10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

(Mark One)

x Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended March 31, 2012

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:  0-21184

MICROCHIP TECHNOLOGY INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

Delaware	86-0629024
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

2355 W. Chandler Blvd., Chandler, AZ  85224-6199

(Address of Principal Executive Offices, Including Zip Code)

(480) 792-7200

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.001 Par Value Per Share	NASDAQ® Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     x Yes    ¨No

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ¨ Yes x No

Indicate by checkmark 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:    xYes      ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     xYes      ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§232.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge,in definitive proxy or information statements incorporated by reference in Part III of Form 10-K or any amendment to this Form 10-K.    ¨

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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

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

(Do not check if a smaller reporting company)

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

Aggregate market value of the voting and non-voting common equity held by non-affiliates as of September 30, 2011 based upon the closing price of the common stock as reported by the NASDAQ Global Market on such date was approximately $5,787,068,543

Number of Shares of Common Stock, $0.001 par value, outstanding as of May 25, 2012: 193,583,220 shares

Documents Incorporated by Reference
Document	Part of Form 10-K
Proxy Statement for the 2012 Annual Meeting of Stockholders	III

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	23
PART II
Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters	23
Item 6.	Selected Financial Data	25
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	44
Item 9A.	Controls and Procedures	44
Item 9B.	Other Information	47
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	47
Item 11.	Executive Compensation	47
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	48
Item 13.	Certain Relationships and Related Transactions, and Director Independence	48
Item 14.	Principal Accountant Fees and Services	48
PART IV
Item 15.	Exhibits and Financial Statement Schedules	49
	Signatures	50

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PART I

This Form 10-K contains certain forward-looking statements that involve risks and uncertainties, including statements regarding our strategy and future financial performance and those statements identified under "Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations – Note Regarding Forward-looking Statements."  Our actual results could differ materially from the results described in these forward-looking statements as a result of certain factors including those set forth under "Item 1A – Risk Factors," beginning below at page 11, and elsewhere in this Form 10-K.  Although we believe that the matters reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  You should not place undue reliance on these forward-looking statements.  We disclaim any obligation to update information contained in any forward-looking statement.

Item 1.   BUSINESS

We develop and manufacture specialized semiconductor products used by our customers for a wide variety of embedded control applications.  Our product portfolio comprises 8-bit, 16-bit, and 32-bit PIC^® microcontrollers and 16-bit dsPIC^® digital signal controllers, which feature on-board Flash (reprogrammable) memory technology.  In addition, we offer a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety and security, and interface devices, as well as serial EEPROMs, Serial Flash memories and Parallel Flash memories.  We also license Flash-IP solutions that are incorporated in a broad range of products.  Our synergistic product portfolio targets thousands of applications worldwide and a growing demand for high-performance designs in the automotive, communications, computing, consumer and industrial control markets.  Our quality systems are ISO/TS16949 (2002 version) certified.

Microchip Technology Incorporated was incorporated in Delaware in 1989.  In this Form 10-K, "we," "us," and "our" each refers to Microchip Technology Incorporated and its subsidiaries.  Our executive offices are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224-6199 and our telephone number is (480) 792-7200.

Our Internet address is www.microchip.com.  We post the following filings on our website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission:

• our annual report on Form 10-K

• our quarterly reports on Form 10-Q

• our current reports on Form 8-K

• our proxy statement

• any amendments to the above-listed reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934

All SEC filings on our website are available free of charge.  The information on our website is not incorporated into this Form 10-K.

Recent Developments

On May 2, 2012, we announced that we had signed a definitive agreement to acquire Standard Microsystems Corporation (“SMSC”) for $37.00 per share in cash, which represents a total equity value of about $939 million, and a total enterprise value of about $766 million, after excluding SMSC's cash and investments on its balance sheet at February 29, 2012 of approximately $173 million. The acquisition has been approved by our Board of Directors and by the SMSC Board of Directors and is expected to close in the third quarter of calendar 2012, subject to approval by SMSC stockholders, regulatory approvals and other customary closing conditions. SMSC is a leading developer of Smart Mixed-Signal Connectivity™ solutions. SMSC employs a unique systems level approach that incorporates a broad set of technologies and intellectual property to deliver differentiating products to its customers. SMSC is focused on delivering connectivity solutions that enable the proliferation of data in automobiles, consumer devices, PCs and other applications. SMSC's feature-rich products drive a number of industry standards and include USB, MOST^® automotive networking, Kleer^® and JukeBlox^® wireless audio, embedded system control and analog solutions, including thermal management and RightTouch^® capacitive sensing. SMSC is headquartered in New York and has offices and research facilities in North America, Asia and Europe.

Industry Background

Competitive pressures require manufacturers of a wide variety of products to expand product functionality and provide differentiation while maintaining or reducing cost.  To address these requirements, manufacturers often use integrated circuit-based embedded control systems that enable them to:

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• differentiate their products

• replace less efficient electromechanical control devices

• reduce the number of components in their system

• add product functionality

• reduce the system level energy consumption

• decrease time to market for their products

• significantly reduce product cost

Embedded control systems have been incorporated into thousands of products and subassemblies in a wide variety of applications and markets worldwide, including:

• automotive comfort, safety and entertainment applications

• remote control devices

• handheld tools

• home appliances

• portable computers

• robotics

• accessories

• cordless and cellular telephones

• motor controls

• security systems

• educational and entertainment devices

• consumer electronics

• power supplies

• touch screens

• medical products

Embedded control systems typically incorporate a microcontroller as the principal active, and sometimes sole, component.  A microcontroller is a self-contained computer-on-a-chip consisting of a central processing unit, non-volatile program memory, random access memory for data storage and various input/output peripheral capabilities.  In addition to the microcontroller, a complete embedded control system incorporates application-specific software and may include specialized peripheral device controllers, non-volatile memory components such as EEPROMs, Flash memory and various analog and interface products.

The increasing demand for embedded control has made the market for microcontrollers one of the larger segments of the semiconductor market at approximately $15 billion in calendar year 2011.  Microcontrollers are currently available in 4-bit through 32-bit architectures.  4-bit microcontrollers are the smallest segment of the microcontroller market and have been in decline for several years.  8-bit microcontrollers remain very cost-effective for a wide range of high-volume embedded control applications and, as a result, continue to represent a significant portion of the overall microcontroller market.  16-bit and 32-bit microcontrollers provide higher performance and functionality, and are generally found in more complex embedded control applications.

Our Products

Our strategic focus is on embedded control solutions, including:

• microcontrollers

• development tools

• analog and interface products

• memory products

• technology licensing

We provide highly cost-effective embedded control solutions that also offer the advantages of small size, high performance, extreme low power, wide voltage range operation, mixed signal integration, and ease of development, enabling timely and cost-effective embedded control product integration by our customers.

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Microcontrollers

We offer a broad family of proprietary microcontroller products marketed under the PIC brand name.  We believe that our PIC product family is a price/performance leader in the worldwide microcontroller market.  We have shipped over 10 billion PIC microcontrollers to customers worldwide since their introduction in 1990.  Our PIC products are designed for applications requiring field programmability, high performance, low power and cost effectiveness.  Our performance results from a product architecture which features dual data and instruction pathways, referred to as a Harvard dual-bus architecture; a Reduced Instruction Set Computer, referred to as RISC; and variable length instructions; all of which provide significant speed advantages over alternative single-bus, Complex Instruction Set Computer architectures, referred to as CISC.  With close to 900 microcontrollers in our product portfolio, we target the 8-bit, 16-bit, and 32-bit microcontroller markets.

Digital Signal Controllers (DSC) are a subset of our 16-bit microcontroller offering.  Our dsPICDSC families integrate the control features of high-performance 16-bit microcontrollers with the computation capabilities of Digital Signal Processors (DSPs), along with a wide variety of peripheral functions making them suitable for a large number of embedded control applications.  Our dsPIC product family offers a broad suite of hardware and software development tools, software application libraries, development boards and reference designs to ease and expedite the customer application development cycle.  With its field-reprogrammability, large selection of peripheral functions, small footprint and ease of use, we believe that our dsPIC DSCs expand our addressable market.

We have used our manufacturing experience and design and process technology to bring additional enhancements and manufacturing efficiencies to the development and production of our PIC family of microcontroller products.  Our extensive experience base has enabled us to develop our small footprint, flexible, extreme low power, low-cost user programmability feature by incorporating non-volatile memory, such as Flash, EEPROM and EPROM Memory, into the microcontroller, and to be a leader in reprogrammable microcontroller product offerings.

Development Tools

We offer a comprehensive set of low-cost and easy-to-learn application development tools.  These tools enable system designers to quickly and easily program a PIC microcontroller and dsPIC DSC for specific applications and, we believe, are a key factor for obtaining design wins.

Our family of development tools for PIC and dsPIC products range from entry-level systems, which include an assembler and programmer or in-circuit debugging hardware, to fully configured systems that provide in-circuit emulation capability.  Customers moving from entry-level designs to those requiring real-time emulation are able to preserve their investment in learning and tools as they migrate to future PIC devices since all of our PIC and dsPIC development tools share the same integrated development environment.

Many independent companies also develop and market application development tools that support our standard microcontroller product architecture.  Currently, there are approximately 200 third-party tool suppliers worldwide whose products support our proprietary microcontroller architecture.

We believe that familiarity with and adoption of both our and third-party development tools by an increasing number of product designers will be an important factor in the future selection of our embedded control products.  These development tools allow design engineers to develop thousands of application-specific products from our standard microcontrollers.  To date, we have shipped almost 1.3 million development tools.

Analog and Interface Products

Our analog and interface products consist of several families with approximately 800 power management, linear, mixed-signal, thermal management, RF Linear drivers, safety and security, and interface products.  At the end of fiscal 2012, our mixed-signal analog and interface products were being shipped to more than 18,500 end customers.

We market and sell our analog and interface products into our microcontroller customer base, to customers who use microcontrollers from other suppliers and to customers who use other products that may not fit our traditional PIC microcontroller and memory products customer base.  We market these, and all of our products, based on an application segment approach targeted to provide customers with application solutions.

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Memory Products

Our memory products consist of serial electrically erasable programmable read-only memory (referred to as Serial EEPROMs), Serial Flash Memories, Parallel Flash Memories and Serial SRAM memories.  Serial EEPROMs, Serial Flash memories and Serial SRAM have a very low I/O pin requirement, permitting production of very small footprint devices.  We sell our memory products primarily into the embedded control market, complementing our microcontroller offerings.

Technology Licensing

Our technology licensing business includes license fees and royalties associated with technology licenses for the use of our SuperFlash technology and fees for engineering services.  We license our SuperFlash^®  technology to foundries, integrated device manufacturers and design partners throughout the world for use in the manufacture of their advanced microcontroller products, gate array, RF and analog products that require embedded flash.

Manufacturing

Our manufacturing operations include wafer fabrication and assembly and test.  The ownership of our manufacturing resources is an important component of our business strategy, enabling us to maintain a high level of manufacturing control, resulting in us being one of the lowest cost producers in the embedded control industry.  By owning our wafer fabrication facilities and our assembly and test operations, and by employing statistical techniques (statistical process control, designed experiments and wafer level monitoring), we have been able to achieve and maintain high production yields.  Direct control over manufacturing resources allows us to shorten our design and production cycles.  This control also allows us to capture the wafer manufacturing and a portion of the assembly and testing profit margin.

Our manufacturing facilities are located in:

• Tempe, Arizona (Fab 2)

• Gresham, Oregon (Fab 4)

• Chandler, Arizona (wafer probe)

• Bangkok, Thailand (wafer probe, assembly and test)

Wafer Fabrication

Fab 2 currently produces 8-inch wafers and supports manufacturing processes from 0.35 to 5.0 microns.  During the first half of fiscal 2012, Fab 2 operated at or above normal capacity levels, which we typically consider to be in the range of 90% to 95% of the actual capacity of the installed equipment.  During the second half of fiscal 2012, due to weak economic and semiconductor industry conditions, Fab 2 operated slightly below normal capacity levels. Fab 2's capacity to support more advanced technologies was increased during fiscal 2012 by making process improvements, upgrading existing equipment, and adding equipment as required.

Fab 4 currently produces 8-inch wafers using predominantly 0.22 to 0.5 micron manufacturing processes and is capable of supporting technologies below 0.18 microns.  Similar to Fab 2, Fab 4 was operating at or above normal capacity levels during the first half of fiscal 2012 and slightly below normal capacity levels during the second half of fiscal 2012. The capacity of Fab 4 increased during fiscal 2012 to support our most advanced technology and support new technology development. The capacity increase was completed by starting up more of the tools we acquired when we purchased Fab 4 in fiscal 2003 and installing new tools.  A significant amount of additional clean room capacity and equipment acquired with Fab 4 can be brought on line in the future to support incremental wafer fabrication capacity needs.  We believe the combined capacity of Fab 2 and Fab 4 will provide sufficient capacity to allow us to respond to increases in future demand over the next several years with modest incremental capital expenditures.

We continue to transition products to more advanced process technologies to reduce future manufacturing costs.  We believe that our ability to successfully transition to more advanced process technologies is important for us to remain competitive.

We have, in recent years, outsourced a portion of our wafer production requirements to third-party wafer foundries to augment our internal manufacturing capabilities.  As a result of our acquisition of SST in fiscal 2011, we have become more reliant on outside wafer foundries for our wafer fabrication requirements.  In fiscal 2012, approximately 20% of our sales came from products that were produced at outside wafer foundries.

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Wafer Probe, Assembly and Test

We perform wafer probe, product assembly and testing at our facilities located near Bangkok, Thailand.  We also perform a limited amount of wafer probe at our Chandler, Arizona facility. As of March 31, 2012, approximately 67% of our assembly requirements were being performed in our Thailand facilities.  As of March 31, 2012, approximately 95% of our test requirements were performed in our Thailand facilities.  We use third-party assembly and test contractors in several Asian countries for the balance of our assembly and test requirements.  During the first half of fiscal 2012, we operated at normal capacity levels and selectively increased our probe, assembly and test capacity at our Thailand facilities. During the second half of fiscal 2012, due to weak economic and semiconductor industry conditions, we operated at levels below the total operating capacity of our Thailand facilities.

General Matters Impacting Our Manufacturing Operations

We employ proprietary design and manufacturing processes in developing our microcontroller, analog and memory products.  We believe our processes afford us both cost-effective designs in existing and derivative products and greater functionality in new product designs.  While many of our competitors develop and optimize separate processes for their logic, analog and memory product lines, we use a common process technology for our microcontroller, analog, and non-volatile memory products.  This allows us to more fully absorb our process research and development costs and to deliver new products to market more rapidly.  Our engineers utilize advanced computer-aided design tools and software to perform circuit design, simulation and layout, and our in-house photomask and wafer fabrication facilities enable us to rapidly verify design techniques by processing test wafers quickly and efficiently.

Due to the high fixed costs inherent in semiconductor manufacturing, consistently high manufacturing yields have significant positive effects on our gross profit and overall operating results.  Our continuous focus on manufacturing productivity has allowed us to maintain excellent manufacturing yields at our facilities.  Our manufacturing yields are primarily driven by a comprehensive implementation of statistical process control, extensive employee training and our effective use of our manufacturing facilities and equipment.  Maintenance of manufacturing productivity and yields are important factors in the achievement of our operating results.  The manufacture of integrated circuits, particularly non-volatile, erasable CMOS memory and logic devices, such as those that we produce, are complex processes.  These processes are sensitive to a wide variety of factors, including the level of contaminants in the manufacturing environment, impurities in the materials used and the performance of our manufacturing personnel and equipment.  As is typical in the semiconductor industry, we have from time to time experienced lower than anticipated manufacturing yields.  Our operating results will suffer if we are unable to maintain yields at approximately the current levels.

Historically, we have relied on our ability to respond quickly to customer orders as part of our competitive strategy, resulting in customers placing orders with relatively short delivery schedules.  In order to respond to such requirements, we have historically maintained a significant work-in-process and finished goods inventory.

At the end of fiscal 2012, we owned identifiable long-lived assets (consisting of property, plant and equipment) in the U.S. with a carrying value, net of accumulated depreciation, of $314.3 million and $202.3 million in other countries, including $186.1 million in Thailand.  At the end of fiscal 2011, we owned identifiable long-lived assets in the U.S. with a carrying value, net of accumulated depreciation, of $330.0 million and $210.5 million in other countries, including $193.7 million in Thailand.

Research and Development (R&D)

We are committed to continuing our investment in new and enhanced products, including development systems, and in our design and manufacturing process technologies.  We believe these investments are significant factors in maintaining our competitive position.  Our current R&D activities focus on the development of microcontrollers, digital signal controllers, Serial EEPROM memory, NOR FLASH Memory, Embedded FLASH technologies, RF products, analog and interface products, development systems, user interface products, software and application-specific software libraries.  We are also developing design and process technologies to enable new products and innovative features as well as achieve further cost reductions and performance improvements in existing products.

In fiscal 2012, our R&D expenses were $182.7million, compared to $170.6million in fiscal 2011 and $120.8 million in fiscal 2010.  R&D expenses included share-based compensation expense of $14.7million in fiscal 2012, $12.9 million in fiscal 2011 and $12.2 million in fiscal 2010.

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Sales and Distribution

General

We market our products worldwide primarily through a network of direct sales personnel and distributors.

Our direct sales force focuses on a wide variety of strategic accounts in three geographical markets: the Americas, Europe and Asia.  We currently maintain sales and technical support centers in major metropolitan areas in all three geographic markets.  We believe that a strong technical service presence is essential to the continued development of the embedded control market.  Many of our field sales engineers (FSEs), field application engineers (FAEs), and sales management have technical degrees or backgrounds and have been previously employed in high technology environments.  We believe that the technical knowledge of our sales force is a key competitive advantage in the sale of our products.  The primary mission of our FAE team is to provide technical assistance to customers and to conduct periodic training sessions for the balance of our sales team.  FAEs also frequently conduct technical seminars and workshops in major cities around the world.

Our licensing division has dedicated sales, technology, design, product, test and reliability personnel that support the requirements of our licensees.

Distribution

Our distributors focus primarily on servicing the product requirements of a broad base of diverse customers.  We believe that distributors provide an effective means of reaching this broad and diverse customer base.  We believe that customers recognize us for our products and brand name and use distributors as an effective supply channel.

In fiscal 2012, we derived 59% of our net sales through distributors and 41% of our net sales from customers serviced directly by us.  In fiscal 2011, we derived 58% of our net sales through distributors and 42% of our net sales from customers serviced directly by us.  In fiscal 2010, we derived 61% of our net sales through distributors and 39% of our net sales from customers serviced directly by us.  Our largest distributor accounted for approximately 10% of our net sales in each of fiscal 2012 and 2011 and 12% of our net sales in fiscal 2010.  No other distributor or end customer accounted for more than 10% of our net sales in fiscal 2012, fiscal 2011 or fiscal 2010.

We do not have long-term agreements with our distributors and we, or our distributors, may each terminate our relationship with little or no advanced notice.  The loss of, or the disruption in the operations of, one or more of our distributors could reduce our future net sales in a given quarter and could result in an increase in inventory returns.

Sales by Geography

Sales by geography for fiscal 2012, fiscal 2011 and fiscal 2010 were as follows (dollars in thousands):

	Year Ended March 31,
	2012		%	2011		%	2010		%
Americas	$	290,392	21.0	$	310,735	20.9	$	231,398	24.4
Europe	319,881		23.1	334,911		22.5	237,354		25.1
Asia	772,903		55.9	841,559		56.6	478,977		50.5
Total Sales	$	1,383,176	100.0	$	1,487,205	100.0	$	947,729	100.0

Sales to foreign customers accounted for approximately 82% of our net sales in fiscal 2012, approximately 80% of our net sales in fiscal 2011 and approximately 77% of our net sales in fiscal 2010.  Our sales to foreign customers have been predominately in Asia and Europe, which we attribute to the manufacturing strength in those areas for automotive, communications, computing, consumer and industrial control products.  Americas sales include sales to customers in the U.S., Canada, Central America and South America.

Sales to customers in China, including Hong Kong, accounted for approximately 24% of our net sales in fiscal 2012, approximately 25% of our net sales in fiscal 2011 and approximately 25% of our net sales in fiscal 2010.  Sales to customers in Taiwan accounted for approximately 15% of our net sales in fiscal 2012, approximately 13% of our net sales in fiscal 2011 and approximately 10% of our net sales in fiscal 2010.  We did not have sales into any other foreign countries that exceeded 10% of our net sales during fiscal 2012, fiscal 2011 or fiscal 2010.

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Our international sales are substantially all U.S. dollar denominated.  Although foreign sales are subject to certain government export restrictions, we have not experienced any material difficulties to date as a result of export restrictions.

The semiconductor industry is characterized by seasonality and wide fluctuations of supply and demand.  Since a significant portion of our revenue is from consumer markets and international sales, our business is subject to seasonally lower revenues in the third and fourth quarters of our fiscal year.  However, in recent periods, changes in global economic and semiconductor industry conditions have had a more significant impact on our results than seasonality, and has made it difficult to assess the impact of seasonal factors on our business.

Backlog

As of April 30, 2012, our backlog was approximately $328.8 million, compared to $544.9 million as of April 30, 2011.  Our backlog includes all purchase orders scheduled for delivery within the subsequent 12 months.

We primarily produce standard products that can be shipped from inventory within a relatively short time after we receive an order.  Our business and, to a large extent, that of the entire semiconductor industry, is characterized by short-term orders and shipment schedules.  Orders constituting our current backlog are subject to changes in delivery schedules, or to cancellation at the customer's option without significant penalty.  Thus, while backlog is useful for scheduling production, backlog as of any particular date may not be a reliable measure of sales for any future period.

Competition

The semiconductor industry is intensely competitive and has been characterized by price erosion and rapid technological change.  We compete with major domestic and international semiconductor companies, many of which have greater market recognition and greater financial, technical, marketing, distribution and other resources than we have with which to pursue engineering, manufacturing, marketing and distribution of their products.  We also compete with a number of companies that we believe have copied, cloned, pirated or reverse engineered our proprietary product lines in such countries as China, Korea and Taiwan.  We are continuing to take actions to vigorously and aggressively defend and protect our intellectual property on a worldwide basis.

We currently compete principally on the basis of the technical innovation and performance of our embedded control products, including the following product characteristics:

• speed

• functionality

• density

• low power consumption

• reliability

• packaging alternatives

We believe that other important competitive factors in the embedded control market include:

• ease of use

• functionality of application development systems

• dependable delivery, quality and availability

• technical and innovative service and support

• price

We believe that we compete favorably with other companies on all of these factors, but we may be unable to compete successfully in the future, which could harm our business.

Patents, Licenses and Trademarks

We maintain a portfolio of U.S. and foreign patents, expiring on various dates between 2012 and 2030.  We also have numerous additional U.S. and foreign patent applications pending.  We do not expect that the expiration of any particular patent will have a material impact on our business.  While we intend to continue to seek patents on our technology and manufacturing processes, we believe that our continued success depends primarily on the technological skills and innovative capabilities of our personnel and our ability to rapidly commercialize product developments, rather than on our patents.  Our existing and new patents, trademarks and copyrights that issue may not be of sufficient scope or strength to provide meaningful intellectual

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property protection or any commercial advantage to us.  Pursuing violations of our intellectual property rights on a worldwide basis is a complex business area involving patent law, trademark law, copyright law and the laws of certain foreign countries do not protect our intellectual property rights to the same extent as the laws of the U.S.

We have entered into certain intellectual property licenses and cross-licenses with other companies related to semiconductor products and manufacturing processes.  As is typical in the semiconductor industry, we and our customers have from time to time received, and may in the future receive, communications from third parties asserting patent or other intellectual property rights on certain of our products or technologies.  We investigate all such notices and respond as we believe is appropriate.  Based on industry practice, we believe that in most cases we can obtain necessary licenses or other rights on commercially reasonable terms, but we cannot assure that all licenses would be on acceptable terms, that litigation would not ensue or that damages for any past infringement would not be assessed.  Litigation, which could result in substantial costs to us and require significant attention from management, may be necessary to enforce our patents or other intellectual property rights, or to defend us against claimed infringement of the rights of others.  The failure to obtain necessary licenses or other rights, or litigation arising out of infringement claims, could harm our business.

Environmental Regulation

We must comply with many different federal, state, local and foreign governmental regulations related to the use, storage, discharge and disposal of certain chemicals and gases used in our manufacturing processes.  Our facilities have been designed to comply with these regulations and we believe that our activities are conducted in material compliance with such regulations.  Any changes in such regulations or in their enforcement could require us to acquire costly equipment or to incur other significant expenses to comply with environmental regulations.  Any failure by us to adequately control the storage, use, discharge and disposal of regulated substances could result in significant future liabilities.

Increasing public attention has been focused on the environmental impact of electronic manufacturing operations.  While we have not experienced any materially adverse effects on our operations from recently adopted environmental regulations, our business and results of operations could suffer if for any reason we fail to control the storage or use of, or to adequately restrict the discharge or disposal of, hazardous substances under present or future environmental regulations.

Employees

As of March 31, 2012, we had 6,923 employees.  None of our employees are represented by a labor organization.  We have never had a work stoppage and believe that our employee relations are good.

Executive Officers of the Registrant

The following sets forth certain information regarding our executive officers as of April 30, 2012:

Name	Age	Position
Steve Sanghi	56	Chairman of the Board, President and Chief Executive Officer
Ganesh Moorthy	52	Executive Vice President & Chief Operating Officer
J. Eric Bjornholt	41	Vice President, Chief Financial Officer
Stephen V. Drehobl	50	Vice President, Security, Microcontroller and Technology Division
David S. Lambert	60	Vice President, Fab Operations
Mitchell R. Little	60	Vice President, Worldwide Sales and Applications
Richard J. Simoncic	48	Vice President, Analog and Interface Products Division

Mr. Sanghi has been President since August 1990, CEO since October 1991, and Chairman of the Board since October 1993.  He has served as a director since August 1990.  Mr. Sanghi holds an M.S. degree in Electrical and Computer Engineering from the University of Massachusetts and a B.S. degree in Electronics and Communication from Punjab University, India.  Since May 2004, he has been a member of the Board of Directors of Xyratex Ltd., a storage and network

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technology company.  Since May 2007, he has been a member of the Board of Directors of FIRST (For Inspiration and Recognition of Science and Technology).

Mr. Moorthy has served as Chief Operating Officer since June 2009, as Executive Vice President since October 2006 and as a Vice President in various roles since he joined Microchip in 2001.  Prior to this time, he served in various executive capacities with other semiconductor companies.  Mr. Moorthy holds an M.B.A. in Marketing from National University, a B.S. degree in Electrical Engineering from the University of Washington and a B.S. degree in Physics from the University of Mumbai, India.

Mr. Bjornholt has served as Vice President of Finance since 2008 and as Chief Financial Officer since January 1, 2009.  He has served in various financial management capacities since he joined Microchip in 1995.  Mr. Bjornholt holds a Masters degree in Taxation from Arizona State University and a B.S. degree in accounting from the University of Arizona.

Mr. Drehobl has served as Vice President of the Security, Microcontroller, and Technology Division since July 2001. He has been employed by Microchip since August 1989 and has served as a Vice President in various roles since February 1997.  Mr. Drehobl holds a Bachelor of Technology degree from the University of Dayton.

Mr. Lambert has served as Vice President, Fab Operations since November 1993.  From 1991 to November 1993, he served as Director of Manufacturing Engineering, and from 1989 to 1991, he served as Engineering Manager of Fab Operations.  Mr. Lambert holds a B.S. degree in Chemical Engineering from the University of Cincinnati.

Mr. Little has served as Vice President, Worldwide Sales and Applications since July 2000.  He has been employed by Microchip since 1989 and has served as a Vice President in various roles since September 1993.  Mr. Little holds a B.S. degree in Engineering Technology from United Electronics Institute.

Mr. Simoncic has served as Vice President, Analog and Interface Products Division since September 1999.  From October 1995 to September 1999, he served as Vice President in various roles.  Joining Microchip in 1990, Mr. Simoncic held various roles in Design, Device/Yield Engineering and Quality Systems.  Mr. Simoncic holds a B.S. degree in Electrical Engineering Technology from DeVry Institute of Technology.

 Item 1A.    RISK FACTORS

When evaluating Microchip and its business, you should give careful consideration to the factors listed below, in addition to the information provided elsewhere in this Form 10-K and in other documents that we file with the Securities and Exchange Commission.

Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.

Our operating results are affected by a wide variety of factors that could reduce our net sales and profitability, many of which are beyond our control. Some of the factors that may affect our operating results include:

• general economic, industry or political conditions in the U.S. or internationally;

• changes in demand or market acceptance of our products and products of our customers;

• changes in utilization of our manufacturing capacity and fluctuations in manufacturing yields;

• the mix of inventory we hold and our ability to satisfy orders from our inventory;

• levels of inventories at our customers;

• risk of excess and obsolete inventories;

• our ability to secure sufficient wafer foundry, assembly and testing capacity;

• availability of raw materials and equipment;

• competitive developments including pricing pressures;

• unauthorized copying of our products resulting in pricing pressure and loss of sales;

• the level of orders that are received and can be shipped in a quarter;

• the level of sell-through of our products through distribution;

• fluctuations in the mix of products;

• changes or fluctuations in customer order patterns and seasonality;

• announcements of significant acquisitions or any delays or unexpected developments with respect to previously announced acquisitions;

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• disruptions in our business or our customers' businesses due to terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns, natural disasters or disruptions in the transportation system;

• constrained availability from other electronic suppliers impacting our customers' ability to ship their products, which in turn may adversely impact our sales to those customers;

• costs and outcomes of any current or future tax audits or any litigation involving intellectual property, customers or other issues;

• changes in tax regulations and policies in the U.S. and other countries in which we do business;

• fluctuations in commodity prices; and

• property damage or other losses, whether or not covered by insurance.

