on the last day of the quarter and had similar remaining terms (in years). The risk-free interest rate is based upon interest rates that match the expected life of the outstanding options under our employee stock option plans, the expected life of the purchase rights under our employee stock purchase plan and the retention period under the executive officer retention arrangements, as applicable. The dividend yield is based on recent history and our expectation of d ividend payouts.

Note 2. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which the transaction to sell the asset or transfer the liability would occur and the assumptions that market participants would use in pricing the asset or liability. We measure fair value to record our cash equivalents, derivative financial instruments and the deferred compensation plan assets. The measurement of fair value for our long-term debt is used to provide disclosure under Accounting Standards Codification (ASC) Topic 825, “Financial Instruments.” We do not measure fair value to record the carrying value of our long-term debt, except for the debt associated with our interest rate swap that was subject to hedge accounting (See Note 3 to the Condensed Consolidated Financial Statements). Our non-financial assets subject to fair value measurements include goodwill and amortizable intangible assets, which are measured and recorded at fair value in the period they are acquired or determined to be impaired, and property, plant and equipment, which is measured and recorded at fair value in the period it is determined to be impaired.

9

The FASB guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

·Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

Level 1 assets include our investments in institutional money-market funds that are classified as cash equivalents and the investment funds of the deferred compensation plan assets where the respective financial instruments are traded in an active market with sufficient volume and frequency of activity.

·Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

Level 2 assets and liabilities include our investments in commercial paper that are classified as cash equivalents and our senior notes that represent long-term debt instruments that are less actively traded in the market, but where quoted market prices exist for similar instruments that are actively traded, and derivative financial instruments which are based on observable inputs or can be corroborated by observable data for substantially the full term of the derivative financial instrument.

·Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Level 3 assets include goodwill, amortizable intangible assets, and property, plant and equipment where we determine fair value based on unobservable inputs using the best information available in the circumstances and take into consideration assumptions that market participants would use in pricing the asset.

10

Assets and liabilities measured at fair value on a recurring basis include the following:

(In Millions)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Balance at November 28, 2010
Cash equivalents:
Institutional money-market funds	$	240.1	$	—	$	240.1
Commercial paper	—		105.0		105.0
	240.1		105.0		345.1
Other current assets:
Derivative assets — Forward contracts	—		0.6		0.6
Other assets:
Investment funds — Deferred compensation plan assets:
Institutional money-market funds	8.3		—		8.3
Mutual funds	37.8		—		37.8
Marketable equity securities	0.8		—		0.8
	46.9		—		46.9
Total assets measured at fair value	$	287.0	$	105.6	$	392.6
Balance at May 30, 2010
Cash equivalents:
Institutional money-market funds	$	216.6	$	—	$	216.6
Commercial paper	—		79.9		79.9
	216.6		79.9		296.5
Other current assets:
Derivative assets — Forward contracts	—		0.6		0.6
Other assets:
Investment funds — Deferred compensation plan assets:
Institutional money-market funds	6.9		—		6.9
Mutual funds	32.6		—		32.6
Marketable equity securities	0.8		—		0.8
	40.3		—		40.3
Derivative assets — Interest rate swap	—		1.6		1.6
Total assets measured at fair value	$	256.9	$	82.1	$	339.0

There were no transfers between level 1 and level 2 financial assets and liabilities in fiscal 2011 and 2010.

The institutional money-market funds and the various investment funds within our deferred compensation plan assets are traded in an active market and the net asset value of each fund on the last day of the quarter is used to determine its fair value. We determine fair value of our commercial paper by obtaining non-binding market prices from our broker on the last day of the quarter. We then corroborate these market prices by comparison to quoted market prices for similar instruments. The fair value of foreign currency forward contracts represents the present value difference between the stated forward contract rate and the current market forward rate at settlement. The fair value of the interest rate swap was based on a commonly used valuation model that includes significant observable inputs, such as interest rate yield curves and discount rates commensurate with the six-month LIBOR interest r ates, as well as the creditworthiness of the counterparties and our own nonperformance risk.

11

The fair value of our long-term debt (including the current portion) at November 28, 2010 was $1,118.4 million. The fair value measurements for our long-term debt instruments take into consideration credit rating changes, equity price movements, interest rate changes and other economic variables.

Note 3. Derivative Financial Instruments

The objective of our foreign exchange risk management policy is to preserve the U.S. dollar value of after-tax cash inflow in relation to non-U.S. dollar currency movements. We are exposed to foreign currency exchange rate risk that is inherent in orders, sales, cost of sales, expenses, and assets and liabilities denominated in currencies other than the U.S. dollar. We enter into foreign exchange contracts, primarily forwards and purchased options, to hedge against exposure to changes in foreign currency exchange rates. These contracts are matched at inception to the related foreign currency exposures that are being hedged. Exposures which are hedged include sales by subsidiaries, and assets and liabilities denominated in currencies other than the U.S. dollar. Our foreign currency hedges typically mature within six months.

Derivative instruments used to hedge exposures to variability in expected future foreign denominated cash flows are not designated as cash flow hedges. Gains or losses on these derivative instruments are immediately recorded in earnings.

We had an interest rate swap agreement that managed our exposure to interest rate changes from our $250 million senior unsecured notes due April 2015 (see below). The agreement effectively converted the fixed interest rate of the $250 million principal amount of senior unsecured notes to a floating interest rate. We designated this swap agreement as a fair value hedge and recognize the changes in the fair value of both the swap and the related debt, which we record as gains or losses on derivative instrument in fair value hedge included in other non-operating income, net.

12

The following table provides information about gains (losses) associated with our derivative financial instruments:

	Location of Gains	Amount of Gains (Losses) Recognized in Income on Derivative						Location of Losses	Amount of Losses Recognized in Income on Hedged Item
(In Millions)	(Losses) Recognized in Income on Derivative	Nov. 28, 2010			Nov. 29, 2009			Recognized in Income on Hedged Item	Nov. 28, 2010			Nov. 29, 2009
Three Months Ended:
Fair value hedge:
Interest rate swap	Other non-operating income (expense), net	$	1.9		$	—		Other non-operating (expense) income, net	$	(1.6	)	$	—
		$	1.9		$	—			$	(1.6	)	$	—
Instruments without hedge accounting designation:
Forward contracts	Selling, general and administrative	$	(0.3	)	$	—
Purchased options	Selling, general and administrative	(0.1		)	—
		$	(0.4	)	$	—
Six Months Ended:
Fair value hedge:
Interest rate swap	Other non-operating income (expense), net	$	12.0		$	—		Other non-operating (expense) income, net	$	(14.1	)	$	—
		$	12.0		$	—			$	(14.1	)	$	—
Instruments without hedge accounting designation:
Forward contracts	Selling, general and administrative	$	(1.3	)	$	(0.2	)
Purchased options	Selling, general and administrative	(0.1		)	(0.1		)
		$	(1.4	)	$	(0.3	)

On September 23, 2010, we liquidated our interest rate swap for which we received proceeds of $16.1 million including accrued interest through the liquidation date. Upon the date of liquidation, we measured the fair value of both the swap and the related debt, which resulted in a $0.3 million net gain on derivative instrument in fair value hedge. We also incurred a loss of $0.7 million due to the derecognition of the fair value hedge in connection with the liquidation of the interest rate swap. These amounts are included in other non-operating income, net. The accumulated fair value adjustment to the carrying value of the senior unsecured notes will be amortized over the remaining term of the debt on an effective yield basis and will be recorded as a reduction of interest expense.

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Fair Value and Notional Principal of Derivative Financial Instruments

The notional principal amounts for derivative financial instruments provide one measure of the transaction volume outstanding as of November 28, 2010 and May 30, 2010, and does not represent the amount of the exposure to credit or market loss. The estimates of fair value are based on applicable and commonly used pricing models using prevailing financial market information at November 28, 2010 and May 30, 2010. The table below shows the fair value and notional principal of our derivative financial instruments.

	Asset Derivatives
(In Millions)	Balance Sheet Location	Notional Principal		Fair Value
Balance at November 28, 2010
Instruments without hedge accounting designation:
Forward contracts	Other current assets	$	10.0	$	0.6
Total		$	10.0	$	0.6
Balance at May 30, 2010
Fair value hedge:
Interest rate swap	Other assets	$	250.0	$	1.6
Instruments without hedge accounting designation:
Forward contracts	Other current assets	20.0		0.6
Total		$	270.0	$	2.2

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Note 4. Condensed Consolidated Financial Statements Detail

Condensed Consolidated Balance Sheets

(In Millions)	Nov. 28, 2010			May 30, 2010
Receivable allowances:
Doubtful accounts	$	0.4		$	0.4
Returns and allowances	33.3			29.6
Total receivable allowances	$	33.7		$	30.0
Inventories:
Raw materials	$	12.3		$	9.5
Work in process	83.5			67.8
Finished goods	40.6			41.3
Total inventories	$	136.4		$	118.6
Other current assets:
Prepaid income taxes	$	89.0		$	90.0
Prepaid expenses	16.9			19.8
Assets held for sale	40.1			45.8
Other	1.0			1.2
Total other current assets	$	147.0		$	156.8
Property, plant and equipment:
Total property, plant and equipment	$	2,208.7		$	2,199.0
Less accumulated depreciation and amortization	(1,801.1		)	(1,808.9		)
Total property, plant and equipment, net	$	407.6		$	390.1
Other assets:
Debt issuance costs	$	5.2		$	5.8
Income tax receivable	41.7			41.7
Deferred compensation plan assets	46.9			40.3
Other	12.1			14.4
Total other assets	$	105.9		$	102.2
Accrued liabilities:
Payroll and employee related	$	81.3		$	127.3
Accrued interest payable	23.0			24.6
Severance and restructuring expenses	7.1			15.4
Other	31.3			37.2
Total accrued liabilities	$	142.7		$	204.5
Other non-current liabilities:
Accrued pension obligation	$	70.4		$	67.3
Deferred compensation plan liability	46.9			40.3
Other	16.8			16.6
Total other non-current liabilities	$	134.1		$	124.2

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Condensed Consolidated Balance Sheets (Continued)

(In Millions)	Nov. 28, 2010			May 30, 2010
Accumulated other comprehensive loss:
Defined benefit pension plans	$	(132.4	)	$	(131.9	)
Other	(0.3		)	(0.3		)
Total accumulated other comprehensive loss	$	(132.7	)	$	(132.2	)

Condensed Consolidated Statements of Income

	Three Months Ended						Six Months Ended
(In Millions)	Nov. 28, 2010			Nov. 29, 2009			Nov. 28, 2010			Nov. 29, 2009
Other operating expense (income), net:
Litigation settlement	$	—		$	1.5		$	—		$	(0.5	)
Other	—			(0.4		)	0.1			(0.4		)
Total other operating expense (income), net	$	—		$	1.1		$	0.1		$	(0.9	)
Other non-operating income, net:
Trading securities:
Change in net unrealized holding gains/losses	$	3.7		$	2.0		$	3.7		$	5.3
Total gain on investments	3.7			2.0			3.7			5.3
Net gain (loss) on derivative instrument in fair value hedge	0.3			—			(2.1		)	—
Loss on liquidation of interest rate swap	(0.7		)	—			(0.7		)	—
Total other non-operating income, net	$	3.3		$	2.0		$	0.9		$	5.3

Note 5. Statements of Cash Flows Information

	Six Months Ended
(In Millions)	Nov. 28, 2010		Nov. 29, 2009
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest	$	26.8	$	30.6
Income taxes	$	83.1	$	47.5
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Acquisition of software under license obligations	$	0.4	$	—
Cancellation of shares withheld for taxes on restricted stock and performance share unit awards	$	1.8	$	1.6
Deposit applied to purchase equipment	$	4.7	$	—

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Note 6. Cost Reduction Programs and Restructuring of Operations

We recorded total net charges for severance and restructuring expenses of $6.5 million in the second quarter and $16.3 million in the first six months of fiscal 2011. The following table provides additional detail related to these expenses:

(In Millions)	Analog Segment		All Others			Total
Three Months Ended November 28, 2010:
May 2010 business realignment:
Severance	$	0.4	$	0.1		$	0.5
Other exit-related costs	0.3		0.1			0.4
	0.7		0.2			0.9
March 2009 workforce reduction and plant closures:
Other exit-related costs	—		4.6			4.6
Severance	—		0.2			0.2
Loss on sale of equipment	—		0.1			0.1
Impairment of equipment	—		0.8			0.8
Release of reserve:
Severance	—		(0.1		)	(0.1		)
	—		5.6			5.6
Total severance and restructuring expenses, net	$	0.7	$	5.8		$	6.5
Six Months Ended November 28, 2010:
May 2010 business realignment:
Severance	$	0.7	$	0.6		$	1.3
Other exit-related costs	0.3		0.1			0.4
Impairment of equipment and other assets	1.2		—			1.2
	2.2		0.7			2.9
March 2009 workforce reduction and plant closures:
Other exit-related costs	—		11.2			11.2
Severance	—		0.3			0.3
Gain on sale of equipment	—		(0.8		)	(0.8		)
Impairment of equipment	—		2.8			2.8
Release of reserve:
Severance	—		(0.1		)	(0.1		)
	—		13.4			13.4
Total severance and restructuring expenses, net	$	2.2	$	14.1		$	16.3

In connection with exit activities related to the realignment of certain product line business units originally announced in May 2010, we recorded charges of $0.9 million in the second quarter and $2.9 million in the first six months of fiscal 2011. These amounts include $0.5 million in the second quarter of fiscal 2011 for severance payments to 7 employees who were terminated in the quarter due to these exit activities and a total of $1.3 million for severance expenses in the first six months of fiscal 2011. We also recorded $0.4 million for other exit-related costs in the second quarter and first six months of fiscal 2011 in connection with two leased facilities. In the first quarter of fiscal 2011, we decided to discontinue the development of a product which was originally acquired with the purchase of ActSolar, Inc. in fiscal 2009. As a result, the charges in the first six m onths of fiscal 2011 include a $1.2 million charge to write off the intangible asset and certain equipment related to the development project that is no longer used. Since these charges relate to an action announced in fiscal 2010, total cumulative charges through November 28, 2010 were $4.6 million, which includes an additional $1.7 million for severance payments recorded in fiscal 2010. Remaining exit activities related to the product line business unit realignment are expected to be completed in early calendar 2011 and total cumulative charges are expected to be approximately $5 million to $6 million.

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In connection with the workforce reduction and plant closures announced in March 2009, we recorded a total net charge of $5.6 million in the second quarter and $13.4 million in the first six months of fiscal 2011. These amounts include other exit-related costs of $4.6 million in the second quarter and $11.2 million in the first six months of fiscal 2011 associated with the closure and transfer activities that occurred at our manufacturing sites in Texas and China during the same periods. These amounts also include severance costs of $0.2 million in the second quarter and $0.3 million in the first six months of fiscal 2011. We also recorded a $0.8 million charge in the second quarter of fiscal 2011 to write off certain Texas building improvements that were removed during the quarter. Total charges for impairment of equipment in the first six months of fiscal 2011 was $2.8 million incl uding a $2.0 million charge in the first quarter of fiscal 2011 to write off certain Texas equipment previously classified as held for sale that remained unsold after completing a final public sale of the equipment. In addition, we recorded a $0.1 million loss on sale of certain Texas equipment in the second quarter of fiscal 2011. Partially offsetting these charges was a $0.1 million recovery in the second quarter and first six months of fiscal 2011 to reduce accrued severance upon redeploying an employee from Texas to another location and a $0.8 million gain on the sale of certain Texas equipment in the first six months of fiscal 2011. Since these net charges relate to actions announced in fiscal 2009, total cumulative net charges (including the net charges incurred in fiscal 2011, 2010 and 2009) through November 28, 2010 for these actions are presented in the following table:

(In Millions)	Analog Segment			All Others			Total
March 2009 workforce reduction and plant closures:
Severance	$	14.0		$	46.5		$	60.5
Other exit-related costs	—			43.2			43.2
Impairment of equipment	—			57.1			57.1
Gain on sale of equipment	—			(2.1		)	(2.1		)
Other equipment gain, net	—			(1.2		)	(1.2		)
Release of reserves:
Severance	(0.4		)	(4.9		)	(5.3		)
Total cumulative severance and restructuring expenses for the March 2009 workforce reduction and plant closures	$	13.6		$	138.6		$	152.2

In fiscal 2010 we ceased production activity in both China and Texas. Remaining activities associated with the closures of the China and Texas manufacturing facilities were substantially completed by the end of November 2010. However, we continue to incur minimal ongoing expenses to maintain the facilities until they are sold. We expect to incur approximately $3 million to $5 million of these expenses through fiscal 2011. As a result, total charges for all actions announced in March 2009 are expected to be approximately $155 million to $157 million. Most of this amount will be reported within our corporate group, which is not considered an operating segment, and will be included in the category described as “All Others.”

Since production activity in both China and Texas has ceased, we are actively engaged in locating buyers to purchase each of these manufacturing facilities and the existing machinery and equipment located in these facilities. As a result, all of the China and Texas plant assets have been classified as held for sale. As of November 28, 2010, the total carrying value of assets held for sale was $40.1 million and is reported in other current assets in the condensed consolidated balance sheet. We have ceased depreciation on these assets and now measure the carrying value at the lower of historical net book value or fair value (less cost to sell). During the first six months of fiscal 2011, activity related to assets held for sale included the sale of certain Texas equipment with a carrying value of $2.6 million and the write off of certain Texas building improvements and equipment with a carrying value of $2.8 million. In addition, certain Texas equipment with a carrying value of $0.3 million (approximating fair value) was transferred to our manufacturing facility in Maine and reclassified as held and used.

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The following table provides a summary of the activities through the first six months of fiscal 2011 related to severance and restructuring costs included in accrued liabilities:

	Fiscal 2010 Business Unit Realignment						Fiscal 2009 Workforce Reduction and Plant Closures
(In Millions)	Severance			Other Exit-Related Costs			Severance			Other Exit-Related Costs			Total
Balance at May 30, 2010	$	1.7		$	—		$	13.1		$	0.6		$	15.4
Severance and restructuring expenses	1.3			0.4			0.3			11.2			13.2
Cash payments	(1.4		)	(0.4		)	(8.0		)	(11.4		)	(21.2		)
Release of residual reserves	—			—			(0.1		)	—			(0.1		)
Exchange rate adjustment	(0.1		)	—			(0.1		)	—			(0.2		)
Balance at November 28, 2010	$	1.5		$	—		$	5.2		$	0.4		$	7.1

During the first six months of fiscal 2011 we paid severance to 131 employees in connection with exit activities as part of the business unit realignment announced in May 2010 and the plant closures. Payments for other exit-related costs were primarily for expenses associated with closure and transfer activities incurred in connection with the closures of our manufacturing facilities in Texas and China.

The balances at November 28, 2010 represent remaining estimated costs for activities that have occurred, but have yet to be paid, as a result of the business unit realignment and the manufacturing plant closures. Payments for the remaining severance balances of $1.5 million related to the business unit realignment and $5.2 million related to the plant closures that have been substantially completed are expected to be paid over the next quarter. Severance amounts are generally paid 30-60 days after the employee’s actual departure date or may be deferred until the beginning of the calendar year after their departure date. Other exit-related costs primarily relate to expenses associated with closure and transfer activities occurring in these manufacturing locations.

Note 7. Acquisition

In June 2010, we acquired substantially all of the assets of GTronix Inc. (GTronix), a fabless semiconductor company based in Fremont, California. GTronix’s proprietary analog technology provides very low-power solutions for noise cancellation in mobile applications such as wireless handsets and audio accessories. The acquisition of GTronix’s assets is intended to expand our existing audio portfolio. In addition, GTronix technology has potential for other broader applications in which low-power analog signal processing is important.

The acquisition was accounted for using the acquisition method of accounting with a purchase price of $4.5 million for the GTronix’s assets. The acquired assets constitute a business under FASB guidance and included primarily amortizable intangible assets, inventory and equipment. No liabilities were assumed in the transaction. The purchase price was allocated as follows:

(In Millions)	Total
Tangible assets	$	0.2
Acquired developed technology	1.7
Other intangible assets	0.4
Goodwill	2.2
Total	$	4.5

Goodwill from this acquisition is included in our Analog segment and it primarily represents the expected value of future technologies that have yet to be determined. Goodwill is expected to be deductible for tax purposes. Pro forma results of operations related to this acquisition have not been presented since GTronix’s operating results up to the date of acquisition were immaterial to our consolidated financial statements.