We believe that period-to-period comparisons of our operating results are not necessarily meaningful and that you should not rely upon any such comparisons as indications of our future performance. In future periods, our operating results may fall below our public guidance or the expectations of public market analysts and investors, which would likely have a negative effect on the price of our common stock. Adverse global economic conditions, the subsequent economic recovery and recent economic uncertainty have caused our operating results to fluctuate significantly and make comparability between periods less meaningful.

Our operating results will suffer if we ineffectively utilize our manufacturing capacity or fail to maintain manufacturing yields.

The manufacture and assembly of integrated circuits, particularly non-volatile, erasable CMOS memory and logic devices such as those that we produce, are complex processes. These processes are sensitive to a wide variety of factors, including the level of contaminants in the manufacturing environment, impurities in the materials used, the performance of our wafer fabrication and assembly and test personnel and equipment, and other quality issues. As is typical in the semiconductor industry, we have from time to time experienced lower than anticipated manufacturing yields. Our operating results will suffer if we are unable to maintain yields at approximately the current levels. This could include delays in the recognition of revenue, loss of revenue or future orders, and customer-imposed penalties for failure to meet contractual shipment deadlines. Our operating results are also adversely affected when we operate at less than optimal capacity. During the third and fourth quarters of fiscal 2009, we reduced wafer starts in both Fab 2 and Fab 4, implemented rotating unpaid time off and had multiple planned shutdowns in our Thailand facility to help control inventory levels in response to adverse economic conditions. This lower capacity utilization resulted in certain costs being charged directly to expense and lower gross margins. From the March 2010 quarter through the September 2011 quarter, we were running at more optimal levels of capacity utilization. However, in the third quarter of fiscal 2012, we reduced wafer starts to control inventory balances in response to a slowdown in global economic conditions. We continued with the reduced level of wafer starts in the fourth quarter of fiscal 2012. These recent actions had a negative impact on our gross margins.

We are dependent on orders that are received and shipped in the same quarter and are therefore limited in our visibility of future product shipments.

Our net sales in any given quarter depend upon a combination of shipments from backlog and orders received in that quarter for shipment in that quarter, which we refer to as turns orders. We measure turns orders at the beginning of a quarter based on the orders needed to meet the shipment targets that we set entering the quarter. Historically, we have relied on our ability to respond quickly to customer orders as part of our competitive strategy, resulting in customers placing orders with relatively short delivery schedules. Shorter lead times generally mean that turns orders as a percentage of our business are relatively high in any particular quarter and reduce our backlog visibility on future product shipments. Turns orders correlate to overall semiconductor industry conditions and product lead times. Because turns orders are difficult to predict, varying levels of turns orders make our net sales more difficult to forecast. If we do not achieve a sufficient level of turns orders in a particular quarter relative to our revenue targets, our revenue and operating results will likely suffer.

Intense competition in the markets we serve may lead to pricing pressures, reduced sales of our products or reduced market share.

The semiconductor industry is intensely competitive and has been characterized by price erosion and rapid technological change. We compete with major domestic and international semiconductor companies, many of which have greater market recognition and substantially greater financial, technical, marketing, distribution and other resources than we do. We may be unable to compete successfully in the future, which could harm our business. Our ability to compete successfully depends on a number of factors both within and outside our control, including, but not limited to:

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• the quality, performance, reliability, features, ease of use, pricing and diversity of our products;

• our success in designing and manufacturing new products including those implementing new technologies;

• the rate at which customers incorporate our products into their own applications;

• product introductions by our competitors;

• the number, nature and success of our competitors in a given market;

• our ability to obtain adequate supplies of raw materials and other supplies at acceptable prices;

• our ability to protect our products and processes by effective utilization of intellectual property rights;

• our ability to remain price competitive against companies that have copied our proprietary product lines, especially in countries where intellectual property rights protection is difficult to achieve and maintain;

• our ability to address the needs of our customers; and

• general market and economic conditions.

Historically, average selling prices in the semiconductor industry decrease over the life of any particular product. The overall average selling prices of our microcontroller and proprietary analog and interface products have remained relatively constant, while average selling prices of our memory and non-proprietary analog and interface products have declined over time.

We have experienced, and expect to continue to experience, modest pricing declines in certain of our more mature proprietary product lines, primarily due to competitive conditions. We have been able to moderate average selling price declines in many of our proprietary product lines by continuing to introduce new products with more features and higher prices. However, there can be no assurance that we will be able to do so in the future. We have experienced in the past, and expect to continue to experience in the future, varying degrees of competitive pricing pressures in our memory and non-proprietary analog products. We may be unable to maintain average selling prices for our products as a result of increased pricing pressure in the future, which could adversely impact our operating results.

Our business is dependent on selling through distributors.

Sales through distributors accounted for approximately 59% of our net sales in fiscal 2012 and approximately 58% of our net sales in fiscal 2011. Our largest distributor accounted for approximately 10% of our net sales in each of fiscal 2012 and fiscal 2011. We do not have long-term agreements with our distributors and we and our distributors may each terminate our relationship with little or no advance notice.

Any future adverse conditions in the U.S. or global economies or in the U.S. or global credit markets could materially impact the operations of our distributors. Any deterioration in the financial condition of our distributors or any disruption in the operations of our distributors could adversely impact the flow of our products to our end customers and adversely impact our results of operation. In addition, during an industry or economic downturn, it is possible there will be an oversupply of products and a decrease in sell-through of our products by our distributors which could reduce our net sales in a given period and result in an increase in inventory returns.

Our success depends on our ability to introduce new products on a timely basis.

Our future operating results will depend on our ability to develop and introduce new products on a timely basis that can compete effectively on the basis of price and performance and which address customer requirements. The success of our new product introductions depends on various factors, including, but not limited to:

• proper new product selection;

• timely completion and introduction of new product designs;

• timely filing and protection of intellectual property rights for new product designs;

• availability of development and support tools and collateral literature that make complex new products easy for engineers to understand and use; and

• market acceptance of our customers' end products.

Because our products are complex, we have experienced delays from time to time in completing development of new products. In addition, our new products may not receive or maintain substantial market acceptance.  We may be unable to design, develop and introduce competitive products on a timely basis, which could adversely impact our future operating results.

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Our success also depends upon our ability to develop and implement new design and process technologies. Semiconductor design and process technologies are subject to rapid technological change and require significant R&D expenditures. We and other companies in the industry have, from time to time, experienced difficulties in effecting transitions to advanced process technologies and, consequently, have suffered reduced manufacturing yields or delays in product deliveries. Our future operating results could be adversely affected if any transition to future process technologies is substantially delayed or inefficiently implemented.

Our technology licensing business exposes us to various risks.

In connection with our acquisition of SST in April 2010, we acquired SST's intellectual property licensing business which is based on its SuperFlash technology. The success of our licensing business will depend on the continued market acceptance of this technology and on our ability to further develop and enhance such technology and to introduce new technologies in the future. To be successful, any such technology must be able to be repeatably implemented by licensees, provide satisfactory yield rates, address licensee and customer requirements, and perform competitively. The success of our technology licensing business depends on various other factors, including, but not limited to:

• proper identification of licensee requirements;

• timely development and introduction of new or enhanced technology;

• our ability to protect our intellectual property rights for our licensed technology;

• availability of sufficient development and support services to assist licensees in their design and manufacture of products integrating our technology;

• availability of foundry licensees with sufficient capacity to support OEM production; and

• market acceptance of our customers' end products.

Because our SuperFlash technology is complex, there may be delays from time to time in developing and enhancing such technology. There can be no assurance that our existing or any enhanced or new technology will achieve or maintain substantial market acceptance. Our licensees may experience disruptions in production or lower than expected production levels which would adversely affect the revenue that we receive from them. Our technology license agreements generally include an indemnification clause that indemnifies the licensee against liability and damages (including legal defense costs) arising from intellectual property matters. We could be exposed to substantial liability for claims or damages related to intellectual property matters or indemnification claims. Any claim, with or without merit, could result in significant legal fees and require significant attention from our management. Any of the foregoing issues may adversely impact the success of our licensing business and adversely affect our future operating results.

We must attract and retain qualified personnel to be successful, and competition for qualified personnel can be intense.

Our success depends upon the efforts and abilities of our senior management, engineering and other personnel. The competition for qualified engineering and management personnel can be intense. We may be unsuccessful in retaining our existing key personnel or in attracting and retaining additional key personnel that we require. The loss of the services of one or more of our key personnel or the inability to add key personnel could harm our business. We have no employment agreements with any member of our senior management team. 

We are dependent on several contractors to perform key manufacturing functions for us, and our licensees of our SuperFlash technology also rely on foundries and other contractors.

We use several contractors located in Asia for a portion of the assembly and testing of our products. We also rely on outside wafer foundries for a portion of our wafer fabrication. Although we own the majority of our manufacturing resources, the disruption or termination of any of our contractors could harm our business and operating results.

Our use of third parties involves some reduction in our level of control over the portions of our business that we subcontract. Our future operating results could suffer if any contractor were to experience financial, operational or production difficulties or situations when demand exceeds capacity, or if they were unable to maintain manufacturing yields, assembly and test yields and costs at approximately their current levels, or if due to their locations in foreign countries they were to experience political upheaval or infrastructure disruption. Further, procurement of required products and services from third parties is done by purchase order and contracts. If these third parties are unable or unwilling to timely deliver products or services conforming to our quality standards, we may not be able to qualify additional manufacturing sources for our products

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in a timely manner or at all, and such arrangements, if any, may not be on favorable terms to us. In such event, we could experience an interruption in production, an increase in manufacturing and production costs or a decline in product reliability, and our business and operating results could be adversely affected.

Certain of our SuperFlash technology licensees also rely on outside wafer foundries for wafer fabrication services. If the licensees were to experience any disruption in supply from the wafer foundries, this would reduce the revenue we receive in our technology licensing business and would harm our operating results.

We may lose sales if our suppliers of raw materials and equipment fail to meet our needs.

Our semiconductor manufacturing operations require raw materials and equipment that must meet exacting standards.  We generally have more than one source for these supplies, but there are only a limited number of suppliers capable of delivering various raw materials and equipment that meet our standards.  The raw materials and equipment necessary for our business could become more difficult to obtain as worldwide use of semiconductors in product applications increases. We have experienced supply shortages from time to time in the past, and on occasion our suppliers have told us they need more time than expected to fill our orders or that they will no longer support certain equipment with updates or spare and replacement parts. An interruption of any raw materials or equipment sources, or the lack of supplier support for a particular piece of equipment, could harm our business.

Our operating results may be impacted by both seasonality and the wide fluctuations of supply and demand in the semiconductor industry.

The semiconductor industry is characterized by seasonality and wide fluctuations of supply and demand. Since a significant portion of our revenue is from consumer markets and international sales, our business is subject to seasonally lower revenues in the third and fourth quarters of our fiscal year. However, broad fluctuations in our overall business in recent periods and changes in semiconductor industry and global economic conditions have had a more significant impact on our results than seasonality, and have made it difficult to assess the impact of seasonal factors on our business. The industry has also experienced significant economic downturns, characterized by diminished product demand and production over-capacity. We have sought to reduce our exposure to this industry cyclically by selling proprietary products that cannot be easily or quickly replaced to a geographically diverse base of customers across a broad range of market segments. However, we have experienced substantial period-to-period fluctuations in operating results and expect, in the future, to experience period-to-period fluctuations in operating results due to general industry or economic conditions.

We are exposed to various risks related to legal proceedings or claims.

We are currently, and in the future may be, involved in legal proceedings or claims regarding patent infringement, intellectual property rights, contracts and other matters. As is typical in the semiconductor industry, we receive notifications from customers or licensees from time to time who believe that we owe them indemnification or other obligations related to infringement claims made against us or the customers or licensees by third parties. These legal proceedings and claims, whether with or without merit, could result in substantial cost to us and divert our resources. If we are not able to resolve a claim, settle a matter, obtain necessary licenses on commercially reasonable terms, reengineer our products or processes to avoid infringement, and/or successfully prosecute or defend our position, we could incur uninsured liability in any of them, be required to take an appropriate charge to operations, be enjoined from selling a material portion of our products or using certain processes, suffer a reduction or elimination in the value of our inventories, and our business, financial condition or results of operations could be harmed.

It is also possible that from time to time we may be subject to claims related to the manufacture, performance or use of our products. These claims may be due to injuries or environmental exposures related to manufacturing, a product's nonconformance to our specifications, or specifications agreed upon with the customer, changes in our manufacturing processes, or unexpected end customer system issues due to the interaction with our products or insufficient design or testing by our customers. We could incur significant expenses related to such matters, including, but not limited to:

• costs related to writing off the value of our inventory of nonconforming products;

• recalling nonconforming products;

• providing support services, product replacements, or modifications to products and the defense of such claims;

• diversion of resources from other projects;

• lost revenue or a delay in the recognition of revenue due to cancellation of orders and unpaid receivables;

• customer imposed fines or penalties for failure to meet contractual requirements; and

• a requirement to pay damages.

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Because the systems into which our products are integrated have a higher cost of goods than the products we sell, our expenses and damages may be significantly higher than the sales and profits we received from the products involved. While we specifically exclude consequential damages in our standard terms and conditions, our ability to avoid such liabilities may be limited by applicable law. We do have liability insurance which covers damages arising out of product defects, but we do not expect that insurance will cover all claims or be of a sufficient amount to fully protect against such claims. Costs or payments we may make in connection with these customer claims may adversely affect the results of our operations.

Further, we sell to customers in industries such as automotive, aerospace, and medical, where failure of the systems in which our products are integrated could cause damage to property or persons. We may be subject to claims if our products, or interactions with our products, cause the system failures. We will face increased exposure to claims if there are substantial increases in either the volume of our sales into these applications or the frequency of system failures integrating our products.

Failure to adequately protect our intellectual property could result in lost revenue or market opportunities.

Our ability to obtain patents, licenses and other intellectual property rights covering our products and manufacturing processes is important for our success. To that end, we have acquired certain patents and patent licenses and intend to continue to seek patents on our technology and manufacturing processes. The process of seeking patent protection can be long and expensive, and patents may not be issued from currently pending or future applications. In addition, our existing and new patents, trademarks and copyrights that issue may not be of sufficient scope or strength to provide meaningful protection or any commercial advantage to us. We may be subject to or may ourselves initiate interference proceedings in the U.S. Patent and Trademark Office, patent offices of a foreign country or U.S. or foreign courts, which can require significant financial and management resources. In addition, the laws of certain foreign countries do not protect our intellectual property rights to the same extent as the laws of the U.S. Infringement of our intellectual property rights by a third party could result in uncompensated lost market and revenue opportunities for us. Although we continue to vigorously and aggressively defend and protect our intellectual property on a worldwide basis, there can be no assurance that we will be successful in our endeavors.

Our operating results may be adversely impacted if economic conditions impact the financial viability of our licensees, customers, distributors, or suppliers.

We regularly review the financial performance of our licensees, customers, distributors and suppliers. However, any downturn in global economic conditions may adversely impact the financial viability of our licensees, customers, distributors or suppliers. The financial failure of a large licensee, customer or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our not being able to collect our accounts receivable balances, higher reserves for doubtful accounts, write-offs for accounts receivable, and higher operating costs as a percentage of revenues.

We do not typically have long-term contracts with our customers.

We do not typically enter into long-term contracts with our customers and we cannot be certain about future order levels from our customers. When we do enter into customer contracts, the contract is generally cancelable at the convenience of the customer. Even though we had approximately 74,000 customers and our ten largest direct customers made up approximately 8% of our total net sales in fiscal 2012, cancellation of customer contracts could have an adverse impact on our revenue and profits.

Further, as the practice has become more commonplace in the industry, we have entered into contracts with certain customers that differ from our standard terms of sale. For example, under these contracts we may commit to supply specific quantities of products on scheduled delivery dates, or agree to extend our obligations for certain liabilities such as warranties or indemnification for claims of intellectual property infringement. If we agree to special supply terms and we become unable to supply the customer as required under the contract, the customer may incur additional production costs, lost revenues due to subsequent delays in their own manufacturing schedule, or quality-related issues. If we agree to special warranty or indemnification provisions, we may be liable for the customer's costs, expenses and damages associated with their claims and we may be obligated to defend the customer against claims of intellectual property infringement and pay the associated legal fees. While we try to limit the number of contracts that we sign which contain such special provisions, manage the risks underlying such liabilities and set caps on our liability exposure, such provisions do expose us to significant additional risks and could result in a material adverse impact on our results of operation and financial condition.

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Business interruptions to our operations or the operations of our key vendors, subcontractors, licensees or customers, whether due to natural disasters or other events, could harm our business.

Operations at any of our facilities, at the facilities of any of our wafer fabrication or assembly and test subcontractors, or at any of our significant vendors or customers may be disrupted for reasons beyond our control. These reasons may include work stoppages, power loss, incidents of terrorism or security risk, political instability, public health issues, telecommunications, transportation or other infrastructure failure, radioactive contamination, fire, earthquake, floods, volcanic eruptions or other natural disasters. We have taken steps to mitigate the impact of some of these events should they occur; however, we cannot be certain that our actions will be effective to avoid a significant impact on our business in the event of a disaster or other business interruption.

In particular, Thailand has experienced periods of severe flooding in recent years; however, our facilities in Thailand have continued to operate normally. There can be no assurance that any future flooding in Thailand would not have a material adverse impact on our operations. If operations at any of our facilities, or our subcontractors' facilities are interrupted, we may not be able to shift production to other facilities on a timely basis, and we may need to spend significant amounts to repair or replace our facilities and equipment.  If we experienced business interruptions, we would likely experience delays in shipments of products to our customers and alternate sources for production may be unavailable on acceptable terms. This could result in reduced revenues and profits and the cancellation of orders or loss of customers. Although we maintain business interruption insurance, such insurance will likely not be enough to compensate us for any losses that may occur and any losses or damages incurred by us as a result of business interruptions could significantly harm our business.

Additionally, as described above, operations at our customers and licensees may be disrupted for a number of reasons. In the event of customer disruptions, sales of our products may decline and our revenue, profitability and financial condition could suffer. Likewise, if our licensees are unable to manufacture and ship products incorporating our technology, or if there is a decrease in product demand due to a business disruption, our royalty revenue may decline as our licenses are based on per unit royalties.

We are highly dependent on foreign sales and operations, which exposes us to foreign political and economic risks.

Sales to foreign customers account for a substantial portion of our net sales. During fiscal 2012, approximately 82% of our net sales were made to foreign customers. During fiscal 2011, approximately 80% of our net sales were made to foreign customers. We purchase a substantial portion of our raw materials and equipment from foreign suppliers. In addition, we own product assembly and testing facilities located near Bangkok, Thailand, which has experienced periods of political instability in the past. From time to time, Thailand has also experienced periods of severe flooding; however, our facilities have continued to operate normally. There can be no assurance that any future flooding in Thailand would not have a material adverse impact on our operations. We use various foreign contractors for a portion of our assembly and testing and for a portion of our wafer fabrication requirements. Substantially all of our finished goods inventory is maintained in Thailand.

Our reliance on foreign operations, foreign suppliers, maintenance of substantially all of our finished goods inventory at foreign locations and significant foreign sales exposes us to foreign political and economic risks, including, but not limited to:

• political, social and economic instability;

• public health conditions;

• trade restrictions and changes in tariffs;

• import and export license requirements and restrictions;

• difficulties in staffing and managing international operations;

• employment regulations;

• disruptions in international transport or delivery;

• difficulties in collecting receivables;

• economic uncertainty in the worldwide markets served by us; and

• potentially adverse tax consequences.

If any of these risks materialize, our sales could decrease and our operating results could suffer.

Fluctuations in foreign currency exchange rates could impact our operating results.

We use forward currency exchange contracts in an attempt to reduce the adverse earnings impact from the effect of exchange rate fluctuations on our non-U.S. dollar net balance sheet exposures. Nevertheless, in periods when the U.S. dollar significantly fluctuates in relation to the non-U.S. currencies in which we transact business, the value of our non-U.S. dollar

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transactions can have an adverse effect on our results of operations and financial condition. In particular, in periods when a foreign currency significantly declines in value in relation to the U.S. dollar, such as past declines in the Euro relative to the U.S. dollar, customers transacting in that foreign currency may find it more difficult to fulfill their previously committed contractual obligations or to undertake new obligations to make payments or purchase products. In periods when the U.S. dollar is significantly declining in relation to the British pound, Euro and Thai baht, the operational costs in our European and Thailand subsidiaries are adversely affected.

Interruptions in our information technology systems could adversely affect our business.

We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our business.  Any significant system or network disruption, including, but not limited to, new system implementations, computer viruses, security breaches, facility issues or energy blackouts could have a material adverse impact on our operations, sales and operating results.  Such network disruption could result in a loss of our intellectual property or the release of sensitive competitive information or partner, customer or employee personal data. Any loss of such information could harm our competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages caused by the disruptions or security breaches. From time to time, we have experienced verifiable attacks on our data by unauthorized parties; however, such attacks have not resulted in any material damage to us. In recent years, we have implemented improvements to our protective measures which are not limited to the following: firewalls, antivirus, patches, log monitors, routine backups with offsite retention of storage media, system audits, data partitioning and routine password

modifications. There can be no assurance that such system improvements will be sufficient to prevent or limit the damage from any future cyber attack or disruptions and any such attack or disruption could have a material adverse impact on our business, operations and financial results.

Third-party service providers, such as foundries, assembly and test contractors, distributors, credit card processors and other vendors have access to certain portions of our sensitive data. In the event that these service providers do not properly safeguard our data that they hold, security breaches and loss of our data could result. Any such loss of data by our third-party service providers could negatively impact our business, operations and financial results.

The occurrence of events for which we are self-insured, or which exceed our insurance limits, may adversely affect our profitability and liquidity.

We have insurance contracts with independent insurance companies related to many different types of risk; however, we self-insure for some potentially significant risks and obligations. In these circumstances, we have determined that it is more cost effective to self-insure certain risks than to pay the high premium costs. The risks and exposures that we self-insure include, but are not limited to, certain property, product defects, political risks, and intellectual property matters. Should there be a loss or adverse judgment or other decision in an area for which we are self-insured, then our financial condition, results of operations and liquidity may be adversely affected.

We are subject to stringent environmental regulations, which may force us to incur significant expenses.

We must comply with many different federal, state, local and foreign governmental regulations related to the use, storage, discharge and disposal of toxic, volatile or otherwise hazardous substances used in our products and manufacturing processes.  Our failure to comply with applicable regulations could result in the imposition of fines, suspension of production, cessation of operations or future liabilities. Such environmental regulations have required us in the past and could require us in the future to acquire costly equipment or to incur other significant expenses to comply with such regulations. Any failure by us to control the use of or adequately restrict the discharge of hazardous substances could also restrict our ability to ship certain products to certain countries, require us to modify our operations logistics, or require us to incur other significant costs and expenses. Over the past several years, there has been an expansion in environmental laws focusing on reducing or eliminating hazardous substances in electronic products. The European Union and countries such as the U.S., China, Korea and Brazil, have enacted or may enact such laws or regulations. These and other future environmental regulations could require us to reengineer certain of our existing products and may make it more expensive for us to manufacture and sell our products. In addition, over the last several years, the number and complexity of laws focused on the energy efficiency of electronic products and accessories, the recycling of electronic products, and the reduction in quantity and the recycling of packaging materials have expanded significantly. It may be difficult for us to timely comply with these laws and we may not have sufficient quantities of compliant products to meet customers' needs, thereby adversely impacting our sales and profitability. We may also have to write off inventory in the event that we hold inventory that is not saleable as a result of changes to regulations. We expect these risks and trends to continue. In addition, we anticipate increased customer requirements to meet voluntary criteria related to the reduction or elimination of hazardous substances in our products and energy efficiency measures.

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Customer demands and new regulations related to conflict-free minerals may force us to incur additional expenses.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the SEC to establish new disclosure and reporting requirements regarding the use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in products, whether or not these products are manufactured by third parties. When these new requirements are implemented, they could affect the sourcing and availability of minerals used in the manufacture of semiconductor devices (including our products), and there will be additional costs associated with complying with the disclosure requirements, such as costs related to determining the source of any conflict minerals used in our products. Also, since our supply chain is complex, we may face reputational challenges if we are unable to sufficiently verify the origins for all metals used in our products through the procedures we may implement. We may also encounter challenges to satisfy those customers who require that all of the components of our products are certified as conflict free.  If we are not able to meet customer requirements, customers may choose to disqualify us as a supplier and we may have to write off inventory in the event that it cannot be sold.

Climate change regulations and sustained adverse climate change poses both regulatory and physical risks that could harm our results of operations or affect the way we conduct our business.

New climate change regulations could require us to limit emissions, change our manufacturing processes, obtain substitute materials that may cost more or be less available, increase our investment in control technology for greenhouse gas emissions, fund offset projects or undertake other costly activities. These regulations could significantly increase our costs and restrict our manufacturing operations by virtue of requirements for new equipment. It is possible that new permits will be required for our current or any expansion of our operations. Failure to receive timely permits could result in the imposition of fines, suspension of production, or cessation of operations at one or more facilities. In addition, new restrictions on carbon dioxide or other greenhouse gas emissions could result in significant costs such as higher energy costs, and utility companies passing down carbon taxes, emission cap and trade programs and renewable portfolio standards. The cost of complying, or of failing to comply, with these and other climate change and emissions regulations could have an adverse effect on our operating results.

Further, any sustained adverse change in climate could have a direct adverse economic impact on us such as water and power shortages or higher costs for water or energy to control the temperature inside of our facilities. Also, certain of our operations are located in tropical regions, such as Thailand. Some environmental experts predict that these regions may become vulnerable to storms, severe floods and droughts due to climate change. While we maintain business recovery plans that are intended to allow us to recover from natural disasters or other events that can be disruptive to our business, we cannot be certain that our plans will protect us from all such disasters or events. 

Regulatory authorities in jurisdictions into which we ship our products could levy fines or restrict our ability to export products.

A significant portion of our sales are made outside of the U.S. through the exporting and re-exporting of products. In addition to local jurisdictions' export regulations, our U.S.-manufactured products or products based on U.S. technology are subject to U.S. laws and regulations governing international trade and exports, including, but not limited to the Foreign Corrupt Practices Act, Export Administration Regulations (EAR), and trade sanctions against embargoed countries and destinations administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC). Licenses or proper license exceptions are required for the shipment of our products to certain countries. A determination by the U.S. or local government that we have failed to comply with these or other export regulations or anti-bribery regulations can result in penalties which may include denial of export privileges, fines, civil or criminal penalties, and seizure of products. Such penalties could have a material adverse effect on our business, sales and earnings. Further, a change in these laws and regulations could restrict our ability to export to previously permitted countries, customers, distributors or other third parties. Any one or more of these sanctions or a change in laws or regulations could have a material adverse effect on our business, financial condition and results of operations.

The outcome of currently ongoing and future examinations of our income tax returns by the IRS could have an adverse effect on our results of operations.

We are subject to examination of our income tax returns by the I.R.S. and other tax authorities for fiscal 2009 and later. We are currently being audited by the I.R.S. for fiscal 2009 and fiscal 2010.  We are subject to certain income tax examinations in foreign jurisdictions for fiscal 2005 and later. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuing examinations will not have an adverse effect on our future operating results.

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The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors.

The market price of our common stock has fluctuated significantly in the past and is likely to fluctuate in the future. The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors, many of which are beyond our control, including, but not limited to:

• quarterly variations in our operating results and the operating results of other technology companies;

• actual or anticipated announcements of technical innovations or new products by us or our competitors;

• changes in analysts' estimates of our financial performance or buy/sell recommendations;

• changes in our financial guidance or our failure to meet such guidance;

• any acquisitions we pursue or complete;

• general conditions in the semiconductor industry; and

• global economic and financial conditions.

In addition, the stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices for many companies and that often have been unrelated to the operating performance of such companies. These broad market fluctuations and other factors have harmed and may harm the market price of our common stock. Some or all of the foregoing factors could also cause the market price of our convertible debentures to decline or fluctuate substantially.

We may not fully realize the anticipated benefits of our completed or future acquisitions or divestitures, including our recently announced agreement to acquire SMSC.

We have acquired, and expect in the future to acquire, additional businesses that we believe will complement or augment our existing businesses. In this regard, in May 2012, we announced the execution of a definitive agreement to acquire SMSC, a publicly traded semiconductor company. The integration process for our acquisitions, including our acquisition of SMSC, may be complex, costly and time consuming and include unanticipated issues, expenses and liabilities. We may not be able to successfully or profitably integrate, operate, maintain and manage any newly acquired operations or employees. We may not be able to maintain uniform standards, procedures and policies and we may be unable to realize the expected synergies and cost savings from the integration. There may be increased risk due to integrating financial reporting and internal control systems. We may have difficulty in developing, manufacturing and marketing the products of a newly acquired company, or in growing the business at the rate we anticipate. Following an acquisition, we may not achieve the revenue or net income levels that justify the acquisition. We may suffer loss of key employees, customers and strategic partners of acquired companies and it may be difficult to implement our corporate culture at acquired companies. We may be subject to claims by terminated employees, shareholders of acquired companies and other third parties related to the transaction. Acquisitions may also result in one-time charges (such as acquisition-related expenses, write-offs, restructuring charges, or future impairment of goodwill), contingent liabilities, adverse tax consequences, additional stock-based compensation expense and other charges that adversely affect our operating results. Additionally, we may fund acquisitions of new businesses or strategic alliances by utilizing cash, raising debt, issuing shares of common stock, or other mechanisms.