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Note 8. Goodwill

The following table presents goodwill by reportable segments:

(In Millions)	Analog Segment		All Others		Total
Balance at May 30, 2010	$	58.8	$	7.3	$	66.1
Acquisition of GTronix	2.2		—		2.2
Balance at November 28, 2010	$	61.0	$	7.3	$	68.3

Note 9. Debt

Our multicurrency credit agreement with a bank was renewed and amended in October 2010 to provide up to $10 million for multicurrency loans, letters of credit and standby letters of credit. The agreement contains restrictive covenants, conditions and default provisions that require the maintenance of certain financial ratios. As of November 28, 2010, we were in compliance with all financial covenants under the agreement. The agreement will expire in October 2011.

In October 2010, we also amended an existing credit agreement with a bank to extend the due date of our unsecured promissory note denominated in Japanese yen (2,408,750,000). Under the terms of the agreement, the promissory note will become due in November 2013 and all other terms under the agreement remain the same.

In June 2010, we repaid in full the $250.0 million aggregate principal amount of senior floating rate notes that became due June 2010. The total amount of the repayment was $250.3 million, which included the aggregate principal amount outstanding and accrued interest through the repayment date.

Note 10. Income Taxes

Income tax expense of $30.1 million in the second quarter and $67.3 million in the first six months of fiscal 2011 was higher than the $14.4 million in the second quarter and the $22.9 million in the first six months of fiscal 2010 primarily because of higher U.S. income in fiscal 2011 along with discrete tax benefits in fiscal 2010 that did not recur in fiscal 2011. In addition, the income tax expense in the second quarter and the first six months of fiscal 2011 was higher due to the expiration of the federal research and development tax credit in fiscal 2010.

Note 11. Retirement and Pension Plans

Net periodic pension costs for our defined benefit pension plans maintained in the United Kingdom, Germany and Taiwan are presented in the following table:

	Three Months Ended						Six Months Ended
(In Millions)	Nov. 28, 2010			Nov. 29, 2009			Nov. 28, 2010			Nov. 29, 2009
Service cost of benefits earned during the period	$	0.7		$	0.8		$	1.4		$	1.7
Plan participant contributions	—			(0.2		)	—			(0.4		)
Interest cost on projected benefit obligation	4.1			4.0			8.0			8.1
Expected return on plan assets	(4.2		)	(3.5		)	(8.2		)	(6.9		)
Net amortization and deferral	1.5			1.4			3.0			2.8
Net periodic pension cost	$	2.1		$	2.5		$	4.2		$	5.3

Total contributions paid to these plans during fiscal 2011 were $0.4 million in the second quarter and $0.8 million in the first six months. Total contributions paid to these plans during fiscal 2010 were $0.5 million in the second quarter and $1.0 million in the first six months. We currently expect our total fiscal 2011 contribution to these plans to be approximately $6 million.

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Note 12. Shareholders’ Equity

Stock Repurchase Programs

During the second quarter and first six months of fiscal 2011, we did not repurchase any shares of our common stock in connection with the $500 million stock repurchase program we announced in June 2007. Under this program, we had a balance of $127.4 million remaining available for future stock repurchases as of November 28, 2010. We do not have any plans to terminate the program prior to its completion, and there is no expiration date for this repurchase program.

Dividends

We paid cash dividends of $24.0 million ($0.10 per outstanding share of common stock) in the second quarter and a total of $43.1 million in the first six months of fiscal 2011. We paid cash dividends of $18.9 million ($0.08 per outstanding share of common stock) in the second quarter and a total of $37.6 million in the first six months of fiscal 2010.

On December 9, 2010, we announced that our Board of Directors declared a cash dividend of $0.10 per outstanding share of common stock, which will be paid on January 10, 2011 to shareholders of record at the close of business on December 20, 2010.

Note 13. Share-based Compensation Plans

Stock Option Plans

In fiscal 2011 to date, stock options were granted only from the 2009 Incentive Award Plan (the 2009 Plan), while stock options that were exercised, forfeited and expired represent stock options that were granted under the 2009 Plan and our former equity plans (the 1977 Stock Option Plan, the 2007 Employee Equity Plan (EEP), the 2005 Executive Officer Equity Plan (EOEP) and the Executive Officer Stock Option Plan). The following table summarizes the activity during the first six months of fiscal 2011 of common stock shares related to stock options granted under all of our equity plans (excluding the director stock option plan):

	Number of Shares (In Millions)		Weighted-Average  Exercise Price
Outstanding at May 30, 2010	30.9		$	15.64
Granted	0.8		$	14.57
Exercised	(0.8	)	$	8.99
Forfeited	(0.4	)	$	14.63
Expired	(4.2	)	$	19.53
Outstanding at November 28, 2010	26.3		$	15.22

The total intrinsic value of options exercised in fiscal 2011 was $0.8 million in the second quarter and $4.0 million in the first six months. The total intrinsic value of options exercised in fiscal 2010 was $0.5 million in the second quarter and $6.1 million in the first six months. Total unrecognized compensation cost related to stock option grants as of November 28, 2010 was $17.2 million, which is expected to be recognized over a weighted-average period of 2.1 years.

The following table provides additional information about total options outstanding under our stock option plans (excluding the director stock option plan) at November 28, 2010:

	Number of Shares (In Millions)	Weighted-Average Exercise Price		Aggregate Intrinsic Value (In Millions)		Weighted- Average Remaining Contractual Life (In Years)
Fully vested and expected to vest	26.0	$	15.25	$	31.6	2.5
Currently exercisable	19.3	$	15.52	$	27.4	1.9

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Other Stock Plans

In fiscal 2011 to date, restricted stock shares and restricted stock units were granted from the 2009 Plan, while restricted stock shares and restricted stock units that were vested and forfeited represent restricted stock awards that were granted under the 2009 Plan and the former EEP and restricted stock plan. The following table provides a summary of activity during the first six months of fiscal 2011 for grants of restricted stock not yet vested and restricted stock units under the 2009 Plan, the EEP and the restricted stock plan (excluding units granted with performance based restrictions):

	Number of Shares (In Millions)		Weighted-Average Grant-Date Fair Value
Outstanding at May 30, 2010	3.0		$	13.96
Granted	1.6		$	13.12
Vested	(0.5	)	$	14.64
Forfeited	(0.2	)	$	14.52
Outstanding at November 28, 2010	3.9		$	13.50

The total fair value of restricted shares that vested in fiscal 2011 was $5.7 million in the second quarter and $6.3 million in the first six months. The total fair value of restricted shares that vested in fiscal 2010 was $0.6 million in the second quarter and $0.8 million in the first six months. Total unrecognized compensation cost related to non-vested restricted stock shares and restricted stock units outstanding as of November 28, 2010 was $34.8 million, which is expected to be recognized over a weighted-average period of 3.0 years.

Under the director stock plan, we granted 104,626 shares of common stock to our directors in the second quarter and first six months of fiscal 2011. Total unrecognized compensation cost as of November 28, 2010 related to non-vested awards granted under the plan was $1.0 million, which is expected to be recognized over a weighted-average period of 2.4 years.

With respect to performance share units under the EOEP, no shares were issued in July 2010 upon completion of the fourth two-year performance period since minimum performance thresholds were not achieved. Targets for a fifth two-year performance period that were established in July 2009 will be measured after the end of fiscal 2011. Targets for a one-year performance period that were also established in July 2009, were measured after the end of fiscal 2010, but require a two-year vesting period. Targets for a sixth two-year performance period were established in June 2010 and will be measured after the end of fiscal 2012. Total unrecognized compensation cost related to unvested performance share units as of November 28, 2010 was $10.1 million, which is expected to be recognized over a weighted-average period of 0.9 year.

On November 29, 2010, we paid a one-time cash payment of an aggregate of $14.6 million to our executive officers in connection with the special retention incentive program approved by our Compensation Committee in fiscal 2009. To receive the payment, the officer must have been providing services to the company on the payment date. The amount of each cash award was determined based upon the average daily closing price of our common stock for the second quarter of fiscal 2011 ending November 28, 2010, which was $13.06 per share.

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Note 14. Segment Information

The following tables present information related to our reportable segments:

(In Millions)	Analog Segment		All Others			Total
Three months ended November 28, 2010:
Sales to unaffiliated customers	$	365.4	$	25.0		$	390.4
Segment income (loss) before taxes	$	121.8	$	(8.2	)	$	113.6
Three months ended November 29, 2009:
Sales to unaffiliated customers	$	320.7	$	23.9		$	344.6
Segment income (loss) before taxes	$	68.0	$	(6.6	)	$	61.4
Six months ended November 28, 2010:
Sales to unaffiliated customers	$	751.0	$	51.4		$	802.4
Segment income (loss) before taxes	$	261.2	$	(21.6	)	$	239.6
Six months ended November 29, 2009:
Sales to unaffiliated customers	$	612.6	$	46.4		$	659.0
Segment income (loss) before taxes	$	120.5	$	(20.8	)	$	99.7

In the first quarter of fiscal 2011, we combined the activities of the former key market segments group together with certain emerging product lines that were previously a part of two separate power business units to form a new business unit called the strategic growth markets business unit. This business unit will concentrate its efforts on selected high-growth emerging markets that represent promising opportunities to the company. The remaining product lines that were previously a part of the former performance power products business unit were combined with the remaining product lines within the infrastructure power business unit and were renamed the power products business unit. As a result, the Analog segment now comprises five operating segments which include the high-speed products, mobile devices power, power products, precision signal path and strategic growth markets business un its.  The information in the table above for the second quarter and first six months ended November 29, 2009 has been reclassified to present segment information based on the structure of our operating segments in fiscal 2011.

Operating segments that do not meet the criteria of a reportable segment are combined under the category “All Others.” Sales for the category “All Others” include sales of products from non-analog business units that are no longer a part of our core focus, as well as sales generated from foundry and contract service arrangements.

Note 15.  Contingencies — Legal Proceedings

Environmental Matters

We have been named to the National Priorities List for our Santa Clara, California, site and we have completed a remedial investigation/feasibility study with the Regional Water Quality Control Board (RWQCB), acting as an agent for the EPA. We have agreed in principle with the RWQCB on a site remediation plan and we are conducting remediation and cleanup efforts at the site. In addition to the Santa Clara site, we have been designated from time to time as a potentially responsible party (PRP) by international, federal and state agencies for certain environmental sites with which we may have had direct or indirect involvement. These designations are made regardless of the extent of our involvement. These claims are in various stages of administrative or judicial proceedings and include demands for recovery of past governmental costs and for future investigations and remedial actions. In many cases, the dol lar amounts of the claims have not been specified, and, claims have been asserted against a number of other entities for the same cost recovery or other relief as is sought from us. We accrue costs associated with environmental matters when they become probable and can be reasonably estimated. The amount of all environmental charges to earnings, including charges for the Santa Clara site remediation, (excluding potential reimbursements from insurance coverage), were not material during the second quarter and first six months of fiscal 2011.

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We have also retained responsibility for environmental matters connected with businesses we sold in fiscal 1996 and 1997. To date, the costs associated with the liabilities we have retained in these dispositions have not been material and there have been no related legal proceedings.

Tax Matters

The Internal Revenue Service is currently examining our federal tax returns for fiscal 2007 through 2009, as well as our amended federal tax returns for fiscal 2005 and 2006. Several U.S. state taxing jurisdictions are examining our state tax returns for fiscal 2001 through 2005. During fiscal 2010, the state of California closed its audits of fiscal years up through fiscal 2000, which resulted in an immaterial adjustment. Internationally, tax authorities from several foreign jurisdictions are also examining our tax returns. We believe we have made adequate tax payments and/or accrued adequate amounts of reserves such that the outcomes of these audits will have no material adverse effects on our financial statements.

Other Matters

In May 2008, eTool Development, Inc. and eTool Patent Holdings Corporation (collectively eTool) brought suit in the U.S. District Court for the Eastern District of Texas alleging that our WEBENCH® online design tools infringe an eTool patent and seeking an injunction and unspecified amounts of monetary damages (trebled because of the alleged willful infringement), attorneys’ fees and costs. In December 2008, eTool amended the complaint and counterclaims to include our SOLUTIONS online tool in its allegations of infringement of the eTool patent. We filed an answer to the amended complaint and counterclaims for declaratory judgment of non-infringement and invalidity of the patent. On February 27, 2009, the Court held a scheduling conference setting a claim construction hearing for August 2011 and a jury trial for January 2012. eTool served its infringement contentions in March 2009 and we served o ur invalidity contentions in May 2009. Both parties exchanged initial disclosures on May 29, 2009. The discovery phase of the case is now open and ongoing. In February 2010, we filed our inter partes reexamination petition with the United States Patent and Trademark Office (PTO), seeking a determination that the ‘919 patent is invalid. On March 15, 2010, the PTO issued a communication granting our inter partes reexamination petition. The inter partes proceeding is ongoing. On June 8, 2010, eTool filed its second amended complaint removing the infringement allegations against our SOLUTIONS online tool. We answered eTool’s second amended complaint on June 25, 2010. We intend to contest the case through all available means.

We are currently a party to various claims and legal proceedings, including those noted above. We make provisions for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We believe we have made adequate provisions for potential liability in litigation matters. We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Based on the information that is currently available to us, we believe that the ultimate outcome of litigation matters, individually and in the aggregate, will not have a material adverse effect on our results of operations or financial position. However, litigation is inherently unpredictable. If an unfavorable ruling or outcome were to occur, there is a possibility of a material adverse effect on results of operations or our financial position.

Contingencies — Other

In connection with our past divestitures, we have routinely provided indemnities to cover the indemnified party for matters such as environmental, tax, product and employee liabilities. We also routinely include intellectual property indemnification provisions in our terms of sale, development agreements and technology licenses with third parties. Since maximum obligations are not explicitly stated in these indemnification provisions, the potential amount of future maximum payments cannot be reasonably estimated. To date we have incurred minimal losses associated with these indemnification obligations and as a result, we have not recorded any liabilities in our consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This MD&A contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and particularly in Part II of Form 10-Q, “Item 1A. Risk Factors” and the “Outlook” section of this MD&A. These statements relate to, among other things, sales, gross margins, operating expenses, capital expenditures, economic and market conditions, research and development efforts, asset dispositions, and acquisitions of and investments in other companies, and are indicated by words or phrases such as “anticipate,” “expect,” “outlook,” “foresee,” “believe,” “could,” “s hould,” “intend,” “will,” and similar words or phrases. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. For a discussion of some of the factors that could cause actual results to differ materially from our forward-looking statements, see the discussion on risk factors that appears in Part II, Item 1A. of this Form 10-Q and other risks and uncertainties detailed in this and our other reports and filings with the SEC. We undertake no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof and disclaim any obligation to do so.

This discussion should be read in conjunction with the consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q for the period ended November 28, 2010 and in our Annual Report on Form 10-K for the fiscal year ended May 30, 2010.

Strategy and Business

We design, develop, manufacture and market a wide range of semiconductor products, most of which are analog and mixed-signal integrated circuits. Our goal is to be the premier provider of high-performance, energy-efficient analog and mixed-signal solutions. Many of these solutions are marketed under our PowerWise® brand. We are focused on the following:

· growing our core revenues by marketing our extensive portfolio of general purpose analog products to a broad base of customers utilizing our established distribution channels and industry leading design tools;

· identifying and understanding the complex application specific system problems addressable by analog innovation;

· providing energy efficient, analog-intensive solutions that enable customers to differentiate their products while reducing the power consumption of their systems;

· targeting our analog solutions towards emerging areas or applications that can provide further growth on top of our core business (current examples would include LED lighting, renewable energy, portable medical, communications infrastructure, personal mobile devices and automotive);

· consistently delivering competitive products with superior quality and supply chain execution to our customers, and

· consistently delivering superior returns on invested capital to our shareholders.

Approximately 94 percent of our net sales in the first six months of fiscal 2011 came from Analog segment products. Beyond the general purpose analog categories defined by the World Semiconductor Trade Statistics (WSTS), we also sell analog subsystems specifically targeted at certain particular markets and applications. Energy efficiency is our overarching theme, and our PowerWise® products enable systems that consume less power, extend battery life and generate less heat. Our leading-edge products include power management circuits and sub-systems, audio and operational amplifiers, communication interface products and data conversion solutions. For more information on our business, see Part I, “Item 1. Business,” in our Annual Report on Form 10-K for the fiscal year ended May 30, 2010.

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Critical Accounting Policies and Estimates

We believe the following critical accounting policies are those policies that have a significant effect on the determination of our financial position and results of operations. These policies also require us to make our most difficult and subjective judgments:

a)Revenue Recognition

We recognize revenue from the sale of semiconductor products upon shipment, provided we have persuasive evidence of an arrangement typically in the form of a purchase order, title and risk of loss have passed to the customer, the amount is fixed or determinable and collection of the revenue is reasonably assured. We record a provision for estimated future returns at the time of shipment. Approximately 70 percent of our semiconductor product sales were made to distributors in the first six months of fiscal 2011, which includes approximately 10 percent of sales made through dairitens (fulfillment service providers) in Japan under local business practices. This compares to approximately 60 percent in the first six months of fiscal 2010, which includes approximately 8 percent of sales made through dairitens in Japan under local business practices.  We have agreements with our distributors that cover vario us programs, including pricing adjustments based on resale pricing and volume, price protection for inventory and scrap allowances. The revenue we record for these distribution sales is net of estimated provisions for these programs. When determining this net distribution revenue, we must make significant judgments and estimates. Our estimates are based upon historical experience rates by geography and product family, inventory levels in the distribution channel, current economic trends and other related factors. We continuously monitor the claimed allowance against the rates assumed in our estimates of the allowances. Actual distributor claims activity has been materially consistent with the provisions we have made based on our estimates. However, because of the inherent nature of estimates, there is always a risk that there could be significant differences between actual amounts and our estimates. Our financial condition and operating results are dependent on our ability to make reliable estimates, and we believe that our estimates are reasonable. However, different judgments or estimates could result in variances that might be significant to our operating results.

Service revenues are recognized as the services are provided or as milestones are achieved, depending on the terms of the arrangement. These revenues are included in net sales and totaled $10.0 million in the first six months of fiscal 2011 and $8.2 million in the first six months of fiscal 2010.

Certain intellectual property income is classified as revenue if it meets specified criteria established by company policy that defines whether it is considered a source of income from our primary operations. These revenues are included in net sales and totaled $0.2 million in the first six months of fiscal 2011 and $1.0 million in the first six months of fiscal 2010. All other intellectual property income that does not meet the specified criteria is not considered a source of income from primary operations and is therefore classified as a component of other operating income, net, in the consolidated statement of income. Intellectual property income is recognized when the license is delivered, the fee is fixed or determinable, collection of the fee is reasonably assured and remaining obligations are perfunctory or inconsequential to the other party.

b)Valuation of Inventories

Inventories are stated at the lower of standard cost, which approximates actual cost on a first-in, first-out basis, or market. The total carrying value of our inventory is reduced for any difference between cost and estimated market value of inventory that is determined to be obsolete or unmarketable, based upon assumptions about future demand and market conditions. Reductions in carrying value are deemed to establish a new cost basis. Inventory is not written up if estimates of market value subsequently improve. We evaluate obsolescence by analyzing the inventory aging, order backlog and future customer demand on an individual product basis. If actual demand were to be substantially lower than what we have estimated, we may be required to write inventory down below the current carrying value. While our estimates require us to make significant judgments and assumptions about future events, we believe our relationships with our customers, combined with our understanding of the end-markets we serve, provide us with the ability to make reasonable estimates. The actual amount of obsolete or unmarketable inventory has been materially consistent with previously estimated write-downs we have recorded. We also evaluate the carrying value of inventory for lower-of-cost-or-market on an individual product basis, and these evaluations are intended to identify any difference between net realizable value and standard cost. Net realizable value is used as a measure of market for purposes of evaluating lower-of-cost-or-market and is determined as the selling price of the product less the estimated cost of disposal. When necessary, we reduce the carrying value of inventory to net realizable value. If actual market conditions and resulting product sales were to be less favorable than what we have projected, additional inventory write-downs may be required.

c)Impairment of Goodwill, Intangible Assets and Other Long-lived Assets

We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable from the estimated future cash flows expected to result from their use and eventual disposition. Our long-lived assets subject to this evaluation include property, plant and equipment and

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amortizable intangible assets. Amortizable intangible assets subject to this evaluation include developed technology we have acquired, patents and technology licenses. We assess the impairment of goodwill annually in our fourth fiscal quarter and whenever events or changes in circumstances indicate that it is more likely than not that an impairment loss has been incurred. We are required to make judgments and assumptions in identifying those events or changes in circumstances that may trigger impairment. Some of the factors we consider include:

· significant decrease in the market value of an asset;

· significant changes in the extent or manner for which the asset is being used or in its physical condition;

· significant change, delay or departure in our business strategy related to the asset;

· significant negative changes in the business climate, industry or economic conditions; and

· current period operating losses or negative cash flow combined with a history of similar losses or a forecast that indicates continuing losses associated with the use of an asset.