While the risks above may be relevant to all of our acquisitions, our recently announced acquisition of SMSC, when completed, will be a larger and more complex transaction than our other recent transactions and exposes us to greater risks and liabilities than we have encountered in the past.

Further, when we decide to sell assets or a business, we may encounter difficulty in finding or completing divestiture opportunities or alternative exit strategies on acceptable terms or in a timely manner. These circumstances could delay the accomplishment of our strategic objectives or cause us to incur additional expenses with respect to a business that we want to dispose of, or we may dispose of a business at a price or on terms that are less favorable than we had anticipated. Even following a divestiture, we may be contractually obligated with respect to certain continuing obligations to customers, vendors or other third parties and such obligations may have a material adverse impact on our results of operation and financial condition.

In addition to acquisitions, we have in the past and expect in the future to enter into joint development agreements or other business or strategic relationships with other companies. These transactions are subject to a number of risks similar to those we face with our acquisitions including our ability to realize the expected benefits of any such transaction, to successfully market and sell any products resulting from such transactions or to successfully integrate any technology developed through such transactions.

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We may in the future incur impairments to goodwill or long-lived assets.

We review our long-lived assets, including goodwill and other intangible assets, for impairment annually in the fourth fiscal quarter or whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. Factors that may be considered in assessing whether goodwill or intangible assets may not be recoverable include a decline in our stock price or market capitalization, reduced estimates of future cash flows and slower growth rates in our industry. Our valuation methodology for assessing impairment requires management to make judgments and assumptions

based on historical experience and to rely heavily on projections of future operating performance. Because we operate in highly competitive environments, projections of future operating results and cash flows may vary significantly from our actual results. No goodwill or long-lived asset impairment charges were recorded in fiscal 2011 or fiscal 2012.

Our financial condition and results of operations could be adversely affected if we do not effectively manage our current or future debt.

As a result of our sale of $1.15 billion of principal value 2.125% junior subordinated convertible debentures in December 2007, we have a substantially greater amount of long-term debt than we have maintained in the past. In August 2011, we entered into a $750 million revolving credit agreement. Although we have not yet borrowed under such credit agreement, we expect to borrow a significant amount under such agreement in connection with the closing of our acquisition of SMSC later this year. Our maintenance of substantial levels of debt could adversely affect our ability to take advantage of corporate opportunities and could adversely affect our financial condition and results of operations. We may need or desire to refinance all or a portion of our debentures or any other future indebtedness and there can be no assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms, if at all.

Conversion of our debentures will dilute the ownership interest of existing stockholders, including holders who had previously converted their debentures.

The conversion of some or all of our outstanding debentures will dilute the ownership interest of existing stockholders to the extent we deliver common stock upon conversion of the debentures. Upon conversion, we may satisfy our conversion obligation by delivering cash, shares of common stock or any combination, at our option. If upon conversion we elect to deliver cash for the lesser of the conversion value and principal amount of the debentures, we would pay the holder the cash value of the applicable number of shares of our common stock. Upon conversion, we intend to satisfy the lesser of the principal amount or the conversion value of the debentures in cash. If the conversion value of a debenture exceeds the principal amount of the debenture, we may also elect to deliver cash in lieu of common stock for the conversion value in excess of the one thousand dollars principal amount (i.e., the conversion spread). There would be no adjustment to the numerator in the net income per common share computation for the cash settled portion of the debentures as that portion of the debt instrument will always be settled in cash. The conversion spread will be included in the denominator for the computation of diluted net income per common share. Any sales in the public market of any common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the debentures may encourage short selling by market participants because the conversion of the debentures could be used to satisfy short positions, or anticipated conversion of the debentures into shares of our common stock could depress the price of our common stock.

Our reported financial results may be adversely affected by new accounting pronouncements or changes in existing accounting standards and practices.

We prepare our financial statements in conformity with accounting principles generally accepted in the U.S. These accounting principles are subject to interpretation or changes by the FASB and the SEC. New accounting pronouncements and varying interpretations of accounting standards and practices have occurred in the past and are expected to occur in the future. New accounting pronouncements or a change in the interpretation of existing accounting standards or practices may have a significant effect on our reported financial results and may even affect our reporting of transactions completed before the change is announced or effective.

Potential U.S. tax legislation regarding our foreign earnings could materially and adversely impact our business and financial results.

Currently, a majority of our revenue is generated from customers located outside the U.S., and a substantial portion of our assets, including employees, are located outside the U.S. Present U.S. income taxes and foreign withholding taxes have not been provided on undistributed earnings for certain of our non-U.S. subsidiaries, because such earnings are intended to be indefinitely reinvested in the operations of those subsidiaries. In recent years, there have been a number of initiatives proposed by the Obama administration and members of Congress regarding the tax treatment of such undistributed earnings.  If adopted,

21

certain of these initiatives would substantially reduce our ability to defer U.S. taxes including repealing the deferral of U.S. taxation of foreign earnings, eliminating utilization of or substantially reducing our ability to claim foreign tax credits, and eliminating various tax deductions until foreign earnings are repatriated to the U.S. Changes in tax law such as these proposals could have a material negative impact on our financial position and results of operations.

The value of our investments in marketable equity investments could change materially.

Our investments in available-for-sale marketable securities at March 31, 2012 consist of shares of public company common stock, the value of which is determined by the closing price of such shares on the respective markets on which the shares are traded as of our balance sheet date. The market value of these investments was approximately $5.3 million at March 31, 2012. The stock prices of these securities could materially decrease due to company performance or market-related activity, negatively affecting the value of these investments. If we wanted to liquidate these investments at a time in which the stock prices had decreased from current levels, our realized return would be materially and adversely affected. Depending on the number of shares we desire to sell relative to the daily trading volume in the shares, in the event we desire to sell our marketable securities, it may take several weeks or months to dispose of our position and our efforts to sell could drive down the price of the shares we are selling.

We may not realize a return on our non-marketable equity investments.

At March 31, 2012, we had investments of $7.7 million in several privately held companies, including those that we acquired as a result of our acquisition of SST. These companies range from early-stage companies to more mature companies with established revenue and business models. Many factors are critical to the success of these companies, including product and technology development, market acceptance of their products and technology, and achievement of financial and operational efficiencies. If any of these private companies are unsuccessful as a result of these or other factors, we could lose all or part of our investment in that company. Also, if we determine that an other-than-temporary impairment to fair value exists in any of our non-marketable equity investments, we will need to write down the investment to its fair value and recognize the related impairment charge.

Additionally, we may desire to dispose of one or more of these non-marketable equity investments from time to time. However, our investments in these private companies are not liquid and we may not be able to dispose of the investments to our advantage or even at all. Also, for investments accounted for under the equity method of accounting, the income or loss we are required to share from the investee's income or loss could affect our earnings. Gains or losses from equity securities could vary from our expectations depending on gains or losses realized on the sale or exchange of securities, gains or losses from equity method investments, and impairment charges.

Credit conditions have adversely impacted our holdings of auction rate securities.

At March 31, 2012, $10.2million of the fair value of our investment portfolio was invested in ARS.  Historically, the carrying value of ARS approximated fair value due to the frequent resetting of the interest rates.  With the continuing liquidity issues in the global credit and capital markets, our ARS have experienced multiple failed auctions.  As a result, we will not be able to access such funds until a future auction on these investments is successful. 

Our ARS have experienced multiple rating downgrades by the major rating agencies. The fair value of these ARS has been estimated based on market information and estimates determined by management and could change significantly based on market conditions. Based on the estimated values, we concluded these investments were other than temporarily impaired and have recognized impairment charges on these investments in prior periods. In fiscal 2012, we recognized a $0.3 million gain on our ARS positions as a gain on redemption at par value of one ARS position offset impairment charges recognized during the year. We recognized impairment charges of $1.6 million in fiscal 2011. If the issuers are unable to successfully close future auctions or if their credit ratings deteriorate further, we may be required to further adjust the carrying value of the investments through an additional impairment charge to earnings.

The majority of our short and long-term investments are in highly rated government agency bonds and corporate bonds. Other than with respect to our holdings of ARS, we have not experienced any liquidity or impairment issues with such investments. However, there can be no assurance that credit market conditions will not in the future adversely affect the liquidity or value of our investments in government agency bonds or corporate bonds.

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Item 1B.    UNRESOLVED STAFF COMMENTS

None.

Item 2.    PROPERTIES

At March 31, 2012, we owned the facilities described below:

Location	Approximate Total Sq. Ft.	Uses
Chandler, Arizona	415,000	Executive and Administrative Offices; Wafer Probe; R&D Center; Sales and Marketing; and Computer and Service Functions
Tempe, Arizona	379,000	Wafer Fabrication (Fab 2); R&D Center; Administrative Offices; and Warehousing
Gresham, Oregon	826,500	Wafer Fabrication (Fab 4); R&D Center; Administrative Offices; and Warehousing
Chacherngsao, Thailand	489,000	Test and Assembly; Wafer Probe; Sample Center; Warehousing; and Administrative Offices
Chacherngsao, Thailand	215,000	Assembly and Test
Bangalore, India	67,174	Research and Development; Marketing Support and Administrative Offices

In addition to the facilities we own, we lease several research and development facilities and sales offices in North America, Europe and Asia.  Our aggregate monthly rental payment for our leased facilities is approximately $0.8 million.

We currently believe that our existing facilities are suitable and will be adequate to meet our requirements for at least the next 12 months.

See page 37 for a discussion of the capacity utilization of our manufacturing facilities.

Item 3.    LEGAL PROCEEDINGS

In the ordinary course of our business, we are involved in a limited number of legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them. We also periodically receive notification from various third parties alleging infringement of patents, intellectual property rights or other matters. With respect to these pending legal actions to which we are a party, although the outcome of these actions are generally not determinable, we believe that the ultimate resolution of these matters will not harm our business and will not have a material adverse effect on our financial position, cash flows or results of operations.  Litigation relating to the semiconductor industry is not uncommon, and we are, and from time to time have been, subject to such litigation.  No assurances can be given with respect to the extent or outcome of any such litigation in the future.

Item 4.    MINE SAFETY DISCLOSURES

Not applicable.

PART II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is traded on the NASDAQ Global Market under the symbol "MCHP."  Our common stock has been quoted on such market since our initial public offering on March 19, 1993.  The following table sets forth the quarterly high and low closing prices of our common stock as reported by NASDAQ for our last two fiscal years.

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Fiscal 2012	High	Low	Fiscal 2011	High	Low
First Quarter	$41.33	$35.69	First Quarter	$30.62	$26.61
Second Quarter	$38.39	$29.60	Second Quarter	$31.56	$27.60
Third Quarter	$37.09	$30.43	Third Quarter	$36.31	$30.46
Fourth Quarter	$38.42	$35.17	Fourth Quarter	$38.31	$34.72

Stock Price Performance Graph

The following graph and table show a comparison of the five-year cumulative total stockholder return, calculated on a dividend reinvestment basis, for Microchip Technology Incorporated, the Standard & Poor's (S&P) 500 Stock Index, and the Philadelphia Semiconductor Index.

	Cumulative Total Return
	March 2007	March 2008	March 2009	March 2010	March 2011	March 2012
Microchip Technology Incorporated	100.00	95.35	65.13	91.36	128.84	131.12
S&P 500 Stock Index	100.00	94.92	58.77	88.02	101.79	110.48
Philadelphia Semiconductor Index	100.00	96.18	74.68	104.58	122.11	145.95

Data acquired by Research Data Group, Inc. (www.researchdatagroup.com)

On May 18, 2012, there were approximately 340 holders of record of our common stock.  This figure does not reflect beneficial ownership of shares held in nominee names.

We have been declaring and paying quarterly cash dividends on our common stock since the third quarter of fiscal 2003.  Our total cash dividends paid were $266.2 million, $256.8 million and $249.6 million in fiscal 2012, fiscal 2011 and fiscal 2010, respectively.  The following table sets forth our quarterly cash dividends per common share and the total amount of the dividend payment for each quarter in fiscal 2012 and fiscal 2011.  At the end of our fiscal 2011 third quarter, a second cash dividend of $0.345 per share was paid in the aggregate amount of $65.0 million which was an acceleration of the dividend that would normally have been paid in March 2011 (amounts in thousands, except per share amounts):

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Fiscal 2012	Dividends per Common Share	Aggregate Amount ofDividend Payment	Fiscal 2011	Dividends per Common Share	Aggregate Amount ofDividend Payment
First Quarter	$0.346	$65,900	First Quarter	$0.342	$63,452
Second Quarter	0.347	66,206	Second Quarter	0.343	63,908
Third Quarter	0.348	66,813	Third Quarter	0.344	64,496
Fourth Quarter	0.349	67,259	Third Quarter*	0.345	64,952
			Fourth Quarter	None	None

*This dividend would normally have been paid in the fourth fiscal quarter.

On May 1, 2012, we declared a quarterly cash dividend of $0.35 per share, which will be paid on May 31, 2012 to stockholders of record on May 17, 2012 and the total amount of such dividend is expected to be approximately $67.8 million.  Our Board of Directors is free to change our dividend practices at any time and to increase or decrease the dividend paid, or not to pay a dividend, on our common stock on the basis of our results of operations, financial condition, cash requirements and future prospects, and other factors deemed relevant by our Board of Directors.  Our current intent is to provide for ongoing quarterly cash dividends depending upon market conditions and our results of operations.

Please refer to "Item 12 - Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters," at page 48 below, for the information required by Item 201(d) of Regulation S-K with respect to securities authorized for issuance under our equity compensation plans at March 31, 2012.

Item 6.    SELECTED FINANCIAL DATA 

You should read the following selected consolidated financial data for the five-year period ended March 31, 2012 in conjunction with our consolidated financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Items 7 and 8 of this Form 10-K.  Our consolidated statements of income data for each of the years in the three-year period ended March 31, 2012, and the balance sheet data as of March 31, 2012 and 2011, are derived from our audited consolidated financial statements, included in Item 8 of this Form 10-K.  The statements of operations data for the years ended March 31, 2009 and 2008 and balance sheet data as of March 31, 2010, 2009 and 2008 have been derived from our audited consolidated financial statements not included herein (for information below all amounts are in thousands, except per share data).

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Statement of Income Data:

	Year ended March 31,
	2012			2011			2010			2009			2008
Net sales	$	1,383,176		$	1,487,205		$	947,729		$	903,297		$	1,035,737
Cost of sales	590,782			612,769			413,487			386,793			410,799
Research and development	182,650			170,607			120,823			115,524			120,864
Selling, general and administrative	212,391			227,781			167,222			161,218			175,646
Special charges (1)	837			1,865			1,238			6,434			26,763
Operating income	396,516			474,183			244,959			233,328			301,665
(Losses) gains on equity method investments	(195		)	157			—			—			—
Interest income	17,992			16,002			15,325			32,545			54,851
Interest expense	(34,266		)	(31,521		)	(31,150		)	(29,440		)	(9,495		)
Other (expense) income, net	(352		)	1,877			8,679			(4,354		)	2,435
Income from continuing operations before income taxes	379,695			460,698			237,813			232,079			349,456
Income tax provision (benefit)	42,990			31,531			20,808			(13,508		)	52,663
Net income from continuing operations	$	336,705		$	429,167		$	217,005		$	245,587		$	296,793
Basic net income per common share – continuing operations	$	1.76		$	2.29		$	1.18		$	1.34		$	1.43
Diluted net income per common share – continuing operations	$	1.65		$	2.20		$	1.16		$	1.31		$	1.40
Dividends declared per common share	$	1.390		$	1.374		$	1.359		$	1.346		$	1.205
Basic common shares outstanding	191,283			187,066			183,642			183,158			207,220
Diluted common shares outstanding	203,519			194,715			187,339			186,788			212,048

Balance Sheet Data:

	March 31,
	2012		2011		2010		2009		2008
Working capital	$	1,767,988	$	1,434,667	$	1,407,579	$	1,587,144	$	1,526,649
Total assets	3,083,776		2,968,058		2,516,313		2,405,711		2,496,031
Long-term obligations, less current portion	355,050		347,334		340,672		334,184		329,409
Stockholders' equity	1,990,673		1,812,438		1,533,380		1,490,311		1,539,000

⁽¹⁾  Discussions of the special charges for the fiscal years ended March 31, 2012, 2011 and 2010 are contained in Note 4 to our consolidated financial statements.  An explanation of the special charges for the fiscal years ended March 31, 2009 and 2008 is provided below. 

The following table presents a summary of special charges for the five-year period ended March 31, 2012:

	Year ended March 31,
	2012			2011		2010		2009		2008
Acquisition related (income) expenses	$	(660	)	$	1,865	$	—	$	—	$	—
Patent licenses	1,497			—		1,238		4,000		—
In-process research and development expenses	—			—		—		860		—
Abandoned acquisition related expenses	—			—		—		1,574		—
Loss on sale of Fab 3	—			—		—		—		26,763
Totals	$	837		$	1,865	$	1,238	$	6,434	$	26,763

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Fiscal 2009 Special Charges

Patent Licenses

We entered into a patent portfolio license effective March 31, 2009 with an unrelated third-party that covers both issued patents and patent applications and settled alleged infringement claims.  The total payment made to the third-party was $8.25 million, $4.0 million of which was expensed in the fourth quarter of fiscal 2009 and the remaining $4.25 million was recorded as a prepaid royalty that will be amortized over the estimated 20-year remaining life of the patents.  We entered into another patent portfolio license with the same unrelated third party in March 2011 and $2.75 million was paid covering patent applications and was recorded as a prepaid royalty that will be amortized over the life of the patents.

In-Process Research and Development

During the third quarter of fiscal 2009, we completed our acquisition of Hampshire Company, a leader in the large format touch screen controller market.  As a result of the acquisition, we incurred a $0.5 million in-process research and development charge in the third quarter of fiscal 2009.

During the fourth quarter of fiscal 2009, we completed the acquisition of HI-TECH Software, a provider of software development tools and compilers.  As a result of the acquisition, we incurred a $0.2 million in-process research and development charge in the fourth quarter of fiscal 2009.

During the fourth quarter of fiscal 2009, we completed our acquisition of R&E International, a leader in developing innovative integrated circuits for smoke and carbon monoxide detectors and other life-safety systems.  As a result of the acquisition, we incurred a $0.2 million in-process research and development charge in the fourth quarter of fiscal 2009.

Abandoned Acquisition Expenses

During the third quarter of fiscal 2009, we pursued a potential acquisition and such efforts were subsequently terminated during the fourth quarter of fiscal 2009. As such, during the fourth quarter of fiscal 2009, we expensed $1.6 million of various costs associated with the terminated acquisition.

Fiscal 2008 Special Charge – Loss on Sale of Fab 3

We received an unsolicited offer on our Puyallup, Washington facility (Fab 3) in September 2007.  We assessed our available capacity in our current facilities, along with potential available capacity from outside foundries and determined the capacity of Fab 3 would not be required in the near term.  As a result of this assessment, we accepted the offer on September 21, 2007, and the transaction closed on October 19, 2007.  We received $27.5 million in cash, net of expenses associated with the sale, and recognized a loss on sale of $26.8 million, representing the difference between the carrying value of the assets and the amounts received.

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-looking Statements

This report, including "Item 1 – Business," "Item 1A – Risk Factors," and "Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations," contains certain forward-looking statements that involve risks and uncertainties, including statements regarding our strategy, financial performance and revenue sources.  We use words such as "anticipate," "believe," "plan," "expect," "estimate," "future," "continue," "intend" and similar expressions to identify forward-looking statements.  These forward-looking statements include, without limitation, statements regarding the following:

• The effects that adverse global economic conditions and fluctuations in the global credit and equity markets may have on our financial condition and results of operations;

• The effects and amount of competitive pricing pressure on our product lines;

• Our ability to moderate future average selling price declines;

• The effect of product mix, capacity utilization, yields, fixed cost absorption, competition and economic conditions on gross margin;

• The amount of, and changes in, demand for our products and those of our customers;

• The level of orders that will be received and shipped within a quarter;

• Our expectation that our inventory levels will stay about flat in the June 2012 quarter compared to the March 2012 quarter and that it will allow us to maintain competitive lead times;

• The effect that distributor and customer inventory holding patterns will have on us;

• Our belief that customers recognize our products and brand name and use distributors as an effective supply channel;

• Our belief that deferred cost of sales are recorded at their approximate carrying value and will have low risk of material impairment;

• Our belief that our direct sales personnel combined with our distributors provide an effective means of reaching our customer base;

• Our ability to increase the proprietary portion of our analog and interface product lines and the effect of such an increase;

• Our belief that our processes afford us both cost-effective designs in existing and derivative products and greater functionality in new product designs;

• The impact of any supply disruption we may experience;

• Our ability to effectively utilize our facilities at appropriate capacity levels and anticipated costs;

• That we adjust capacity utilization to respond to actual and anticipated business and industry-related conditions;

• That our existing facilities will provide sufficient capacity to respond to increases in demand with modest incremental capital expenditures;

• That manufacturing costs will be reduced by transition to advanced process technologies;

• Our ability to maintain manufacturing yields;

• Continuing our investments in new and enhanced products;

• The cost effectiveness of using our own assembly and test operations;

• Our anticipated level of capital expenditures;

• Continuation and amount of quarterly cash dividends;

• The sufficiency of our existing sources of liquidity to finance anticipated capital expenditures and otherwise meet our anticipated cash requirements, and the effects that our contractual obligations are expected to have on them;

• The impact of seasonality on our business;

• The accuracy of our estimates used in valuing employee equity awards;

• That the resolution of legal actions will not have a material effect on our business, and the accuracy of our assessment of the probability of loss and range of potential loss;

• The recoverability of our deferred tax assets;

• The adequacy of our tax reserves to offset any potential tax liabilities, having the appropriate support for our income tax positions and the accuracy of our estimated tax rate;

• Our belief that the expiration of any tax holidays will not have a material impact on our overall tax expense or effective tax rate;

• Our belief that the estimates used in preparing our consolidated financial statements are reasonable;

• Our belief that recently issued accounting pronouncements listed in this document will not have a significant impact on our consolidated financial statements;

• The accuracy of our estimates of the useful life and values of our property, assets and other liabilities;

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• The adequacy of our patent strategy, and our belief that the impact of the expiration of any particular patent will not have a material effect on our business;

• Our actions to vigorously and aggressively defend and protect our intellectual property on a worldwide basis;

• Our ability to obtain patents and intellectual property licenses and minimize the effects of litigation;

• The level of risk we are exposed to for product liability or indemnification claims;

• The effect of fluctuations in market interest rates on our income and/or cash flows;

• The effect of fluctuations in currency rates;

• The accuracy of our estimates of market information that determines the value of our Auction Rate Securities (ARS), and that the lack of markets for the ARS will not have a material impact on our liquidity, cash flow, or ability to fund operations;

• Our intention to satisfy the lesser of the principal amount or the conversion value of our debenture in cash;

• Our intention to indefinitely reinvest undistributed earnings of certain non-US subsidiaries in those subsidiaries;

• Our intent to maintain a high-quality investment portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations and delivers an appropriate yield;

• Our intention to fund the SMSC acquisition purchase price using a portion of our existing balance of cash, cash equivalents or short-term investments and borrowings under our credit agreement; and

• Our ability to collect accounts receivable.

Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors including those set forth in "Item 1A – Risk Factors," and elsewhere in this Form 10-K.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  You should not place undue reliance on these forward-looking statements.  We disclaim any obligation to update information contained in any forward-looking statement.

Introduction

The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this document, as well as with other sections of this Annual Report on Form 10-K, including "Item 1 – Business;" "Item 6 – Selected Financial Data;" and "Item 8 – Financial Statements and Supplementary Data."

We begin our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) with a summary of our overall business strategy to give the reader an overview of the goals of our business and the overall direction of our business and products.  This is followed by a discussion of the Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.  In the next section, beginning at page 34, we discuss our Results of Operations for fiscal 2012 compared to fiscal 2011, and for fiscal 2011 compared to fiscal 2010.  We then provide an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in sections titled "Liquidity and Capital Resources," "Contractual Obligations" and "Off-Balance Sheet Arrangements."

Strategy

Our goal is to be a worldwide leader in providing specialized semiconductor products for a wide variety of embedded control applications.  Our strategic focus is on embedded control products, which include microcontrollers, high-performance linear and mixed signal devices, power management and thermal management devices, interface devices, Serial EEPROMs, and our patented KeeLoq^® security devices.  We provide highly cost-effective embedded control products that also offer the advantages of small size, high performance, low voltage/power operation and ease of development, enabling timely and cost-effective embedded control product integration by our customers.  With our acquisition of SST in April 2010, we added Flash-IP solutions and SuperFlash memory products to our strategic focus.  We license SuperFlash technology to foundries, integrated device manufacturers and design partners throughout the world for use in the manufacture of their advanced microcontroller products.

We sell our products to a broad base of domestic and international customers across a variety of industries. The principal markets that we serve include consumer, automotive, industrial, office automation and telecommunications.  Our business is subject to fluctuations based on economic conditions within these markets. 

Our manufacturing operations include wafer fabrication and assembly and test.  The ownership of our manufacturing resources is an important component of our business strategy, enabling us to maintain a high level of manufacturing control resulting in us being one of the lowest cost producers in the embedded control industry.  By owning our wafer fabrication facilities and our assembly and test operations, and by employing statistical process control techniques, we have been able to

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achieve and maintain high production yields.  Direct control over manufacturing resources allows us to shorten our design and production cycles.  This control also allows us to capture a portion of the wafer manufacturing and the assembly and test profit margin. We do outsource a portion of our manufacturing requirements to third parties.

We employ proprietary design and manufacturing processes in developing our embedded control products.  We believe our processes afford us both cost-effective designs in existing and derivative products and greater functionality in new product designs.  While many of our competitors develop and optimize separate processes for their logic and memory product lines, we use a common process technology for both microcontroller and non-volatile memory products.  This allows us to more fully leverage our process research and development costs and to deliver new products to market more rapidly.  Our engineers utilize advanced computer-aided design (CAD) tools and software to perform circuit design, simulation and layout, and our in-house photomask and wafer fabrication facilities enable us to rapidly verify design techniques by processing test wafers quickly and efficiently.

We are committed to continuing our investment in new and enhanced products, including development systems, and in our design and manufacturing process technologies.  We believe these investments are significant factors in maintaining our competitive position.  Our current research and development activities focus on the design of new microcontrollers, digital signal controllers, memory and mixed-signal products, Flash-IP systems, new development systems, software and application-specific software libraries.  We are also developing new design and process technologies to achieve further cost reductions and performance improvements in our products.

We market our products worldwide primarily through a network of direct sales personnel and distributors.  Our distributors focus primarily on servicing the product and technical support requirements of a broad base of diverse customers.  We believe that our direct sales personnel combined with our distributors provide an effective means of reaching this broad and diverse customer base.  Our direct sales force focuses primarily on major strategic accounts in three geographical markets: the Americas, Europe and Asia.  We currently maintain sales and support centers in major metropolitan areas in North America, Europe and Asia.  We believe that a strong technical service presence is essential to the continued development of the embedded control market.  Many of our field sales engineers (FSEs), field application engineers (FAEs), and sales management have technical degrees and have been previously employed in an engineering environment.  We believe that the technical knowledge of our sales force is a key competitive advantage in the sale of our products.  The primary mission of our FAE team is to provide technical assistance to strategic accounts and to conduct periodic training sessions for FSEs and distributor sales teams.  FAEs also frequently conduct technical seminars for our customers in major cities around the world, and work closely with our distributors to provide technical assistance and end-user support.

Critical Accounting Policies and Estimates

General

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.  We review the accounting policies we use in reporting our financial results on a regular basis.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities.  On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, business combinations, share-based compensation, inventories, income taxes, junior subordinated convertible debentures and contingencies.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Our results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions.  We review these estimates and judgments on an ongoing basis.  We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.  We also have other policies that we consider key accounting policies, such as our policy regarding revenue recognition to OEMs; however, we do not believe these policies require us to make estimates or judgments that are as difficult or subjective as our policies described below.

Revenue Recognition – Distributors

Our distributors worldwide generally have broad price protection and product return rights, so we defer revenue recognition until the distributor sells the product to their customer.  Revenue is recognized when the distributor sells the product to an end-user, at which time the sales price becomes fixed or determinable.  Revenue is not recognized upon shipment to our distributors since, due to discounts from list price as well as price protection rights, the sales price is not substantially fixed or determinable at that time.  At the time of shipment to these distributors, we record a trade receivable for the selling

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price as there is a legally enforceable right to payment, relieve inventory for the carrying value of goods shipped since legal title has passed to the distributor, and record the gross margin in deferred income on shipments to distributors on our consolidated balance sheets.

Deferred income on shipments to distributors effectively represents the gross margin on the sale to the distributor; however, the amount of gross margin that we recognize in future periods could be less than the deferred margin as a result of credits granted to distributors on specifically identified products and customers to allow the distributors to earn a competitive gross margin on the sale of our products to their end customers and price protection concessions related to market pricing conditions.