Our impairment evaluation of long-lived assets includes an analysis of estimated future undiscounted net cash flows expected to be generated by the assets over their remaining estimated useful lives. If our estimate of future undiscounted net cash flows is insufficient to recover the carrying value of the assets over the remaining estimated useful lives, we record an impairment loss in the amount by which the carrying value of the assets exceeds the fair value. We determine fair value based on discounted cash flows using a discount rate commensurate with the risk inherent in our current business model. Major factors that influence our cash flow analysis are our estimates for future revenue and expenses associated with the use of the asset. Different estimates could have a significant impact on the results of our evaluation. If, as a result of our analysis, we determine that our amortizable intangible assets or other long-lived assets have been impaired, we will recognize an impairment loss in the period in which the impairment is determined. Any such impairment charge could be significant and could have a material adverse effect on our financial position and results of operations.

We classify long-lived assets as assets held for sale when the criteria have been met, in accordance with ASC Topic 360, “Property, Plant, and Equipment.” Upon classification of an asset as held for sale, we cease depreciation of the asset and classify the asset in other current assets at the lower of its carrying value or fair value (less cost to sell). If an asset is held for sale as a result of a restructuring of operations, any write down to fair value (less cost to sell) is included as a restructuring expense in the consolidated statement of income. When we commit to a plan to abandon a long-lived asset before the end of its previously estimated useful life, we revise depreciation estimates to reflect the use of the asset over its shortened useful life. We review depreciation estimates periodically, including both estimated useful lives and estimated salvage values. These re views may result in changes to historical depreciation rates, which are considered to be changes in accounting estimates and are accounted for on a prospective basis.

Our impairment evaluation of goodwill is based on comparing the fair value to the carrying value of our reporting units containing goodwill. Our reporting units are based on our operating segments as defined under ASC Topic 280, “Segment Reporting.”  The fair value of a reporting unit is measured at the business unit level using a discounted cash flow approach that incorporates our estimates of future revenues and costs for those business units. As of November 28, 2010 our reporting units containing goodwill include our high speed products, mobile devices power, power products and precision signal path business units, all of which are operating segments within our Analog reportable segment, and our custom solutions business unit which is included in the category “All Others.” Based upon our latest annual impairment assessment of goodwill completed in the fourth qua rter of fiscal 2010, we concluded that the fair value of each reporting unit substantially exceeded its carrying value. There have been no significant events or changes in circumstances since our annual assessment nor have there been significant changes in the underlying assumptions we used that would indicate the fair value of our reporting units substantially declined during the first six months of fiscal 2011. The estimates we use in evaluating goodwill are consistent with the plans and estimates that we use to manage the underlying businesses. If we fail to deliver new products for these business units, if the products fail to gain expected market acceptance, or if market conditions for these business units fail to materialize as anticipated, our revenue and cost forecasts may not be achieved and we may incur charges for goodwill impairment, which could be significant and could have a material adverse effect on our results of operations.

d)Income Taxes

We determine deferred tax assets and liabilities based on the future tax consequences that can be attributed to net operating loss and credit carryovers and differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, using the enacted tax rate expected to be applied when the taxes are actually paid or recovered. The recognition of deferred tax assets is reduced by a valuation allowance if it is more

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likely than not that the tax benefits will not be realized. The ultimate realization of deferred tax assets depends upon the generation of future taxable income during the periods in which the net operating loss and credit carryovers and differences between financial statement carrying amounts and their respective tax bases become deductible. In determining a valuation allowance, we consider past performance, expected future taxable income and prudent and feasible tax planning strategies. We currently have a valuation allowance that has been established primarily against the reinvestment and investment tax credits related to our operation in Malaysia, as we have concluded that the deferred tax assets will not be realized in the foreseeable future due to a tax holiday granted by the Malaysian government that is effective for a ten-year period that began in our fiscal 2010 and the uncertainty of sufficient t axable income in Malaysia beyond fiscal 2019.

Our forecast of expected future taxable income is based on historical taxable income and projections of future taxable income over the periods that the deferred tax assets are deductible. Changes in market conditions that differ materially from our current expectations and changes in future tax laws in the United States and international jurisdictions or changes in our tax structure may cause us to change our judgments of future taxable income. These changes, if any, may require us to adjust the existing tax valuation allowance higher or lower than the amount we currently have recorded and such an adjustment could have a material impact on the tax expense for the fiscal year.

The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Although ASC Topic 740, “Income Taxes,” provides further clarification on the accounting for uncertainty in income taxes recognized in the financial statements, the threshold and measurement attribute prescribed by the FASB guidance will continue to require significant judgment by management. If the ultimate resolution of tax uncertainties is different from what we have currently estimated, this could have a material impact on income tax expense.

e)Share-based Compensation

We measure and record compensation expense for all share-based payment awards based on estimated fair values in accordance with ASC Topic 718, “Compensation-Stock Compensation.” We provide share-based awards to our employees, executive officers and directors through various equity compensation plans including our employee equity, stock option, stock purchase and restricted stock plans. The fair value of stock option and stock purchase equity awards is measured at the date of grant using a Black-Scholes option pricing model, and the fair value of restricted stock awards is based on the market price of our common stock on the date of grant. The cash awards to be paid in connection with retention arrangements with each of our executive officers (approved by the Compensation Committee of our Board of Directors in November 2008) is considered a share-based payment award and measured at fair value sinc e the award is indexed to the price of our common stock. The fair value of these cash awards is measured each reporting period and is calculated using the Monte Carlo valuation method.

In determining fair value using the Black-Scholes option pricing model and the Monte Carlo valuation method, management is required to make certain estimates of the key assumptions such as expected life, expected volatility, dividend yields and risk free interest rates. The estimates of these key assumptions involve judgment regarding subjective future expectations of market price and trends. The assumptions used in determining expected life and expected volatility have the most significant effect on calculating the fair value of share-based awards. For all options granted after December 31, 2007, we determine expected life based on historical stock option exercise experience for the last four years, adjusted for our expectation of future exercise activity. For options granted prior to January 1, 2008, we use the simplified method specified by the SEC’s Staff Accounting Bulletin No. 1 07 to determine the expected life of stock options. Expected volatility is based on implied volatility, as management has determined that implied volatility better reflects the market’s expectation of future volatility than historical volatility. If we were to determine that another method to estimate these assumptions was more reasonable than our current methods, or if another method for calculating these assumptions were to be prescribed by authoritative guidance, the fair value for our share-based awards could change significantly. If the expected volatility and/or expected life were increased under our assumptions, then the Black-Scholes and Monte Carlo computations of fair value would also increase, thereby resulting in higher compensation costs being recorded.

Under GAAP, we are required to estimate forfeitures at the date of grant. Our estimate of forfeitures is based on our historical activity, which we believe is indicative of expected forfeitures. In subsequent periods if the actual rate of forfeitures differs from our estimate, the forfeiture rates may be revised, as necessary. Changes in the estimated forfeiture rates can have a significant effect on share-based compensation expense since the effect of adjusting the rate is recognized in the period the forfeiture estimate is changed.

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We also grant performance share units to executive officers that require us to estimate expected achievement of performance targets over the performance period. This estimate involves judgment regarding future expectations of various financial performance measures such as those described in the overview section below. If there are changes in our estimate of the level of financial performance measures expected to be achieved, the related share-based compensation expense may be significantly increased or reduced in the period that our estimate changes.

Overview

We focus on providing leading-edge analog solutions with a large portion of our sales classified within the general purpose analog categories as defined by WSTS. In the first six months of fiscal 2011, approximately 94 percent of our total sales came from our Analog segment. We believe that the success we have achieved in these markets has been driven by our knowledge of the analog markets, our circuit design capabilities and our understanding of electronic systems, especially as they pertain to energy efficiency that is enabled by our products. Our success has also been due to our innovative packaging and proprietary analog process technology, as well as our comprehensive manufacturing and supply chain competence.

Net sales were higher in the second quarter and first six months of fiscal 2011 compared to net sales in the second quarter and first six months of fiscal 2010 due to higher overall demand from customers as the global economy continued to slowly recover. As a result, factory utilization increased to 70 percent in the first six months of fiscal 2011 compared to 46 percent in the first six months of fiscal 2010. Our gross margin percentage was also higher in the second quarter and first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010. Our performance in gross margin percentage is primarily attributable to continued improvement in manufacturing efficiencies from higher capacity utilization and benefits from factory consolidation activities that were completed by the end of fiscal 2010. We continue to direct our research and development investments on high-value growth areas in analog markets and applications, with particular focus on power management and energy efficiency where our PowerWise® products enable systems that consume less power, extend battery life and generate less heat.

In reviewing our performance, we consider several key financial measures. When reviewing our net sales performance, we look at sales growth rates (both absolute and relative to competitors), new order rates (including turns orders, which are orders received with delivery requested in the same quarter), blended-average selling prices, sales of new products and market share. We gauge our operating income performance based on gross margin trends, product mix, blended-average selling prices, factory utilization rates and operating expenses relative to sales. We remain focused on growing our revenue and earnings per share over time while generating a consistently high return on invested capital by concentrating on operating income, working capital management, capital expenditures and cash management. We determine return on invested capital based on net operating income after tax divided by invested capital, which generally consists of total assets reduced by goodwill and non-interest bearing liabilities.

We continued with the dividend program in the second quarter of fiscal 2011, during which time we paid a total of $24.0 million in cash dividends. Through the first six months of fiscal 2011, we paid a total of $43.1 million in cash dividends. On December 9, 2010, we announced that our Board of Directors declared a cash dividend of $0.10 per outstanding share of common stock, which will be paid on January 10, 2011 to shareholders of record at the close of business on December 20, 2010.

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The following table and discussion provide an overview of our operating results for the second quarter and first six months of fiscal 2011 and 2010:

	Three Months Ended								Six Months Ended
(In Millions)	Nov. 28, 2010			% Change		Nov. 29, 2009			Nov. 28, 2010			% Change		Nov. 29, 2009
Net sales	$	390.4		13.3	%	$	344.6		$	802.4		21.8	%	$	659.0
Gross margin	$	268.9				$	225.0		$	560.9				$	417.2
As a % of net sales	68.9		%			65.3		%	69.9		%			63.3		%
Operating income	$	123.5				$	74.0		$	264.3				$	124.2
As a % of net sales	31.6		%			21.5		%	32.9		%			18.8		%
Net income	$	83.5				$	47.0		$	172.3				$	76.8
As a % of net sales	21.4		%			13.6		%	21.5		%			11.7		%

Net income in the second quarter of fiscal 2011 includes a net charge of $6.5 million for severance and restructuring expenses, of which $5.6 million relates to activities associated with the closures of our manufacturing facilities in Texas and China announced in March 2009 and $0.9 million relates to exit activities associated with the realignment of certain product line business units announced in May 2010 (see Note 6 to the Condensed Consolidated Financial Statements). Including these amounts, net income for the first six months of fiscal 2011 includes a total net charge of $16.3 million for severance and restructuring expenses (see Note 6 to the Condensed Consolidated Financial Statements) and a total of $0.1 million for other operating expense, net (see Note 4 to the Condensed Consolidated Financial Statements). These charges and credits are all pre-tax amounts.

Net income in the second quarter of fiscal 2010 included a net charge of $6.3 million for severance and restructuring expenses related to the planned closures of our manufacturing facilities in Texas and China announced in March 2009, which was offset by a $5.6 million recovery of severance expenses related to the workforce reductions announced in fiscal 2009. The fiscal 2010 second quarter net income also included $1.1 million of other operating expense, net (see Note 4 to the Condensed Consolidated Financial Statements). Including these amounts, net income for the first six months of fiscal 2010 included a total net charge of $6.4 million for severance and restructuring expenses and a total of $0.9 million for other operating income, net (see Note 4 to the Condensed Consolidated Financial Statements). These charges and credits are all pre-tax amounts.

Share-based Compensation Expense

Our operating results include the recognition of share-based compensation expense, which totaled $16.3 million in the second quarter of fiscal 2011 compared to $21.1 million in the second quarter of fiscal 2010 and $30.1 million in the first six months of fiscal 2011 compared to $37.2 million in the first six months of fiscal 2010. Our share-based compensation expense in the second quarter and the first six months of fiscal 2011 was lower compared to the second quarter and the first six months of fiscal 2010 since we granted fewer stock options as part of our annual equity award grant in fiscal 2011, which are subject to accelerated expense associated with employees who are eligible for retirement or expected to be eligible for retirement during the nominal vesting period. Instead, a greater portion of restricted stock units were granted in fiscal 2011. No accelerated expense is associated with restricted stock units since retirement eligible employees do not receive accelerated vesting privileges. In addition, share-based compensation expense in fiscal 2010 contained an incremental $1.7 million charge related to the stock option exchange that occurred in the second quarter of fiscal 2010. No such expense is included in fiscal 2011.

For further information and a description of our share-based compensation plans, see Note 1 and Note 14 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended May 30, 2010. Also see Note 1 and Note 12 to the Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding our share-based compensation plans and the effect of share-based compensation expense for the second quarter and first six months of fiscal 2011 and 2010.

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Net Sales

	Three Months Ended								Six Months Ended
(In Millions)	Nov. 28, 2010			% Change		Nov. 29, 2009			Nov. 28, 2010			% Change		Nov. 29, 2009
Analog segment	$	365.4		13.9	%	$	320.7		$	751.0		22.6	%	$	612.6
As a % of net sales	93.6		%			93.1		%	93.6		%			93.0		%
All others	$	25.0		4.6	%	$	23.9		$	51.4		10.8	%	$	46.4
As a % of net sales	6.4		%			6.9		%	6.4		%			7.0		%
Total net sales	$	390.4				$	344.6		$	802.4				$	659.0
	100.0		%			100.0		%	100.0		%			100.0		%

In the first quarter of fiscal 2011, we combined the activities of the former key market segments group together with certain emerging product lines that were previously a part of two separate power business units to form a new business unit called the strategic growth markets business unit. This business unit concentrates its efforts on selected high-growth emerging markets that represent promising opportunities to the company. The remaining product lines that were previously a part of the former performance power products business unit were combined with the remaining product lines within the infrastructure power business unit and renamed the power products business unit. As a result, the Analog segment now comprises five operating segments which include the high-speed products, mobile devices power, power products, precision signal path and strategic growth markets business units. The information for the sec ond quarter and the first six months of fiscal 2010 has been reclassified to present segment information based on the structure of our operating segments in the second quarter and the first six months of fiscal 2011.

Analog segment sales were higher in the second quarter and first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010 due to higher overall demand from customers as the global economy continued to slowly recover. Sales of products for the industrial and the communications and networking markets were major contributors to the growth in sales for the second quarter and first six months of fiscal 2011. Unit shipments in our Analog segment were higher by 11 percent in the second quarter and 23 percent in the first six months of fiscal 2011 compared to the volume shipped in the second quarter and first six months of fiscal 2010.  Our blended-average selling prices in our Analog segment were higher by 3 percent in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010, but were essentially flat in the first six months compared to t he first six months of fiscal 2010.

For purposes of the following discussion, we have combined as one group the business units whose products fundamentally entail power management technology (mobile devices power, power products and strategic growth markets). Net sales from this group increased by 13 percent in the second quarter and 19 percent in the first six months of fiscal 2011 compared to the corresponding periods of fiscal 2010. Net sales from our high speed products and precision signal path business units in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010 increased by 26 percent and 7 percent, respectively.  For the first six months of fiscal 2011 compared to the first six months of fiscal 2010, net sales from our high-speed products and precision signal path business units increased by 36 percent and 20 percent, respectively.

For other operating business units included in “All Others,” the increase in sales for the second quarter and first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010 was attributable to a higher volume of sales from non-analog business units that are no longer a part of our core focus. The sales from these non-analog business units also include sales generated from foundry and contract service arrangements.

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Gross Margin

	Three Months Ended								Six Months Ended
(In Millions)	Nov. 28, 2010			% Change		Nov. 29, 2009			Nov. 28, 2010			% Change		Nov. 29, 2009
Net sales	$	390.4		13.3	%	$	344.6		$	802.4		21.8	%	$	659.0
Cost of sales	121.5			1.6	%	119.6			241.5			(0.1	)%	241.8
Gross margin	$	268.9				$	225.0		$	560.9				$	417.2
As a % of net sales	68.9		%			65.3		%	69.9		%			63.3		%

Our gross margin percentage was higher in the second quarter and the first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010 due to an increase in factory utilization caused by higher sales and the favorable effect of cost savings from the closures of our manufacturing facilities in both Texas and China, where we ceased production activity during fiscal 2010. Wafer fabrication capacity utilization (based on wafer starts) was 70 percent in the first six months of fiscal 2011 compared to 46 percent in the first six months of fiscal 2010. Product mix within our portfolio of analog products had a positive influence on our performance in gross margin percentage. Blended-average selling prices in our Analog segment were up 3 percent in the second quarter, but were essentially flat in the first six months of fiscal 2011 compared to the corresponding periods of fiscal 2010. Gr oss margin includes share-based compensation expense of $1.9 million in the second quarter and $3.8 million in the first six months of fiscal 2011 compared to fiscal 2010 which was $2.6 million in the second quarter and $5.8 million in the first six months.

Research and Development

	Three Months Ended								Six Months Ended
(In Millions)	Nov. 28, 2010			% Change		Nov. 29, 2009			Nov. 28, 2010			% Change		Nov. 29, 2009
Research and development	$	69.5		1.9	%	$	68.2		$	140.8		5.5	%	$	133.5
As a % of net sales	17.8		%			19.8		%	17.5		%			20.3		%

The increase in research and development expenses in the second quarter and the first six months of fiscal 2011 compared to the second quarter and the first six months of fiscal 2010 primarily reflects higher payroll expenses. Share-based compensation expense included in R&D expense was $4.4 million in the second quarter and $8.3 million in the first six months of fiscal 2011 compared to fiscal 2010 which was $5.1 million in the second quarter and $9.5 million in the first six months. We are continuing to concentrate our research and development spending on analog products and underlying analog capabilities with particular emphasis on circuits that enable greater energy efficiency. We continue to invest in the development of new analog products that can serve applications in a wide variety of end markets such as portable electronics, industrial, communications infrastructure, renewable energy products and m edical applications. Because of our focus on markets and applications that require or involve greater energy efficiency, a significant portion of our research and development is directed at power management technology.

Selling, General and Administrative

	Three Months Ended								Six Months Ended
(In Millions)	Nov. 28, 2010			% Change		Nov. 29, 2009			Nov. 28, 2010			% Change		Nov. 29, 2009
Selling, general and administrative	$	69.4		(14.3	)%	$	81.0		$	139.4		(9.5	)%	$	154.0
As a % of net sales	17.8		%			23.5		%	17.4		%			23.4		%

We record a charge or credit in selling, general and administrative expenses for the change in the liability associated with the employee deferred compensation plan due to an increase or decrease in the market value of the employees’ corresponding investment assets for the plan. See the discussion of the corresponding gain and loss on the employees’ investment asset described in the paragraph, “Other Non-Operating Income, Net.” SG&A expenses in both the second quarter and first six months of fiscal 2011 includes a charge of $3.7 million due to an increase in the liability related to market fluctuation in the plan’s investment assets in the second quarter. There was no such change in the liability in the first quarter. SG&A expenses

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in fiscal 2010 included charges of $2.0 million in the second quarter and $5.3 million in the first six months due to increases in the liability related to market fluctuation in the plan’s investment. We believe that excluding the charges or credits relating to changes in the liability associated with the employee deferred compensation plan liability provides a better understanding of the changes in our SG&A expenses that are related to our core operating performance during the relevant fiscal periods. Excluding these amounts, SG&A expenses for fiscal 2011 decreased compared to fiscal 2010 by $13.3 million, or 17 percent, in the second quarter and $13.0 million, or 9 percent, in the first six months.  The decrease in SG&A expense reflects lower payroll and employee compensation expenses and lower share-based compensation expense. Share-based compensation expense included in SG&A expens es was $10.0 million in the second quarter and $18.0 million in the first six months of fiscal 2011 compared to fiscal 2010 which was $13.4 million in the second quarter and $21.9 million in the first six months.