We sell the majority of the items in our product catalog to our distributors worldwide at a uniform list price.  However, distributors resell our products to end customers at a very broad range of individually negotiated price points.  The majority of our distributors' resales require a reduction from the original list price paid.  Often, under these circumstances, we remit back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors' outstanding accounts receivable balance.  The credits are on a per unit basis and are not given to the distributor until they provide information to us regarding the sale to their end customer.  The price reductions vary significantly based on the customer, product, quantity ordered, geographic location and other factors and discounts to a price less than our cost have historically been rare.  The effect of granting these credits establishes the net selling price to our distributors for the product and results in the net revenue recognized by us when the product is sold by the distributors to their end customers.  Thus, a portion of the "deferred income on shipments to distributors" balance represents the amount of distributors' original purchase price that will be credited back to the distributor in the future.  The wide range and variability of negotiated price concessions granted to distributors does not allow us to accurately estimate the portion of the balance in the deferred income on shipments to distributors account that will be credited back to the distributors.  Therefore, we do not reduce deferred income on shipments to distributors or accounts receivable by anticipated future concessions; rather, price concessions are typically recorded against deferred income on shipments to distributors and accounts receivable when incurred, which is generally at the time the distributor sells the product.  At March 31, 2012, we had approximately $159.1 million of deferred revenue and $50.4 million in deferred cost of sales recognized as $108.7 million of deferred income on shipments to distributors.  At March 31, 2011, we had approximately $208.1 million of deferred revenue and $68.1 million in deferred cost of sales recognized as $140.0 million of deferred income on shipments to distributors.  The deferred income on shipments to distributors that will ultimately be recognized in our income statement will be lower than the amount reflected on the balance sheet due to additional price credits to be granted to the distributors when the product is sold to their customers.  These additional price credits historically have resulted in the deferred income approximating the overall gross margins that we recognize in the distribution channel of our business.

Distributor advances, reflected as a reduction of deferred income on shipments to distributors on our consolidated balance sheets, totaled $51.7 million at March 31, 2012 and $71.9 million at March 31, 2011.  On sales to distributors, our payment terms generally require the distributor to settle amounts owed to us for an amount in excess of their ultimate cost.  The sales price to our distributors may be higher than the amount that the distributors will ultimately owe us because distributors often negotiate price reductions after purchasing products from us and such reductions are often significant.  It is our practice to apply these negotiated price discounts to future purchases, requiring the distributor to settle receivable balances, on a current basis, generally within 30 days, for amounts originally invoiced.  This practice has an adverse impact on the working capital of our distributors.  As such, we have entered into agreements with certain distributors whereby we advance cash to the distributors to reduce the distributor's working capital requirements.  These advances are reconciled at least on a quarterly basis and are estimated based on the amount of ending inventory as reported by the distributor multiplied by a negotiated percentage.  Such advances have no impact on our revenue recognition or our consolidated statements of income.  We process discounts taken by distributors against our deferred income on shipments to distributors' balance and true-up the advanced amounts generally after the end of each completed fiscal quarter.  The terms of these advances are set forth in binding legal agreements and are unsecured, bear no interest on unsettled balances and are due upon demand.  The agreements governing these advances can be canceled by us at any time.

We reduce product pricing through price protection based on market conditions, competitive considerations and other factors.  Price protection is granted to distributors on the inventory they have on hand at the date the price protection is offered.  When we reduce the price of our products, it allows the distributor to claim a credit against its outstanding accounts receivable balances based on the new price of the inventory it has on hand as of the date of the price reduction.  There is no immediate revenue impact from the price protection, as it is reflected as a reduction of the deferred income on shipments to distributors' balance.

Products returned by distributors and subsequently scrapped have historically been immaterial to our consolidated results of operations.  We routinely evaluate the risk of impairment of the deferred cost of sales component of the deferred income on

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shipments to distributors account.  Because of the historically immaterial amounts of inventory that have been scrapped, and historically rare instances where discounts given to a distributor result in a price less than our cost, we believe the deferred costs are recorded at their approximate carrying value.

Business Combinations

All of our business combinations are accounted for at fair value under the acquisition method of accounting.  Under the acquisition method of accounting, (i) acquisition-related costs, except for those costs incurred to issue debt or equity securities, will be expensed in the period incurred; (ii) non-controlling interests will be valued at fair value at the acquisition date; (iii) in-process research and development will be recorded at fair value as an intangible asset at the acquisition date and amortized once the technology reaches technological feasibility; (iv) restructuring costs associated with a business combination will be expensed subsequent to the acquisition date; and (v) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date will be recognized through income tax expense or directly in contributed capital.  The measurement of fair value of assets accrued and liabilities assumed requires significant judgment.  The valuation of intangible assets and acquired investments in privately held companies, in particular, requires that we use valuation techniques such as the income approach.  The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires the following significant estimates:  revenue, expenses, capital spending and other costs, and discount rates based on the respective risks of the cash flows.  The valuation of non-marketable equity investments acquired also takes into account variables such as conditions reflected in the capital markets, recent financing activity by the investees, the investees' capital structure and the terms of the investees' issued interests.

Share-based Compensation

We measure at fair value and recognize compensation expense for all share-based payment awards, including grants of employee stock options, restricted stock units (RSUs) and employee stock purchase rights, to be recognized in our financial statements based on their respective grant date fair values.  Total share-based compensation in fiscal 2012 was $38.3 million, of which $32.7 million was reflected in operating expenses.  Total share-based compensation included in cost of sales in fiscal 2012 was $5.6 million.  Total share-based compensation included in our inventory balance was $4.6 million at March 31, 2012.

Determining the appropriate fair-value model and calculating the fair value of share-based awards at the date of grant requires judgment.  The fair value of our RSUs is based on the fair market value of our common stock on the date of grant discounted for expected future dividends.  We use the Black-Scholes option pricing model to estimate the fair value of employee stock options and rights to purchase shares under our employee stock purchase plans.  Option pricing models, including the Black-Scholes model, require the use of input assumptions, including expected volatility, expected life, expected dividend rate, and expected risk-free rate of return.  We use a blend of historical and implied volatility based on options freely traded in the open market as we believe this is most reflective of market conditions and a better indicator of expected volatility than using purely historical volatility.  The expected life of the awards is based on historical and other economic data trended into the future.  The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our awards.  The dividend yield assumption is based on our history and expectation of future dividend payouts.  We estimate the number of share-based awards that will be forfeited due to employee turnover.  Quarterly changes in the estimated forfeiture rate can have a significant effect on reported share-based compensation, as the effect of adjusting the rate for all expense amortization after April 1, 2006 is recognized in the period the forfeiture estimate is changed.  If the actual forfeiture rate is higher or lower than the estimated forfeiture rate, then an adjustment is made to increase or decrease the estimated forfeiture rate, which will result in a decrease or increase to the expense recognized in our financial statements.  If forfeiture adjustments are made, they would affect our gross margin, research and development expenses, and selling, general, and administrative expenses.  The effect of forfeiture adjustments in fiscal 2012 was immaterial.

We evaluate the assumptions used to value our awards on a quarterly basis.  If factors change and we employ different assumptions, share-based compensation expense may differ significantly from what we have recorded in the past.  If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense.  Future share-based compensation expense and unearned share-based compensation will increase to the extent that we grant additional equity awards to employees or we assume unvested equity awards in connection with acquisitions. 

Inventories

Inventories are valued at the lower of cost or market using the first-in, first-out method.  We write down our inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.  If actual market conditions are

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less favorable than those we projected, additional inventory write-downs may be required.  Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later

suggest that increased carrying amounts are recoverable.  In estimating our inventory obsolescence, we primarily evaluate estimates of demand over a 12-month period and record impairment charges for inventory on hand in excess of the estimated 12-month demand.

In periods where our production levels are substantially below our normal operating capacity, the reduced production levels of our manufacturing facilities are charged directly to cost of sales.   As a result of decreased production in our wafer fabs, approximately $6.7 million and $22.3 million was charged directly to cost of sales in fiscal 2012 and 2010, respectively. There were no such charges in fiscal 2011.

Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate.  This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes.  These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets.  We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income within the relevant jurisdiction and to the extent we believe that recovery is not likely, we must establish a valuation allowance.  We have provided valuation allowances for certain of our deferred tax assets where it is more likely than not that some portion, or all of such assets, will not be realized.  At March 31, 2012, the valuation allowances totaled $78.5 million and consists of state net operating loss carryforwards, foreign tax credits and state tax credits.  Should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.  At March 31, 2012, our gross deferred tax asset was $91.2 million.

Various taxing authorities in the U.S. and other countries in which we do business scrutinize the tax structures employed by businesses.  Companies of our size and complexity are regularly audited by the taxing authorities in the jurisdictions in which they conduct significant operations.  We are currently under audit by the U.S. Internal Revenue Service (IRS) for our fiscal years 2009 and 2010.  Fiscal years 2011 and 2012 are open for examination by tax authorities.  We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional tax payments are probable.  We believe that we maintain appropriate tax reserves to offset any potential tax liabilities that may arise upon these and other pending audits in the U.S. and other countries in which we do business.  If such amounts ultimately prove to be unnecessary, the resulting reversal of such reserves would result in tax benefits being recorded in the period the reserves are no longer deemed necessary.  If such amounts ultimately prove to be less than an ultimate assessment, a future charge to expense would be recorded in the period in which the assessment is determined. 

Junior Subordinated Convertible Debentures

We separately account for the liability and equity components of our junior subordinated convertible debentures in a manner that reflects our nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized.  This results in a bifurcation of a component of the debt, classification of that component in equity and the accretion of the resulting discount on the debt to be recognized as part of interest expense in our consolidated statements of income.  Additionally, certain embedded features of the debentures qualify as derivatives and are bundled as a compound embedded derivative that is measured at fair value.  Lastly, we include the dilutive effect of the shares of our common stock issuable upon conversion of the outstanding junior subordinated convertible debentures in our diluted income per share calculation regardless of whether the market price trigger or other contingent conversion feature has been met.  We apply the treasury stock method as we have the intent and have adopted an accounting policy to settle the principal amount of the junior subordinated convertible debentures in cash.  This method results in incremental dilutive shares when the average fair value of our common stock for a reporting period exceeds the conversion price per share, which was $27.94 at March 31, 2012, and adjusts as dividends are recorded in the future.

Contingencies

In the ordinary course of our business, we are involved in a limited number of legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them.  We also periodically receive notifications from various third parties alleging infringement of patents, intellectual property rights or other matters.  With respect to pending legal actions to which we are a party, although the outcomes of these actions are not generally determinable, we believe that the ultimate resolution of these matters will not have a material adverse effect on our financial position, cash flows or results of operations.  Litigation relating to the semiconductor industry is not uncommon, and we are, and from time to time have been, subject to such litigation.  No assurances can be given with respect to the extent or outcome of any such litigation in the future.

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Results of Continuing Operations

The following table sets forth certain operational data as a percentage of net sales for the years indicated:

	Year Ended March 31,
	2012		2011		2010
Net sales	100.0	%	100.0	%	100.0	%
Cost of sales	42.7		41.2		43.6
Gross profit	57.3		58.8		56.4
Research and development	13.2		11.5		12.8
Selling, general and administrative	15.3		15.3		17.7
Special charges	0.1		0.1		0.1
Operating income	28.7	%	31.9	%	25.8	%

Net Sales

We operate in two industry segments and engage primarily in the design, development, manufacture and marketing of semiconductor products as well as the licensing of Flash intellectual property.  We sell our products to distributors and original equipment manufacturers, referred to as OEMs, in a broad range of market segments, perform ongoing credit evaluations of our customers and generally require no collateral.  In certain circumstances, a customer's financial condition may require collateral, and, in such cases, the collateral would be typically provided by letters of credit.

Our net sales of $1,383.2million in fiscal 2012 decreased by $104.0 million, or 7.0%, over fiscal 2011, and our net sales of $1,487.2 million in fiscal 2011 increased by $539.5 million, or 56.9%, over fiscal 2010.  The decrease in net sales in fiscal 2012 over fiscal 2011 was due primarily to weak general economic and semiconductor industry conditions.  The increase in net sales in fiscal 2011 over fiscal 2010 was due primarily to improving semiconductor industry conditions, market share gains in our microcontroller and analog product lines, and an increase in net sales due to our acquisition of SST.  Average selling prices for our semiconductor products were essentially flat in fiscal 2012 over fiscal 2011 and were down approximately 1% in fiscal 2011 over fiscal 2010.  The number of units of our semiconductor products sold was down approximately 8% in fiscal 2012 over fiscal 2011 and up approximately 54% in fiscal 2011 over fiscal 2010.  The average selling prices and the unit volumes of our sales are impacted by the mix of our products sold and overall semiconductor market conditions.  Key factors impacting the amount of net sales during the last three fiscal years include:

• global economic conditions in the markets we serve;

• semiconductor industry conditions;

• our acquisition of SST;

• inventory holding patterns of our customers;

• increasing semiconductor content in our customers' products;

• customers' increasing needs for the flexibility offered by our programmable solutions;

• our new product offerings that have increased our served available market; and

• continued market share gains in the segments of the markets we address.

Sales by product line for the fiscal years ended March 31, 2012, 2011 and 2010 were as follows (dollars in thousands):

	Year Ended March 31,
	2012		%	2011		%	2010		%
Microcontrollers	$	928,509	67.1	$	1,013,937	68.2	$	767,723	81.0
Memory products	179,217		13.0	221,219		14.9	80,158		8.5
Analog and interface products	171,165		12.4	177,994		12.0	99,848		10.5
Technology licensing	87,001		6.3	72,068		4.8	—		—
Other	17,284		1.2	1,987		0.1	—		—
Total Sales	$	1,383,176	100.0	$	1,487,205	100.0	$	947,729	100.0

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Microcontrollers

Our microcontroller product line represents the largest component of our total net sales.  Microcontrollers and associated application development systems accounted for approximately 67.1% of our total net sales in fiscal 2012, approximately 68.2% of our total net sales in fiscal 2011 and 81.0% of our total net sales in fiscal 2010.  The primary reason for the decrease in our microcontroller net sales as a percentage of our total net sales in fiscal 2011 compared to fiscal 2010 was our acquisition of SST which resulted in an increase in our memory product and technology licensing sales.

Net sales of our microcontroller products decreased approximately 8.4% in fiscal 2012 compared to fiscal 2011, and increased approximately 32.1% in fiscal 2011 compared to fiscal 2010.  The decrease in net sales in fiscal 2012 compared to fiscal 2011 and the increase in net sales in fiscal 2011 compared to fiscal 2010 resulted primarily from changes in general economic and semiconductor industry conditions in the end markets that we serve including the consumer, automotive, industrial control, communications and computing markets, as well as market share gains.

Historically, average selling prices in the semiconductor industry decrease over the life of any particular product.  The overall average selling prices of our microcontroller products have remained relatively constant over time due to the proprietary nature of these products.  We have experienced, and expect to continue to experience, moderate pricing pressure in certain microcontroller product lines, primarily due to competitive conditions.  We have in the past been able to, and expect in the future to be able to, moderate average selling price declines in our microcontroller product lines by introducing new products with more features and higher prices.  We may be unable to maintain average selling prices for our microcontroller products as a result of increased pricing pressure in the future, which could adversely affect our operating results.

Memory Products

Sales of our memory products accounted for approximately 13.0% of our total net sales in fiscal 2012, approximately 14.9% of our total net sales in fiscal 2011 and approximately 8.5% of our total net sales in fiscal 2010.  The primary reason for the increase in our memory product net sales as a percentage of our total net sales in fiscal 2011 compared to the prior fiscal year was our acquisition of SST’s SuperFlash memory products.

Net sales of our memory products decreased approximately 19.0% in fiscal 2012 compared to fiscal 2011, and increased approximately 176% in fiscal 2011 compared to fiscal 2010.  Excluding our SST memory product sales, our memory product sales increased approximately 20.0% in fiscal 2011 compared to fiscal 2010.  The decrease in memory product net sales in fiscal 2012 compared to fiscal 2011 was driven primarily by adverse customer demand conditions within the Serial EEPROM and Flash memory markets and weak general economic and semiconductor industry conditions. The increase in memory product net sales in fiscal 2011 compared to fiscal 2010 was driven primarily by increased revenue due to our acquisition of SST, improving semiconductor industry conditions and by customer demand conditions within the Serial EEPROM and Flash memory markets. 

Memory product pricing has historically been cyclical in nature, with steep price declines followed by periods of relative price stability, driven by changes in industry capacity at different stages of the business cycle.  We have experienced, and expect to continue to experience, varying degrees of competitive pricing pressures in our memory products.  We may be unable to maintain the average selling prices of our memory products as a result of increased pricing pressure in the future, which could adversely affect our operating results.

Analog and Interface Products

Sales of our analog and interface products accounted for approximately 12.4% of our total net sales in fiscal 2012, approximately 12.0% of our total net sales in fiscal 2011 and approximately 10.5% of our total net sales in fiscal 2010.

Net sales of our analog and interface products decreased approximately 3.8% in fiscal 2012 compared to fiscal 2011 and increased approximately 78.3% in fiscal 2011 compared to fiscal 2010.  The decrease in net sales in fiscal 2012 compared to fiscal 2011 was driven primarily by weak general economic and semiconductor industry conditions which offset market share gains achieved within the analog and interface market. The increase in net sales in fiscal 2011 compared to fiscal 2010 was driven primarily by improving semiconductor industry conditions, market share gains achieved within the analog and interface market and increased revenue due to our acquisition of SST.  

Analog and interface products can be proprietary or non-proprietary in nature.  Currently, we consider more than 70% of our analog and interface product mix to be proprietary in nature, where prices are relatively stable, similar to the pricing

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stability experienced in our microcontroller products.  The non-proprietary portion of our analog and interface business will experience price fluctuations, driven primarily by the current supply and demand for those products.  We may be unable to maintain the average selling prices of our analog and interface products as a result of increased pricing pressure in the future, which could adversely affect our operating results.  We anticipate the proprietary portion of our analog and interface products will increase over time.

Technology Licensing

Technology licensing revenue includes a combination of royalties associated with technology licensed for the use of our SuperFlash technology and fees for engineering services. Technology licensing accounted for approximately 6.3% of our total net sales in fiscal 2012 and approximately 4.8% of our total net sales in fiscal 2011. Technology licensing revenue is the result of our acquisition of SST in the first quarter of fiscal 2011.

Net sales related to our technology licensing increased approximately 20.7% in fiscal 2012 compared to fiscal 2011 driven primarily by the adoption of our technology by more manufacturers of semiconductors.

Revenue from technology licensing can fluctuate over time due to general economic and semiconductor industry conditions.

Other

 Revenue from assembly and test subcontracting services accounted for approximately 1.2% of our total net sales in fiscal 2012 and approximately 0.1% of our total net sales in fiscal 2011. Our assembly and test subcontractors services are a result of our acquisition of Millennium Microtech Thailand (MMT) in the fourth quarter of fiscal 2011.

Distribution

Distributors accounted for approximately 59% of our net sales in fiscal 2012, approximately 58% of our net sales in fiscal 2011 and approximately 61% of our net sales in fiscal 2010.

Our largest distributor accounted for approximately 10% of our net sales in each of fiscal 2012 and fiscal 2011, and approximately 12% of our net sales in fiscal 2010.  Our two largest distributors together accounted for approximately 14% of our net sales in each of fiscal 2012 and fiscal 2011, and approximately 17% of our net sales in fiscal 2010.

Generally, we do not have long-term agreements with our distributors and we, or our distributors, may terminate our relationship with each other with little or no advanced notice.  The loss of, or the disruption in the operations of, one or more of our distributors could reduce our future net sales in a given quarter and could result in an increase in inventory returns.

At March 31, 2012, our distributors maintained 31 days of inventory of our products compared to 40 days at March 31, 2011 and 41 days at March 31, 2010.  Over the past three fiscal years, the days of inventory maintained by our distributors have fluctuated between approximately 31 days and 46 days.  We do not believe that inventory holding patterns at our distributors will materially impact our net sales, due to the fact that we recognize revenue based on sell-through for all of our distributors.

Sales by Geography

Sales by geography for the fiscal years ended March 31, 2012, 2011 and 2010 were as follows (dollars in thousands):

	Year Ended March 31,
	2012		%	2011		%	2010		%
Americas	$	290,392	21.0	$	310,735	20.9	$	231,398	24.4
Europe	319,881		23.1	334,911		22.5	237,354		25.1
Asia	772,903		55.9	841,559		56.6	478,977		50.5
Total Sales	$	1,383,176	100.0	$	1,487,205	100.0	$	947,729	100.0

Our sales to foreign customers have been predominately in Asia and Europe, which we attribute to the manufacturing strength in those areas for automotive, communications, computing, consumer and industrial control products.  Americas sales include sales to customers in the U.S., Canada, Central America and South America.

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Sales to foreign customers accounted for approximately 82% of our net sales in fiscal 2012, approximately 80% of our net sales in fiscal 2011 and approximately 77% of our net sales in fiscal 2010.  Substantially all of our foreign sales are U.S. dollar denominated.  Sales to customers in Asia have generally increased over time due to many of our customers transitioning their manufacturing operations to Asia and growth in demand from the emerging Asian market.  Our sales force in the Americas and Europe supports a significant portion of the design activity for products which are ultimately shipped to Asia.

Sales to customers in China, including Hong Kong, accounted for approximately 24% of our net sales in fiscal 2012 and approximately 25% of our net sales in each of fiscal 2011 and 2010.  Sales to customers in Taiwan accounted for approximately 15% of our net sales in fiscal 2012, approximately 13% of our net sales in fiscal 2011 and approximately 10% of our net sales in fiscal 2010.  We did not have sales into any other countries that exceeded 10% of our net sales during the last three fiscal years.

Gross Profit

Our gross profit was $792.4 million in fiscal 2012, $874.4 million in fiscal 2011 and $534.2 million in fiscal 2010.  Gross profit as a percent of sales was 57.3% in fiscal 2012, 58.8% in fiscal 2011 and 56.4% in fiscal 2010.

The most significant factors affecting our gross profit percentage in the periods covered by this report were:

• production levels being below the range of our normal capacity, resulting in under absorption of fixed costs, in the first half of fiscal 2010 and second half of fiscal 2012, compared to production levels being at or above the range of our normal capacity levels in the second half of fiscal 2010, all of fiscal 2011 and the first half of fiscal 2012;

• for each of fiscal 2012 and fiscal 2011, inventory write-downs being higher than the gross margin impact of sales of inventory that was previously written down;

• the addition of licensing and SuperFlash Memory revenue starting in fiscal 2011 as a result of our acquisition of SST; and

• fluctuations in the product mix of microcontrollers, analog products, memory products and technology licensing.

Other factors that impacted our gross profit percentage in the periods covered by this report include:

• continual cost reductions in wafer fabrication and assembly and test manufacturing, such as new manufacturing technologies and more efficient manufacturing techniques; and

• lower depreciation as a percentage of cost of sales.

We adjust our wafer fabrication and assembly and test capacity utilization as required to respond to actual and anticipated business and industry-related conditions.  Our wafer fabrication facilities operated at or above normal capacity levels, which we typically consider to be 90% to 95% of the actual capacity of the installed equipment, during the second half of fiscal 2010 through the first half of fiscal 2012. However, during the first half of fiscal 2010 and the second half of fiscal 2012, we operated below normal capacity levels in our wafer fabrication facilities in response to weaker economic conditions.  As a result of decreased production in our wafer fabs, approximately $6.7 million was charged to cost of sales in fiscal 2012 and approximately $22.3 million was charged to cost of sales in fiscal 2010.  There were no such charges in fiscal 2011.  In the future, if production levels are below normal capacity, we will charge cost of sales for the unabsorbed capacity.  During the first half of fiscal 2010 and the second half of fiscal 2012, we operated at levels below the total operating capacity of our Thailand facility due to adverse business conditions and these actions had a negative impact on our gross margins.  During the second half of fiscal 2010 through the first half of fiscal 2012, we operated at normal levels of capacity at our Thailand facility, and we selectively increased our assembly and test capacity at such facility.

The process technologies utilized in our wafer fabs impact our gross margins.  Fab 2 currently utilizes various manufacturing process technologies, but predominantly utilizes our 0.5 to 1.0 micron processes.  Fab 4 predominantly utilizes our 0.22 to 0.5 micron processes.  We continue to transition products to more advanced process technologies to reduce future manufacturing costs.  All of our production has been on 8-inch wafers during the periods covered by this report.

Our overall inventory levels were $217.3 million at March 31, 2012, compared to $180.8 million at March 31, 2011 and $116.6 million at March 31, 2010.  We maintained 137 days of inventory on our balance sheet at March 31, 2011 compared to 107 days of inventory at March 31, 2011 and 97 days at March 31, 2010.  We expect our inventory levels in the June 2012 quarter to be about flat to the levels at March 31, 2012. We believe this level of inventory will allow us to maintain competitive lead times and provide strong delivery performance to our customers and allow us to keep our fiscal 2013 capital expenditures at low levels.

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We anticipate that our gross margins will fluctuate over time, driven primarily by capacity utilization levels, the overall product mix of microcontroller, analog and interface, memory products and technology licensing revenue and the percentage of net sales of each of these products in a particular quarter, as well as manufacturing yields, fixed cost absorption, and competitive and economic conditions in the markets we serve.

At March 31, 2012, approximately 67% of our assembly requirements were performed in our Thailand facility, compared to approximately 61% at March 31, 2011 and approximately 65% at March 31, 2010.  The percentage of our assembly work that is performed internally fluctuates over time based on supply and demand conditions in the semiconductor industry and our internal capacity capabilities.  Third-party contractors located in Asia perform the balance of our assembly operations.  At March 31, 2012, approximately 95% of our test requirements were performed in our Thailand facility compared to approximately 88% in fiscal 2011.  In fiscal 2010, substantially all of our test requirements were performed in our Thailand facility. We believe that the assembly and test operations performed at our Thailand facility provide us with significant cost savings compared to contractor assembly and test costs, as well as increased control over these portions of the manufacturing process.  The primary reason for the decrease in the portion of assembly and test operations performed in our Thailand facility in fiscal 2011 compared to fiscal 2010 was due to our acquisition of SST which had outsourced 100% of its assembly and test operations prior to being acquired by Microchip.  We plan to continue to bring a portion of SST's assembly and test volume into our Thailand facilities over time.

We rely on outside wafer foundries for a portion of our wafer fabrication requirements.  As a result of our acquisition of SST in the first quarter of fiscal 2011, we have become more reliant on outside foundries for our wafer fabrication requirements.  In fiscal 2012, approximately 20%of our total net sales related to products which were purchased from outside wafer foundries.

Our use of third parties involves some reduction in our level of control over the portions of our business that we subcontract.  While we review the quality, delivery and cost performance of our third-party contractors, our future operating results could suffer if any third-party contractor is unable to maintain manufacturing yields, assembly and test yields and costs at approximately their current levels.

Research and Development (R&D)

R&D expenses for fiscal 2012 were $182.7 million, or 13.2% of sales, compared to $170.6 million, or 11.5% of sales, for fiscal 2011 and $120.8 million, or 12.8% of sales, for fiscal 2010.  We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies.  We believe these investments are significant factors in maintaining our competitive position.  R&D costs are expensed as incurred.  Assets purchased to support our ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their expected useful lives.  R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments.

R&D expenses increased $12.1 million, or 7.1%, for fiscal 2012 over fiscal 2011.  The primary reasons for the dollar increase in R&D costs in fiscal 2012 compared to fiscal 2011 were an increased number of employees driving higher employee costs and higher discretionary expenses offset by lower bonus costs.  R&D expenses increased $49.8 million, or 41.2%, for fiscal 2011 over fiscal 2010.  The primary reasons for the dollar increase in R&D costs in fiscal 2011 compared to fiscal 2010 were higher salary and bonus costs and additional costs from our acquisition of SST.  

Selling, General and Administrative

Selling, general and administrative expenses for fiscal 2012 were $212.4million, or 15.3% of sales, compared to $227.8 million, or 15.3% of sales, for fiscal 2011, and $167.2 million, or 17.7% of sales, for fiscal 2010.  Selling, general and administrative expenses include salary expenses related to field sales, marketing and administrative personnel, advertising and promotional expenditures and legal expenses.  Selling, general and administrative expenses also include costs related to our direct sales force and field applications engineers who work in sales offices worldwide to stimulate demand by assisting customers in the selection and use of our products.

Selling, general and administrative expenses decreased $15.4million, or 6.8%, for fiscal 2012 over fiscal 2011.  The primary reasons for the dollar decrease in selling, general and administrative expenses in fiscal 2012 over fiscal 2011 were

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lower bonus costs.  Selling, general and administrative expenses increased $60.6million, or 36.2%, for fiscal 2011 over fiscal 2010.  The primary reasons for the dollar increase in selling, general and administrative expenses in fiscal 2011 over fiscal 2010 were higher salary and bonus costs and additional costs from our acquisition of SST.  

Selling, general and administrative expenses fluctuate over time, primarily due to revenue and operating expense investment levels.

Special Charges

Acquisition Related Expenses

During fiscal 2012, special charges included a benefit of $0.7 million comprised of a $1.0 million favorable adjustment to contingent consideration offset by $0.3 million of severance-related charges related to a prior year acquisition. During fiscal 2011, we incurred $1.9 million of severance-related and office closure costs associated with our acquisition of SST.

Patent Licenses

During the fourth quarter of fiscal 2012, we agreed to the terms of a patent license with an unrelated third party and signed an agreement on March 20, 2012.  The patent license settled alleged infringement claims.  The total payment made to the third-party in March 2012 was $2.8 million, $1.5 million of which was expensed in the fourth quarter of fiscal 2012 and the remaining $1.3 million was recorded as a prepaid royalty which will be amortized over the remaining life of the patents, which expire in December 2018.

During the first quarter of fiscal 2010, we agreed to the terms of a patent license with an unrelated third party and signed an agreement on July 9, 2009.  The patent license settled alleged infringement claims.  The total payment made to the third-party in July 2009 was $1.4 million, $1.2 million of which was expensed in the first quarter of fiscal 2010 and the remaining $0.2 million was recorded as a prepaid royalty that was amortized over the remaining life of the patents, which expired in June 2010.

Other Income (Expense)

Interest income in fiscal 2012 increased to $18.0 million from $16.0 million in fiscal 2011 and from $15.3 million in fiscal 2010.  The primary reasons for the increase in interest income in fiscal 2012 over fiscal 2011 relates to the redemption of a previously written down auction rate security at par value and higher invested cash balances. The primary reason for the increase in interest income in fiscal 2011 over fiscal 2010 was a higher rate of return realized on certain of our investments.  Interest expense in fiscal 2012 was $34.3 million compared to $31.5 million in fiscal 2011 and $31.2 million in fiscal 2010. The primary reasons for the increase in interest expense in fiscal 2012 over fiscal 2011 were $1.7 million related to our credit facility and $0.7 million of additional non-cash interest expense on our 2.125% junior subordinated convertible debentures. Other expense, net in fiscal 2012 was $0.4 million compared to other income, net of $1.9 million in fiscal 2011 and other income, net of $8.7 million in fiscal 2010.  The change in other (expense) income, net during fiscal 2012 compared to fiscal 2011 primarily relates to $1.3 million of losses on equity securities during fiscal 2012 compared to $2.4 million of gains on equity securities during fiscal 2011. These losses and gains were a result of impairment charges due to market fluctuations in the value of certain investments in publicly traded companies, as well as dividends received and losses and gains recognized on the sale of these equity securities. The decrease in other income, net during fiscal 2011 compared to fiscal 2010 primarily relates to $7.5 million of gains on trading securities during fiscal 2010.  These gains were a result of market fluctuations in the value of certain strategic investments in publicly traded companies, which we classified as trading securities.

Provision for Income Taxes

Provisions for income taxes reflect tax on our foreign earnings and federal and state tax on our U.S. earnings.  Our effective tax rate on income from continuing operations was 11.3% in fiscal 2012, 6.8% in fiscal 2011 and 8.8% in fiscal 2010.  Excluding one-time tax events described below, our effective tax rate is lower than statutory rates in the U.S. primarily due to our mix of earnings in foreign jurisdictions with lower tax rates, changes in tax regulations and the R&D tax credit.  During fiscal 2012, we completed a project that led to additional R&D tax credit claims in the amount of $4.1 million which reduced our effective tax rate by 1.1% to 11.3%. Our effective tax rate in fiscal 2011 includes a $24.4 million benefit related to various items including a settlement with the IRS for our fiscal 2006 through fiscal 2008 tax audits, the expiration of the statute of limitations on various tax reserves, and a charge related to a corporate restructuring.  This benefit reduced our effective tax rate from continuing operations by 5.4 percentage points to an effective tax rate of 6.8%.  Our effective tax rate in

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fiscal 2010 includes a $8.5 million U.S. tax benefit related to our settlement with the IRS for our fiscal 2002 through fiscal 2004 tax audits.  This benefit reduced our effective tax rate by 3.6 percentage points to an effective tax rate of 8.8%.

Various taxing authorities in the U.S. and other countries in which we do business are increasing their scrutiny of the tax structures employed by businesses.  Companies of our size and complexity are regularly audited by the taxing authorities in the jurisdictions in which they conduct significant operations.  We are currently under audit by the IRS for our fiscal years 2009 and 2010.  Fiscal years 2011 and 2012 are open for examination by tax authorities.  We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional tax payments are probable.  We believe that we maintain adequate tax reserves to offset any potential tax liabilities that may arise upon these and other pending audits in the U.S. and other countries in which we do business.  If such amounts ultimately prove to be unnecessary, the resulting reversal of such reserves would result in tax benefits being recorded in the period the reserves are no longer deemed necessary.  If such amounts ultimately prove to be less than any final assessment, a future charge to expense would be recorded in the period in which the assessment is determined.

Our Thailand manufacturing operations currently benefit from numerous tax holidays that have been granted to us by the Thailand government based on our investments in property, plant and equipment in Thailand.  Our tax holiday periods in Thailand expire at various times in the future and any expiration of our tax holidays in Thailand are expected to have a minimal impact on our overall tax expense due to other tax holidays and increases in income in other taxing jurisdictions with lower statutory rates.

Results of Discontinued Operations

As a result of our acquisition of SST, certain of SST's product lines were marketed for sale based on management's decision regarding them not being a strategic fit into our product portfolio.  The discontinued businesses include various memory product lines.  For financial statement purposes, the net assets and results of operations for these discontinued businesses have been segregated from those of the continuing operations and are presented in our consolidated financial statements as discontinued operations and assets held for sale.  On May 21, 2010, we completed a transaction to sell one of the businesses acquired from SST to Greenliant Systems, Ltd.  The sale price in this transaction was determined by management to represent fair value, and accordingly, no gain or loss was recognized on the sale of the net assets.  In this sale, we disposed of approximately $23.6 million of assets held for sale, primarily comprised of inventory, property, plant and equipment, intangible assets and non-marketable securities.  Consideration in the transaction was in the form of cash and notes receivable from Greenliant Systems, Ltd.  On July 8, 2010, we granted an exclusive limited license for certain Serial NOR-Flash products to Professional Computer Technology, Ltd. (PCT).  The license is limited to certain industry segments and geographic regions and excludes certain multinational customers.  PCT has no license to sell these products to any other industry segment or geographic region other than as set forth in our agreement with them.

The net loss from discontinued operations in fiscal 2011 was $10.2 million, or $0.05 per diluted share.  Contributing to the net loss from discontinued operations in fiscal 2011 was $9.4 million of inventory write-downs related to discontinued operations.   There were no assets held for sale on our consolidated balance sheet for the fiscal years ended March 31, 2012 or March 31, 2011.

Liquidity and Capital Resources

We had $1,787.6 million in cash, cash equivalents and short-term and long-term investments at March 31, 2012, an increase of $79.3 million from the March 31, 2011 balance.  The increase in cash, cash equivalents and short-term and long-term investments over this time period is primarily attributable to cash generated by operating activities being offset by dividend payments of $266.2 million during fiscal 2012.

Net cash provided from operating activities was $396.5 million for fiscal 2012, $582.7 million for fiscal 2011 and $452.0 million for fiscal 2010.  The decrease in cash flow from operations in fiscal 2012 compared to fiscal 2011 was primarily due to changes in our operating assets and liabilities and lower net income in fiscal 2012. The increase in cash flow from operations in fiscal 2011 compared to fiscal 2010 was primarily due to higher net income in fiscal 2011 partially offset by fiscal 2010 proceeds of $87.0 million of trading securities which were sold during that year.

Net cash used in investing activities was $256.5 million for fiscal 2012, $187.9 million for fiscal 2011 and $195.3 million in fiscal 2010.  The increase in net cash used in investing activities in fiscal 2012 compared to fiscal 2011 was primarily due to a decrease in cash related to changes in our net purchases, sales and maturities of short-term and long-term investments which offset lower capital expenditures in fiscal 2012. The decrease in net cash used in investing activities in fiscal 2011 compared to fiscal 2010 was primarily due to an increase in cash related to changes in our net purchases, sales and maturities of short-term and long-term investments being partially offset by cash used to acquire SST and higher capital expenditures in fiscal 2011.

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Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.  Capital expenditures were $62.4 million in fiscal 2012, $124.5 million in fiscal 2011 and $47.6 million in fiscal 2010.  The lower capital expenditure activity in fiscal 2012 compared to fiscal 2011 was primarily driven by decreased production requirements as a result of economic conditions.  Capital expenditures are primarily for the expansion of production capacity and the addition of research and development equipment.  We currently intend to spend approximately $70 million during the next twelve months to invest in equipment and facilities to maintain, and selectively increase, capacity to meet our currently anticipated needs.

We expect to finance our capital expenditures through our existing cash balances and cash flows from operations.  We believe that the capital expenditures anticipated to be incurred over the next twelve months will provide sufficient manufacturing capacity to meet our currently anticipated needs.

Net cash used in financing activities was $208.1 million for fiscal 2012, $183.0million for fiscal 2011 and $211.0 million for fiscal 2010.  Proceeds from the exercise of stock options and employee purchases under our employee stock purchase plans were $57.5 million for fiscal 2012, $71.9 million for fiscal 2011 and $36.5 million for fiscal 2010.  We paid cash dividends to our shareholders of $266.2 million in fiscal 2012, $256.8 million in fiscal 2011, and $249.6 million in fiscal 2010.

On August 12, 2011, we entered into a credit agreement with certain lenders.  The credit agreement provides for a $750 million revolving credit facility, with a $100 million foreign currency sublimit, a $25 million letter of credit sublimit and a $15 million swingline loan sublimit, terminating on August 12, 2016. The credit agreement also contains an increase option permitting us, subject to certain requirements, to arrange with existing lenders and/or new lenders for them to provide up to an aggregate of $250 million in additional commitments, which may be for revolving loans or term loans. Proceeds of loans made under the credit agreement may be used for working capital and general corporate purposes. No loans were made nor letters of credit issued under the credit agreement at closing, and no amounts were outstanding and no letters of credit were issued at March 31, 2012.  See Note 15 of the notes to consolidated financial statements for more information regarding the credit agreement.

We enter into derivative transactions from time to time in an attempt to reduce our exposure to currency rate fluctuations.  Although none of the countries in which we conduct significant foreign operations have had a highly inflationary economy in the last five years, there is no assurance that inflation rates or fluctuations in foreign currency rates in countries where we conduct operations will not adversely affect our operating results in the future.  At March 31, 2012, we had no foreign currency-forward contracts outstanding.

On December 11, 2007, we announced that our Board of Directors had authorized the repurchase of up to 10 million shares of our common stock in the open market or in privately negotiated transactions.  As of March 31, 2012, we had repurchased 7.5 million shares under this 10 million share authorization for a total of $234.7 million.  There is no expiration date associated with this program.  The timing and amount of future repurchases will depend upon market conditions, interest rates, and corporate considerations.

As of March 31, 2012, we held approximately 25.6 million shares as treasury shares.

On October 28, 2002, we announced that our Board of Directors had approved and instituted a quarterly cash dividend on our common stock.  The initial quarterly dividend of $0.02 per share was paid on December 6, 2003 in the amount of $4.1 million.  To date, our cumulative dividend payments have totaled approximately $1.67 billion.  During fiscal 2012, we paid dividends in the amount of $1.390 per share for a total dividend payment of $266.2 million. During fiscal 2011, we paid dividends in the amount of $1.374 per share for a total dividend payment of $256.8 million.  During fiscal 2010, we paid dividends in the amount of $1.359 per share for a total dividend payment of $249.6 million.  On May 1, 2012, we declared a quarterly cash dividend of $0.35 per share, which will be paid on May 31, 2012, to stockholders of record on May 17, 2012 and the total amount of such dividend is expected to be approximately $67.8 million.  Our Board is free to change our dividend practices at any time and to increase or decrease the dividend paid, or not to pay a dividend, on our common stock on the basis of our results of operations, financial condition, cash requirements and future prospects, and other factors deemed relevant by our Board.  Our current intent is to provide for ongoing quarterly cash dividends depending upon market conditions and our results of operations.

On May 2, 2012, we announced that we had signed a definitive agreement to acquire SMSC for $37.00 per share in cash, which represents a total equity value of about $939 million, and a total enterprise value of about $766 million, after excluding SMSC's cash and investments on its balance sheet of approximately $173 million. The acquisition has been approved by our Board of Directors and by the SMSC Board of Directors and is expected to close in the third quarter of calendar 2012, subject

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to approval by SMSC stockholders, regulatory approvals and other customary closing conditions.  We plan to fund the acquisition purchase price using a portion of our existing balance of cash, cash equivalents and short-term investments and borrowings under our credit agreement.

We believe that our existing sources of liquidity combined with cash generated from operations will be sufficient to meet our currently anticipated cash requirements for at least the next 12 months.  However, the semiconductor industry is capital intensive.  In order to remain competitive, we must constantly evaluate the need to make significant investments in capital equipment for both production and research and development.  We may seek additional equity or debt financing from time to time to maintain or expand our wafer fabrication and product assembly and test facilities, or for acquisitions or other purposes.  The timing and amount of any such financing requirements will depend on a number of factors, including demand for our products, changes in industry conditions, product mix, competitive factors and our ability to identify suitable acquisition candidates.  There can be no assurance that such financing will be available on acceptable terms, and any additional equity financing would result in incremental ownership dilution to our existing stockholders.

Contractual Obligations

The following table summarizes our significant contractual obligations at March 31, 2012, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.  This table excludes amounts already recorded on our balance sheet as current liabilities at March 31, 2012 (dollars in thousands):

	Payments Due by Period
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Operating lease obligations	$	30,477	$	9,293	$	11,815	$	6,676	$	2,693
Capital purchase obligations (1)	13,265		13,265		—		—		—
Other purchase obligations and commitments (2)	21,360		21,062		193		105		—
2.125% junior convertible debentures – principal and interest (3)	1,778,247		24,438		48,875		48,875		1,656,059
Total contractual obligations (4)	$	1,843,349	$	68,058	$	60,883	$	55,656	$	1,658,752

⁽¹⁾  Capital purchase obligations represent commitments for construction or purchases of property, plant and equipment.  These obligations were not recorded as liabilities on our balance sheet as of March 31, 2012, as we have not yet received the related goods or taken title to the property.

⁽²⁾  Other purchase obligations and commitments include payments due under various types of licenses and outstanding purchase commitments with our wafer foundries of approximately $19.5 million for delivery in fiscal 2013.

⁽³⁾  For purposes of this table we have assumed that the principal of our convertible debentures will be paid on December 31, 2037.

⁽⁴⁾  Total contractual obligations do not include contractual obligations recorded on the balance sheet as current liabilities, or certain purchase obligations as discussed below.  The contractual obligations also do not include amounts related to uncertain tax positions because reasonable estimates cannot be made.

Purchase orders or contracts for the purchase of raw materials and other goods and services are not included in the table above.  We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements.  For the purpose of this table, contractual obligations for the purchase of goods or services are defined as agreements that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.  Our purchase orders are based on our current manufacturing needs and are fulfilled by our vendors with short time horizons.  We do not have significant agreements for the purchase of raw materials or other goods specifying minimum quantities or set prices that exceed our expected requirements for three months.  We also enter into contracts for outsourced services; however, the obligations under these contracts were not significant and the contracts generally contain clauses allowing for cancellation without significant penalty.

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The expected timing of payment of the obligations discussed above is estimated based on current information.  Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.

Off-Balance Sheet Arrangements

As of March 31, 2012, we are not involved in any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Recently Issued Accounting Pronouncements

Goodwill. In September 2011, the FASB issued an amendment to the existing guidance on the annual testing of goodwill for impairment. The amended guidance allows companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. This guidance is effective for annual and interim periods beginning after December 15, 2011, with early adoption permitted. We early adopted this pronouncement, effective for our March 31, 2012 impairment assessment.

Comprehensive Income. In June 2011, the FASB issued an amendment to the existing guidance on the presentation of comprehensive income. Under the amended guidance, entities have the option to present the components of net income and other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Entities no longer have the option of presenting the components of other comprehensive income within the statement of changes in stockholders' equity. This amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2011, which for us is the first quarter in fiscal 2013. The adoption of this amendment will result in a change to the current presentation of comprehensive income, but will not have any impact on our consolidated financial statements and related disclosures.

Fair Value Measurement. In May 2011, the FASB issued amendments to the existing guidance on fair value measurement. The amendments are intended to create consistency between U.S. generally accepted accounting standards and International Financial Reporting Standards on measuring fair value and disclosing information about fair value measurements. The amendments clarify the application of existing fair value measurement requirements including (i) the application of the highest and best use valuation premise concepts, (ii) measuring the fair value of an instrument classified in a reporting entity's stockholders' equity, and (iii) quantitative information required for fair value measurements categorized within Level 3. In addition, the amendments require additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. These amendments are effective for interim and annual periods beginning after December 15, 2011, which for us is our fiscal year 2013. These changes are required to be applied prospectively. We do not anticipate that the adoption of these amendments will have a material impact on our consolidated financial statements and related disclosures.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our investments are intended to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relationship to our investment guidelines and market conditions.  Our investment portfolio, consisting of fixed income securities, money market funds, cash deposits, and marketable securities that we hold on an available-for-sale basis, was $1,787.6million as of March 31, 2012 compared to $1,708.3 million as of March 31, 2011. The available-for-sale debt securities, like all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase.  We have the ability to hold our fixed income investments until maturity and, therefore, we would not expect to recognize any material adverse impact in income or cash flows if market interest rates increase.  The following table provides information about our available-for-sale securities that are sensitive to changes in interest rates.  We have aggregated our available-for-sale securities for presentation purposes since they are all very similar in nature (dollars in thousands):

	Financial instruments maturing during the fiscal year ended March 31,
	2013			2014			2015			2016	2017	Thereafter
Available-for-sale securities	$	270,017		$	356,718		$	484,985		—	—	$	30,230
Weighted-average yield rate	1.93		%	1.51		%	1.11		%	—	—	1.43		%

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At March 31, 2012, $10.2 million of the fair value of our investment portfolio was invested in ARS.  Historically, the carrying value of ARS approximated fair value due to the frequent resetting of the interest rates.  If an auction fails for amounts we have invested, our investment will not be liquid.  With the continuing liquidity issues experienced in the global credit and capital markets, our ARS have experienced multiple failed auctions.  While we continue to earn interest on these investments

based on a pre-determined formula with spreads tied to particular interest rate indices, the estimated market value for a portion of these ARS no longer approximates the original purchase value.

The fair value of the failed ARS of $10.2 million has been estimated based on market information and estimates determined by management and could change significantly based on market conditions.  We evaluated the impairments in the value of these ARS, determining our intent to sell these securities prior to the recovery of our amortized cost basis resulted in the securities being other-than-temporarily impaired. In fiscal 2012, we recognized a $0.3 million gain on our ARS positions as a gain on redemption at par value of one ARS position offset impairment charges recognized during the year. We recognized impairment charges of $1.6 million on our ARS in fiscal 2011. If the issuers are unable to successfully close future auctions or if their credit ratings deteriorate further, we may be required to further adjust the carrying value of the investments through an additional impairment charge to earnings.

Investments in Marketable Equity Investments

Our available-for-sale marketable equity investments at March 31, 2012 consist of shares of public company common stock, the value of which is determined by the closing price of such shares on the respective markets on which the shares are traded as of the balance sheet date.  These investments are classified as marketable securities and accounted for under the provisions of ASC 320 Investments -- Debt and Equity Securities.  The market value of these investments was approximately $5.3 million at March 31, 2012 compared to our cost basis of approximately $5.9 million.  The value of our investments in these securities would be materially impacted if there was a significant change in the market price of the shares.  A hypothetical 30% favorable or unfavorable change in the stock prices compared to the stock prices at March 31, 2012 would have affected the value of our investments in marketable equity securities by approximately $1.6 million.  See Note 5 to our consolidated financial statements for additional information about our investments in these marketable securities.

Investments in Non-Marketable Equity Investments

We have non-marketable equity investments in several companies, including those that we acquired as a result of our acquisition of SST.  These companies range from early-stage companies to more mature companies with established revenue and business models.  These companies are dependent upon successful execution of their product and technology development objectives, acceptance of their products and technology in the markets they serve, and achievement of financial and operational efficiencies.  If any of these private companies are unsuccessful in these and other related initiatives, or if there are factors beyond their control in the markets which they serve, their performance could be affected materially and adversely, resulting in a loss of some or all of their value, which would in turn require us to determine if an other-than-temporary impairment to fair value exists in such private equity or debt investments.  If an other-than-temporary impairment of fair value exists, we will need to write down the investment to its fair value and recognize the related impairment charge to our income statement.  Our non-marketable equity investments, excluding those accounted for under the equity method, had a carrying amount of $5.6 million as of March 31, 2012.  As of March 31, 2012, the carrying amount of our non-marketable equity method investments was $2.1 million.

Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements listed in the index appearing under Item 15(a)(1) hereof are filed as part of this Form 10-K.  See also Index to Financial Statements below.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 

None.

Item 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we evaluated under the supervision

44

of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act.  Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management.  Our disclosure controls and procedures include components of our internal control over financial reporting.  Management's assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met.

Management Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on our financial statements.

Management assessed our internal control over financial reporting as of March 31, 2012, the end of our fiscal year.  Management based its assessment on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Management's assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.  This assessment is supported by testing and monitoring performed by our finance organization.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.  We reviewed the results of management's assessment with the Audit Committee of our Board of Directors.

Ernst & Young LLP, an independent registered public accounting firm, who audited our consolidated financial statements included in this Form 10-K has issued an attestation report on our internal control over financial reporting, which is included in Part II, Item 9A.

Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2012, there was no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

45

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Microchip Technology Incorporated and subsidiaries

We have audited Microchip Technology Incorporated and subsidiaries' internal control over financial reporting as of March 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).  Microchip Technology Incorporated and subsidiaries' management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting.  Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed 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.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Microchip Technology Incorporated and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of March 31, 2012, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the March 31, 2012 consolidated financial statements of Microchip Technology Incorporated and subsidiaries and our report dated May 30, 2012 expressed an unqualified opinion thereon.

/s/   Ernst & Young LLP

Phoenix, Arizona

May 30, 2012

46

 Item 9B.    OTHER INFORMATION

In fiscal 2012, each of J. Eric Bjornholt, our Chief Financial Officer, Mitch Little, our Vice President, Worldwide Sales and Applications, Steve Drehobl, our Vice President, Security, Microcontroller and Technology Division, and Rich Simoncic, our Vice President, Analog and Interface Products Division, entered into trading plans as contemplated by Rule 10b-5-1 under the Exchange Act and periodic sales of our common stock are expected to occur under such plans.

The foregoing disclosure is being made on a voluntary basis and not pursuant to any specific requirement under Form 10-K, Form 8-K or otherwise.

PART III

 Item 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information on the members of our Board of Directors is incorporated herein by reference to our proxy statement for our 2012 annual meeting of stockholders under the captions "The Board of Directors," and "Proposal One – Election of Directors."

Information on the composition of our audit committee and the members of our audit committee, including information on our audit committee financial experts, is incorporated by reference to our proxy statement for our 2012 annual meeting of stockholders under the caption "The Board of Directors – Committees of the Board of Directors – Audit Committee."

Information on our executive officers is provided in Item 1, Part I of this Form 10-K under the caption "Executive Officers of the Registrant" at page 10, above.

Information with respect to compliance with Section 16(a) of the Exchange Act, is incorporated herein by reference to our proxy statement for our 2012 annual meeting of stockholders under the caption "Section 16(a) Beneficial Ownership Reporting Compliance."

Information with respect to our code of ethics that applies to our directors, executive officers (including our principal executive officer and our principal financial and accounting officer) and employees is incorporated by reference to our proxy statement for our 2012 annual meeting of stockholders under the caption "Code of Ethics."  A copy of our Code of Ethics is available on our website at the Investor Relations section under Mission Statement/Corporate Governance on www.microchip.com.

Information regarding material changes, if any, to procedures by which security holders may recommend nominees to our Board of Directors is incorporated by reference to our proxy statement for the 2012 annual meeting of stockholders under the caption "Requirements, Including Deadlines, for Receipt of Stockholder Proposals for the 2012 Annual Meeting of Stockholders; Discretionary Authority to Vote on Stockholder Proposals."

 Item 11.    EXECUTIVE COMPENSATION

Information with respect to executive compensation is incorporated herein by reference to the information under the caption "Executive Compensation" in our proxy statement for our 2012 annual meeting of stockholders.

Information with respect to director compensation is incorporated herein by reference to the information under the caption "The Board of Directors – Director Compensation" in our proxy statement for our 2012 annual meeting of stockholders.

Information with respect to compensation committee interlocks and insider participation in compensation decisions is incorporated herein by reference to the information under the caption "The Board of Directors – Compensation Committee Interlocks and Insider Participation" in our proxy statement for our 2012 annual meeting of stockholders.

Our Board compensation committee report on executive compensation is incorporated herein by reference to the information under the caption "Executive Compensation – Compensation Committee Report on Executive Compensation" in our proxy statement for our 2012 annual meeting of stockholders.

47

 Item 12. SECURITY OWNERSHIP OF CERTIAN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to securities authorized for issuance under our equity compensation plans is incorporated herein by reference to the information under the caption "Executive Compensation – Equity Compensation Plan Information" in our proxy statement for our 2012 annual meeting of stockholders.

Information with respect to security ownership of certain beneficial owners, members of our Board of Directors and management is incorporated herein by reference to the information under the caption "Security Ownership of Principal Stockholders, Directors and Executive Officers" in our proxy statement for our 2012 annual meeting of stockholders.

 Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item pursuant to Item 404 of Regulation S-K is incorporated by reference to the information under the caption "Certain Transactions" contained in our proxy statement for our 2012 annual meeting of stockholders.

The information required by this Item pursuant to Item 407(a) of Regulation S-K regarding the independence of our directors is incorporated by reference to the information under the caption "Meetings of the Board of Directors" contained in our proxy statement for our 2012 annual meeting of stockholders.

 Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item related to principal accountant fees and services as well as related pre-approval policies is incorporated by reference to the information under the caption "Independent Registered Public Accounting Firm" contained in our proxy statement for our 2012 annual meeting of stockholders.

48

PART IV

Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)         The following documents are filed as part of this Form 10-K:

		Page No.
(1)	Financial Statements:
	Report of Independent Registered Public Accounting Firm	F-1
	Consolidated Balance Sheets as of March 31, 2012 and 2011	F-2
	Consolidated Statements of Income for each of the three years in the period ended March 31, 2012	F-3
	Consolidated Statements of Cash Flows for each of the three years in the period ended March 31, 2012	F-4
	Consolidated Statements of Stockholders' Equity for each of the three years in the period ended March 31, 2012	F-5
	Notes to Consolidated Financial Statements	F-6
(2)	Financial Statement Schedules	None
(3)	The Exhibits filed with this Form 10-K or incorporated herein by reference are set forth in the Exhibit Index beginning on page 51 hereof, which Exhibit Index is incorporated herein by this reference.

(b)         See Item 15(a)(3) above.

(c)         See "Index to Financial Statements" included under Item 8 to this Form 10-K.