Interest Income

	Three Months Ended				Six Months Ended
(In Millions)	Nov. 28, 2010		Nov. 29, 2009		Nov. 28, 2010		Nov. 29, 2009
Interest income	$	0.6	$	0.4	$	1.2	$	0.9

The increase in interest income in the second quarter and first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010 is due to higher average cash balances.

Interest Expense

	Three Months Ended				Six Months Ended
(In Millions)	Nov. 28, 2010		Nov. 29, 2009		Nov. 28, 2010		Nov. 29, 2009
Interest expense	$	13.8	$	15.0	$	26.8	$	30.7

The decrease in interest expense in the second quarter and first six months of fiscal 2011 compared to the second quarter and first six months of fiscal 2010 is due to lower interest rates and a lower overall debt balance.

Other Non-Operating Income, Net

	Three Months Ended					Six Months Ended
(In Millions)	Nov. 28, 2010			Nov. 29, 2009		Nov. 28, 2010			Nov. 29, 2009
Gain on investments	$	3.7		$	2.0	$	3.7		$	5.3
Net gain (loss) on derivative instrument in fair value hedge	0.3			—		(2.1		)	—
Loss on liquidation of interest rate swap	$	(0.7	)	$	—	$	(0.7	)	$	—
Total other non-operating income, net	$	3.3		$	2.0	$	0.9		$	5.3

The gain (loss) on derivative instrument in fair value hedge is a non-cash credit or charge and is related to fair market valuation changes associated with our interest rate swap agreement related to the $250 million senior unsecured notes due April 2015 (see Note 3 to the Condensed Consolidated Financial Statements). In the second quarter and first six months of fiscal 2011, we also recognized a loss in connection with the liquidation of the interest rate swap in September 2010 (see Note 3 to the Condensed Consolidated Financial Statements).

The gain on investments in the second quarter and the first six months of fiscal 2011 and fiscal 2010 reflects an increase in the market value of the investment assets held in a trust for the employee deferred compensation plan. As described in the paragraph, “Selling, General and Administrative,” SG&A expenses for the second quarter and the first six months of fiscal 2011 and 2010 include an offsetting charge pertaining to the corresponding liability.

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Income Tax Expense

	Three Months Ended						Six Months Ended
(In Millions)	Nov. 28, 2010			Nov. 29, 2009			Nov. 28, 2010			Nov. 29, 2009
Income tax expense	$	30.1		$	14.4		$	67.3		$	22.9
Effective tax rate	26.5		%	23.5		%	28.1		%	23.0		%

The effective tax rate was higher in the second quarter and first six months of fiscal 2011 compared to the first quarter and first six months of fiscal 2010 primarily because of higher U.S. income in fiscal 2011 along with discrete tax benefits in the fiscal 2010 rate that did not recur in fiscal 2011. In addition, the effective tax rate in the second quarter and first six months of fiscal 2011 was higher due to the expiration of the federal research and development tax credit in fiscal 2010.

In December 2010, the United States Congress passed the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010,” which extends most expiring tax policies for two years. The legislation includes over 70 different provisions in the tax extension bill, including an extension of the federal research and development tax credit through December 31, 2011. As a result, we expect that our income tax provision for the third quarter of fiscal 2011 will include a discrete tax benefit which will reduce our effective tax rate for the quarter.

Liquidity and Capital Resources

	Six Months Ended
(In Millions)	Nov. 28, 2010			Nov. 29, 2009
Net cash provided by operating activities	$	167.7		$	159.6
Net cash used in investing activities	(49.9		)	(20.3		)
Net cash used in financing activities	(266.0		)	(17.9		)
Net change in cash and cash equivalents	$	(148.2	)	$	121.4

The primary factors contributing to the changes in cash and cash equivalents in the first six months of fiscal 2011 and 2010 are described below:

During the first six months of 2011, cash provided by operating activities was generated by net income adjusted for non-cash items (primarily depreciation and amortization, and share-based compensation expense), which was partially offset by the negative effect from changes in working capital components. The negative effect in changes in working capital components was primarily caused by an increase in inventories, combined with a decrease in accounts payable and accrued liabilities. In the first six months of fiscal 2010, cash from operating activities was generated by net income, adjusted for non-cash items (primarily depreciation and amortization, and share-based compensation expense), combined with the positive effect from changes in working capital components.

The primary use of cash for investing activities in the first six months of fiscal 2011 was the purchase of property, plant and equipment of $46.9 million, mainly representing the purchase of machinery and equipment. The primary use of cash for investing activities in the first six months of fiscal 2010 was the purchase of property, plant and equipment of $14.4 million, mainly representing the purchase of machinery and equipment, combined with a net payment of $4.8 million associated with our acquisition of Energy Recommerce Inc. in October 2009.

The primary use of cash for financing activities in the first six months of fiscal 2011 was for the repayment of our $250 million senior notes due June 2010. We also used cash to make payments of $43.1 million for cash dividends and $3.4 million for software license obligations. This amount was partially offset by proceeds of $17.2 million from the issuance of common stock under employee benefit plans and $13.0 million from the liquidation of the interest rate swap agreement related to our $250 million senior unsecured notes due April 2015. The primary use of cash for financing activities in the first six months of fiscal 2010 was for payments of $37.6 million for cash dividends, $31.2 million of principal payments on the bank term loan and $3.2 million for software license obligations. This amount was partially offset by proceeds of $56.7 million from the issuance of common stock und er employee benefit plans.

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On December 9, 2010, we announced that our Board of Directors declared a cash dividend of $0.10 per outstanding share of common stock, which will be paid on January 10, 2011 to shareholders of record at the close of business on December 20, 2010.

We anticipate that our fiscal 2011 capital expenditures will be higher than the fiscal 2010 amount. We will continue to manage the level of capital expenditures relative to sales levels, capacity utilization and industry business conditions. Although we ceased production activity in both China and Texas by the end of fiscal 2010, activities associated with the closures of those manufacturing facilities, including ongoing expenses for the maintenance of those facilities until they are sold, are expected to continue during fiscal 2011. We also expect exit activities associated with the realignment of certain product line business units to continue into early calendar 2011. Our existing cash and investment balances, together with existing lines of credit and cash generated by operations, should be sufficient to finance the capital investments currently planned for fiscal 2011 and payments related to the plant closures and product line business unit realignment. However, we cannot assure you that if economic conditions were to substantially deteriorate within the next year, we would have adequate financial resources to meet our business requirements.

Our cash and investment balances are dependent in part on continued collection of customer receivables and the ability to sell inventories. Although we have not experienced major problems with our customer receivables, future declines in overall economic conditions could lead to deterioration in the quality of customer receivables in the future. Since we no longer hold investments with maturities greater than 90 days, we did not experience any major declines in our cash equivalents or marketable investments as a result of the downturn in the financial markets. However, major declines in financial markets could cause reductions in our cash equivalents and marketable investments in the future.

Outlook

Our shipments in the second quarter of fiscal 2011 were lower than in the preceding quarter since new orders decreased in total by 24 percent. Distributors reduced their order rates as lead times shortened and product availability improved in general throughout the supply chain. We also saw some backlog adjustments from selected mobile phone customers. Approximately half of the decrease in new orders was caused by lower turns orders, which are orders received with delivery requested in the same quarter. The remainder of the decline affected our backlog. As a result, our opening 13-week backlog entering the third quarter of fiscal 2011 is lower than at the start of the second quarter of fiscal 2011. We expect seasonally lower build activity by our OEM customers after the holiday season, especially those in the wireless handset and other consumer driven markets. Shipments to distributors are also expected to be l ower since we anticipate distributors will experience seasonally lower resales and reduce their inventory levels.

Considering all factors, including those described above and our historical seasonality patterns, we provided guidance for net sales in the third quarter of fiscal 2011 to be down approximately 8 to 12 percent sequentially from the level achieved in our recently completed second quarter of fiscal 2011.  However, if backlog orders are cancelled or if the currently anticipated level of turns orders is less than expected, we may not be able to achieve this level of sales.  In view of the lower demand anticipated in the third quarter of fiscal 2011, we expect our wafer fabrication utilization to run below 60 percent in the third quarter. We anticipate that our gross margin percentage for the third quarter of fiscal 2011 will range from 65 to 67 percent depending on the sales level that we achieve. However, if there are declines in factory utilization or changes in the expected sales level or product mix, our gross margin percentage could be unfavorably affected.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended May 30, 2010 and to the subheading “Financial Market Risks” under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 37 of our Annual Report on Form 10-K for the fiscal year ended May 30, 2010 and to Note 1, “Summary of Significant Accounting Policies,” and Note 3, “Financial Instruments,” in the Notes to the Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended May 30, 2010. There have been no material changes in market risk from the information reported in these sections.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are intended to ensure that the information required to be disclosed in our Exchange Act filings is properly and timely recorded, processed, summarized and reported. In designing and evaluating our disclosure controls and procedures, we recognize that management necessarily is required to apply its judgment in evaluating controls and procedures. Since we have investments in certain unconsolidated entities which we do not control or manage, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain for our consolidated subsidiaries.

We have a disclosure controls committee comprised of key individuals from a variety of disciplines in the company that are involved in the disclosure and reporting process. The committee meets regularly to ensure the timeliness, accuracy and completeness of the information required to be disclosed in our filings containing financial statements. As required by SEC Rule 13a-15(b), the committee reviewed this Form 10-Q and also met with the Chief Executive Officer and the Chief Financial Officer to review this Form 10-Q and the required disclosures and the effectiveness of the design and operation of our disclosure controls and procedures. The committee performed an evaluation, under the supervision of and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure c ontrols and procedures as of the end of the fiscal quarter covered by this report. Based on that evaluation and their supervision of and participation in the process, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

Changes in Internal Controls

As part of our efforts to ensure compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we conduct a continual review of our internal control over financial reporting. The review is an ongoing process and it is possible that we may institute additional or new internal controls over financial reporting as a result of the review. During the second quarter of fiscal 2011, we did not make any changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Further, because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree on compliance with policies or procedures.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We currently are a party to various legal proceedings, including those noted below. While we believe that the ultimate outcome of these various proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position or results of operations, litigation is always subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include money damages or an injunction prohibiting us from selling one or more products. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on the net income of the period in which the ruling occurs, and future periods.

Tax Matters

The Internal Revenue Service is currently examining our federal tax returns for fiscal 2007 through 2009, as well as our amended federal tax returns for fiscal 2005 and 2006. Several U.S. state taxing jurisdictions are examining our state tax returns for fiscal 2001 through 2005. During fiscal 2010, the state of California closed its audits of fiscal years up through fiscal 2000, which resulted in an immaterial adjustment. Internationally, tax authorities from several foreign jurisdictions are also examining our foreign tax returns. We believe we have made adequate tax payments and/or accrued adequate amounts such that the outcome of these audits will have no material adverse effect on our financial statements.

Environmental Matters

We have been named to the National Priorities List (Superfund) for our Santa Clara, California site and we have completed a remedial investigation/feasibility study with the Regional Water Quality Control Board (RWQCB), which is acting as agent for the EPA. We have agreed in principle with the RWQCB on a site remediation plan, and we are conducting remediation and cleanup efforts at the site. In addition to the Santa Clara site, we have been designated from time to time as a potentially responsible party by international, federal and state agencies for certain environmental sites with which we may have had direct or indirect involvement. These designations are made regardless of the extent of our involvement. These claims are in various stages of administrative or judicial proceedings and include demands for recovery of past governmental costs and for future investigations and remedial actions. In many cases, t he dollar amounts of the claims have not been specified and the claims have been asserted against a number of other entities for the same cost recovery or other relief as is sought from us. We have also retained responsibility for environmental matters connected with businesses we sold in fiscal 1996 and 1997, but we are not currently involved in any legal proceedings relating to those liabilities.

Other

In May 2008, eTool Development, Inc. and eTool Patent Holdings Corporation (collectively eTool) brought suit in the U.S. District Court for the Eastern District of Texas alleging that our WEBENCH® online design tools infringe an eTool patent and seeking an injunction and unspecified amounts of monetary damages (trebled because of the alleged willful infringement), attorneys’ fees and costs. In December 2008, eTool amended the complaint and counterclaims to include our SOLUTIONS online tool in its allegations of infringement of the eTool patent. We filed an answer to the amended complaint and counterclaims for declaratory judgment of non-infringement and invalidity of the patent. On February 27, 2009, the Court held a scheduling conference setting a claim construction hearing for August 2011 and a jury trial for January 2012. eTool served its infringement contentions in Ma rch 2009 and we served our invalidity contentions in May 2009. Both parties exchanged initial disclosures on May 29, 2009. The discovery phase of the case is now open and ongoing. In February 2010, we filed our inter partes reexamination petition with the United States Patent and Trademark Office (PTO), seeking a determination that the ‘919 patent is invalid. On March 15, 2010, the PTO issued a communication granting our inter partes reexamination petition. The inter partes proceeding is ongoing. On June 8, 2010, eTool filed its second amended complaint removing the infringement allegations against our SOLUTIONS online tool. We answered eTool’s second amended complaint on June 25, 2010. We intend to contest the case through all available means.

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ITEM 1A. RISK FACTORS

A description of the risk factors associated with our business is set forth below. We review and update our risk factors each quarter. The description set forth below includes any changes to and supersedes the description of risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 30, 2010. The risks described below are not the only ones facing us. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business operations, results or financial condition.

You should read the following risk factors in conjunction with the factors discussed elsewhere in this and our other filings with the SEC and in materials incorporated by reference in these filings. These risk factors are intended to highlight certain factors that may affect our financial condition and results of operations and are not meant to be an exhaustive discussion of risks that apply to companies like National with broad international operations. Like other companies, we are susceptible to macroeconomic downturns in the United States or abroad that may affect the general economic climate and our performance and the performance of our customers. Similarly, the price of our stock is subject to volatility due to fluctuations in general market conditions, differences in our results of operations from estimates and projections generated by the investment community, and other factors be yond our control.

RISK FACTORS RELATING TO GENERAL BUSINESS CONDITIONS

Significant deterioration in the global economy has reduced demand for our products, and our business has been and may continue to be adversely affected.

As a result of the credit market crisis and other macro-economic challenges affecting the economy of the United States and other parts of the world, customers have modified, delayed and cancelled plans to purchase our products. Consequently, we experienced a significant reduction in order rates during fiscal 2009. Although near-term market conditions have shown some improvement since then, our order rates have not returned to pre-crisis levels as business conditions have fluctuated. Global economic conditions remain uncertain, and it is possible that current conditions could remain or worsen.

A large portion of our revenues is dependent on the wireless handset market.

The wireless handset market (including smart phones) is a significant source of our overall sales. Global economic difficulties have affected the sales of handsets and have adversely affected our revenues and profitability. This environment may continue even though we continue to develop new products to address new features and functionality in handsets. The worldwide handset market is large and future trends and other variables are difficult to predict. As a consumer-driven market, changes in the economy that adversely affect consumer demand for wireless handsets will impact demand for our products and adversely affect our business and operating results.

Conditions inherent in the semiconductor industry may cause periodic fluctuations in our operating results.

Rapid technological change and frequent introduction of new technology leading to more complex and integrated products characterize the semiconductor industry. The result is a cyclical environment with potentially short product life cycles, characterized by significant and rapid increases and decreases in product demand. Substantial capital and R&D investment are required to support products and manufacturing processes in the semiconductor industry, which amplify the effect of this cyclicality. As a result of this environment, we may experience rapid and significant fluctuations in our operating results. Market or other shifts in our product mix toward or away from higher margin products, including analog products, or reductions in our product margins may also have a significant impact on our operating results.

Our business will be harmed if we are unable to compete successfully in our markets.

Competition in the semiconductor industry is intense. Our major competitors include Analog Devices, Intersil Corporation, Linear Technology, Maxim Integrated Products and Texas Instruments. In some cases, we may also compete with our customers. Competition is based on design and quality of products, product performance, price and service, with the relative importance of these factors varying among products, markets and customers. We cannot assure you that we will be able to compete successfully in the future against existing or new competitors or that our operating results will not be adversely affected by increased competition.

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RISK FACTORS RELATING TO INTERNATIONAL OPERATIONS

We operate in the global marketplace and face risks associated with worldwide operations.

During the first six months of fiscal 2011, approximately 76 percent of our sales were derived from customers in international markets. We expect that international sales will continue to account for a significant majority of our total revenue in future years. We have manufacturing facilities outside the United States in Scotland and Malaysia. We are subject to the economic and political risks inherent in international operations, including the risks associated with ongoing uncertainties and political and economic instability in many countries around the world. In addition, the management of global operations subjects us to risks associated with legal and regulatory requirements, trade balance issues, currency controls, differences in local business and cultural factors, fluctuations in interest and currency exchange rates, and difficulties in staffing and managing foreign operations.

Global disruptions and events could adversely affect our financial performance and operating results.

Terrorist activities worldwide and hostilities in and between nation states, including the continuing hostilities and violence in Iraq and Afghanistan and the threat of future hostilities involving the United States and other countries, may cause uncertainty and instability in the overall state of the global economy or in the industries in which we operate. We have no assurance that the consequences from these events will not disrupt our operations in either the United States or other regions of the world. Significant destabilization of relations between the United States and other countries where we operate or between the countries where we operate and other countries could result in restrictions and prohibitions in the countries where we operate. Continued increases in oil prices, as well as spreading subprime mortgage failures, could also affect our operations. Pandemic illnesses that spread globally a nd/or substantial natural disasters, as well as geopolitical events, may also affect our future costs, operating capabilities and revenues.

We have significant manufacturing operations in Malaysia and, as a result, are subject to risks.

We have significant assembly and test facilities in Melaka, Malaysia. We may be adversely affected by laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters.  We cannot assure you that we will be able to maintain compliance with all of these laws and regulations, that new, stricter laws or regulations will not be imposed or that interpretations of existing regulations will not be changed, each of which would require additional expenditures or result in other adverse effects. Changes in the political environment or government policies could result in laws or regulations that impact us adversely. A significant destabilization of relations between the United States and Malaysia or with either of these countries and other countries could result in restrictions or prohibitions on our operations in that c ountry.

We are subject to fluctuations in the exchange rate of the U.S. dollar and foreign currencies.

While we transact business primarily in U.S. dollars, and most of our revenues are denominated in U.S. dollars, a portion of our costs and revenues is denominated in other currencies, such as the euro, the Japanese yen, pound sterling and certain other Asian currencies. As a result, changes in the exchange rates of these or any other applicable currencies to the U.S. dollar will affect our net sales, costs of goods sold and operating margins. We have a program to hedge our exposure to currency rate fluctuations, but our hedging program may not be fully effective in preventing foreign exchange losses.

We are subject to export restrictions and laws affecting trade and investments.

As a global company headquartered in the United States, we are subject to U.S. laws and regulations that limit and restrict the export of some of our products and related product information. Compliance with these laws has limited our operations and sales in the past and could significantly limit them in the future. We maintain a compliance program but there are risks of noncompliance exposing us to significant legal liabilities. We must also comply with export restrictions and laws imposed by other countries affecting trade and investments which may conflict with the laws and regulations in the United States or other countries in which we do business. There is a risk that these restrictions and laws could significantly restrict our operations in the future.

RISK FACTORS RELATING TO SALES AND OPERATIONS

Our increased focus on revenue growth could adversely impact margins over time.

Our current priority is to grow revenues at an annual rate greater than the rate of growth we have achieved in recent fiscal years. During those recent fiscal years our rate of revenue growth was consistently below that of our competitors, as we directed more of our efforts on maintaining and increasing our profit margins.  By focusing on our relationship with our

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customers and delivering exceptional value to our customers we hope to increase sales while retaining our overall profitability.  It is possible, however, that elevating our priority on increasing sales could come at the expense of gross margin. If a decrease in gross margin is not offset by sufficient increased revenue it would adversely affect our overall profitability. In addition, we may not achieve increased revenue growth rates.

Our performance depends on the availability and cost of raw materials, utilities, critical manufacturing equipment and third-party manufacturing services.

Our manufacturing processes and critical manufacturing equipment require that certain key raw materials and utilities be available. Limited or delayed access to or increases in the cost of these items, or the inability to implement new manufacturing technologies or install manufacturing equipment on a timely basis, could adversely affect our results of operations. We subcontract a portion of our wafer fabrication and assembly and testing of our integrated circuits. We depend on a limited number of third parties, most of whom are located outside of the United States, to perform these subcontracted functions. We do not have long-term contracts with all of these third parties. Reliance on these third parties involves risks, including possible shortages of capacity in periods of high demand. We have had difficulties in the past with supplies and subcontractors and could experience them in the future, includin g as a result of weak global economic conditions.

A substantial portion of our sales are made to distributors and the termination of an agreement with one or more distributors could result in a negative impact on our business.

In the first six months of fiscal 2011, our distributors accounted for approximately 70 percent of our sales, which includes approximately 10 percent of sales made through dairitens (fulfillment service providers) in Japan under local business practices. Two of our distributors together accounted for 36 percent of total sales. Distributors typically sell products from several of our competitors along with our products. A significant reduction of effort to sell our products, the termination of our relationship with one or more distributors or distributor cash flow problems or other financial difficulties could reduce our access to certain end-customers and adversely impact our ability to sell our products. The termination of the distributor relationship agreement with a specific distributor could also result in the return of our inventory held by the distributor.

Our profit margins may vary over time.

Our profit margins may be adversely affected by a number of factors, including decreases in our shipment volume, reductions in, or obsolescence of our inventory, and shifts in our product mix or strategy. Because we own most of our manufacturing capacity, a significant portion of our operating costs is fixed, including costs associated with depreciation expense. In general, these costs do not decline proportionally with reductions in customer demand or utilization of our manufacturing capacity, nor do they increase proportionally as volume increases. Failure to maintain utilization rates of our manufacturing facilities or maintain the fixed costs associated with these facilities at current levels will result in higher average unit costs and lower gross margins.

We make forecasts of customer demand that may be inaccurate.

Our ability to match inventory and production mix with the product mix needed to fill current orders and orders to be delivered in any given quarter may affect our ability to meet that quarter’s revenue forecast. To be able to accommodate customer requests for shorter shipment lead times, we manufacture product based on customer forecasts. These forecasts are based on multiple assumptions. While we believe our relationships with our customers, combined with our understanding of the end markets we serve, provide us with the ability to make reliable forecasts, if we inaccurately forecast customer demand, it could result in inadequate, excess or obsolete inventory that would reduce our profit margins.

We are subject to warranty claims, product recalls and product liability.

We could be subject to warranty or product liability claims that could lead to significant expenses as we defend such claims or pay damage awards. In the event of a warranty claim, we may also incur costs if we compensate the affected customer. We maintain product liability insurance, but there is no guarantee that such insurance will be available or adequate to protect against all such claims. We may incur costs and expenses relating to a recall of one of our customers’ products containing one of our devices. Any future costs or payments made in connection with warranty claims or product recalls could materially affect our results of operations and financial condition in future periods.

We may be harmed by natural disasters and other disruptions.

Our worldwide operations could be subject to natural disasters and other disruptions. Our corporate headquarters are located near major earthquake fault lines in California. In the event of a major earthquake, or other natural or manmade disaster, we could experience loss of life of our employees, destruction of facilities or other business interruptions. The operations of our

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suppliers could also be subject to natural disasters and other disruptions, which could cause shortages and price increases in various essential materials. We use third party freight firms for nearly all of our shipments from vendors and from our wafer manufacturing facilities to assembly and test sites and for shipments to customers of our final product. This includes ground, sea and air freight. Any significant disruption of our freight shipments globally or in certain parts of the world, particularly where our operations are concentrated, would materially affect our operations. We maintain property and business interruption insurance, but there is no guarantee that such insurance will be available or adequate to protect against all costs associated with such disasters and disruptions.

We may incur losses in connection with the sale of, or we may be unable to sell, our manufacturing facilities in China and Texas.

In March 2009, we announced the eventual closure of our wafer fabrication facility in Texas and our assembly and test plant in China. We have since ceased production activity in these two facilities. We are actively engaged in locating buyers to purchase each of these manufacturing facilities and the machinery and equipment located in these facilities. In selling these properties, we are faced with the inherent volatility in the industrial real estate market, which is a function of the supply and demand for industrial properties in the micro-markets where our facilities are located. Although we believe we will be able to sell these facilities in the current fiscal year, it may take longer than we currently expect. If we must incur additional costs to maintain the facilities over a longer time frame than we currently expect, if we are forced to accept a lower price than we originally estimated, or if we are unable to locate a buyer for either or both of these facilities, our operating results will be negatively affected.

We may be subject to information technology system failures, network disruptions and breaches in data security.

Information technology system failures, network disruptions and breaches of data security could disrupt our operations by causing delays or cancellation of customer orders, impeding the manufacture or shipment of products, preventing the processing of transactions and reporting of financial results. They could also result in the unintentional disclosure of confidential information about the company or with respect to our customers and employees. While management has taken steps to address these concerns by implementing sophisticated network security and internal control measures, there can be no assurance that a system failure or data security breach will not have a material adverse effect on our financial condition and operating results.

We may experience delays in implementing a new enterprise resource planning system.

We recently began a significant initiative to transform National’s mainframe application landscape with a large scale enterprise resource planning (ERP) implementation intended to reduce the risk associated with our existing mainframe systems, simplify our complex information technology landscape to reduce cost of ownership and increase flexibility for evolving business needs. This program will introduce risks to our business operations. For example, implementation of a new ERP system will require significant investment, re-engineering of many processes used to run our business, and the attention of many employees who would otherwise be focused on other aspects of our business. The design and implementation of the new ERP system could also take longer than anticipated, which could result in delays in our ability to realize any anticipated benefits of the new ERP system, as well as additional costs an d disruption to our business, and could have a material adverse effect on our cash flows, results of operations and financial condition.

RISK FACTORS RELATING TO R&D, INTELLECTUAL PROPERTY AND LITIGATION

We may experience delays in introducing new products or market acceptance of new products may be below our expectations.

Rapidly changing technologies and industry standards, along with frequent new product introductions, characterize the industries in which our primary customers operate. As our customers evolve and introduce new products, our success depends on our ability to anticipate and adapt to these changes in a timely and cost-effective manner by developing and introducing into the market new products that meet the needs of our customers. We are also directing efforts to develop new and different types of products to serve emerging mega trends such as energy efficiency. We believe that continued focused investment in research and development, especially the timely development, introduction and market acceptance of new products, is a key factor to successful growth and the ability to achieve strong financial performance. Successful development and introduction of these new products are critical to our ability to main tain a competitive position in the marketplace. We cannot assure you, however, that we will be successful in timely developing and introducing successful new products demanded by the market, or in achieving anticipated revenues from new products, and a failure to bring new products to market or achieve market success with them may harm our operating results. We also cannot assure you that products that may be developed in the future by our competitors will not render our products obsolete or non-competitive.

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Our products are dependent on the use of intellectual property that we need to protect.

We rely on patents, trade secrets, trademarks, mask works and copyrights to protect our products and technologies, and have a program to file applications for and obtain patents, trademarks, mask works and copyrights in the United States and in selected foreign countries where we believe filing for such protection is appropriate. Effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for by us in some countries. Some of our products and technologies are not covered by any patent or patent application. In addition, we cannot assure you that:

·the patents owned by us or numerous other patents which third parties license to us will not be invalidated, circumvented, challenged or licensed to other companies; or

·any of our pending or future patent applications will be issued within the scope of the claims sought by us, if at all; or

·our products will not be held to infringe patents of others.

We also seek to protect our proprietary technologies, including technologies that may not be patented or patentable, in part by confidentiality agreements and, if applicable, inventors’ rights agreements with our collaborators, advisors, employees and consultants. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that our collaborators will not assert rights to intellectual property arising out of our research collaborations. In addition, we may not be able to enforce these agreements globally. Some of our technologies have been licensed on a non-exclusive basis from other companies, which may license such technologies to others, including our competitors. If necessary or desirable, we may seek licenses under patents or intellectual property rights claimed by others. However, we cannot assure you that we will obtain such licenses or that the terms of any offered licenses will be acceptable to us. The failure to obtain a license from a third party for technologies we use could cause us to incur substantial liabilities and to suspend the manufacture or shipment of products or our use of processes requiring the technologies.

The protection of our intellectual property is essential in preventing unauthorized third parties from copying or otherwise obtaining and using our technologies. Despite our efforts, we cannot assure you that we will be able to adequately prevent misappropriation or improper use of our protected technologies.

We are subject to litigation risks.

All industries, including the semiconductor industry, are subject to legal claims. We are involved in a variety of routine legal matters that arise in the normal course of business. Further discussion of certain specific material legal proceedings in which we are involved is contained in Note 15 to the Condensed Consolidated Financial Statements. We believe it is unlikely that the final outcome of these legal claims will have a material adverse effect on our consolidated financial position or results of operations. However, litigation is inherently uncertain and unpredictable. An unfavorable resolution of any particular legal claim or proceeding could have a material adverse effect on our consolidated financial position or results of operations.

RISK FACTORS RELATED TO OUR DEBT

Increased leverage may harm our financial condition and results of operations.

Our total long term debt at November 28, 2010 was $1.0 billion and it will have important effects on our future operations, including, without limitation:

·we will have additional cash requirements in order to support the payment of principal and interest on our outstanding indebtedness;

·increases in our outstanding indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure;

·our ability to obtain additional financing for working capital, capital expenditures, general corporate and other purposes may be limited; and

·our flexibility in planning for, or reacting to, changes in our business and our industry may be limited.

Our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which is subject to general economic conditions, industry cycles and financial, business and other factors affecting our consolidated operations, many of which are beyond our control. In addition, under our multicurrency credit agreement with a bank, we are required to comply with certain restrictive covenants, conditions, and default provisions that require the maintenance of certain financial ratios. If we are unable to generate sufficient cash flow from operations in the future to

43

service our debt or maintain compliance with the financial covenants of our multicurrency credit agreement due to current economic conditions or otherwise, we may take certain actions which require us to, among other things:

·seek additional financing in the debt or equity markets;

·refinance, retire or restructure all or a portion of our indebtedness;

·sell selected assets;

·reduce or delay planned capital expenditures; or

·reduce or delay planned operating expenditures.

Such measures might not be sufficient to enable us to service our debt. In addition, any such financing, refinancing or sale of assets might not be available on economically favorable terms, if at all, particularly if our credit rating is not strong.

Difficulties in the credit markets may limit our ability to refinance our debt as it becomes due.

We cannot assure you that we will be able to refinance our debt as it becomes due. The cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Continued turbulence in the U.S. and international markets and economies may adversely affect the liquidity and financial conditions of issuers.

RISK FACTORS RELATING TO PERSONNEL AND MERGER AND ACQUISITION ACTIVITY

We may not be able to attract or retain employees with skills necessary to remain competitive in our industry.

Our continued success depends in part on the recruitment and retention of skilled personnel, including technical, marketing, management and staff personnel. Experienced personnel in the semiconductor industry, particularly in our targeted analog areas, are in high demand and competition for their skills is intense. We cannot assure you that we will be able to successfully recruit and retain the key personnel we require.

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

We have made and will continue to consider making strategic business investments, alliances and acquisitions we consider necessary to gain access to key technologies that we believe will augment our existing technical capability and support our business model objectives. Acquisitions and investments involve risks and uncertainties that may unfavorably impact our future financial performance. We may not be able to integrate and develop the technologies we acquire as expected. If the technology is not developed in a timely manner, we may be unsuccessful in penetrating target markets. With any acquisition there are risks that future operating results may be unfavorably affected by acquisition related costs and incremental R&D spending.

RISK FACTORS RELATING TO TAX AND ENVIRONMENTAL REGULATIONS

We may be affected by higher than expected tax rates or exposure to additional income tax liabilities.

As a global company, our effective tax rate is dependent upon the geographic composition of worldwide earnings and tax regulations governing each region. We are subject to income taxes in both the United States and various foreign jurisdictions, and complex analyses and significant judgment are required to determine worldwide tax liabilities. From time to time, we have received notices of tax assessments in various jurisdictions where we operate. We may receive future notices of assessments and the amounts of these assessments or our failure to favorably resolve such assessments may have a material adverse effect on our financial condition or results of operations.

We have significant amounts of deferred tax assets. The recognition of deferred tax assets is reduced by a valuation allowance if it is more likely than not that the tax benefits associated with the deferred tax benefits will not be realized. If we are unable to generate sufficient future taxable income in certain jurisdictions, or if there is a significant change in the enacted tax rates or the time period within which the underlying temporary differences become taxable or deductible, we could be required to increase the valuation allowances against our deferred tax assets, which would cause an increase in our effective tax rate. Proposals and discussions in Congress and the Executive branch for new U.S. tax legislation could, if adopted, adversely affect our effective tax rate. A significant increase in our effective tax rate could have a material adverse effect on our financial conditi on or results of operations.

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We were granted a tax holiday by the Malaysian government that is effective for a ten-year period that began in our fiscal 2010. Such tax holiday is contingent upon meeting certain minimum requirements either on an annual basis or over specified periods of time ranging from 5 to 7 years. These requirements relate to capital expenditures levels, statutory revenue realization and the maintenance of a skilled workforce in Malaysia. If we are unable to meet these requirements, our income in Malaysia would be subject to taxation by the Malaysian government and this would result in increasing our effective tax rate.

We are subject to many environmental laws and regulations.

Increasingly stringent environmental regulations restrict the amount and types of materials that can be released from our operations into the environment. While the cost of compliance with environmental laws has not had a material adverse effect on our results of operations historically, compliance with these and any future regulations could require significant capital investments in pollution control equipment or changes in the way we make our products. In addition, because we use hazardous and other regulated materials in our manufacturing processes, we are subject to risks of liabilities and claims, regardless of fault, resulting from accidental releases, including personal injury claims and civil and criminal fines. The following should also be considered:

·we currently are remediating past contamination at some of our sites;

·we have been identified as a potentially responsible party at a number of Superfund sites where we (or our predecessors) disposed of wastes in the past; and

·significant regulatory and public attention on the impact of semiconductor operations on the environment may result in more stringent regulations, further increasing our costs.

For more information on environmental matters, see Note 15 to the Condensed Consolidated Financial Statements.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)During the second quarter of fiscal 2011, we did not make any unregistered sales of our equity securities.

(b)The following table summarizes our purchases of our common stock during the second quarter of fiscal 2011:

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
Month # 1:
August 30, 2010 - September 29, 2010	1,573	$	12.21	—	$	127 million
Month # 2:
September 30, 2010 - October 29, 2010	1,151	$	13.04	—	$	127 million
Month # 3:
October 30, 2010- November 28, 2010	121,781	$	13.30	—	$	127 million
Total	124,505			—

(1)  Represents 122,489 shares that were reacquired through the withholding of shares to pay employee tax obligations upon the vesting of restricted stock and 2,016 shares purchased by the rabbi trust utilized by our Deferred Compensation Plan, which permits participants to direct investment of their accounts in our common stock in accordance with their instructions.

(2) No purchases were made under our $500 million stock repurchase program announced in June 2007. As of November 28, 2010, $127 million of the $500 million stock repurchase program remains available for future stock repurchases. We do not have any plans to terminate the program prior to its completion, and there is no expiration date for this repurchase program.

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ITEM 6.  EXHIBITS

(a)	Exhibits
10.1	Twelfth Amendment to Credit Agreement (Multicurrency) dated as of October 25, 2010 by and between National Semiconductor Corporation and Bank of America, N.A.
10.2	Third Amended and Restated Credit Agreement dated as of August 22, 1995 as amended and restated as of November 17, 2006 by and between National Semiconductor Corporation and Bank of America, N.A.
10.3	First Amendment to Credit Agreement dated as of October 25, 2010 by and between National Semiconductor Corporation and Bank of America, N.A.
31.1	Rule 13a-14 (a) /15d-14 (a) Certifications.
32.1	Section 1350 Certifications.
101.1	Interactive Data File.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NATIONAL SEMICONDUCTOR CORPORATION
Date: January 4, 2011	/s/ Jamie E. Samath
	Jamie E. Samath Vice President and Corporate Controller Signing on behalf of the registrant and as principal accounting officer

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EX-10.1

Exhibit 10.1

EXECUTION VERSION

TWELFTH AMENDMENT TO CREDIT AGREEMENT

THIS TWELFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of October 25, 2010, is entered into by and between NATIONAL SEMICONDUCTOR CORPORATION, a Delaware corporation (the “Company”), and BANK OF AMERICA, N.A. (the “Bank”).

RECITALS

A.The Company and the Bank are parties to a Credit Agreement (Multicurrency), dated as of October 30, 2000, as amended by that certain First Amendment to Credit Agreement dated as of October 29, 2001, that certain Second Amendment to Credit Agreement dated as of October 28, 2002, that certain Third Amendment to Credit Agreement dated as of October 14, 2003, that certain Fourth Amendment to Credit Agreement dated as of March 19, 2004, that certain Fifth Amendment to Credit Agreement dated as of October 20, 2004, that certain Sixth Amendment to Credit Agreement dated as of October 24, 2005, that certain Seventh Amendment to Credit Agreement dated as of October 24, 2006, that certain Eighth Ame ndment to Credit Agreement dated as of June 26, 2007, that certain Ninth Amendment to Credit Agreement dated as of October 10, 2007, that certain Tenth Amendment to Credit Agreement dated as of October 2, 2008 and that certain Eleventh Amendment to Credit Agreement dated as of October 26, 2009 (as so amended, the “Credit Agreement”), pursuant to which the Bank has extended certain credit facilities to the Company and the Guaranteed Subsidiaries.

B.The Company has requested that the Bank agree to certain amendments of the Credit Agreement and the Guaranty.

C.The Bank is willing to amend the Credit Agreement and Guaranty, subject to the terms and conditions of this Amendment.

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Defined Terms.  Unless otherwise defined herein, capitalized terms used herein shall have the meanings, if any, assigned to them in the Credit Agreement.

2.Amendments to Credit Agreement.

(a)Section 1.01 of the Credit Agreement shall be amended at the following definitions by amending and restating each such definition to read in its entirety as follows:

“Applicable Margin” means (i) with respect to Base Rate Loans, 1.25% per annum, and (ii) with respect to Offshore Rate Loans, 2.25% per annum.

“Commitment” means Ten Million Dollars ($10,000,000), or the Equivalent Amount thereof, as such amount may be reduced from time to time pursuant to Section 2.08.

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“Revolving Termination Date” means October 26, 2011, or if such date is not a Business Day, the last Business Day prior to such date.

(b)Section 1.01 of the Credit Agreement shall be further amended by adding the definitions below in appropriate alphabetical order:

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

“Capital Lease”  means, as applied to any Person, any lease of any property by that Person as lessee which, in accordance with GAAP, is required to be accounted for as a capital lease on the balance sheet of that Person

“Consolidated EBITDA” means, for any period, for the Company and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income, without duplication: (i) consolidated interest charges for such period, (ii) the provision for federal, state, local and foreign income taxes payable by the Company and its Subsidiaries for such period, (iii) the amount of depreciation and amortization expense for such period, (iv) charges incurred during such period under Financial Accounting Standard 123R which do not represent a cash item in such period or any future period, and (v) other non-recurring expenses of the Company and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or a ny future period, and minus (b) the following to the extent included in calculating such Consolidated Net Income: (i) federal, state, local and foreign income tax credits of the Company and its Subsidiaries for such period and (ii) all non-cash items increasing Consolidated Net Income for such period; provided, however, that if there has occurred an acquisition during the relevant period, Consolidated EBITDA shall be calculated on a pro forma basis as if such acquisition occurred on the first day of the applicable period.

“Consolidated Funded Indebtedness” means, as of any date of determination, for the Company and its Subsidiaries on a consolidated basis, without duplication, the sum of (a) the outstanding principal amount of all obligations for borrowed money, whether current or long-term (including Obligations to the extent constituting such obligations) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all purchase money Indebtedness; (c) all direct obligations arising under letters of credit, whether drawn or undrawn (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (d) all obligations in respect of the deferred purchase price of

2

property or services (other than trade accounts payable in the ordinary course of business); (e) Attributable Indebtedness; (f) without duplication, all Guaranty Obligations with respect to outstanding Indebtedness of the types specified in clauses (a) through (e) above of Persons other than the Company or any Subsidiary; and (g) all Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Company or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Company or such Subsidiary.

“Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently ended.

“Synthetic Lease Obligation” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing arrangement whereby the arrangement is considered borrowed money indebtedness for tax purposes but is classified as an operating lease and does not otherwise appear on a balance sheet under GAAP.

“Twelfth Amendment Date” means October 25, 2010.