49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	MICROCHIP TECHNOLOGY INCORPORATED
	(Registrant)
Date:  May 30, 2012	By:  /s/ Steve Sanghi
	Steve Sanghi
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name and Signature	Title	Date
/s/ Steve Sanghi	Director, President and Chief Executive Officer	May 30, 2012
Steve Sanghi
/s/ Albert J. Hugo-Martinez	Director	May 30, 2012
Albert J. Hugo-Martinez
/s/ L.B. Day	Director	May 30, 2012
L.B. Day
/s/ Matthew W. Chapman	Director	May 30, 2012
Matthew W. Chapman
/s/ Wade F. Meyercord	Director	May 30, 2012
Wade F. Meyercord
/s/ J. Eric Bjornholt	Vice President and Chief Financial Officer	May 30, 2012
J. Eric Bjornholt	(Principal Financial and Accounting Officer)

50

EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed Herewith
2.1	Purchase and Sale Agreement, dated as of July 18, 2002 between Registrant and Fujitsu Microelectronics, Inc.	8-K	000-21184	2.1	7/18/2002
2.2	Agreement and Plan of Merger dated as of May 1, 2012 by and among Microchip Technology Incorporated, Microchip Technology Management Co. and Standard Microsystems Corporation, including Form of Voting Agreement					X
2.3	Agreement and Plan of Merger dated as of February 2, 2010 by and among Microchip Technology Incorporated, Sun Acquisition Corporation and Silicon Storage Technology, Inc.	10-Q	000-21184	2.1	2/9/2010
2.4	Amendment No. 1 to Agreement and Plan of Merger by and among Microchip Technology Incorporated, Sun Acquisition Corporation and Silicon Storage Technology, Inc.	8-K	000-21184	2.1	2/23/2009
2.5	Amendment No. 2 to Agreement and Plan of Merger by and among Microchip Technology Incorporated, Sun Acquisition Corporation and Silicon Storage Technology, Inc.	8-K	000-21184	2.1	3/8/2010
3.1	Restated Certificate of Incorporation of Registrant	10-Q	000-21184	3.1	11/12/2002
3.2	Amended and Restated By-Laws of Registrant, as amended through January29, 2007	10-Q	000-21184	3.1	2/6/2007
4.1	Indenture, dated as of December 7, 2007, by and between Wells Fargo Bank, National Association, as Trustee, and Microchip Technology Incorporated	8-K	000-21184	4.1	12/7/2007
4.2	Registration Rights Agreement, dated as of December 7, 2007, by and between J.P. Morgan Securities Inc. and Microchip Technology Incorporated	8-K	000-21184	4.2	12/7/2007
10.1	Credit Agreement, dated August 12, 2011, among Microchip Technology Incorporated, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent	8-K	000-21184	10.1	8/18/2011
10.2	Amendment No. 1 to Credit Agreement dated as of February 6, 2012					X
10.3	Amendment No. 2 to Credit Agreement dated as of April 10, 2012					X

51

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed Herewith
10.4	Form of Indemnification Agreement between Registrant and its directors and certain of its officers	S-1	33-57960	10.1	2/5/1993
10.5	*2004 Equity Incentive Plan as amended and restated by the Board on May 10, 2011	10-Q	000-21184	10.1	8/9/2011
10.6	*Form of Notice of Grant for 2004 Equity Incentive Plan (including Exhibit A Stock Option Agreement)	S-8	333-119939	4.5	10/25/2004
10.7	Form of Notice of Grant (Foreign) for 2004 Equity Incentive Plan (including Exhibit A Stock Option Agreement (Foreign))	10-K	000-21184	10.4	5/23/2005
10.8	*Form of Notice of Grant of Restricted Stock Units for 2004 Equity Incentive Plan (including Exhibit A Restricted Stock Units Agreement)	10-K	000-21184	10.6	5/31/2006
10.9	*Restricted Stock Units Agreement (Domestic) for 2004 Equity Incentive Plan	10-Q	000-21184	10.3	11/7/2007
10.10	Restricted Stock Units Agreement (Foreign) for 2004 Equity Incentive Plan	10-Q	000-21184	10.4	11/7/2008
10.11	*Form of Global RSU Agreement for 2004 Equity Incentive Plan (including Notice of Grant of Restricted Stock Units)	8-K	000-21184	10.1	9/27/2010
10.12	*1993 Stock Option Plan, as Amended through August 16, 2002	10-Q	000-21184	10.1	11/12/2002
10.13	*Form of Notice of Grant For 1993 Stock Option Plan, with Exhibit A thereto, Form of Stock Option Agreement; and Exhibit B thereto, Form of Stock Purchase Agreement	S-8	333-872	10.6	1/23/1996
10.14	*Microchip Technology Incorporated 2001 Employee Stock Purchase Plan as amended through March 1, 2012	10-Q	000-21184	10.1	2/6/2012
10.15	*1997 Nonstatutory Stock Option Plan, as Amended Through March 3, 2003	10-K	000-21184	10.13	6/5/2003
10.16	*Form of Notice of Grant For 1997 Nonstatutory Stock Option Plan, with Exhibit A thereto, Form of Stock Option Agreement	10-K	000-21184	10.17	5/27/1998
10.17	Microchip Technology Incorporated International Employee Stock Purchase Plan as amended through August 19, 2011, including Purchase Agreement, Enrollment Form and Change Form	S-8	333-177889	4.2	11/10/2011

52

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed Herewith
10.18	*Executive Management Incentive Compensation Plan as amended on August 19, 2011	8-K	000-21184	10.1	8/24/2011
10.19	*Discretionary Executive Management Incentive Compensation Plan	10-Q	000-21184	10.5	2/6/2007
10.20	*Management Incentive Compensation Plan amended by Board of Directors May 10, 2011	10-K	000-21184	10.19	5/31/2011
10.21	PowerSmart, Inc. 1998 Stock Incentive Plan, Including Forms of Incentive Stock Option Agreement and Nonqualified Stock Option Agreement	S-8	333-96791	4.1	7/19/2002
10.22	*Microchip Technology Incorporated Supplemental Retirement Plan	S-8	333-101696	4.1.1	4/1/2009
10.23	*Adoption Agreement to the Microchip Technology Incorporated Supplemental Retirement Plan dated January 1, 1997	S-8	333-101696	4.1.3	4/1/2003
10.24	*Amendment dated December 9, 1999 to the Adoption Agreement to the Microchip Technology Incorporated Supplemental Retirement Plan	S-8	333-101696	4.1.4	4/1/2004
10.25	*February 3, 2003 Amendment to the Adoption Agreement to the Microchip Technology Incorporated Supplemental Retirement Plan	10-K	000-21184	10.28	6/5/2003
10.26	*Amendments to Supplemental Retirement Plan	10-Q	000-21184	10.1	2/9/2006
10.27	*Change of Control Severance Agreement	8-K	000-21184	10.1	12/18/2008
10.28	*Change of Control Severance Agreement	8-K	000-21184	10.2	12/18/2008
10.29	Development Agreement dated as of August 29, 1997 by and between Registrant and the City of Chandler, Arizona	10-Q	000-21184	10.1	2/13/1998
10.30	Addendum to Development Agreement by and between Registrant and the City of Tempe, Arizona, dated May 11, 2000	10-K	000-21184	10.14	5/15/2001
10.31	Development Agreement dated as of July 17, 1997 by and between Registrant and the City of Tempe, Arizona	10-Q	000-21184	10.2	2/13/1998
10.32	Amended Strategic Investment Program Contract dated as of June 8, 2009 between, Multnomah County, Oregon, City of Gresham, Oregon and Microchip Technology Incorporated	8-K	000-21184	10.1	6/11/2009

53

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed Herewith
21.1	Subsidiaries of Registrant					X
23.1	Consent of Independent Registered Public Accounting Firm					X
24.1	Power of Attorney re:  Microchip Technology Incorporated, the Registrant	10-K	000-21184	24.1	5/29/2009
31.1	Certification of Chief Executive Officer Pursuant to  Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act)					X
31.2	Certification of Chief Financial Officer Pursuant to  Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act)					X
32	Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
	*Compensation plans or arrangements in which directors or executive officers are eligible to participate.

54

Annual Report on Form 10-K

Item 8, Item 15(a)(1) and (2), (b) and (c)

_________________________________

INDEX TO FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

EXHIBITS

_________________________________

YEAR ENDED MARCH 31, 2012

MICROCHIP TECHNOLOGY INCORPORATED

AND SUBSIDIARIES

CHANDLER, ARIZONA

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

Index to Consolidated Financial Statements

	Page Number
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of March 31, 2012 and 2011	F-2
Consolidated Statements of Income for each of the three years in the period ended March 31, 2012	F-3
Consolidated Statements of Cash Flows for each of the three years in the period ended March 31, 2012	F-4
Consolidated Statements of Stockholders' Equity for each of the three years in the period ended March 31, 2012	F-5
Notes to Consolidated Financial Statements	F-6

i

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Microchip Technology Incorporated and subsidiaries

We have audited the accompanying consolidated balance sheets of Microchip Technology Incorporated and subsidiaries as of March 31, 2012 and 2011, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 2012.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Microchip Technology Incorporated and subsidiaries at March 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Microchip Technology Incorporated and subsidiaries' internal control over financial reporting as of March 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 30, 2012 expressed an unqualified opinion thereon.

/s/   Ernst & Young LLP

Phoenix, Arizona

May 30, 2012

F-1

Item1. Financial Statements

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

ASSETS
	March 31,
	2012			2011
Cash and cash equivalents	$	635,755		$	703,924
Short-term investments	823,254			539,572
Accounts receivable, net	170,201			181,202
Inventories	217,278			180,800
Prepaid expenses	25,658			22,234
Deferred tax assets	91,191			88,822
Other current assets	52,524			58,429
Total current assets	2,015,861			1,774,983
Property, plant and equipment, net	516,611			540,513
Long-term investments	328,586			464,838
Goodwill	93,513			76,018
Intangible assets, net	90,436			77,929
Other assets	38,769			33,777
Total assets	$	3,083,776		$	2,968,058
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	50,287		$	68,433
Accrued liabilities	88,877			131,839
Deferred income on shipments to distributors	108,709			140,044
Total current liabilities	247,873			340,316
Junior convertible debentures	355,050			347,334
Long-term income tax payable	70,490			58,125
Deferred tax liability	411,368			399,527
Other long-term liabilities	8,322			10,318
Stockholders' equity:
Preferred stock, $0.001 par value; authorized 5,000,000 shares; no shares issued or outstanding	—			—
Common stock, $0.001 par value; authorized 450,000,000 shares; 218,789,994 shares issued and 193,150,532 shares outstanding at March 31, 2012; 218,789,994 shares issued and 189,541,707 shares outstanding at March 31, 2011	193			190
Additional paid-in capital	1,268,907			1,268,128
Common stock held in treasury: 25,639,462 shares at March 31, 2012; 29,248,287 shares at March 31, 2011	(780,893		)	(888,075		)
Accumulated other comprehensive income	3,101			3,357
Retained earnings	1,499,365			1,428,838
Total stockholders' equity	1,990,673			1,812,438
Total liabilities and stockholders' equity	$	3,083,776		$	2,968,058

See accompanying notes to consolidated financial statements

F-2

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

	Year ended March 31,
	2012			2011			2010
Net sales	$	1,383,176		$	1,487,205		$	947,729
Cost of sales (1)	590,782			612,769			413,487
Gross profit	792,394			874,436			534,242
Operating expenses:
Research and development  (1)	182,650			170,607			120,823
Selling, general and administrative  (1)	212,391			227,781			167,222
Special charges, net	837			1,865			1,238
	395,878			400,253			289,283
Operating income	396,516			474,183			244,959
(Losses) gains on equity method investments	(195		)	157			—
Other income (expense):
Interest income	17,992			16,002			15,325
Interest expense	(34,266		)	(31,521		)	(31,150		)
Other (expense) income, net	(352		)	1,877			8,679
Income from continuing operations before income taxes	379,695			460,698			237,813
Income tax provision	42,990			31,531			20,808
Net income from continuing operations	336,705			429,167			217,005
Discontinued operations:
Loss from discontinued operations before income taxes	—			(11,126		)	—
Income tax benefit	—			(909		)	—
Net loss from discontinued operations	—			(10,217		)	—
Net income	$	336,705		$	418,950		$	217,005
Basic net income per common share – continuing operations	$	1.76		$	2.29		$	1.18
Basic net loss per common share – discontinued operations	—			(0.05		)	—
Basic net income per common share	$	1.76		$	2.24		$	1.18
Diluted net income per common share – continuing operations	$	1.65		$	2.20		$	1.16
Diluted net loss per common share – discontinued operations	—			(0.05		)	—
Diluted net income per common share	$	1.65		$	2.15		$	1.16
Dividends declared per common share	$	1.390		$	1.374		$	1.359
Basic common shares outstanding	191,283			187,066			183,642
Diluted common shares outstanding	203,519			194,715			187,339
(1) Includes share-based compensation expense as follows:
Cost of sales	$	5,648		$	6,825		$	7,054
Research and development	14,719			12,874			12,194
Selling, general and administrative	17,922			17,113			17,530

See accompanying notes to consolidated financial statements

F-3

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year ended March 31,
	2012			2011			2010
Cash flows from operating activities:
Net income	$	336,705		$	418,950		$	217,005
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	99,424			106,612			90,057
Deferred income taxes	21,954			24,003			22,330
Share-based compensation expense related to equity incentive plans	38,289			36,812			36,778
Excess tax benefit from share-based compensation	(576		)	(1,854		)	(2,094		)
Convertible debt derivatives - revaluation and amortization	204			(185		)	230
Amortization of convertible debenture issuance costs	219			219			215
Amortization of debt discount on convertible debentures	7,512			6,847			6,258
Losses (gains) on equity method investments	195			(157		)	—
Gain on sale of assets	(411		)	(89		)	(100		)
Unrealized impairment loss on available-for-sale investments	2,158			4,659			4,750
Special (income) charges	(1,000		)	—			1,238
Sales of trading securities, net	—			—			86,970
Gain on trading securities	—			—			(7,425		)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	11,845			6,341			(49,078		)
(Increase) decrease in inventories	(35,240		)	(22,068		)	15,239
(Decrease) increase in deferred income on shipments to distributors	(31,335		)	38,781			15,010
(Decrease) increase in accounts payable and accrued liabilities	(61,455		)	(638		)	29,583
Change in other assets and liabilities	7,970			(35,572		)	(14,919		)
Net cash provided by operating activities	396,458			582,661			452,047
Cash flows from investing activities:
Purchases of available-for-sale investments	(1,133,625		)	(1,008,056		)	(1,576,044		)
Sales and maturities of available-for-sale investments	983,500			1,055,286			1,502,127
Purchase of Silicon Storage Technology, Inc., net of cash received	—			(112,707		)	—
Investment in Silicon Storage Technology, Inc.	—			—			(58,402		)
Investments in other assets	(44,398		)	(29,587		)	(15,439		)
Proceeds from sale of assets	411			31,668			100
Capital expenditures	(62,370		)	(124,454		)	(47,604		)
Net cash used in investing activities	(256,482		)	(187,850		)	(195,262		)
Cash flows from financing activities:
Payment of cash dividend	(266,178		)	(256,811		)	(249,556		)
Proceeds from sale of common stock	57,457			71,940			36,478
Excess tax benefit from share-based compensation	576			1,854			2,094
Net cash used in financing activities	(208,145		)	(183,017		)	(210,984		)
Net (decrease) increase in cash and cash equivalents	(68,169		)	211,794			45,801
Cash and cash equivalents at beginning of period	703,924			492,130			446,329
Cash and cash equivalents at end of period	$	635,755		$	703,924		$	492,130

See accompanying notes to consolidated financial statements

F-4

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
	Common Stock and Additional Paid-in-Capital					Common Stock Held in Treasury					Accumulated Other Comprehensive Income			Retained Earnings			Net Stockholders' Equity
	Shares		Amount			Shares		Amount
Balance at March 31, 2009	218,790		$	1,282,119		36,021		$	(1,095,370	)	$	4,312		$	1,299,250		$	1,490,311
Components of other comprehensive income:
Net income	—		—			—		—			—			217,005			217,005
Net unrealized losses on available-for-sale securities, net of $1,778 of tax	—		—			—		—			(1,280		)	—			(1,280		)
Total comprehensive income																	215,725
Issuances from equity incentive plans	1,955		27,108			—		—			—			—			27,108
Employee stock purchase plan	605		9,370			—		—			—			—			9,370
Treasury stock used for new issuances	(2,560	)	(82,012		)	(2,560	)	82,012			—			—			—
Tax benefit from equity incentive plans	—		3,709			—		—			—			—			3,709
Share-based compensation	—		36,713			—		—			—			—			36,713
Cash dividend	—		—			—		—			—			(249,556		)	(249,556		)
Balance at March 31, 2010	218,790		1,277,007			33,461		(1,013,358		)	3,032			1,266,699			1,533,380
Components of other comprehensive income:
Net income	—		—			—		—			—			418,950			418,950
Net unrealized gains on available-for-sale securities, net of $493 of tax	—		—			—		—			325			—			325
Total comprehensive income																	419,275
Issuances from equity incentive plans	3,591		57,396			—		—			—			—			57,396
Employee stock purchase plan	622		14,544			—		—			—			—			14,544
Treasury stock used for new issuances	(4,213	)	(125,283		)	(4,213	)	125,283			—			—			—
Tax benefit from equity incentive plans	—		7,523			—		—			—			—			7,523
Share-based compensation	—		37,131			—		—			—			—			37,131
Cash dividend	—		—			—		—			—			(256,811		)	(256,811		)
Balance at March 31, 2011	218,790		1,268,318			29,248		(888,075		)	3,357			1,428,838			1,812,438
Components of other comprehensive income:
Net income	—		—			—		—			—			336,705			336,705
Net unrealized losses on available-for-sale securities, net of $281 of tax	—		—			—		—			(256		)	—			(256		)
Total comprehensive income																	336,449
Issuances from equity incentive plans	3,000		42,596			—		—			—			—			42,596
Employee stock purchase plan	609		14,861			—		—			—			—			14,861
Treasury stock used for new issuances	(3,609	)	(107,182		)	(3,609	)	107,182			—			—			—
Tax benefit from equity incentive plans	—		10,980			—		—			—			—			10,980
Share-based compensation	—		39,527			—		—			—			—			39,527
Cash dividend	—		—			—		—			—			(266,178		)	(266,178		)
Balance at March 31, 2012	218,790		$	1,269,100		25,639		$	(780,893	)	$	3,101		$	1,499,365		$	1,990,673
See accompanying notes to consolidated financial statements

F-5

MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Microchip develops, manufactures and sells specialized semiconductor products used by its customers for a wide variety of embedded control applications.  Microchip's product portfolio comprises 8-bit, 16-bit and 32-bit PIC^® microcontrollers and 16-bit dsPIC^® digital signal controllers, which feature on-board Flash (reprogrammable) memory technology.  In addition, Microchip offers a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety and security and interface devices, as well as serial EEPROMs, Serial Flash memories and Parallel Flash memories.  Microchip also licenses Flash-IP solutions that are incorporated in a broad range of products.

Principles of Consolidation

The consolidated financial statements include the accounts of Microchip Technology Incorporated and its wholly-owned subsidiaries (Microchip or the Company).  The Company does not have any subsidiaries in which it does not own 100% of the outstanding stock.  All of the Company's subsidiaries are included in the consolidated financial statements.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, as evidenced by an agreement with the customer, transfer of title as well as fixed or determinable pricing and collectability is reasonably assured.  The Company recognizes revenue from product sales to original equipment manufacturers (OEMs) upon shipment and records reserves for estimated customer returns.

For license and other arrangements for SuperFlash^® technology that the Company is continuing to enhance and refine or under which it is obligated to provide unspecified enhancements, non-royalty revenue is recognized over the lesser of (1) the estimated period that the Company has historically enhanced and developed refinements to the specific technology, typically one to three years (the "upgrade period"), and (2) the remaining portion of the upgrade period after the date of delivery of all specified technology and documentation, provided that the fee is fixed or determinable and collection of the fee is reasonably assured.  Royalties received during the upgrade period are recognized as revenue based on an amortization calculation of the elapsed portion of the upgrade period compared to the entire estimated upgrade period.  Royalties received after the upgrade period has elapsed are recognized when reported to the Company, which generally coincides with the receipt of payment.  For licenses or other technology arrangements without an upgrade period, non-royalty revenue from license is recognized upon delivery of the technology if the fee is fixed or determinable and collection of the fee is reasonably assured.  Royalties are recognized when reported to the Company, which generally coincides with the receipt of payment.

Distributors worldwide generally have broad price protection and product return rights, so the Company defers revenue recognition until the distributor sells the product to their customer.  Revenue is recognized when the distributor sells the product to their end customer, at which time the sales price becomes fixed or determinable.  Revenue is not recognized upon the Company's shipment to the distributors since, due to discounts from list price as well as price protection rights, the sales price is not substantially fixed or determinable at that time.  At the time of shipment to these distributors, the Company records a trade receivable for the selling price as there is a legally enforceable right to payment, relieves inventory for the carrying value of goods shipped since legal title has passed to the distributor, and records the gross margin in deferred income on shipments to distributors on the consolidated balance sheets.

Deferred income on shipments to distributors effectively represents the gross margin on the sale to the distributor; however, the amount of gross margin recognized by the Company in future periods will be less than the deferred margin as a result of credits granted to distributors on specifically identified products and customers to allow the distributors to earn a competitive gross margin on the sale of the Company's products to their end customers and price protection concessions related to market pricing conditions.

The Company sells the majority of the items in its product catalog to its distributors worldwide at a uniform list price.  However, distributors resell the Company's products to end customers at a very broad range of individually negotiated price points.  The majority of the Company's distributors' resales require a reduction from the original list price paid.  Often, under these circumstances, the Company remits back to the distributor a portion of their original purchase price after the resale

F-6

transaction is completed in the form of a credit against the distributors' outstanding accounts receivable balance.  The credits are on a per unit basis and are not given to the distributor until they provide information regarding the sale to their end customer.  The price reductions vary significantly based on the customer, product, quantity ordered, geographic location and other factors and discounts to a price less than the Company's cost have historically been rare.  The effect of granting these credits establishes the net selling price from the Company to its distributors for the product and results in the net revenue recognized by the Company when the product is sold by the distributors to their end customers.  Thus, a portion of the "deferred income on shipments to distributors" balance represents the amount of distributors' original purchase price that will be credited back to the distributor in the future.  The wide range and variability of negotiated price concessions granted to distributors does not allow the Company to accurately estimate the portion of the balance in the deferred income on shipments to distributors account that will be credited back to the distributors.  Therefore, the Company does not reduce deferred income on shipments to distributors or accounts receivable by anticipated future price concessions; rather, price concessions are recorded against deferred income on shipments to distributors when incurred, which is generally at the time the distributor sells the product.

At March 31, 2012, the Company had approximately $159.1 million of deferred revenue and $50.4 million in deferred cost of sales recognized as $108.7 million of deferred income on shipments to distributors.  At March 31, 2011, the Company had approximately $208.1 million of deferred revenue and $68.1 million of deferred cost of sales recognized as $140.0 million of deferred income on shipments to distributors.  The deferred income on shipments to distributors that will ultimately be recognized in the Company's income statement will be lower than the amount reflected on the balance sheet due to price credits to be granted to the distributors when the product is sold to their customers.  These price credits historically have resulted in the deferred income approximating the overall gross margins that the Company recognizes in the distribution channel of its business.

The Company reduces product pricing through price protection based on market conditions, competitive considerations and other factors.  Price protection is granted to distributors on the inventory they have on hand at the date the price protection is offered.  When the Company reduces the price of its products, it allows the distributor to claim a credit against its outstanding accounts receivable balances based on the new price of the inventory it has on hand as of the date of the price reduction.  There is no immediate revenue impact from the price protection, as it is reflected as a reduction of the deferred income on shipments to distributors' balance.

Products returned by distributors and subsequently scrapped have historically been immaterial to the Company's consolidated results of operations.  The Company routinely evaluates the risk of impairment of the deferred cost of sales component of the deferred income on shipments to distributors account.  Because of the historically immaterial amounts of inventory that have been scrapped, and historically rare instances where discounts given to a distributor result in a price less than the Company's cost, the Company believes the deferred costs have a low risk of material impairment.

Shipping charges billed to customers are included in net sales, and the related shipping costs are included in cost of sales.

Product Warranty

The Company generally sells its products with a limited warranty related to product quality and a limited indemnification of customers against intellectual property infringement claims related to the Company's products.  Due to comprehensive product testing, the short time between product shipment and the detection and correction of product failures, and a low historical rate of payments on indemnification claims, the accrual based on historical activity and the related expense were immaterial as of and for the fiscal years ended March 31, 2012, 2011 and 2010.

Advertising Costs

The Company expenses all advertising costs as incurred.  Advertising costs were immaterial for the fiscal years ended March 31, 2012, 2011 and 2010.

Research and Development

Research and development costs are expensed as incurred.  Assets purchased to support the Company's ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their estimated useful lives.  Research and development expenses include expenditures for labor, share-based payments, depreciation, masks, prototype wafers, and expenses for development of process technologies, new packages, and software to support new products and design environments.

F-7

Foreign Currency Translation and Forward Contracts

The Company's foreign subsidiaries are considered to be extensions of the U.S. Company and any translation gains and losses related to these subsidiaries are included in other income (expense) in the consolidated statements of income.  As the U.S. dollar is utilized as the functional currency, gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the subsidiaries' functional currency) are also included in income.  Gains and losses associated with currency rate changes on forward contracts are recorded currently in income.  These gains and losses have been immaterial to the Company's financial statements.

Income Taxes

As part of the process of preparing its consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates.  This process involves estimating the Company's actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes.  These differences result in deferred tax assets and liabilities, which are included within the Company's consolidated balance sheet.  The Company must then assess the likelihood that its deferred tax assets will be recovered from future taxable income and to the extent it believes that recovery is not likely, it must establish a valuation allowance.  The Company has provided valuation allowances for certain of its deferred tax assets where it is more likely than not that some portion, or all of such assets, will not be realized.  

Cash and Cash Equivalents

All highly liquid investments, including marketable securities purchased with a remaining maturity of three months or less when acquired are considered to be cash equivalents.

Investments – Available-for-Sale and Trading Securities

The Company classifies its investments in debt and marketable equity securities as available-for-sale or trading securities based upon management's intent with regard to the investments and the nature of the underlying securities. 

The Company's available-for-sale investments consist of government agency bonds, municipal bonds, auction rate securities (ARS), corporate bonds and marketable equity securities.  The Company's investments are carried at fair value with unrealized gains and losses reported in stockholders' equity.  Premiums and discounts are amortized or accreted over the life of the related available-for-sale security.  Dividend and interest income are recognized when earned.  The cost of securities sold is calculated using the specific identification method. 

The Company includes within short-term investments its trading securities, as well as its income yielding available-for-sale securities that can be readily converted to cash and includes within long-term investments those income yielding available-for-sale securities with maturities of over one year that have unrealized losses attributable to them or those that cannot be readily liquidated.  Except as discussed in Note 5, the Company intends and has the ability to hold its long-term investments with temporary impairments until such time as these assets are no longer impaired.  Such recovery of unrealized losses is not expected to occur within the next year.

Due to the lack of availability of observable market quotes on certain of the Company's investment portfolio of ARS, it utilizes valuation models including those that are based on expected cash flow streams and collateral values, including assessments of counterparty credit quality, default risk underlying the security, discount rates and overall capital market liquidity.  The valuation of the Company's ARS investment portfolio is subject to uncertainties that are difficult to predict.  Factors that may impact the Company's ARS valuation include changes to credit ratings of the securities as well as to the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk, the ongoing strength and quality of the credit markets and market liquidity.

The credit markets experienced significant deterioration and uncertainty beginning in the second half of fiscal 2008.  If these conditions recur, or the Company experiences any additional ratings downgrades on any investments in its portfolio (including its ARS), the Company may incur additional impairments to its investment portfolio, which could negatively affect the Company's financial condition, cash flows and reported earnings.

F-8

Non-Marketable Investments

The Company's non-marketable equity investments are recorded using adjusted cost basis or the equity method of accounting, depending on the circumstances of each investment.  The Company's non-marketable investments are classified within other assets on the Company's consolidated balance sheet.  The Company's non-marketable equity investments include:

Equity Method Investments:  When the Company has the ability to exercise significant influence, but not control, over the investee, it records equity method gain or loss as "gain or loss from equity investments."  Equity method adjustments include the Company's proportionate share of the investee's income or loss.

Cost Method Investments:  When the Company does not have the ability to exercise significant influence over the investee, it records such investments at cost.

The Company reviews its investments quarterly for indicators of impairment.  The impairment review requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances that impact the fair value of the investment, such as:

• the investee's revenue and trends in earnings or losses relative to pre-defined milestones and overall business prospects;

• the technological feasibility of the investee's products and technologies;

• the general market conditions in the investee's industry or geographic area, including adverse regulatory or economic changes;

• factors related to the investee's ability to remain in business, such as the investee's liquidity, debt ratios, and the rate at which the investee is using its cash; and

• the investee's receipt of additional funding at a lower valuation.

If the fair value of an investment is below the Company's carrying value, the Company determines if the investment is other than temporarily impaired based on a quantitative and qualitative analysis, which includes assessing the severity and duration of the impairment and the likelihood of recovery before disposal.  If the investment is considered to be other than temporarily impaired, the Company writes down the investment to its fair value.  

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which is included in bad debt expense.  The Company determines the adequacy of this allowance by regularly reviewing the composition of its accounts receivable aging and evaluating individual customer receivables, considering such customer's financial condition, credit history and current economic conditions.

Inventories

Inventories are valued at the lower of cost or market using the first-in, first-out method.  The Company writes down its inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.  If actual market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required.  Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable.  In estimating reserves for obsolescence, the Company primarily evaluates estimates of demand over a twelve-month period and provides reserves for inventory on hand in excess of the estimated twelve-month demand.

In periods where the Company's production levels are substantially below normal operating capacity, such as in the first half of fiscal 2010 and the second half of fiscal 2012, unabsorbed overhead production associated with the reduced production levels of the Company's manufacturing facilities are charged directly to cost of sales.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred.  The Company's property and equipment accounting policies incorporate estimates, assumptions and judgments relative to the useful lives of its property and equipment.  Depreciation is provided for assets placed in service on a straight-line basis over the estimated useful lives of the relative assets, which range from 3 to

F-9

30 years.  The Company evaluates the carrying value of its property and equipment when events or changes in circumstances indicate that the carrying value of such assets may be impaired.  Asset impairment evaluations are, by nature, highly subjective.

Junior Subordinated Convertible Debentures

The Company separately accounts for the liability and equity components of its junior subordinated convertible debentures in a manner that reflects its nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized.  This results in a bifurcation of a component of the debt, classification of that component in equity and the accretion of the resulting discount on the debt to be recognized as part of interest expense in its consolidated statements of income.  Additionally, certain embedded features of the debentures qualify as derivatives and are bundled as a compound embedded derivative that is measured at fair value.  Lastly, the Company includes the dilutive effect of the shares of its common stock issuable upon conversion of the outstanding junior subordinated convertible debentures in its diluted income per share calculation regardless of whether the market price trigger or other contingent conversion feature has been met.  The Company applies the treasury stock method as it has the intent and current ability to settle the principal amount of the junior subordinated convertible debentures in cash.  This method results in incremental dilutive shares when the average market value of the Company's common stock for a reporting period exceeds the conversion price per share which was $27.94 at March 31, 2012 and adjusts as dividends are recorded in the future.

Litigation

The Company's estimated range of liability related to pending litigation is based on claims for which management believes a loss is probable and it can estimate the amount or range of loss.  Because of the uncertainties related to both the outcome and range of any potential losses on the pending litigation, the Company is generally unable to make a reasonable estimate of the liability that could result from an unfavorable outcome.  As additional information becomes available, the Company will assess the potential liability related to its pending litigation and revise its estimates, if necessary.

Goodwill and Other Intangible Assets

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.  The Company is required to perform an annual impairment review, and more frequently under certain circumstances.  The goodwill is subjected to this test during the fourth quarter of the Company's fiscal year.  The Company engages primarily in the design, development, manufacture and marketing of semiconductor products as well as technology licensing.  As a result, the Company concluded there are two reporting units, semiconductor products and technology licensing.  The Company has early adopted the qualitative goodwill impairment assessment standard which it applied as of March 31, 2012. Under this standard, management evaluates whether it is more likely than not that goodwill is impaired. If it is determined that it is more likely than not, the Company proceeds with the next step of the impairment test, which compares the fair value of the reporting unit to its carrying value.  If the Company determines through the impairment process that goodwill has been impaired, the Company will record the impairment charge in its results of operation.  Through March 31, 2012, the Company has not had impaired goodwill.  The Company's other intangible assets represent existing technologies, core and developed technology, in-process research and development, trademarks and trade names, and customer-related intangibles. Other intangible assets are amortized over their respective estimated lives, ranging from one year to ten years.  In the event that facts and circumstances indicate intangibles or other long-lived assets may be impaired, the Company evaluates the recoverability and estimated useful lives of such assets.  In-process research and development is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.