(c)Section 5.01(g) of the Credit Agreement shall be amended by deleting the phrase “May 31, 2009” and inserting in its place “May 31, 2010”.

(d)Section 5.01(n) of the Credit Agreement shall be amended (i) by deleting the phrase “May 31, 2009” each time it appears and inserting in its place “May 31, 2010” and (ii) by deleting the phrase “August 30, 2009” and inserting in its place “August 30, 2010”.

(e)Section 5.01(o) of the Credit Agreement shall be amended (i) by deleting the phrase “August 30, 2009” and inserting in its place “August 30, 2010”.

(f)Section 6.02(a) of the Credit Agreement shall be amended and restated as follows:

(a)Consolidated Total Leverage Ratio.  The Company shall maintain as of the end of each fiscal quarter from and after the Twelfth Amendment Date on a consolidated basis a Consolidated Total Leverage Ratio not exceeding 3.00 to 1:00.

(g)The Credit Agreement shall be further amended by deleting Exhibit B thereof and replacing it with the Exhibit B attached hereto as Annex I.

3.Representations and Warranties.  The Company hereby represents and warrants to the Bank as follows:

3

(a)No Default or Event of Default has occurred and is continuing.

(b)The execution, delivery and performance by the Company of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable.  The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, without defense, counterclaim or offset.

(c)All representations and warranties of the Company contained in the Credit Agreement are true and correct.

(d)The Company is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Bank or any other Person.

4.Effective Date.  This Amendment will become effective on and as of the date (the “Effective Date”) that each of the following conditions precedent is satisfied:

(a)The Bank has received from the Company a duly executed original (or, if elected by the Bank, an executed facsimile copy) of this Amendment.

(b)The Bank has received from the Company a certificate of the Secretary or Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to execute and deliver this Amendment and attaching:

(i)(A) the articles or certificate of incorporation of the Company as in effect on the date hereof, certified by the Secretary or Assistant Secretary of the Company as being in full force and effect on the date hereof and (B) the bylaws of the Company as in effect on the date hereof, certified by the Secretary or Assistant Secretary of the Company as being in full force and effect on the date hereof; provided, however, that in lieu of attaching such certified articles or certificate of incorporation and bylaws, the Secretary or Assistant Secretary may instead certify that there has been no change in such organizational documents since October 26, 2009; and

(ii)a copy of resolutions passed by the board of directors of the Company, certified by the Secretary or Assistant Secretary of the Company as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment;

(c)The Bank has received from the Company a good standing certificate for the Company from the Secretary of State of its state of incorporation as of a recent date

(d)The Company shall have delivered to the Bank a certificate signed by an appropriate officer of the Company in form and substance satisfactory to the Bank to the effect that: (i) all representations and warranties contained herein are true and correct as of the Effective Date and (ii) as of the Effective Date, no Default or Event of Default has occurred and is existing.

4

(e)The Bank has received from the Company such other approvals, opinions or documents as the Bank may reasonably request.

5.Designation of Additional Guaranteed Subsidiaries; Amendment of Guaranty.

(a)The Company hereby designates National Semiconductor Germany AG, a German corporation (the “New Borrower”), as a “Guaranteed Subsidiary” for all purposes of the Credit Agreement and the Guaranty.  The Bank hereby consents to such designation.  The Company, without limiting the terms of the Guaranty, hereby agrees and confirms that all obligations and liabilities of the New Borrower (or any other Borrower) in respect of any Letter of Credit shall constitute “Guaranteed Obligations” for all purposes of the Guaranty.

(b)The Bank and the Company hereby agree that the Guaranty shall be amended by deleting Exhibit A thereof and replacing it with the Exhibit A attached hereto as Annex II.

6.Reservation of Rights.  The Company acknowledges and agrees that the execution and delivery by the Bank of this Amendment shall not be deemed to create a course of dealing or otherwise obligate the Bank to execute similar amendments under the same or similar circumstances in the future.

7.Miscellaneous.

(a)Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement are and shall remain in full force and effect and all references therein to such Credit Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment.  This Amendment shall be deemed incorporated into, and a part of, the Credit Agreement.

(b)This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment.

(c)This Amendment shall be governed by and construed in accordance with the law of the State of California.

(d)This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Bank of a facsimile transmitted document purportedly bearing the signature of the Company shall bind the Company with the same force and effect as the delivery of a hard copy original.  Any failure by the Bank to rec eive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Bank, and the Bank is hereby authorized to make sufficient photocopies thereof to assemble complete counterparty documents.

5

(e)This Amendment, together with the Credit Agreement, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein.  This Amendment supersedes all prior drafts and communications with respect thereto. This Amendment may not be amended except in accordance with the provisions of Section 8.03 of the Credit Agreement.

(f)If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Credit Agreement, respectively.

(g)The Company covenants to pay to or reimburse the Bank, upon demand, for all costs and expenses (including allocated costs of in-house counsel) incurred in connection with the development, preparation, negotiation, execution and delivery of this Amendment, including without limitation appraisal, audit, search and filing fees incurred in connection therewith.

[Remainder of this page is intentionally left blank.  Signature page to follow.]

6

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written.

NATIONAL SEMICONDUCTOR CORPORATION
By:	/s/ Robert E. Debarr
	Name:	Robert E. Debarr
	Title:	Treasurer
By:	/s/ Lewis Chew
	Name:	Lewis Chew
	Title:	CFO
BANK OF AMERICA, N.A.
By:	/s/ Christina Felsing
	Name:	Christina Felsing
	Title:	Vice President

SIGNATURE PAGE TO

TWELFTH AMENDMENT TO CREDIT AGREEMENT

ANNEX I

EXHIBIT B

to the Credit Agreement

FORM OF COMPLIANCE CERTIFICATE

Bank of America, N.A.

600 Montgomery Street

San Francisco, CA 94111

Attn:Christina Felsing

Vice President

Re:National Semiconductor Corporation

Ladies and Gentlemen:

This Compliance Certificate is made and delivered pursuant to the Credit Agreement (Multicurrency) dated as of October 30, 2000 (as amended, modified, renewed or extended from time to time, the “Credit Agreement”) between National Semiconductor Corporation (the “Company”) and Bank of America, N.A. (the “Bank”), and reference is made thereto for full particulars of the matters described therein.  All capitalized terms used in this Compliance Certificate and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.  This Compliance Certificate relates to the accounting period ending                 ,             .

I hereby certify as of the date hereof that I am the [treasurer] of the Company, and that, as such, I am authorized to execute and deliver this Certificate to the Bank on the behalf of the Company and its consolidated Subsidiaries, and that:

[Use the following paragraph if this Certificate is delivered in connection with the quarterly financial statements required by Section 6.01(a)(i) of the Credit Agreement.]

1.Attached hereto are true and correct copies of the consolidated balance sheet of the Company and its Subsidiaries as of the end of the fiscal quarter ended                      and the related consolidated statements of income, shareholders’ equity and cash flows of the Company and its Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, which are complete and accurate in all material respects and fairly present the financial condition of the Company and the Subsidiaries as at such date and the results of operations of the Company and its Subsidiaries for the period ended on such date and have been prepared in accordance with GAAP consistently applied, subject to changes resulting from normal year-end audit adjustments and except for the absence of notes.

or

[Use the following paragraph if this Certificate is delivered in connection with the annual financial statements required by Section 6.01(a)(ii) of the Credit Agreement.]

B-1

1.Attached hereto are true and correct copies of the consolidated balance sheet of the Company and its Subsidiaries as of the end of the fiscal year ended                        and the related consolidated statements of income, shareholders’ equity and cash flows of the Company and its Subsidiaries for such fiscal year, prepared in accordance with GAAP consistently applied, all in reasonable detail and setting forth in comparative form the figures for the previous fiscal year, accompanied by the report of                   &nb sp; , which report is not qualified.

2.I have reviewed the terms of the Credit Agreement and I have made, or caused to be made under my supervision, a detailed review of the transactions and conditions of the Company and its Subsidiaries during the accounting period covered by the attached financial statements.

3.The information set forth on Schedule 1 hereto (and any additional schedules hereto setting forth further supporting detail) is true, accurate and complete as of the end of such accounting period.

4.The Company and its Subsidiaries, during such period, have observed, performed or satisfied all of the covenants and other agreements, and satisfied every condition in the Credit Agreement to be observed, performed or satisfied by the Company and its Subsidiaries.

5.The representations and warranties of the Company contained in Article V of the Credit Agreement are true and correct as though made on and as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they shall be true and correct as of such date).

I hereby further certify that (i) as of the date hereof no Default or Event of Default has occurred and is continuing, and (ii) on and as of the date hereof, there has occurred no Material Adverse Effect since May 31, 2010, except as may be set forth in a separate attachment hereto describing in detail the nature of each condition or event constituting an exception to the foregoing statements, the period during which it has existed and the action which the Company is taking or proposes to take with respect to each such condition or event.

IN WITNESS WHEREOF, the undersigned officer has signed this Compliance Certificate this              day of        ,         .

[Treasurer]

B-2

SCHEDULE 1

TO COMPLIANCE CERTIFICATE

Dated                       ,        

For the Fiscal Quarter ended                         ,         

			Actual	Required
1.	Section 6.02(b) Minimum Quick Ratio.
	A.	Consolidated Quick Assets	$
	B.	Consolidated Current Liabilities	$
	Quick Ratio (ratio of 1.A to 1.B)		to 1.0	For fiscal quarters ending prior to November 27, 2005, not less than 1.00 to 1.00
				For fiscal quarters ending on or after the November 27, 2005, not less than 1.25 to 1.00
2.	Section 6.02(a) Consolidated Total Leverage Ratio.
	A.	Consolidated Funded Indebtedness at statement date	$
	B.	Consolidated EBITDA for four consecutive fiscal quarters ending on above date (“Subject Period”)
	Consolidated Net Income for Subject Period:		$
	Plus consolidated interest charges for Subject Period:		$
	Plus provision for income taxes for Subject Period:		$
	Plus depreciation expenses for Subject Period:		$

S-1

Plus amortization expenses for Subject Period:	$
Plus Financial Accounting Standard 123R charges incurred for Subject Period not representing cash items in Subject Period or future period:	$
Plus non-cash reductions of Consolidated Net Income for Subject Period:	$
Plus income tax credits for Subject Period:	$
Plus non-cash additions to Consolidated Net Income for Subject Period:	$
Total Consolidated EBITDA	$
Consolidated Total Leverage Ratio (ratio of 2.A to 2.B)	to 1.0	Not exceeding 3.0 to 1.0

S-2

ANNEX II

EXHIBIT A

BORROWER LISTING

Name	State or Other Jurisdiction of Incorporation
Algorex Inc.	California
DigitalQuake, Inc.	California
innoCOMM Wireless	California
Mediamatics, Inc.	California
National Semiconductor International, Inc.	Delaware
National Semiconductor Netsales, Inc.	Delaware
National Semiconductor (Maine), Inc.	Delaware
National Semiconductor Malaysia LLC	Delaware
ASIC II Limited	Hawaii
National Semiconductor B.V. Corporation	Delaware
National Semiconductor Estonia Ou	Estonia
National Semiconductor Finland Oy	Finland
National Semiconductor France S.A.R.L.	France
National Semiconductor GmbH	Germany
National Semiconductor Germany AG	Germany
National Semiconductor (I.C.) Ltd.	Israel
National Semiconductor S.r.l.	Italy
National Semiconductor Aktiebolog	Sweden
National Semiconductor Sweden Aktiebolog	Sweden
National Semiconductor (U.K.) Ltd.	Great Britain
National Semiconductor (U.K.) Holdings Ltd.	Great Britain
National Semiconductor(U.K.) Pension Trust Company Ltd.	Great Britain
National Semiconductor Benelux B.V.	Netherlands
National Semiconductor B.V.	Netherlands
National Semiconductor International B.V.	Netherlands
Natsem India Designs Pvt. Ltd.	India
National Semiconductor Australia Pty. Ltd.	Australia
National Semiconductor Hong Kong Limited	Hong Kong
National Semiconductor (Far East) Limited	Hong Kong
National Semiconductor Hong Kong Sales Limited	Hong Kong
National Semiconductor Services Limited	Hong Kong
National Semiconductor Manufacturing Hong Kong Limited	Hong Kong
National Semiconductor International Hong Kong Limited	Hong Kong
National Semiconductor Manufacturing China Trust	Hong Kong
National Semiconductor Japan Ltd.	Japan
National Semiconductor Korea Limited	Korea
	[Initials]

A-1

Name	State or Other Jurisdiction of Incorporation
National Semiconductor Labuan Ltd.	Malaysia
National Semiconductor SDN. BHD.	Malaysia
National Semiconductor Technology SDN. BHD.	Malaysia
National Semiconductor Services Malaysia SDN BHD	Malaysia
Thrift Gate Marketing SDN BHD	Malaysia
National Semiconductor Pte. Ltd.	Singapore
National Semiconductor Asia Pacific Pte. Ltd.	Singapore
National Semiconductor Manufacturer Singapore Pte. Ltd.	Singapore
National Semiconductor Shanghai Limited	Peoples’ Republic of China
National Semiconductor Management Shanghai Ltd.	Peoples’ Republic of China
National Semiconductor (Suzhou) Ltd.	Peoples’ Republic of China
National Semiconductor Canada, Inc.	Canada
National Semiconductores do Brasil Ltda.	Brazil
National Semiconductores da America do Sul Ltd.	Brazil
Electronica NSC de Mexico, S.A. de C.V.	Mexico
National Semiconductor Investments, Ltd.	British Virgin Islands
National Semiconductor Investments II, Ltd.	British Virgin Islands
	[Initials]

A-2

EX-10.2

Exhibit 10.2

EXECUTION VERSION

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 22, 1995 as amended and restated as of November 17, 2006 (this “Agreement”), is made between NATIONAL SEMICONDUCTOR CORPORATION a Delaware corporation (the “Company”) and BANK OF AMERICA, N.A. successor by merger to Bank of America National Trust and Savings Association (the “Bank”).

WHEREAS, the Company and the Bank entered into that certain Credit Agreement dated as of August 22, 1995, as amended by the Waiver and First Amendment to Credit Agreement dated on or about December 12, 1995, as amended by the Second Amendment to Credit Agreement dated as of July 3, 1996, as amended by the Third Amendment to Credit Agreement dated as of September 30, 1996, as amended by the Fourth Amendment to Credit Agreement dated as of December 19, 1997, as amended and restated by that certain Amended and Restated Credit Agreement dated as of August 25, 1998, and as amended by the First Amendment to (the Amended and Restated) Credit Agreement dated as of August 25, 2001 and as further amended and restated as of August 25, 2004 (collectively, the “Credit Agreement” as so amended, restated or modified as of the da te hereof, the “Existing Agreement”).

WHEREAS, the Company and the Bank wish to extend the Termination Date of the Existing Agreement and to amend and restate the Existing Agreement;

NOW THEREFORE, the Company and the Bank agree to amend and restate the Existing Agreement as set forth in this Agreement, which completely amends, restates, and replaces the Existing Agreement, all upon the terms and provisions and subject to the conditions hereinafter set forth.  In consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:

ARTICLE I.

DEFINITIONS

1.01Certain Defined Terms.  Capitalized terms used in and not defined in this Agreement shall have the respective meanings ascribed in the Multicurrency Credit Agreement.  In addition to the terms defined elsewhere in this Agreement, the following terms have the following meanings:

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests, membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, (c) the power to elect, appoint, or cause the election or appointment of at least a majority of the members of the board of directors or similar governing body of such Person, or (d) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary) provided that the Company or its Subsidiary is the surviving entity.

1

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under Control with the Person specified.

“Agreement” means this Third Amended and Restated Credit Agreement.

“Attorney Costs” means and includes all reasonable fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel, provided that “Attorney Costs” shall mean and include all fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel if incurred by the Bank in connection with the enforcement or protection of its rights under this Agreement or any other Loan Document.

“Bank’s Payment Office” means the Bank’s office at 1850 Gateway Boulevard, Fourth Floor, Concord, California, or such other office of the Bank as the Bank may from time to time specify.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or San Francisco, California are authorized or required by law to close and, if the applicable Business Day relates to any Loan, means such a day on which dealings are carried on in the applicable offshore Yen interbank market.

“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) other than an employee benefit plan or related trust of the Company or of the Company and any Subsidiaries, of shares representing 50% or more of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Company; or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Company by Persons who were neither (i) individuals constituting the Company’s board of directors on the Closing Date (as defined therein) of the Multicurrency Credit Agreement, nor (ii) any subsequent di rector whose election by the board of directors or nomination for election by the Company’s stockholders was not approved by a vote of at least two-thirds of the directors then in office, which directors either were directors on the Closing Date (as defined therein) of the Multicurrency Credit Agreement or whose election or nomination for election was previously so approved.

“Closing Date” means the date on which all conditions precedent to the initial extension of credit under the Existing Agreement were satisfied or waived.

“Code” means the Internal Revenue Code of 1986.

“Commitment” has the meaning specified in Section 2.01.

2

“Contractual Obligations” means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

“Default” means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default.

“Dollars”, “dollars” or “$” means lawful money of the United States of America.

“Eligible Assignee” shall have the meaning provided in Section 9.10(f).

The “Equivalent Amount” of any currency in relation to another currency shall be calculated at the spot rate for the purchase of the first currency with the second currency as quoted by the Bank at approximately 8:00 a.m. in San Francisco, California on the date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Company, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Company or any E RISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Company or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Company or any ERISA Affiliate of any notice, concerning the imposition of withdrawal liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

3

“Event of Default” means any of the events or circumstances specified in Section 8.01.

“Existing Agreement” has the meaning specified in the first Whereas clause of this Agreement.

“Further Taxes” means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges (including, without limitation, net income taxes and franchise taxes), and all liabilities with respect thereto, imposed by any jurisdiction on account of amounts payable or paid pursuant to Section 3.01.

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid (excluding deferred compensation obligations owed to current and former directors, officers and employees), (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable, measured in accordance with GAAP, incurred in the ordinary course of business), (f) all Indebtedness of others secured by (o r for which the holder of such Indebtedness has an existing right, contingent or otherwise to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all capital lease obligations of such Person (the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP), (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, letters of guaranty and similar instruments supporting Indebtedness, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) all net obligations with respect to Hedging Agreements, and (1) all synthetic lease obligations (the monetary obligation of a Person under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations that

4

do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment)) and all obligations with respect to securitized assets, in each case whether contingent or otherwise. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Insolvency Proceeding” means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors or other, similar arrangement; in each case (a) and (b) under either U.S. federal, state or foreign law.

“Interest Payment Date” of a Loan means the last day of each calendar quarter.

“Loan” means an extension of credit by the Bank to the Company under Article II, made under the Existing Agreement and continued under this Agreement.

“Loan Documents” means this Agreement and all other documents delivered to the Bank in connection herewith.

“Long Term Fixed Rate” means 2.50% per annum.

“Margin Stock” means “margin stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System.

“Material Adverse Effect” means a material adverse change in, or a material adverse effect on any of (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Company or the Company and its Subsidiaries taken as a whole, (b) the ability of the Company to perform any of its obligations under any Loan Document to which it is party; (c) the legality, validity, binding effect or enforceability of any Loan Document.

“Material Indebtedness” means any Indebtedness or Contractual Obligation (other than in respect of Hedging Agreements) when due (whether by schedule maturity, requirement prepayment, acceleration, demand or otherwise) the outstanding amount of which at the time of such default is not less than $25,000,000 or the Equivalent Amount in other currencies.

“Multicurrency Credit Agreement” means the Credit Agreement (Multicurrency) dated as of October 30, 2000 between the Company and the Bank. References herein to the Multicurrency Credit Agreement shall mean such credit agreement as in effect from time to time, including at any time after any amendment thereto made in accordance with the terms thereof and if such credit agreement or the commitment to extend credit

5

thereunder shall have terminated or expired, shall mean such credit agreement as in effect immediately prior to such termination or expiration.

“Obligations” means all advances, debts, liabilities, obligations, covenants and duties arising under any Loan Document owing by the Company to the Bank or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising.

“Other Taxes” means any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan Documents.

“Pension Plan” means a pension plan, as defined in Section 3(2) of ERISA, subject to Title IV of ERISA, which the Company or any ERISA Affiliate sponsors or maintains, or to which the Company or any ERISA Affiliate makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan, as described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years; but excluding in all cases any Multiemployer Plan.  “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority.

“Reference Rate” shall have the meaning provided in Section 2.06(c).

“Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

“Solvent” means, as to any Person at any time, that (i) the fair value of the property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the United States Bankruptcy Code (11 U.S.C. §101 et seq.); (ii) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (iii) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (v) such Person is not engaged in business or a transaction, and is not about to engage in

6

business or a transaction, for which such Person’s property would constitute unreasonably small capital.

“Subsidiary” means any subsidiary of the Company.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date.

“Swap Termination Value” means, in respect of any one or more Hedging Agreements, after taking into account the effect of any legally enforceable netting agreement relating to any such Hedging Agreement, (a) for any date on or after the date any such Hedging Agreement has been closed out and the termination value determined in accordance therewith, such termination value, and (b) for any date prior to the date referenced in clause (a), the amount determined as the mark-to-market value for such Hedging Agreement, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Agreement (which may include the Bank).

“Taxes” means any and all present or future taxes, levies, assessments, imposts, duties, deductions, deposits, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Bank, taxes imposed on or measured by its net income by the jurisdiction (or any political subdivision thereof) under the laws of which the Bank is organized or maintains a lending office.

“Termination Date” means November 17, 2010.

“Third Restatement Date” means the date on which all conditions precedent set forth in Section 4.01 are satisfied or waived by the Bank.

“Unfriendly Acquisition” means any Acquisition that has not, at the time of the first public announcement of an offer relating thereto, been approved by the board of directors (or other legally recognized governing body) of the Person to be acquired.

“Unfunded Pension Liability” means, the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“Yen” means the lawful money of Japan.

1.02Other Definitional Provisions.

(a)Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto.  Terms (including uncapitalized terms) not otherwise defined herein

7

or in the Multicurrency Credit Agreement and that are defined in the California Uniform Commercial Code shall have the meanings therein described.

(b)Whenever any provision of the Multicurrency Credit Agreement is referred to or incorporated by reference into this Agreement (i) all related defined terms shall also be deemed incorporated herein by reference, and (ii) unless the context clearly otherwise requires, all references to the following terms shall have the following meaning:

(i)“this Agreement,” “herein,” “hereof,” “hereunder,” and words of similar meaning shall be deemed to be references to this Agreement.

(ii)“Credit Documents” or Credit Document” shall be deemed to be a reference to Loan Documents or Loan Document.

(iii)“Credits,” “Credit,” “Loans,” or “Loan” shall be deemed to be a reference to Loans or Loan, as the context may require.

(iv)“Notices,” “certificates” and other communications shall be deemed to be references to notices, certificates, and other communications under this Agreement and the Multicurrency Credit Agreement.

(v)“Agent”, “Banks”, “Bank” and “Majority Banks” shall be deemed references to the Bank.

1.03Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes”, and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof and hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement, (e) references to any statute or regulation includes all applicable regulations and all amendments or replacements thereto, and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including all securities, accounts and contract rights.  This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.  Unless otherwise expressly provided, any reference to any action of the Bank by way of consent, approval or waiver shall be deemed modified by the phrase “in its sole discretion.” This Agreement and the other Loan Documents are the result of negotiations among

8

and have been reviewed by counsel to the Bank and the Company, and are the products of such parties.  Accordingly, this Agreement and the other Loan Documents shall not be construed against the Bank merely because of its involvement in their preparation.

1.04Accounting Terms, GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Company notifies the Bank that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Bank requests an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.  References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of the Company.

ARTICLE II.

THE CREDIT

2.01Amount and Terms of Commitment.  The Bank, on the terms and conditions set forth herein, made loans in Yen to the Company (each such loan, a “Loan”) from time to time during the period from the Closing Date to September 30, 1995 in an aggregate amount of Yen 2,408,750,000 (the “Commitment”). Amounts borrowed as Loans which are repaid or prepaid by the Company may not be reborrowed.

2.02Loan Accounts.  The Loans made by the Bank were and shall be evidenced by one or more loan accounts or records maintained by the Bank in the ordinary course of business.  The loan accounts or records maintained by the Bank shall be rebuttable presumptive evidence of the amount of the Loans made by the Bank to the Company and the interest and payments thereon.  Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to the Loans.

2.03Conversion to Fixed Rate Loan.  On and as of the Third Restatement Date, all Loans outstanding on such date shall commence accruing interest on the full principal amount thereof at the Long Term Fixed Rate, and shall thereafter accrue interest at such rate until repaid, subject to the other terms and provisions hereof.  Such Loans shall thereafter comprise a single Loan, subject to repayment in accordance with the terms and provisions hereof.

2.04Optional Prepayments.  Subject to Section 3.04, the Company may, at any time or from time to time, upon not less than five Business Days’ irrevocable notice to the Bank, prepay the Loan in whole or in part, in Yen in a minimum amount which is the Equivalent Amount (determined as of the date the Bank receives the notice of prepayment) of $1,000,000 (or any whole multiple of $1,000,000 in excess thereof) in Yen.  Such notice of prepayment shall specify the date and amount of such prepayment.  The Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein,

9

together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.04.

2.05Repayment.  The Company shall repay the principal amount of the Loan on the Termination Date.

2.06Interest.

(a)From and after the Third Restatement Date, the Loan shall bear interest on its outstanding principal amount at a rate per annum equal to the Long Term Fixed Rate.

(b)Interest on the Loan shall be paid in arrears on each Interest Payment Date and on the Termination Date.  Interest shall also be paid on the date of any prepayment of Loans under Section 2.04 for the portion of the Loan so prepaid and upon payment (including prepayment) in full thereof and, during the existence of any Event of Default, interest shall be paid on demand.

(c)Notwithstanding subsection (a) of this Section, while any Event of Default exists or after acceleration, the Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of each outstanding Loan at a rate per annum which is the greater of (i) the sum of two percentage points plus the interest rates applicable to such Loan or (ii) the sum of two percentage points plus the Reference Rate. “Reference Rate” means the rate of interest in effect for such day as publicly announced from time to time by the Bank’s branches in Japan as the Bank’s “reference rate” for Yen loans. (The “reference rate” is a rat e set by the Bank based upon various factors including the Bank’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.) Any change in the reference rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change.

(d)Anything herein to the contrary notwithstanding, the obligations of the Company to the Bank hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by the Bank would be contrary to the provisions of any law applicable to the Bank limiting the highest rate of interest that may be lawfully contracted for, charged or received by the Bank, and in such event the Company shall pay the Bank interest at the highest rate permitted by applicable law.

2.07Computation of Fees and Interest.

(a)All computations of interest and fees shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year).  Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof.

(b)Each determination of an interest rate by the Bank shall be conclusive and binding on the Company in the absence of manifest error.

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2.08Payments by the Company.

(a)All payments to be made by the Company shall be made without set-off, recoupment, counterclaim, condition or deduction.  Except as otherwise expressly provided herein, all payments by the Company shall be made to the Bank at the Bank’s Payment Office and shall be made in Yen with respect to principal and interest and in Dollars in all other cases and in immediately available funds, no later than 10:00 a.m. (San Francisco, California time) on the dates specified herein.  Any payment received by the Bank later than 10:00 a.m. (San Francisco, California time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue.

(b)Whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01Taxes.

(a)Any and all payments by the Company to the Bank under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any and all present or future Taxes.

(b)In addition, the Company agrees to pay all Other Taxes.

(c)The Company shall indemnify and hold the Bank harmless for the full amount of Taxes, Other Taxes and Further Taxes in the amount that the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted.  Payment under this indemnification shall be made within thirty (30) days from the date the Bank makes written demand therefor,

(d)If the Company is required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable hereunder to the Bank, then:

(i)the sum payable shall be increased as may be necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 3.01) the Bank receives and retains an amount equal to the sum it would have received and retained had no such deductions or withholdings been made;

(ii)the Company shall make such deductions and withholdings;

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(iii)the Company shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable law; and

(iv)the Company shall also pay to the Bank at the time interest is paid, all additional amounts which the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such Taxes, Other Taxes or Further Taxes had not been imposed.

(e)Within thirty (30) days after the date of any payment by the Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to the Bank the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Bank.

3.02Illegality.

(a)If the Bank shall determine that (i) the introduction of any Requirement of Law or any change in or in the interpretation or administration thereof has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for the Bank to make or extend any Loan, or (ii) any order, judgment or decree of any Governmental Authority or arbitrator purports by its terms to enjoin or restrain the Bank from making or extending any Loan, then, on notice thereof by the Bank to the Company, the obligation of the Bank to make or extend such Loan shall be suspended until the Bank shall have notified the Company that the circumstances giving rise to such determination no longer exists.

(b)If the Bank shall determine that that it is unlawful to maintain any Loan, the Company shall prepay in full all such Loans then outstanding, together with interest accrued thereon, either on the next Interest Payment Date if the Bank may lawfully continue to maintain such Loans to such day or immediately, if the Bank may not lawfully continue to maintain such Loans, together with any amounts required to be paid in connection therewith pursuant to Section 3.04.

3.03Increased Costs and Reduction of Return.

(a)If the Bank shall determine that, due to either (i) the introduction of or any change (including any change by way of imposition of or increase in reserve requirements included in the Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to the Bank of agreeing to make or making, funding or maintaining any Loans, then the Company shall be liable for, and shall from time to time, upon demand therefor by the Bank, pay to the Bank, additional amounts as are sufficient to compensate it for such increased costs.

(b)If the Bank shall have determined that the introduction of any applicable law, rule, regulation or guideline regarding capital adequacy, or any change therein or any change in the interpretation or administration thereof by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or compliance by the Bank or any corporation controlling the Bank, with any request, guideline or directive regarding capital adequacy (whether or not having the force of law) of any such central bank or other authority,

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affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank, and the Bank (taking into consideration the Bank’s or such corporation’s policies with respect to capital adequacy and the Bank’s desired return on capital) determines that the amount of such capital is increased as a consequence of the Bank’s obligation under this Agreement, then, upon demand of the Bank, the Company shall immediately pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase.

3.04Prepayment Fee.  The Company shall pay a prepayment fee in connection with any prepayment of all or any portion of the Loan, as follows.

(a)The prepayment fee will be the sum of fees calculated separately for each Prepaid Installment, as follows:

(i)The Bank will first determine the amount of interest which would have accrued each month for the Prepaid Installment had it remained outstanding until the Termination Date, using the interest rate applicable to the Prepaid Installment under this Agreement.

(ii)The Bank will then subtract from each monthly interest amount determined in (i), above, the amount of interest which would accrue for that Prepaid Installment if it were reinvested from the date of prepayment through the Termination Date, using the Treasury Rate.

(iii)If (i) minus (ii) for the Prepaid Installment is greater than zero, the Bank will discount the monthly differences to the date of prepayment by the Treasury Rate.  The Bank will then add together all of the discounted monthly differences for the Prepaid Installment.

(b)The following definitions will apply to the calculation of the prepayment fee:

(i)“Prepaid Installment” means the amount of the prepaid principal.

(ii)“Treasury Rate” means the interest rate yield for U.S. Government Treasury Securities which the Bank determines could be obtained by reinvesting a specified Prepaid Installment in such securities from the date of prepayment through the Termination Date.  The Bank may adjust the Treasury Rate to reflect the compounding, accrual basis, or other costs of the prepaid amount.  Each of the rates is the Bank’s estimate only and the Bank is under no obligation to actually reinvest any prepayment.  The rates will be based on information from either the Telerate or Reuters information services, The Wall Street Journal, or other information sources the Bank deems appropriate.

3.05Certificates of Bank.  In connection with any claim for reimbursement or compensation pursuant to this Article III, the Bank will deliver to the Company a certificate setting forth in reasonable detail the amount owing to the Bank hereunder and such certificate shall be conclusive and binding on the Company in the absence of manifest error.

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3.06Survival.  The agreements and obligations of the Company in this Article III shall survive the payment of all other Obligations.

ARTICLE IV.

CONDITIONS PRECEDENT

4.01Conditions of Effectiveness of Agreement.  The effectiveness of this third amended and restated Agreement is subject to the condition that the Bank shall have received all of the following, in form and substance satisfactory to the Bank:

(a)Agreement.  This Agreement executed by each party hereto.

(b)Resolutions; Incumbency.

(i)Copies of the resolutions of the board of directors of the Company authorizing the transactions contemplated hereby, certified as of the Third Restatement Date by the Secretary or an Assistant Secretary of the Company; and

(ii)A certificate of the Secretary or Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Agreement, and all other Loan Documents to be delivered by it hereunder.

(c)Certificate.  A certificate signed by a Responsible Officer, dated as of the Third Restatement Date, stating that:

(i)The representations and warranties contained in Article V are true and correct on and as of such date, as though made on and as of such date;

(ii)No Default or Event of Default exists or would result from the execution and performance by the Company of this Agreement; and

(iii)Except as disclosed in the Company’s 10-K Form for fiscal 2006, there has occurred since May 28, 2006, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(d)Accrued Interest; Breakage.  Payment by the Company of (i) all accrued and outstanding interest on the Loans as of the Third Restatement Date, and (ii) any amount that would be payable under Section 3.04 of the Existing Agreement, assuming the conversion of the Loans pursuant to Section 2.03 hereof were a prepayment of such Loans on the Third Restatement Date.

(e)Fees and Expenses.  Payment by the Company of the reasonable fees and expenses of the Bank’s external counsel, to the extent invoiced on or before the Third Restatement Date.

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(f)Other Documents.  Such other approvals, opinions, documents or materials as the Bank may request.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Bank as of the Third Restatement Date that:

5.01The Multicurrency Credit Agreement.  All representations and warranties in Article V of the Multicurrency Credit Agreement are true and correct and no Default or Event of Default exists under this Agreement or the Multicurrency Agreement.  All references in such Article V to “this Agreement”, “Default” and “Event of Default” shall be deemed to include references to this Agreement, a Default, and an Event of Default under and as defined by this Agreement as well as references to Default and an Event of Default under and as defined by the Multicurrency Credit Agreement.

5.02Use of Proceeds.  The Loans and the proceeds thereof were used by the Company solely for the purposes set forth in and in compliance with Section 6.02.

5.03Regulated Entities.  Neither the Company nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.

ARTICLE VI.

COVENANTS

So long as any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Bank waives compliance in writing:

6.01The Multicurrency Credit Agreement.  The Company shall comply with all of its affirmative and negative covenants under Article VI of the Multicurrency Credit Agreement.  For purposes of this covenant, all references in said Article VI to “this Agreement”, “Default”, and “Event of Default” shall be deemed to include references to this Agreement, a Default, and an Event of Default under and as defined by this Agreement as well as references to a Default and an Event of Default under and as defined by the Multicurrency Credit Agreement.  The Company shall deliver to the Bank a copy of each notice, instrument, document, and other c ommunication (whether in writing or in another form) required to be delivered by the Company to the Agent and/or any Bank under the Multicurrency Credit Agreement, such delivery to occur concurrently with each delivery thereof under the Multicurrency Credit Agreement.

6.02Use of Proceeds.

(a)The Company shall use the Loans and the proceeds thereof solely for working capital, ordinary course operational and trade finance purposes and in compliance with any restrictions set forth in any other applicable Loan Documents.  No part of the proceeds of any Loan will be used, (a) whether directly or indirectly, and whether immediately, incidentally

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or ultimately, (i) to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock or to refund Indebtedness originally incurred for such purpose or (ii) for any purpose which entails a violation of, or which is inconsistent with, the provisions of the regulations of the Board of Governors of the Federal Reserve System, including, without limitation, Regulations G, T, U or X thereof, or (b) directly or through any Subsidiary, to finance any Unfriendly Acquisition.

ARTICLE VII.

[Reserved]

ARTICLE VIII.

EVENTS OF DEFAULT

8.01Event of Default.  Any of the following events shall constitute an “Event of Default”:

(a)Non-Payment.  The Company shall fail to pay as and when due any amount of principal payable hereunder or pursuant to any other Loan Document when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; or

(b)Non-Payment of Interest, Fees and Other Amounts.  The Company shall fail to pay any interest on any of the Loans or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days; or

(c)Representation or Warranty.  Any representation or warranty made or deemed made by or on behalf of the Company or any Subsidiary in or in connection with any Loan Document or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any Loan Document, shall prove to have been incorrect or misleading in any material respect when made or deemed made; or

(d)Breach of Certain Covenants, Conditions and Obligations.  The Company shall fail to observe or perform any covenant, condition or agreement contained in Section 6.01(b)(i), 6.01(b)(ii), subsections (a) or (j) of Section 6.03 or Section 6.04 of the Multicurrency Credit Agreement. or

(e)Other Defaults.  The Company shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document (other than those specified in clauses (a), (b), (c), or (d) of this Section), and such failure shall continue unremedied for a period of thirty (30) days after the earlier of (i) the date upon which the Company knew or should have known of such failure or (ii) the date upon which written notice thereof has been given to the Company by the Bank; or

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(f)Cross-Default.  The Company (i) fails to make any payment in respect of any Indebtedness or Contractual Obligation (other than in respect of Hedging Agreements) when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) the outstanding amount of which at the time of such default is not less than $25,000,000 or the Equivalent Amount in other currencies (“Material Indebtedness”); or (ii) there occurs under any Hedging Agreement an Early Termination Date resulting from (1) any event of default under such Hedging Agreement as to which the Company or any of its Subsidiaries is the Defaulting Party or (2)  ;any Termination Event as to which the Company or any of its Subsidiaries is an Affected Party, and, in either event, the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $25,000,000 (for purposes of this clause (f), the terms “Early Termination Date,” “Defaulting Party,” “Termination Event,” and “Affected Party” shall have the meanings assigned to them in the relevant Hedging Agreement, it being understood that such definitions contemplate Hedging Agreements documented on International Swaps and Derivatives Association (“ISDA”) standard forms; if such Hedging Agreement is not documented on an ISDA standard form, such terms shall be given similar or analogous meanings as used in such non-ISDA standard agreements); or

(g)Other Cross-Defaults.  The Company or any Subsidiary shall default in any obligation or any other event shall occur or condition exist under any agreement or instrument relating to any Material Indebtedness if the effect of such default or condition is to cause, or to permit the holders or beneficiaries of such Material Indebtedness to cause, with the giving of notice if required, such Material Indebtedness to be declared to be due and payable prior to its stated maturity; or

(h)Involuntary Proceedings.  Any involuntary Insolvency Proceeding is commenced or filed against the Company or any of its Subsidiaries or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company’s or any of its Subsidiaries’ assets and any such proceedings or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; or

(i)Bankruptcy or Insolvency.  The Company or any of its Subsidiaries (i) voluntarily ceases to conduct its business in the ordinary course substantially as it is conducted on the date hereof, (ii) commences any Insolvency Proceeding or files any petition or answer in any Insolvency Proceeding; (iii) acquiesces in the appointment of a receiver, trustee, custodian or liquidator for itself or a substantial portion of its property, assets or business or effects a plan or other arrangement with its creditors; (iv) admits the material allegations of a petition filed against it in any Insolvency Proceeding; or (v) takes any action to effectuate any of the fo regoing; or

(j)Solvency.  The Company or any Subsidiary ceases to be Solvent or shall become unable, admit in writing its inability or fail generally, to pay its debts as they become due subject to applicable grace periods, if any, whether at stated maturity or otherwise; or

(k)Monetary Judgments.  One or more judgments, orders or decrees shall be entered against the Company or any of its Subsidiaries, or the Company or any of its Subsidiaries shall enter into any settlement agreement or arrangement in lieu of any of the foregoing,

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involving (A) in the aggregate (as to the Company and its Subsidiaries together) an aggregate liability (not fully paid by insurance or fully covered by insurance pursuant to a policy as to which the insurer is not an Affiliate of the Company and has not contested coverage) of $5,000,000 or more and the same shall remain unvacated, unstayed and unsatisfied for a period of thirty (30) days after the entry thereof; or (B) in the aggregate (as to the Company and its Subsidiaries together) an aggregate liability (not fully paid by or fully covered by insurance as to which the insurer is not an Affiliate of the Company and has not contested coverage) of $60,000,000 or more, and the same shall remain unvacated and unstayed pending appeal for a period of ten (10) days after the entry thereof; or

(l)Non-Monetary Judgments.  Any nonmonetary judgment, order or decree shall be rendered against the Company or any of its Subsidiaries which does or could be expected to cause a Material Adverse Effect, and either (A) enforcement proceedings shall have been commenced by any Person upon such judgment or order or (B) there shall be any period of ten (10) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(m)ERISA.  (i) An ERISA Event occurs that, in the opinion of the Bank, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans at any time exceeds five percent (5%) of the Company’s consolidated net worth; or (iii) the Company or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of five percent (5%) of the Com pany’s consolidated net worth; or

(n)Change in Control.  A Change in Control shall occur; or

(o)Adverse Change.  A Material Adverse Effect shall occur; or

(p)Licenses and Permits.  Any Governmental Agency shall revoke or fail to renew or extend any license or permit that is reasonably material to the conduct of the business of the Company or any of its Subsidiaries if, in the opinion of the Bank, the consequence thereof, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect; or

(q)Multicurrency Credit Agreement.  There occurs an event which is (or, after termination thereof, would have been) an Event of Default under the Multicurrency Credit Agreement, which event is not an Event of Default under any of the foregoing subsections; or

(r)Loan Documents.  Any of the Loan Documents shall for any reason be revoked or invalidated, or otherwise not be in full force and effect, or the Company or any of its Subsidiaries shall contest or deny in any manner its liabilities thereunder or the validity or enforceability thereof.