Impairment of Long-Lived Assets

The Company assesses whether indicators of impairment of long-lived assets are present.  If such indicators are present, the Company determines whether the sum of the estimated undiscounted cash flows attributable to the assets in question is less than their carrying value.  If less, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their respective fair values.  Fair value is determined by discounted future cash flows, appraisals or other methods.  If the assets determined to be impaired are to be held and used, the Company recognizes an impairment loss through a charge to operating results to the extent the present value of anticipated net cash flows attributable to the asset are less than the asset's carrying value.  The Company would depreciate the remaining value over the remaining estimated useful life of the asset.

F-10

Share-Based Compensation

The Company has equity incentive plans under which non-qualified stock options and restricted stock units (RSUs) have been granted to employees and non-employee members of the Board of Directors.  In the second half of fiscal 2006, the Company adopted RSUs as its primary equity incentive compensation instrument for employees.  The Company also has an employee stock purchase plan for all eligible employees.

The Company estimates the fair value of share-based payment awards on the date of grant using an option pricing model.  The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods.  The Company has estimated the fair value of each award as of the date of grant using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable.  The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of the Company's stock price.

Determining the appropriate fair-value model and calculating the fair value of share-based awards at the date of grant requires judgment.  The fair value of RSUs is based on the fair market value of the Company's common stock on the date of grant discounted for expected future dividends.  The Company uses the Black-Scholes option pricing model to estimate the fair value of employee stock options and rights to purchase shares under stock participation plans.  Option pricing models, including the Black-Scholes model, also require the use of input assumptions, including expected volatility, expected life, expected dividend rate, and expected risk-free rate of return.  The Company uses a blend of historical and implied volatility based on options freely traded in the open market as it believes this is more reflective of market conditions and a better indicator of expected volatility than using purely historical volatility.  The expected life of the awards is based on historical and other economic data trended into the future.  The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of the Company's awards.  The dividend yield assumption is based on the Company's history and expectation of future dividend payouts.  The Company estimates the number of share-based awards which will be forfeited due to employee turnover.  Quarterly changes in the estimated forfeiture rate would affect share-based compensation, as the effect of adjusting the rate for all expense amortization after April 1, 2006 is recognized in the period the forfeiture estimate is changed.  If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the financial statements.  If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase to the expense recognized in the financial statements.  If forfeiture adjustments are made, they would affect the Company's results of operations.  The effect of forfeiture adjustments in the years ended March 31, 2012, 2011 and 2010 was immaterial.

The Company evaluates the assumptions used to value its awards on a quarterly basis.  If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what was recorded in the past.  If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate or increase any remaining unearned share-based compensation expense.  Future share-based compensation expense and unearned share-based compensation will increase to the extent that the Company grants additional equity awards to employees or it assumes unvested equity awards in connection with acquisitions.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments in debt securities and trade receivables.  Investments in debt securities with original maturities of greater than six months consist primarily of AAA and AA rated financial instruments and counterparties.  The Company's investments are primarily in direct obligations of the U.S. government or its agencies, corporate bonds, and municipal bonds.

Concentrations of credit risk with respect to accounts receivable are generally not significant due to the diversity of the Company's customers and geographic sales areas.  The Company sells its products primarily to OEMs and distributors in the Americas, Europe and Asia.  The Company performs ongoing credit evaluations of its customers' financial condition and, as deemed necessary, may require collateral, primarily letters of credit.

Distributor advances, included in deferred income on shipments to distributors in the consolidated balance sheets, totaled $51.7 million at March 31, 2012 and $71.9 million at March 31, 2011.  On sales to distributors, the Company's payment terms generally require the distributor to settle amounts owed to the Company for an amount in excess of their ultimate cost.  The Company's sales price to its distributors may be higher than the amount that the distributors will ultimately owe the Company because distributors often negotiate price reductions after purchasing the product from the Company and such reductions are often significant.  It is the Company's practice to apply these negotiated price discounts to future purchases, requiring the

F-11

distributor to settle receivable balances, on a current basis, generally within 30 days, for amounts originally invoiced.  This practice has an adverse impact on the working capital of the Company's distributors.  As such, the Company has entered into agreements with certain distributors whereby it advances cash to the distributors to reduce the distributor's working capital requirements.  These advances are reconciled at least on a quarterly basis and are estimated based on the amount of ending inventory as reported by the distributor multiplied by a negotiated percentage.  Such advances have no impact on revenue recognition or the Company's consolidated statements of income.  The Company processes discounts taken by distributors against its deferred income on shipments to distributors' balance and trues-up the advanced amounts generally after the end of each completed fiscal quarter.  The terms of these advances are set forth in binding legal agreements and are unsecured, bear no interest on unsettled balances and are due upon demand.  The agreements governing these advances can be canceled by the Company at any time.

Use of Estimates

The Company has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare its consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles.  Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In the fourth quarter of fiscal 2012, the Company early adopted a new standard for the assessment of goodwill impairment, which permits an entity to first assess qualitative factors to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. After assessing qualitative factors, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further testing is necessary. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the traditional two-step goodwill impairment test must be performed. The Company applied this standard to its March 31, 2012 goodwill impairment test, concluding that it was not more likely than not that the fair value of its two reporting units were less than the carrying amounts.

In the first quarter of fiscal 2012, the Company adopted new standards for revenue recognition with multiple deliverables. These new standards change the determination of whether the individual deliverables included in a multiple-element arrangement may be treated as separate units for accounting purposes. Additionally, these new standards modify the method in which revenue is allocated to the separately identified deliverables. The adoption of these new standards did not have a significant impact on the Company's consolidated financial statements.

In the first quarter of fiscal 2012, the Company adopted new standards that remove certain tangible products and associated software from the scope of the software revenue recognition guidance. The adoption of these new standards did not have a significant impact on the Company's consolidated financial statements.

In the first quarter of fiscal 2012, the Company adopted new standards for the application of the milestone method of revenue recognition for certain research and development arrangements entered into by its technology licensing segment. Under this standard, the Company will recognize arrangement consideration received for achieving specified performance measures during the period in which the milestones are achieved, provided certain criteria are met for the milestones to be considered substantive. This standard was adopted prospectively, and its adoption is not expected to have a significant impact on the Company's consolidated financial statements.

2.    BUSINESS ACQUISITIONS

Acquisition of Ident Technology AG

On February 9, 2012, the Company acquired Ident Technology AG, a privately-held semiconductor company that offers intellectual property and semiconductor solutions for the touch screen markets of the semiconductor and consumer electronics industries. The business acquisition was accounted for under the purchase method of accounting.  Total consideration paid for this business was approximately $39.5 million.  The initial purchase price of the acquisition resulted in purchased intangible assets of approximately $18.1 million, of which $8.2 million relates to in-process technology, and goodwill of approximately $17.4 million.  Goodwill recognized in this transaction is non-deductible. The purchased intangible assets (other than goodwill and the in-process technology intangible asset) are being amortized over a period of 10 years. The Company's purchase price allocation is not yet finalized, as management is still evaluating the deferred taxes associated with the transaction.

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Acquisition of Silicon Storage Technology, Inc. (SST)

On April 8, 2010, the Company acquired SST, a publicly traded company based in Sunnyvale, California, in a merger transaction for $3.05 per share, or a total of $353.8 million, which included $295.4 million of cash consideration for the outstanding shares of SST common stock, and $58.4 million of SST shares acquired by the Company on March 8, 2010.  The SST business acquired included a variety of different business units including a licensing business focused on opportunities in the embedded control market, a microcontroller business, a variety of memory businesses and a Wi-Fi power-amplifier business. The Company's primary reason for this acquisition was to gain access to SST's SuperFlash^® technology and extensive patent portfolio, which it believes are critical building blocks for advanced microcontrollers.

The acquisition was accounted for under the acquisition method of accounting, with the Company identified as the acquirer, and the operating results of SST have been included in the Company's consolidated financial statements as of the effective date of the acquisition. The purchase price of the acquisition resulted in purchased intangible assets of approximately $50.9 million and goodwill of approximately $25.0 million of which $19.2 million was allocated to the technology licensing reporting unit and approximately $5.8 million was allocated to the semiconductor products reporting unit. Purchased intangible assets included $32.9 million of core and developed technology, $13.1 million of customer-related intangibles, $2.3 million of acquisition-date backlog, $1.7 million of trademarks and trade names and $0.9 million of in-process research and development. The purchased intangible assets, other than acquisition-date backlog and in-process research and development, are being amortized over their expected useful lives which range between five to ten years. Acquisition-date backlog was amortized over one year and in-process research and development is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.

Other Acquisitions

During the year ended March 31, 2011, the Company completed two business acquisitions, in addition to SST, which were accounted for under the purchase method of accounting.  Total consideration paid for these businesses, net of cash acquired of $2.5 million, was $6.5 million.  As part of one of the acquisitions, the Company assumed a bankruptcy reorganization liability in the amount of approximately $19.4 million which was partially funded by the acquired company prior to the acquisition.    The bankruptcy reorganization liability was settled in the second quarter of fiscal 2012. The purchase price of the acquisitions resulted in purchased intangible assets of approximately $5.6 million and goodwill of approximately $1.0 million.  The purchased intangible assets are being amortized over a weighted average period of approximately seven years.  In addition, one of the acquisitions resulted in contingent consideration with an estimated fair value at the date of purchase of $2.0 million.

During the year ended March 31, 2010, the Company completed one business acquisition which was accounted for under the purchase method of accounting.  Total consideration paid for this business was approximately $9.3 million.  The purchase price of the acquisition resulted in purchased intangible assets of approximately $7.0 million, of which $2.9 million relates to in-process technology, and goodwill of approximately $4.2 million.  The purchased intangible assets (other than goodwill and the in-process technology intangible asset) are being amortized over an average period of seven years.  In addition, the acquisition resulted in contingent consideration with an estimated fair value at the date of purchase of $1.3 million. During the year ended March 31, 2012, a favorable adjustment to the contingent consideration of $1.0 million was included in special charges on the consolidated statements of income.

3.    DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued operations includes the following product families that were acquired in the acquisition of SST: NAND Drives, NAND controllers, Smart Card ICs, Combo Memory, Concurrent SuperFlash, Small-Sector Flash and many-time Programmable Flash memories and certain serial NOR Flash products from 512K to 64MB density in the geographic regions of Taiwan, China, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, Vietnam and Philippines.  These product lines were marketed for sale since the acquisition of SST on April 8, 2010 based on management's decision regarding them not being a strategic fit into the Company's product portfolio.  On May 21, 2010, the Company completed a transaction to sell the NAND Drives, NAND controllers, Smart Card ICs, Combo Memory, Concurrent SuperFlash, Small-Sector Flash and many-time Programmable Flash memories to Greenliant Systems Ltd.  The sale price in this transaction was determined by management to represent fair value, and accordingly, no gain or loss was recognized on the sale of the net assets.  In this sale, the Company disposed of approximately $23.6 million of assets held for sale, primarily comprised of inventory, property, plant and equipment, intangible assets and non-marketable securities.  

On July 8, 2010, the Company granted an exclusive limited license for the manufacture of certain Serial NOR-Flash products to Professional Computer Technology, Ltd. (PCT).  The license to PCT is limited to the industry segments of optical disc drives, set top boxes, electronic books, video games, digital displays, DVD player/recorder, notebook computers, netbooks,

F-13

desktop computers, PC monitors, mass storage devices, printers/scanners/copiers/faxes, PC-CAM, point of sale devices, graphic cards, servers/clients/workstations, and mobile phones.  PCT has no license to sell these products to any other industry segment or geographic region other than those listed above.  Certain multi-national customers are excluded from this license.

For financial statement purposes, the results of operations for these discontinued businesses have been segregated from those of the continuing operations and are presented in the Company's consolidated financial statements as discontinued operations.

The results of discontinued operations for the year ended March 31, 2011 are as follows (amounts in thousands):

	Year ended
	March 31, 2011
Net sales	$	25,177
Cost of sales	(32,627		)
Operating expenses	(3,676		)
Income tax benefit	909
Net loss from discontinued operations	$	(10,217	)

There were no discontinued operations during fiscal years 2012 or 2010.

4.    SPECIAL CHARGES

Acquisition Related Expenses

During fiscal 2012, special charges included a benefit of $0.7 million of special income comprised of a $1.0 million favorable adjustment to contingent consideration offset by $0.3 million of severance-related charges related to a prior year acquisition. During fiscal 2011, the Company incurred $1.9 million of severance-related and office closing costs associated with the acquisition of SST.

Patent Licenses

During the fourth quarter of fiscal 2012, the Company agreed to the terms of a patent license with an unrelated third party and signed an agreement on March 20, 2012.  The patent license settled alleged infringement claims.  The total payment made to the third-party in March 2012 was $2.8 million, $1.5 million of which was expensed in the fourth quarter of fiscal 2012 and the remaining $1.3 million was recorded as a prepaid royalty which will be amortized over the remaining life of the patents, which expires in December 2018.

During the first quarter of fiscal 2010, the Company agreed to the terms of a patent license with an unrelated third party and signed an agreement on July 9, 2009.  The patent license settled alleged infringement claims.  The total payment made to the third-party in July 2009 was $1.4 million, $1.2 million of which was expensed in the first quarter of fiscal 2010 and the remaining $0.2 million was recorded as a prepaid royalty that was amortized over the remaining life of the patents, which expired in June 2010.

5. INVESTMENTS

The Company's investments are intended to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relationship to the Company's investment guidelines and market conditions.  The following is a summary of available-for-sale securities at March 31, 2012 (amounts in thousands):

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	Available-for-sale Securities
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Government agency bonds	$	342,025	$	476	$	(397	)	$	342,104
Municipal bonds	19,888		234		—			20,122
Auction rate securities	10,246		—		—			10,246
Corporate bonds and debt	770,891		4,150		(937		)	774,104
Marketable equity securities	5,864		188		(788		)	5,264
	$	1,148,914	$	5,048	$	(2,122	)	$	1,151,840

The following is a summary of available-for-sale securities at March 31, 2011 (amounts in thousands):

	Available-for-sale Securities
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Government agency bonds	$	431,355	$	159	$	(923	)	$	430,591
Municipal bonds	11,445		34		(22		)	11,457
Auction rate securities	12,475		—		—			12,475
Corporate bonds and debt	519,499		4,116		(589		)	523,026
Marketable equity securities	26,173		688		—			26,861
	$	1,000,947	$	4,997	$	(1,534	)	$	1,004,410

At March 31, 2012, the Company's available-for-sale debt securities, and marketable equity securities are presented on the consolidated balance sheets as short-term investments of $823.3 million and long-term investments of $328.6 million.  At March 31, 2011, the Company’s available-for-sale debt securities and marketable equity securities are presented on the consolidated balance sheets as short-term investments of $539.6 million and long-term investments of $464.8 million.

At March 31, 2012, $10.2 million of the fair value of the Company's investment portfolio was invested in ARS.  With the continuing liquidity issues in the global credit and capital markets, the Company's ARS have experienced multiple failed auctions from September 2007 through the date of this report.  While the Company continues to earn interest on these investments based on a pre-determined formula with spreads tied to particular interest rate indices, the estimated market value for these ARS no longer approximates the original purchase value.

The fair value of the failed ARS of $10.2 million has been estimated based on market information and estimates determined by management and could change significantly based on market conditions.  The Company evaluated the impairments in the value of these ARS, determining its intent to sell these securities prior to the recovery of its amortized cost basis resulted in the securities being other-than-temporarily impaired. In fiscal 2012, the Company recognized a net gain of $0.3 million on these investments due to a redemption at par value of one ARS position offsetting impairment charges. In fiscal 2011, the Company recognized an impairment charge on these investments of $1.6 million.

The Company believes that, based on its current unrestricted cash, cash equivalents and short-term investment balances, the current lack of liquidity in the credit and capital markets for ARS will not have a material impact on its liquidity, cash flow or ability to fund its operations.

At March 31, 2012, the Company evaluated its investment portfolio and noted unrealized losses of $1.3 million on its debt securities, and $0.8 million on its marketable equity securities which were due to fluctuations in interest rates, credit market conditions, and/or market prices.  Management does not believe any of the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of March 31, 2012 and the Company's intent is to hold these investments until these assets are no longer impaired, except for the ARS described above and certain equity investments that are actively being sold.  For those debt securities not scheduled to mature until after March 31, 2013, such recovery is not anticipated to occur in the next year and these investments have been classified as long-term investments.

The amortized cost and estimated fair value of the available-for-sale securities at March 31, 2012, by maturity, excluding marketable equity securities of $5.3 million and corporate debt of $4.6 million, which have no contractual maturity, are shown

F-15

below (amounts in thousands).  Expected maturities can differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties, and the Company views its available-for-sale securities as available for current operations.

	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale
Due in one year or less	$	268,501	$	1,537	$	(21	)	$	270,017
Due after one year and through five years	839,677		3,323		(1,297		)	841,703
Due after five years and through ten years	25,177		—		(16		)	25,161
Due after ten years	5,069		—		—			5,069
	$	1,138,424	$	4,860	$	(1,334	)	$	1,141,950

The amortized cost and estimated fair value of the available-for-sale securities at March 31, 2011, by maturity, excluding marketable equity securities of $26.9 million and corporate debt of $3.5 million, which have no contractual maturity, are shown below (amounts in thousands). 

	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale
Due in one year or less	$	143,447	$	903	$	(2	)	$	144,348
Due after one year and through five years	815,352		3,406		(1,532		)	817,226
Due after five years and through ten years	—		—		—			—
Due after ten years	12,475		—		—			12,475
	$	971,274	$	4,309	$	(1,534	)	$	974,049

During the year ended March 31, 2012, the Company had net realized gains of $0.4 million from sales of available-for-sale marketable equity securities compared to net realized gains of $3.2 million and $1.1 million, respectively, for the years ended March 31, 2011 and March 31, 2010. The Company had a net realized gain of $0.4 million from sales of available-for-sale debt securities during the year ended March 31, 2012, compared to an immaterial amount of net realized gains and losses during the year ended March 31, 2011 and a net realized gain of $1.2 million during the year ended ended March 31, 2010.

Marketable Equity Investments

The Company had investments in public companies with a fair value of $5.3 million as of March 31, 2012. Cash dividends and other distributions of earnings from the investees, if any, are included in other income at the date of record.  The Company has classified the shares owned in these companies as marketable securities.  As of March 31, 2012, the Company had a net unrealized loss in other comprehensive income of $0.6 million on these marketable securities compared to an unrealized gain of $0.7 million for the year ended March 31, 2011. During the years ended March 31, 2012 and March 31, 2011, the Company recorded impairment charges of $2.4 million and $3.0 million, respectively, on certain shares that it held due to the current market price and active selling of the shares.

Non-marketable Equity Investments

The Company has certain non-marketable equity investments in several companies with a carrying value of $7.7 million at March 31, 2012.  The investments in privately held companies are accounted for using the cost or the equity method of accounting, as appropriate.  Each period the Company evaluates whether an event or change in circumstances has occurred that may indicate an investment has been impaired.  If upon further investigation of such events the Company determines the investment has suffered a decline in value that is other than temporary, the Company writes down the investment to its estimated fair value.  At March 31, 2012, the Company determined there were no such impairments and there were no impairment charges recognized in any of the three years then ended.  These investments are included in other assets on the consolidated balance sheet.

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6.    FAIR VALUE MEASUREMENTS

Accounting rules for fair value clarify that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1- Observable inputs such as quoted prices in active markets;

Level 2- Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3- Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Marketable Debt Instruments

Marketable debt instruments include instruments such as corporate bonds and debt, government agency bonds, bank deposits, municipal bonds, and money market fund deposits. When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis at March 31, 2012 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for  Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant  Unobservable Inputs (Level 3)		Total Balance
Assets
Money market fund deposits	$	232,219	$	—	$	—	$	232,219
Marketable equity securities	5,264		—		—		5,264
Corporate bonds & debt	—		769,479		4,625		774,104
Government agency bonds	—		342,104		—		342,104
Deposit accounts	—		403,536		—		403,536
Municipal bonds	—		20,122		—		20,122
Auction rate securities	—		—		10,246		10,246
Total assets measured at fair value	$	237,483	$	1,535,241	$	14,871	$	1,787,595

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Assets measured at fair value on a recurring basis at March 31, 2011 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market fund deposits	$	464,669	$	—	$	—	$	464,669
Marketable equity securities	26,861		—		—		26,861
Corporate bonds & debt	—		519,526		3,500		523,026
Government agency bonds	—		430,591		—		430,591
Deposit accounts	—		239,255		—		239,255
Municipal bonds	—		11,457		—		11,457
Auction rate securities	—		—		12,475		12,475
Total assets measured at fair value	$	491,530	$	1,200,829	$	15,975	$	1,708,334

The Company estimated the fair value of its ARS, which are classified as Level 3 securities, based on the following: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (iii) consideration of the probabilities of default, auction failure, or repurchase at par for each period; and (iv) estimates of the recovery rates in the event of default for each security.  The estimated fair values that are categorized as Level 3 as well as the marketable equity securities could change significantly based on future market conditions.

When the Company uses observable market prices for identical securities that are traded in less active markets, it classifies such securities as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. There were no transfers between Level 1 and Level 2 during the years ended March 31, 2012 and 2011.

The following tables present a reconciliation for all assets measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs (Level 3) for the years ended March 31, 2012 and March 31, 2011 (amounts in thousands):

Year ended March 31, 2012	Auction Rate  Securities			Corporate Debt		Total Gains (Losses)
Balance at March 31, 2011	$	12,475		$	3,500	$	—
Total gains or losses (realized and unrealized):
Included in earnings	271			—		271
Included in other comprehensive income (loss)	—			—		—
Purchases, sales, issuances, and settlements, net	(2,500		)	1,125		—
Transfer into Level 3	—			—		—
Transfer out of Level 3	—			—		—
Balance at March 31, 2012	$	10,246		$	4,625	$	271

F-18

Year ended March 31, 2011	Auction Rate Securities			Put Option on Auction Rate Securities			Corporate Debt		Total Gains (Losses)
Balance at March 31, 2010	$	37,237		$	1,814		$	—	$	—
Total gains or losses (realized and unrealized):
Included in earnings	138			(1,814		)	—		(1,676		)
Included in other comprehensive income (loss)	—			—			—		—
Purchases, sales, issuances, and settlements, net	(24,900		)	—			3,500		—
Transfer into Level 3	—			—			—		—
Transfer out of Level 3	—			—			—		—
Balance at March 31, 2011	$	12,475		$	—		$	3,500	$	(1,676	)

Assets measured at fair value on a recurring basis are presented/classified on the consolidated balance sheets at March 31, 2012 as follows (amounts in thousands):

	Quoted Prices  in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	232,219	$	403,536	$	—	$	635,755
Short-term investments	782		822,472		—		823,254
Long-term investments	4,482		309,233		14,871		328,586
Total assets measured at fair value	$	237,483	$	1,535,241	$	14,871	$	1,787,595

Assets and liabilities measured at fair value on a recurring basis are presented/classified in the consolidated balance sheets at March 31, 2011 as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	464,669	$	239,255	$	—	$	703,924
Short-term investments	16,553		523,019		—		539,572
Long-term investments	10,308		438,555		15,975		464,838
Total assets measured at fair value	$	491,530	$	1,200,829	$	15,975	$	1,708,334

Financial Assets Not Recorded at Fair Value on a Recurring Basis

The Company's non-marketable equity and cost method investments are not recorded at fair value on a recurring basis.  These investments were recorded at fair value as of April 8, 2010, the date of the SST acquisition, and are monitored on a quarterly basis for impairment charges.  The investments will only be recorded at fair value when an impairment charge is recognized.  During the year ended March 31, 2012, there were no impairment charges recognized on these investments. These investments are included in other assets on the consolidated balance sheet.  See further discussion of non-marketable investments in Note 5.

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7.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash equivalents approximates fair value because their maturity is less than three months.  Management believes the carrying amount of the equity and cost-method investments materially approximated fair value at March 31, 2012 based upon unobservable inputs. The fair values of these investments have been determined as level 3 fair value measurements. The carrying amount of accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term maturity of the amounts.  The fair value of the Company's junior subordinated convertible debentures was $1.585 billion at March 31, 2012 and $1.574 billion at March 31, 2011based on observable market prices for these debentures, which are traded in less active markets and are therefore classified as a Level 2 fair value measurement.

8.ACCOUNTS RECEIVABLE

Accounts receivable consists of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Trade accounts receivable	$	171,274	$	181,840
Other	1,529		2,200
	172,803		184,040
Less allowance for doubtful accounts	2,602		2,838
	$	170,201	$	181,202

9.    INVENTORIES

The components of inventories consist of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Raw materials	$	8,065	$	8,174
Work in process	139,045		141,462
Finished goods	70,168		31,164
	$	217,278	$	180,800

Inventories are valued at the lower of cost or market using the first-in, first-out method. Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable.

10. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Land	$	46,529	$	46,497
Building and building improvements	374,042		375,611
Machinery and equipment	1,314,303		1,306,367
Projects in process	83,676		101,202
	1,818,550		1,829,677
Less accumulated depreciation and amortization	1,301,939		1,289,164
	$	516,611	$	540,513

Depreciation expense attributed to property, plant and equipment was $86.4 million, $92.7 million and $86.4 million for the fiscal years ending March 31, 2012, 2011 and 2010, respectively.

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11.    INTANGIBLE ASSETS AND GOODWILL

Intangible assets consist of the following (amounts in thousands):

	March 31, 2012
	Gross Amount		Accumulated Amortization			Net Amount
Developed technology	$	94,681	$	(35,920	)	$	58,761
Customer-related	20,400		(4,633		)	15,767
Trademarks and trade names	1,730		(684		)	1,046
Backlog	2,410		(2,410		)	—
In-process technology	14,086		—			14,086
Distribution rights	5,236		(4,660		)	576
Covenants not to compete	400		(200		)	200
	$	138,943	$	(48,507	)	$	90,436

	March 31, 2011
	Gross Amount		Accumulated Amortization			Net Amount
Developed technology	$	83,751	$	(27,705	)	$	56,046
Customer-related	15,600		(1,621		)	13,979
Trademarks and trade names	1,730		(250		)	1,480
Backlog	2,410		(1,709		)	701
In-process technology	4,300		—			4,300
Distribution rights	5,236		(4,147		)	1,089
Covenants not to compete	400		(66		)	334
	$	113,427	$	(35,498	)	$	77,929

The Company amortizes intangible assets over their expected useful lives, which range between 1 and 10 years.  In fiscal 2012, the Company acquired $10.9 million of developed technology which has a weighted average amortization period of 10 years, $4.8 million of customer-related intangible assets which has a weighted average amortization period of 10 years and $9.8 million of in-process technology which will begin amortization once the technology reaches technological feasibility. The following is an expected amortization schedule for the intangible assets for fiscal year 2013 through fiscal year 2017, absent any future acquisitions or impairment charges (amounts in thousands):

Year ending March 31,	Projected Amortization Expense
2013	$13,218
2014	13,042
2015	12,901
2016	10,784
2017	9,134

Amortization expense attributed to intangible assets was $13.0 million, $13.9 million and $3.7 million for fiscal years 2012, 2011 and 2010, respectively.  In fiscal year 2012, approximately $8.2 million was charged to cost of sales and approximately $4.8 million was charged to operating expenses.  In fiscal year 2011, approximately $7.8 million was charged to cost of sales and approximately $6.1 million was charged to operating expenses.  In fiscal 2010, approximately $1.9 million was charged to cost of sales and $1.8 million was charged to operating expenses.  The Company found no indication of impairment of its intangible assets in fiscal years 2012, 2011 or 2010.

F-21

Goodwill activity for fiscal years 2012 and 2011 was as follows (amounts in thousands):

	Semiconductor Products Reporting Unit		Technology Licensing Reporting Unit
Balance at March 31, 2010	$	40,338	$	—
Additions due to the acquisition of SST	5,761		19,200
Additions due to contingent consideration payments to previous owners of R&E International	9,747		—
Additions due to other acquisitions	972		—
Balance at March 31, 2011	56,818		19,200
Additions due to contingent consideration payments to previous owners of R&E International	120		—
Additions due to other acquisitions	17,375		—
Balance at March 31, 2012	$	74,313	$	19,200

In the year ended March 31, 2011, the Company completed the process of allocating goodwill to its reporting units as it related to the acquisition of SST. As a result, approximately $19.2 million was allocated to the technology licensing reporting unit and approximately $5.8 million was allocated to the semiconductor products reporting unit.

In the years ended March 31, 2012 and 2011, the Company made contingent consideration payments to the previous owners of R&E International in the amount of $0.1 million and $12.1 million, respectively.  The Company acquired R&E International on March 31, 2009.  The fiscal 2011 contingent consideration payment resulted in the de-recognition of negative goodwill in the amount of approximately $2.4 million recorded on the acquisition date and the recognition of approximately $9.7 million of goodwill which was allocated to the semiconductor products reporting unit.

In the year ended March 31, 2012, the Company acquired Ident Technology AG. This acquisition resulted in approximately $17.4 million of goodwill which was allocated to the semiconductor products reporting unit.