8.02Remedies.  If any Event of Default occurs, the Bank may:

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(a)Declare its commitment to make or continue Loans to be terminated, whereupon such commitment shall be terminated;

(b)Declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and

(c)Exercise all rights and remedies available to it under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsection (h) or (i) of Section 8.01 (in the case of subsection (h) upon the expiration of the 60-day period mentioned therein), the obligation of the Bank to make and/or continue Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Bank.

8.03Rights Not Exclusive.  The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

ARTICLE IX.

MISCELLANEOUS

9.01Obligations of the Bank.  The Bank shall not be obligated to issue any further credits, or in any other manner to extend any other financial accommodation to the Company or any of its Subsidiaries, other than as set forth in a writing signed by the Bank.

9.02[Reserved.]

9.03Amendments and Waivers.  No amendment or waiver of any provision of this Agreement or any other Loan Document and no consent with respect to any departure by the Company therefrom, shall be effective unless the same shall be in writing and signed by the Bank (and the Company in cases other than waivers), and any such amendment, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given.

9.04Notices and Other Communications; Facsimile Copies.

(a)General.  Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the address, facsimile number or (subject to subsection (c) below) electronic mail address specified for notices to the applicable party designated herein; or to such other address, facsimile number or electronic mail address as shall be designated by such party in a notice to the other party.  All notices and other communications expressly permitted hereunder to be given by telephone shall be made to the

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telephone number specified for notices to the applicable party designated herein, or to such other telephone number as shall be designated by such party in a notice to the other party.  All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Bank pursuant to Article II< /u> shall not be effective until actually received by the Bank.  In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder.

(b)Effectiveness of Facsimile Documents and Signatures.  Loan Documents may be transmitted and/or signed by facsimile.  The effectiveness of any such documents and signatures shall, subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on the Company and the Bank.  The Bank may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

(c)Limited Use of Electronic Mail.  Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose.

(d)Reliance by Bank.The Bank shall be entitled to rely and act upon any notices (including telephonic notices) purportedly given by or on behalf of the Company even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Company shall indemnify the Bank, its Affiliates, and their respective officers, directors, employees, agents and attorneys-in-fact from all losses, costs, expenses and liabil ities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Company.  All telephonic notices to and other communications with the Bank may be recorded by the Bank, and the Company hereby consents to such recording.

If to the Company: National Semiconductor Corporation 2900 Semiconductor Dr. MS G2-330 (Treasury) Santa Clara, CA 95051 Attn: Treasurer Facsimile: (408) 736-1857 Email:  lieh.oung@nsc.com

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With a copy to:	National Semiconductor Corporation 2900 Semiconductor Dr. MS G3-135 Santa Clara, CA 95051 Attn: General Counsel Facsimile: (408) 733-0293 Email: john.clark@nsc.com
If to the Bank:	Bank of America, N.A. 600 Montgomery Street, 13th Floor San Francisco, CA 94111 Attention:      Lee Merkle-Raymond, Managing Director Facsimile: (415) 627-2323 Email: lee.merkle-raymond@bofasecurities.com

9.05No Waiver; Cumulative Remedies.

(a)No failure or delay by the Bank in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Bank hereunder are cumulative and are not exclusive of any rights or remedies that it would otherwise have.  No waiver of any provision of this Agreement or consent to any departure by the Company therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Bank may have had notice or knowledge of such Default at the time:

(b)Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company and the Bank.

9.06Attorney Costs, Expenses and Taxes.  The Company agrees

(a)to pay or reimburse the Bank for all costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and

(b)to pay or reimburse the Bank for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any Insolvency Proceeding), including all Attorney Costs.  The

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foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Bank and the cost of independent public accountants and other outside experts retained by the Bank.  All amounts due under this Section 9.06 shall be payable within ten Business Days after demand therefor.  The agreements in this Section shall survive the termination of the Commitment and repayment, satisfaction or discharge of all other Obligations.

9.07Indemnification by the Company.  Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify and hold harmless the Bank, its Affiliates, and their respective directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) th e execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) the Commitment, any Loan or the use or proposed use of the proceeds therefrom, (c) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabil ities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. Each Indemnitee will use reasonable efforts to provide the Company with reasonable notice with respect to any claims of Indemnified Liabilities provided that any failure or delay in giving any such information or notice shall not give rise to any defense, right of setoff or counterclaim with respect to any indemnification by the Company hereunder.  No Indemnitee shall have any liability for any indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date).  All amounts due under this Section 9.07 shall be payable within ten Business Days after demand therefor .  The agreements in this Section shall survive the termination of the Commitment and the repayment, satisfaction or discharge of all the other Obligations.

To the extent permitted by applicable law, the Company shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated hereby, any Loan or the use of the proceeds thereof.

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9.08Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

9.09Successors and Assigns.

(a)The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Bank and the Bank may not assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (c) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of su bsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (c) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)The Bank may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of the Commitment, the Loans at the time owing to it) pursuant to documentation acceptable to the Bank and the assignee.  From and after the effective date specified in such documentation, such Eligible Assignee shall be a party to this Agreement and, to the extent of the interest assigned by the Bank, have the rights and obligations of the Bank under this Agreement, and the Bank shall, to the extent of the interest so assigned, be released from its obligations under this Agreement (and, in the case of an assignment of all of the Bank’s rights and obligations under thi s Agreement, shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.03, 3.04, 9.06 and 9.07 with respect to facts and circumstances occurring prior to the effective date of such assignment, and shall continue to have all of the rights provided hereunder to the Bank).  Upon request, the Company (at its expense) shall execute and deliver any other documents reasonably necessary or appropriate to give effect to such assignment and to provide for the administration of this Agreement after giving effect thereto.

(c)The Bank may at any time, without the consent of, or notice to, the Company, sell participations to any Person (other than a natural person or the Company or any of the Company’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of the Bank’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans); provided that (i) the Bank’s obligations under this Agreement shall remain unchanged, (ii) the Bank shall remain solely responsible to the Company for the performance of such obligations and (iii) the Company shall continue to deal solely and directly with the Bank in connection with the Bank’s rights and obli gations under this Agreement.  Any agreement or instrument pursuant to which the Bank sells such a participation shall provide that the Bank shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that the Bank will not, without the consent of the Participant, agree to any amendment,

23

waiver or other modification that would (i) postpone any date upon which any payment of money (other than a mandatory prepayment) is scheduled to be made to such Participant, or (ii) reduce the principal, interest, fees or other amounts payable to such Participant.  Subject to subsection (d) of this Section, the Company agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.03 and 3.04 to the same extent as if it were the Bank and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.11 as though it were the Bank.

(d)A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.03 than the Bank would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Company’s prior written consent.  A Participant that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code shall not be entitled to the benefits of Section 3.01 unless the Company is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Company, to provide to the Bank such tax forms prescribed by the IRS as are necessa ry or desirable to establish an exemption from, or reduction of, U.S. withholding tax.

(e)The Bank may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under the Note, if any) to secure obligations of the Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Bank from any of its obligations hereunder or substitute any such pledgee or assignee for the Bank as a party hereto.

(f)As used herein, the following terms have the following meanings:

“Eligible Assignee” means  (a) an Affiliate of the Bank; (b) an Approved Fund; and (c) any other Person (other than a natural person) approved by the Company (such approval not to be unreasonably withheld or delayed); provided that no such approval shall be required if an Event of Default has occurred and is continuing.

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“Approved Fund” means any Fund that is administered or managed by (a) the Bank or (b) an Affiliate of the Bank.

9.10Confidentiality.  The Bank agrees to take and to cause its Affiliates to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as “confidential” or “secret” by the Company and provided to it by any of the Company or any of its Subsidiaries under this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with any of the Company or any of its Subsidiaries; except to the extent su ch information (i) was or becomes generally available to the

24

public other than as a result of disclosure by the Bank, or (ii) was or becomes available on a nonconfidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company known to the Bank; provided, however, that the Bank may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of the Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding to which the Bank or its Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereund er or under any other Loan Document; (F) to the Bank’s independent auditors and other professional advisors; (G) to any Participant or Assignee, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Bank hereunder; (H) as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any of its Subsidiaries is party to or is deemed party with the Bank or such Affiliate; and (I) to its Affiliates. If reasonable to do so under the circumstances, prior to disclosing pursuant to clause (ii)(B) or clause (ii)(D) any information identified by the Company as “confidential” or “secret,” the Bank subject to such process, proceeding or litigation shall provide the Company with notice thereof (so long as such notice does not otherwise violate any applicable Requirement of Law).

9.11Set-off.  Upon the occurrence and during the continuance of any Event of Default, the Bank shall have the right, without prior notice to the Company, (any such notice being expressly waived by the Company to the fullest extent permitted by applicable law) to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Company against any and all obligations of the Company now or hereafter existing under this Agreement or any other Loan Document, irrespective of whether or not the Bank shall have made demand under this Agreement or any other Lo an Document and although such obligations may be unmatured.  The Bank agrees promptly to notify the Company after any such set-off and application made by the Bank, provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Bank under this Section are in addition to the other rights and remedies (including other rights of set-off and security interests) which the Bank may have.

9.12Survival of Representations and Warranties.  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Bank, regardless of any investigation made by the Bank or on its behalf and notwithstanding that the Bank may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

9.13Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

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9.14Severability.  The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

9.15Judgment Currency.

(a)If any claim arising under or related to this Agreement or the other Loan Documents or the Obligations or any part thereof is reduced to judgment denominated in a Judgment Currency other than the Obligation Currency, the judgment shall be for the greater of (i) the Equivalent Amount of the Judgment Currency of the amount of the claim denominated in the Obligation Currency included in the judgment, determined as of the date or dates the Indebtedness related to such claim was loaned to or incurred by the Company, or (ii) such Equivalent Amount determined as of the date of judgment.  The Equivalent Amount of any Obligation Currency amount in any Judgment Currency shall be calculated at the spot rate for the purchase of the Ob ligation Currency with the Judgment Currency quoted by Bank in San Francisco, California, at approximately 8:00 a.m.  on the date for determination specified above.  For purposes of this Section:

(i)“Judgment Currency” means the currency in which any judgment on any claim arising under or related to this Agreement is denominated.

(ii)“Obligation Currency” means the currency in which the claim is denominated.

(b)The Company shall indemnify the Bank against and hold Bank harmless from all loss and damage resulting from any change in exchange rates between the date any claim is reduced to judgment and the date of payment (or, in the case of partial payments, the date of each partial payment) thereof by the Company.  This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Agreement, shall give rise to a separate and independent cause of action, and shall continue in full force and effect notwithstanding any judgment or order of a liquidated sum in respect of an amount due hereunder or under any judgment or order.

(c)For purposes of this Section 9.15, references to a “judgment” shall be deemed to include any order or determination of an arbitration panel or arbitrator.

9.16Governing Law; Arbitration; Waiver of Jury Trial, Etc.

(a)GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

(b)This Section concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to:  (i) this Agreement (including any renewals, extensions or modifications); or (ii) any document related to this Agreement (collectively a “Claim”).  For the purposes of this arbitration provision only, the term “parties” shall include any

26

parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management or administration of any obligation described or evidenced by this Agreement.

(c)At the request of any party to this Agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”).  The Act will apply even though this Agreement provides that it is governed by the law of a specified state.  The arbitration will take place on an individual basis without resort to any form of class action.

(d)Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and the terms of this paragraph.  In the event of any inconsistency, the terms of this Section shall control.  If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, any party to this Agreement may substitute another arbitration organization with similar procedures to serve as the provider of arbitration.

(e)The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in clause (a) of this Section.  All Claims shall be determined by one arbitrator; however, if Claims exceed $5,000,000, upon the request of any party hereto, the Claims shall be decided by three arbitrators.  All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing.  However, the ar bitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days.  The arbitrator(s) shall provide a concise written statement of reasons for the award.  The arbitration award may be submitted to any court having jurisdiction to be confirmed, judgment entered and enforced.

(f)The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may dismiss the arbitration on the basis that the Claim is barred.  For purposes of the application of the statute of limitations, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit.  Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s).  The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this Agreement.

(g)This paragraph does not limit the right of any party to:  (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies.

(h)The procedure described above will not apply if the Claim, at the time of the proposed submission to arbitration, arises from or relates to an obligation to the Bank secured by real property.  In this case, all of the parties to this Agreement must consent to submission of

27

the Claim to arbitration.  If all parties do not consent to arbitration, the Claim will be resolved as follows:  The parties will designate a referee (or a panel of referees) selected under the auspices of AAA in the same manner as arbitrators are selected in AAA administered proceedings.  The designated referee(s) will be appointed by a court as provided in California Code of Civil Procedure Section 638 and the following related sections.  The referee (or presiding referee of the panel) will be an active attorney or a retired judge.  The award that results from the decision of the referee(s) will be entered as a judgment in the court that appointed the referee, in accordance with the provisions of California Code of Civil Procedure Sections 644 and 645.

(i)The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration.

(j)BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM. FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE, TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH CLAIM.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

9.17USA Patriot Act Notice.  The Bank hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow the Bank to identify the Company in accordance with the Act.

9.18Entire Agreement.  This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding between the Company and the Bank and supersedes all prior or contemporaneous agreements and understandings of such persons, verbal or written, relating to the subject matter hereof and thereof.

9.19Inconsistency.  In the event that any term or provision of this Agreement may conflict with any term or provision of any other Loan Document, unless otherwise expressly provided in such other Loan Document, the term or provision of this Agreement shall prevail.

9.20No Third Parties Benefited.  This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Bank and the Indemnified Persons, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents.

9.21Effect of Amendment and Restatement.  This Agreement is intended to completely amend, restate, and replace the Existing Agreement, without novation.  The Company hereby acknowledges, certifies, and agrees that its obligation to repay the Loans made by the Bank is not subject to any defense, counterclaim, set-off, right of recoupment, abatement

28

or other claim or determination and these Loans shall continue and constitute Loans made to the Company under and subject to the terms and provisions of this Agreement.

[remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in San Francisco, California by their proper and duly authorized officers as of the day and year first above written.

NATIONAL SEMICONDUCTOR CORPORATION
By:	/s/ Robert E. Debarr
Name:		Robert E. Debarr
Title:		Treasurer
By:	/s/ Lieh K. Oung
Name:		Lieh K. Oung
Title:		Assistant Treasurer
BANK OF AMERICA, N.A.
By:	/s/ Lee A. Merkle-Raymond
Name:		Lee A. Merkle-Raymond
Title:		Managing Director

[SIGNATURE PAGE FOR THIRD AMENDED AND RESTATED CREDIT AGREEMENT]

EX-10.3

Exhibit 10.3

EXECUTION VERSION

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of October 25, 2010, is entered into by and between NATIONAL SEMICONDUCTOR CORPORATION, a Delaware corporation (the “Company”), and BANK OF AMERICA, N.A. (the “Bank”).

RECITALS

A.The Company and the Bank are parties to a Credit Agreement dated as of August 22, 1995 and amended and restated as of November 17, 2006 (as amended, restated or modified from time to time, the “Credit Agreement”), pursuant to which the Bank has extended certain credit facilities to the Company.

B.The Company has requested that the Bank agree to certain amendments of the Credit Agreement.

C.The Bank is willing to amend the Credit Agreement, subject to the terms and conditions of this Amendment.

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Defined Terms.  Unless otherwise defined herein, capitalized terms used herein shall have the meanings, if any, assigned to them in the Credit Agreement.

2.Amendment to Credit Agreement.

(a)Section 1.01 of the Credit Agreement shall be amended at the definition of “Termination Date,” by amending and restating such definition to read in its entirety as follows:

“Termination Date” means November 17, 2013.

3.Representations and Warranties.  The Company hereby represents and warrants to the Bank as follows:

(a)No Default or Event of Default has occurred and is continuing.

(b)The execution, delivery and performance by the Company of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable.  The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, without defense, counterclaim or offset.

(c)All representations and warranties of the Company contained in the Credit Agreement are true and correct.

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(d)The Company is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Bank or any other Person.

4.Effective Date.  This Amendment will become effective on the date hereof (the “Effective Date”), provided that each of the following conditions precedent is satisfied:

(a)The Bank has received from the Company a duly executed original (or, if elected by the Bank, an executed facsimile copy) of this Amendment.

(b)The Bank has received from the Company an amendment fee of $50,000.

(c)The Bank has received from the Company a copy of a resolution passed by the board of directors of such corporation, certified by the Secretary or an Assistant Secretary of such corporation as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment.

(d)The Company shall have delivered to the Bank a certificate signed by an appropriate officer of the Company in form and substance satisfactory to the Bank to the effect that: (i) all representations and warranties contained herein are true and correct as of the Effective Date and (ii) as of the Effective Date, no Default or Event of Default has occurred and is existing.

5.Reservation of Rights.  The Company acknowledges and agrees that the execution and delivery by the Bank of this Amendment shall not be deemed to create a course of dealing or otherwise obligate the Bank to execute similar amendments under the same or similar circumstances in the future.

6.Miscellaneous.

(a)Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement are and shall remain in full force and effect and all references therein to such Credit Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment.  This Amendment shall be deemed incorporated into, and a part of, the Credit Agreement.

(b)This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment.

(c)This Amendment shall be governed by and construed in accordance with the law of the State of California.

(d)This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Bank of a facsimile transmitted document purportedly bearing the signature of the Company shall bind the Company with the same force and effect as the delivery of a hard copy original.  Any failure by the Bank to rec eive the hard copy executed original of such

2

document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy page was not received by the Bank, and the Bank is hereby authorized to make sufficient photocopies thereof to assemble complete counterparty documents.

(e)This Amendment, together with the Credit Agreement, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein.  This Amendment supersedes all prior drafts and communications with respect thereto. This Amendment may not be amended except in accordance with the provisions of Section 9.03 of the Credit Agreement.

(f)If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Credit Agreement, respectively.

(g)The Company covenants to pay to or reimburse the Bank, upon demand, for all costs and expenses (including allocated costs of in-house counsel) incurred in connection with the development, preparation, negotiation, execution and delivery of this Amendment, including without limitation appraisal, audit, search and filing fees incurred in connection therewith.

[Remainder of this page is intentionally left blank.  Signature page to follow.]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written.

NATIONAL SEMICONDUCTOR CORPORATION
By:	/s/ Robert E. DeBarr
	Name:	Robert E. DeBarr
	Title:	Treasurer
By:	/s/ Lewis Chew
	Name:	Lewis Chew
	Title:	CFO
BANK OF AMERICA, N.A.
By:	/s/ Christina Felsing
	Name:	Christina Felsing
	Title:	Vice President

SIGNATURE PAGE TO
FIRST AMENDMENT TO CREDIT AGREEMENT

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Donald Macleod, certify that:

1.I have reviewed this quarterly report on Form 10-Q of National Semiconductor Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 4, 2011	/s/ Donald Macleod
	Donald Macleod
	Chairman and Chief Executive Officer

CERTIFICATION

I, Lewis Chew, certify that:

1.I have reviewed this quarterly report on Form 10-Q of National Semiconductor Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))  for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 4, 2011	/s/ Lewis Chew
	Lewis Chew
	Senior Vice President, Finance and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of National Semiconductor Corporation (the “Company”) on Form 10-Q for the period ended November 28, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald Macleod, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

·The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, and

·The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 4, 2011	/s/ Donald Macleod
	Donald Macleod
	Chairman and Chief Executive Officer

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of National Semiconductor Corporation (the “Company”) on Form 10-Q for the period ended November 28, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lewis Chew, Senior Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

·The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, and

·The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 4, 2011	/s/ Lewis Chew
	Lewis Chew
	Senior Vice President, Finance and Chief Financial Officer