At March 31, 2012, $74.3 million of goodwill was recorded in the Company's semiconductor products reporting unit and $19.2 million was recorded in the Company's technology licensing reporting unit. At March 31, 2012, the Company applied a qualitative goodwill impairment screen to its two reporting units, concluding it was not more likely than not that goodwill was impaired. Through March 31, 2012, the Company has never recorded an impairment charge against its goodwill balance.

12. ACCRUED LIABILITIES

Accrued liabilities consist of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Bankruptcy reorganization liability	$	—	$	19,385
Other accrued expenses	88,877		112,454
	$	88,877	$	131,839

The bankruptcy reorganization liability was incurred as part of an acquisition completed in fiscal 2011 for which the liability was settled in the second quarter of fiscal 2012.

13. INCOME TAXES

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions.  The Company files U.S. federal, U.S. state, and foreign income tax returns.  For U.S. federal, and in general for U.S. state tax returns, the fiscal 2009 through fiscal 2012 tax years remain open for examination by tax authorities.  For foreign tax returns, the Company is generally no longer subject to income tax examinations for years prior to fiscal 2005.

Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes.  Although the Company believes that it has appropriately reserved for its uncertain tax positions, no assurance

F-22

can be given that the final tax outcome of these matters will not be different than expectations.  The Company will adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate, the closing of a statutory audit period or changes in applicable tax law.  To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.  The provision for income taxes includes the impact of reserve provisions and changes to the reserves that are considered appropriate, as well as related net interest.

The Company recognizes liabilities for anticipated tax audit issues in the U.S. and other domestic and international tax jurisdictions based on its estimate of whether, and the extent to which, additional tax payments are more likely than not.  The Company believes it maintains appropriate reserves to offset potential income tax liabilities that may arise upon final resolution of matters for open tax years.  The U.S. Internal Revenue Service (IRS) is currently auditing the Company's fiscal years 2009 and 2010.  Fiscal 2011 and fiscal 2012 are currently open for examination by the IRS.  The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are appropriate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.  If such accrued amounts ultimately prove to be unnecessary, the resulting reversal of such reserves would result in tax benefits being recorded in the period the reserves are no longer deemed necessary.  If such assessments ultimately prove to be greater than anticipated, a future charge to expense would be recorded in the period in which the assessment is determined.  Timing of the resolution and/or closure on audits is highly uncertain; however, the Company does not believe that it is reasonably possible that the unrecognized tax benefits could significantly change within the next 12 months as the result of a tax examination closure.

The following table summarizes the activity related to the Company's gross unrecognized tax benefits from April 1, 2009 to March 31, 2012 (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Beginning balance	$	58,125		$	57,140		$	70,051
Increases related to acquisitions	—			36,587			—
Decreases related to prior year tax positions	(2,153		)	(49,932		)	(25,492		)
Increases related to current year tax positions	11,992			13,951			11,332
Increases related to prior year tax positions	2,526			379			1,249
Ending balance	$	70,490		$	58,125		$	57,140

The Company made certain corrections to the presentation of its March 31, 2011 gross unrecognized tax benefits compared to the amounts presented in its fiscal 2011 Notes to Consolidated Financial Statements. The March 31, 2011 corrected balance of gross unrecognized tax benefits is $58.1 million compared to the $45.9 million reflected in the prior year Notes to Consolidated Financial Statements. There were no changes to the consolidated balance sheet as of March 31, 2011, or the results of operations or cash flows for the years then ended resulting from the presentation correction.

As of March 31, 2012, the Company had accrued approximately $3.1 million related to the potential payment of interest on the Company's uncertain tax positions.  As of March 31, 2011, the Company had accrued approximately $2.1 million related to the potential payment of interest on the Company's uncertain tax positions. Interest was included in the provision for income taxes.  The Company has accrued for approximately $0.9 million and $1.0 million in penalties related to its uncertain tax positions related to its international locations as of March 31, 2012 and March 31, 2011, respectively.  Interest and penalties charged or (credited) to operations during the years ended March 31, 2012, 2011 and 2010 related to the Company's uncertain tax positions were $0.9 million, $(3.6) million and $2.5 million, respectively.

F-23

The income tax (benefit) provision from continuing operations consists of the following (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Current (benefit) expense:
Federal	$	7,611		$	294		$	(4,358	)
State	544			21			(436		)
Foreign	21,174			22,877			6,981
Total current	$	29,329		23,192			2,187
Deferred expense (benefit):
Federal	$	14,942		11,035			16,663
State	1,067			788			1,668
Foreign	(2,348		)	(3,484		)	290
Total deferred	13,661			8,339			18,621
	$	42,990		$	31,531		$	20,808

The tax benefit associated with the Company's equity incentive plans reduced taxes currently payable by $11.0 million, $7.5 million and $3.7 million for the years ended March 31, 2012, 2011 and 2010, respectively.  These amounts were credited to additional paid-in capital in each of the three fiscal years.

The provision for income taxes differs from the amount computed by applying the statutory federal tax rate to income before income taxes.  The sources and tax effects of the differences in the total income tax (benefit) provision from continuing operations are as follows (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Computed expected income tax provision	$	132,894		$	161,244		$	83,235
State income taxes, net of federal benefits	1,280			1,746			915
Research and development tax credits - current year	(3,750		)	(3,691		)	(1,500		)
Research and development tax credits - prior years	(5,894		)	—			—
Foreign income taxed at lower than the federal rate	(81,540		)	(103,373		)	(53,390		)
Tax benefit from audit settlements net of restructuring taxes	—			(24,395		)	(8,452		)
	$	42,990		$	31,531		$	20,808

Pretax income from foreign continuing operations was $328.5 million, $390.9 million and $201.2 million for the years ended March 31, 2012, 2011 and 2010, respectively.  Unremitted foreign earnings that are considered to be permanently invested outside the U.S., and on which no deferred taxes have been provided, amounted to approximately $1.9 billion at March 31, 2012.  The Company has the ability and intent to indefinitely reinvest the foreign earnings.  Should the Company elect in the future to repatriate a portion of the foreign earnings so invested, the Company would incur income tax expense on such repatriation, net of any available deductions and foreign tax credits.  This would result in additional income tax expense beyond the computed effective tax rate in such periods.

During the year ended March 31, 2011, the Company settled an IRS examination of fiscal years 2006, 2007 and 2008.  In addition, the Company benefited from the expiration of the statute of limitations related to previously accrued tax reserves and incurred a tax charge related to a corporate restructuring.  The total tax benefit associated with these items resulted in a reduction of income tax provision of approximately $24.4 million and a decrease in the effective tax rate from continuing operations of 5.3%.

In December 2010, the U.S. Congress retroactively reinstated the research and development tax credit from January 1, 2010.  As a result, the Company recognized a one-time tax benefit of $1.5 million in the quarter ended December 31, 2010.

F-24

During the year ended March 31, 2010, the Company settled an IRS examination of fiscal years 2002, 2003 and 2004 which resulted in a one-time tax benefit of $8.5 million.  This tax benefit decreased the Company's effective tax rate by approximately 3.6%.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (amounts in thousands):

	March 31,
	2012			2011
Deferred tax assets:
Deferred intercompany profit	$	14,624		$	11,031
Deferred income on shipments to distributors	23,646			33,304
Inventory valuation	6,245			5,740
Net operating loss carryforward	33,639			2,884
Share-based compensation	25,693			25,195
Income tax credits	103,882			68,647
Accrued expenses and other	10,770			11,052
Gross deferred tax assets	218,499			157,853
Valuation allowances	(78,506		)	(50,346		)
Deferred tax assets, net of valuation allowances	139,993			107,507
Deferred tax liabilities:
Property, plant and equipment, principally due to differences in depreciation	(7,844		)	(5,036		)
Junior convertible debentures	(445,826		)	(407,477		)
Other	(6,500		)	(5,699		)
Deferred tax liabilities	(460,170		)	(418,212		)
Net deferred tax liability	$	(320,177	)	$	(310,705	)
Reported as:
Current deferred tax assets	$	91,191		$	88,822
Non-current deferred tax liability	(411,368		)	(399,527		)
Net deferred tax liability	(320,177		)	(310,705		)

The Company had federal, state and foreign net operating loss carryforwards with an estimated tax effect of $33.6 million available at March 31, 2012.  The state net operating loss carryforwards expire at various times between 2014 and 2029.  The Company believes that it is more likely than not that the benefit from certain state net operating loss carryforwards will not be realized.  In recognition of this risk, at March 31, 2012, the Company has provided a valuation allowance of $5.4 million.  The Company also has state tax credits with an estimated tax effect of $53.2 million available at March 31, 2012.  These state tax credits expire at various times between 2012 and 2027.  The Company believes that it is more likely than not that the benefit from these state tax credits will not be realized, and therefore has provided a valuation allowance against the full amount.  The Company has U.S foreign tax credits with an estimated tax effect of $20.0 million that expire at various times between 2013 and 2017.  The Company believes it is more likely than not that the benefit from these credits will not be fully realized and has provided a valuation allowance of $19.9 million.  At March 31, 2012, the Company had credits for increasing research activity in the amount of $28.5 million that expire at various times between 2017 and 2032. In addition, the Company had $2.2 million of alternative minimum tax credits that do not expire. At March 31, 2012, the Company had alternative minimum tax net operating loss carryforwards of approximately $52.7 million that expire in 2032.

The Company's Thailand manufacturing operations currently benefit from numerous tax holidays granted to the Company based on its investment in property, plant and equipment in Thailand.  The Company's tax holiday periods in Thailand expire at various times in the future, however, the Company actively seeks to acquire new tax holidays.  The Company does not expect the future expiration of any of its tax holiday periods in Thailand to have a material impact on its effective tax rate.  The aggregate dollar benefits derived from these tax holidays approximated $6.5 million, $20.9 million and $17.3 million for the years ended March 31, 2012, 2011 and 2010, respectively.  The benefit the tax holiday had on diluted net income per share approximated $0.03 in the year ended March 31, 2012, $0.10 for the year ended March 31, 2011 and $0.09 for the year ended March 31, 2010.

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14. 2.125% JUNIOR SUBORDINATED CONVERTIBLE DEBENTURES

The Company's $1.15 billion principal amount of 2.125% junior subordinated convertible debentures due December 15, 2037, are subordinated in right of payment to any future senior debt of the Company and are effectively subordinated in right of payment to the liabilities of the Company's subsidiaries.  The debentures are convertible, subject to certain conditions, into shares of the Company's common stock at an initial conversion rate of 29.2783 shares of common stock per $1,000 principal amount of debentures, representing an initial conversion price of approximately $34.16 per share of common stock.  As of March 31, 2012, none of the conditions allowing holders of the debentures to convert had been met.  As a result of cash dividends paid since the issuance of the debentures, the conversion rate has been adjusted to 35.7905 shares of common stock per $1,000 of principal amount of debentures, representing a conversion price of approximately $27.94 per share of common stock.

As the debentures can be settled in cash upon conversion, for accounting purposes, the debentures were bifurcated into a liability component and an equity component, which are both initially recorded at fair value.  The carrying value of the equity component at March 31, 2012 and at March 31, 2011 was $822.4 million.  The estimated fair value of the liability component of the debentures at the issuance date was $327.6 million, resulting in a debt discount of $822.4 million which was further discounted due to embedded features as described below.  The unamortized debt discount was $794.4 million at March 31, 2012 and $801.9 million at March 31, 2011.  The carrying value of the debentures was $355.1 million at March 31, 2012 and $347.3 million at March 31, 2011.  The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 25.75 years.  In the years ended March 31, 2012, 2011 and 2010 the Company recognized $7.5 million, $6.8 million and $6.3 million, respectively, in non-cash interest expense related to the amortization of the debt discount.  The Company recognized $24.4 million of interest expense related to the 2.125% coupon on the debentures in each of fiscal 2012, fiscal 2011 and fiscal 2010.

The debentures also include certain embedded features related to the contingent interest payments, the Company making specific types of distributions (e.g., extraordinary dividends), the redemption feature in the event of changes in tax law, and penalty interest in the event of a failure to maintain an effective registration statement.  These features qualify as derivatives and are bundled as a compound embedded derivative that is measured at fair value.  The fair value of the derivatives as of March 31, 2012 was $0.6 million, compared to the value at March 31, 2011 of $0.4 million, resulting in an increase in interest expense in the year ended March 31, 2012 of $0.2 million.  The fair value of the derivatives as of March 31, 2011 was $0.4 million, compared to the value at March 31, 2010 of $0.7 million, resulting in a reduction of interest expense in the year ended March 31, 2011 of approximately $0.3 million.  The fair value of the derivatives as of March 31, 2010 was $0.7 million, compared to the value at March 31, 2009 of $0.5 million, resulting in an increase of interest expense in the year ended March 31, 2010 of approximately $0.2 million. The balance of the debentures on the Company's consolidated balance sheet at March 31, 2012 of $355.1 million includes the fair value of the embedded derivatives.

15. CREDIT FACILITY

On August 12, 2011, the Company entered into a credit agreement among the Company, the lenders from time to time that are parties thereto and JPMorgan Chase Bank, N.A., as administrative agent (the "Credit Agreement"). The Credit Agreement provides for a $750 million revolving credit facility, with a $100 million foreign currency sublimit, a $25 million letter of credit sublimit and a $15 million swingline loan sublimit, terminating on August 12, 2016 (the "Maturity Date"). The Credit Agreement also contains an increase option permitting the Company, subject to certain requirements, to arrange with existing lenders and/or new lenders for them to provide up to an aggregate of $250 million in additional commitments, which may be for revolving loans or term loans. Proceeds of loans made under the Credit Agreement may be used for working capital and general corporate purposes. No loans were made nor letters of credit issued under the Credit Agreement at closing, and no amounts were outstanding and no letters of credit were issued at March 31, 2012.

The loans bear interest, at the Company's option, at the base rate plus a spread of 0.50% to 1.50% or an adjusted LIBOR rate (based on one, two, three, or six-month interest periods) plus a spread of 1.50% to 2.50%, in each case with such spread being determined based on the consolidated leverage ratio for the preceding four fiscal quarter period. The base rate means the highest of JPMorgan Chase Bank, N.A.'s prime rate, the federal funds rate plus a margin equal to 0.50% and the adjusted LIBOR rate for a 1-month interest period plus a margin equal to 1.00%. Swingline loans accrue interest at a per annum rate based on the base rate plus the applicable margin for base rate loans. Base rate loans may only be made in U.S. Dollars. The Company is also obligated to pay other administration fees and letter of credit fees for a credit facility of this size and type.

F-26

Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted LIBOR rate. Principal, together with all accrued and unpaid interest, is due and payable on the maturity date. The Company may prepay the loans and terminate the commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions including minimum amounts in the case of commitment reductions and reimbursement of certain costs in the case of prepayments of LIBOR loans.

The Company's obligations under the Credit Agreement are guaranteed by certain of its subsidiaries meeting materiality thresholds set forth in the Credit Agreement. To secure the Company's obligations under the Credit Agreement, the Company and its domestic subsidiaries will be required to pledge the equity securities of certain of their respective material subsidiaries, subject to certain exceptions and limitations.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, incur subsidiary indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, repurchase stock, enter into restrictive agreements and enter into sale and leaseback transactions, in each case subject to customary exceptions for a credit facility of this size and type. The Company is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio. At March 31, 2012, the Company was in compliance with these covenants.

The Credit Agreement includes customary events of default that, include among other things, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts.

16. CONTINGENCIES

In the ordinary course of the Company's business, it is involved in a limited number of legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them.  The Company also periodically receives notifications from various third parties alleging infringement of patents, intellectual property rights or other matters.  With respect to pending legal actions to which the Company is a party, although the outcomes of these actions are not generally determinable, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position, cash flows or results of operations.  Litigation relating to the semiconductor industry is not uncommon, and the Company is, and from time to time has been, subject to such litigation.  No assurances can be given with respect to the extent or outcome of any such litigation in the future.

The Company's technology license agreements generally include an indemnification clause that indemnifies the licensee against liability and damages (including legal defense costs) arising from any claims of patent, copyright, trademark or trade secret infringement by the Company's proprietary technology.  The terms of these indemnification provisions approximate the terms of the technology license agreements, which typically range from five to ten years.  The Company's current license agreements expire from 2012 through 2030.  The possible amount of future payments the Company could be required to make based on agreements that specify indemnification limits, if such indemnifications were required on all of these agreements, is approximately $98 million. There are some licensing agreements in place that do not specify indemnification limits.  The Company had not recorded any liabilities related to these indemnification obligations as of March 31, 2012, as there are no amounts considered to be probable.

Contingent liabilities in the amount of $13.0 million were recorded in connection with the SST acquisition as an adverse outcome was determined to be probable and estimable.  At March 31, 2012, there were no material changes to the amount recognized at the acquisition date for these contingencies.

17.STOCK REPURCHASE ACTIVITY

On December 11, 2007, the Company announced that its Board of Directors had authorized the repurchase of up to 10.0 million shares of its common stock in the open market or in privately negotiated transactions.  As of March 31, 2012, the Company had repurchased 7.5 million shares under this authorization for $234.7 million.  There is no expiration date associated with this program.

F-27

During the years ended March 31, 2012, 2011 and 2010, the Company did not purchase any of its shares of common stock. 

18.EMPLOYEE BENEFIT PLANS

The Company maintains a contributory profit-sharing plan for its domestic employees meeting certain eligibility and service requirements.  The plan qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended, and allows employees to contribute up to 60% of their base salary, subject to maximum annual limitations prescribed by the IRS.  Through December 31, 2008, the Company made matching contributions of up to 25% of the first 4% of the participant's eligible compensation and could award up to an additional 25% under the discretionary match.  The Company eliminated the mandatory matching contribution as of January 1, 2009.  All matches are provided on a quarterly basis and require the participant to be an active employee at the end of each quarter.  For the fiscal year ended March 31, 2012, the Company contributions to the plan totaled $1.6 million.  For the fiscal year ended March 31, 2011, the Company contributions to the plan totaled $2.3 million. Due to expense reduction actions taken in response to adverse economic conditions, the Company did not contribute to the plan for the fiscal year ended March 31, 2010.

The Company's 2001 Employee Stock Purchase Plan (the 2001 Purchase Plan) became effective on March 1, 2002.  The Board of Directors approved the 2001 Purchase Plan in May 2001 and the stockholders approved it in August 2001.  Under the 2001 Purchase Plan, eligible employees of the Company may purchase shares of common stock at semi-annual intervals through periodic payroll deductions.  The purchase price in general will be 85% of the lower of the fair market value of the common stock on the first day of the participant's entry date into the offering period or of the fair market value on the semi-annual purchase date.  Depending upon a participant's entry date into the 2001 Purchase Plan, purchase periods under the 2001 Purchase Plan consist of overlapping periods of either 24, 18, 12 or 6 months in duration.  In May 2003 and August 2003, the Company's Board and stockholders, respectively, each approved an annual automatic increase in the number of shares reserved under the 2001 Purchase Plan.  The automatic increase took effect on January 1, 2005, and on each January 1 thereafter during the term of the plan, and is equal to the lesser of (i) 1,500,000, (ii) one half of one percent (0.5%) of the then outstanding shares of the Company's common stock, or (iii) such lesser amount as is approved by board of directors.  On January 1, 2012, an additional 960,269 shares were reserved under the 2001 Purchase Plan based on the automatic increase.  On January 1, 2011 an additional 941,530 shares were reserved under the 2001 Purchase Plan based on the automatic increase.  On January 1, 2010, an additional 921,171 shares were reserved under the 2001 Purchase Plan based on the automatic increase.  Since the inception of the 2001 Purchase Plan, 11,277,862 shares of common stock have been reserved for issuance and 4,639,761 shares have been issued under this purchase plan.

During fiscal 1995, a purchase plan was adopted for employees in non-U.S. locations.  Such plan provided for the purchase price per share to be 100% of the lower of the fair market value of the common stock at the beginning or end of the semi-annual purchase plan period.  Effective May 1, 2006, the Company's Board approved a purchase price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of the semi-annual purchase plan period.  Since the inception of this purchase plan, 1,500,285 shares of common stock have been reserved for issuance and 610,507 shares have been issued under this purchase plan.

Effective January 1, 1997, the Company adopted a non-qualified deferred compensation arrangement.  This plan is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of highly compensated employees as defined in ERISA Sections 201, 301 and 401.  There are no Company matching contributions made under this plan.

The Company has management incentive compensation plans which provide for bonus payments, based on a percentage of base salary, from an incentive pool created from operating profits of the Company, at the discretion of the Board of Directors.  During the years ended March 31, 2012, 2011 and 2010, $7.8 million, $28.3 million and $16.5 million were charged against operations for these plans, respectively.

The Company also has a plan that, at the discretion of the Board of Directors, provides a cash bonus to all employees of the Company based on the operating profits of the Company.  During the years ended March 31, 2012, 2011 and 2010, $3.2 million, $16.0 million and $4.3 million, respectively, were charged against operations for this plan.

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19. EQUITY INCENTIVE PLANS

Share-Based Compensation Expense

The following table presents the details of the Company's share-based compensation expense (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Cost of sales	$	5,648	(1)	$	6,825	(1)	$	7,054	(1)
Research and development	14,719			12,874			12,194
Selling, general and administrative	17,922			17,113			17,530
Pre-tax effect of share-based compensation	38,289			36,812			36,778
Income tax benefit	4,889			4,493			4,563
Net income effect of share-based compensation	$	33,400		$	32,319		$	32,215

⁽¹⁾ During the year ended March 31, 2012, $6.8 million of share-based compensation expense was capitalized to inventory, and $5.6 million of previously capitalized share-based compensation expenses in inventory was sold.  During the year ended March 31, 2011, $7.1 million of share-based compensation expense was capitalized to inventory, and $6.8 million of previously capitalized share-based compensation expense in inventory was sold. During the year ended March 31, 2010, $7.0 million of share-based compensation expense was capitalized to inventory, and $7.1 million of previously capitalized share-based compensation expense in inventory was sold.

The amount of unearned share-based compensation currently estimated to be expensed in the remainder of fiscal 2013 through fiscal 2017 related to unvested share-based payment awards at March 31, 2012 is $69.6 million.  The weighted average period over which the unearned share-based compensation is expected to be recognized is approximately 2.02 years.

Combined Incentive Plan Information

RSU share activity under the 2004 Plan is set forth below:

	Number of Shares
Nonvested shares at March 31, 2009	3,601,772
Granted	1,846,241
Forfeited/expired	(120,198	)
Vested	(689,867	)
Nonvested shares at March 31, 2010	4,637,948
Granted	1,766,257
Forfeited/expired	(171,967	)
Vested	(990,932	)
Nonvested shares at March 31, 2011	5,241,306
Granted	1,627,191
Forfeited/expired	(184,926	)
Vested	(1,191,351	)
Nonvested shares at March 31, 2012	5,492,220

The total intrinsic value of RSUs which vested during the years ended March 31, 2012, 2011 and 2010 was $43.7 million, $32.6 million and $17.5 million, respectively.  The aggregate intrinsic value of RSUs outstanding at March 31, 2012 was $204.3 million, calculated based on the closing price of the Company's common stock of $37.20 per share on March 31, 2012.  At March 31, 2012, the weighted average remaining expense recognition period was 2.06 years.

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The weighted average fair value per share of the RSUs awarded is calculated based on the fair market value of the Company's common stock on the respective grant dates discounted for the Company's expected dividend yield.  The weighted average fair value per share of RSUs awarded in the years ended March 31, 2012, 2011 and 2010 was $30.48, $26.05 and $20.75, respectively. 

Option activity under the Company's stock inventive plans in the three years ended March 31, 2012 is set forth below:

			Weighted
	Number of		Average Exercise
	Shares		Price per Share
Outstanding at March 31, 2009	10,081,533		$	24.20
Granted	12,000		27.03
Exercised	(1,492,866	)	22.03
Canceled	(140,888	)	27.79
Outstanding at March 31, 2010	8,459,779		24.52
Granted	—		—
Exercised	(2,885,365	)	23.09
Canceled	(77,490	)	29.39
Outstanding at March 31, 2011	5,496,924		25.21
Granted	—		—
Exercised	(2,129,260	)	25.53
Canceled	(6,667	)	25.05
Outstanding at March 31, 2012	3,360,997		$	25.00

The total intrinsic value of options exercised during the years ended March 31, 2012, 2011 and 2010 was $26.7 million, $29.8 million and $7.6 million, respectively.  This intrinsic value represents the difference between the fair market value of the Company's common stock on the date of exercise and the exercise price of each equity award.

The aggregate intrinsic value of options outstanding and options exercisable at March 31, 2012 was $41.0 million.  The aggregate intrinsic values were calculated based on the closing price of the Company's common stock of $37.20 per share on March 31, 2012.

As of March 31, 2012 and 2011, the number of option shares exercisable was 3,360,997 and 5,491,363, respectively, and the weighted average exercise price per share was $25.00 and $25.20, respectively.

There were no stock options granted in either of the years ended March 31, 2012 and 2011. The weighted average fair values per share of stock options granted in the year ended March 31, 2010 was $5.90.  The fair values per share of stock options granted in the year ended March 31, 2010 were estimated utilizing the following assumptions:

	Year Ended March 31,
	2010
Expected term (in years)	6.50
Volatility	36	%
Risk-free interest rate	2.57	%
Dividend yield	5.00	%

20.COMMITMENTS

The Company leases office space, transportation and other equipment under operating leases which expire at various dates through March 31, 2018.  The future minimum lease commitments under these operating leases at March 31, 2012 were as follows (amounts in thousands):

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Year Ending March 31,	Amount
2013	$	9,293
2014	7,221
2015	4,594
2016	3,438
2017	3,238
Thereafter	2,693
Total minimum payments	$	30,477

Rental expense under operating leases totaled $15.1 million, $13.0 million and $10.7 million for fiscal years 2012, 2011 and 2010, respectively.

Commitments for construction or purchase of property, plant and equipment totaled $13.3 million as of March 31, 2012, all of which will be due within the next year. Other purchase obligations and commitments totaled approximately $21.4 million as of March 31, 2012. Other purchase obligations and commitments include payments due under various types of licenses and outstanding purchase commitments with the Company's wafer foundries of approximately $19.5 million for delivery in fiscal 2013.

21. GEOGRAPHIC AND SEGMENT INFORMATION

The Company's reporting segments include semiconductor products and technology licensing.  The Company does not allocate operating expenses, interest income, interest expense, other income or expense, or provision for or benefit from income taxes to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance.  Additionally, the Company does not allocate assets to segments for internal reporting purposes as it does not manage its segments by such metrics. The technology licensing segment is the result of the acquisition of SST in the first quarter of fiscal 2011 and thus for fiscal 2010, net sales and gross profit are solely attributable to the semiconductor product segment.

The following table represents revenues and gross profit for each segment (amounts in thousands):

	Years ended March 31,
	2012				2011				2010
	Net Sales		Gross Profit		Net Sales		Gross Profit		Net Sales		Gross Profit
Semiconductor products	$	1,296,175	$	709,754	$	1,415,137	$	806,398	$	947,729	$	534,242
Technology licensing	87,001		82,640		72,068		68,038		—		—
	$	1,383,176	$	792,394	$	1,487,205	$	874,436	$	947,729	$	534,242

The Company sells its products to distributors and original equipment manufacturers (OEMs) in a broad range of market segments, performs on-going credit evaluations of its customers and, as deemed necessary, may require collateral, primarily letters of credit.  The Company's operations outside the U.S. consist of product assembly and final test facilities in Thailand, and sales and support centers and design centers in certain foreign countries.  Domestic operations are responsible for the design, development and wafer fabrication of products, as well as the coordination of production planning and shipping to meet worldwide customer commitments.  The Thailand assembly and test facility is reimbursed in relation to value added with respect to assembly and test operations and other functions performed, and certain foreign sales offices receive compensation for sales within their territory.  Accordingly, for financial statement purposes, it is not meaningful to segregate sales or operating profits for the assembly and test and foreign sales office operations.  Identifiable long-lived assets (consisting of property, plant and equipment) by geographic area are as follows (amounts in thousands):

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	March 31,
	2012		2011
United States	$	314,339	$	330,046
Thailand	186,098		193,729
Various other countries	16,174		16,738
Total long-lived assets	$	516,611	$	540,513

Sales to unaffiliated customers located outside the U.S., primarily in Asia and Europe, aggregated approximately 82%, 80% and 77% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales to customers in Europe represented 23%, 23% and 25% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales to customers in Asia represented 56%, 57% and 51% of consolidated net sales for each of the years ended March 31, 2012, 2011 and 2010, respectively.  Within Asia, sales into China, including Hong Kong, represented 24%, 25% and 25% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales into Taiwan represented 15%, 13% and 10% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales into any other individual foreign country did not exceed 10% of the Company's net sales for any of the years presented.

No single end customer accounted for 10% or more of the Company's net sales or accounts receivable balances during the years ended March 31, 2012, 2011 and 2010. The Company's largest distributor accounted for approximately 10% of its net sales in each of fiscal 2012 and fiscal 2011 and approximately 12% of its net sales in fiscal 2010. These net sales are reported in the semiconductor products segment.

22. DERIVATIVE INSTRUMENTS

The Company has international operations and is thus subject to foreign currency rate fluctuations.  To manage the risk of changes in foreign currency rates, the Company periodically enters into derivative contracts comprised of foreign currency forward contracts to hedge its asset and liability foreign currency exposure and a portion of its foreign currency operating expenses.  Approximately 99% of the Company's sales are U.S. Dollar denominated.  To date, the exposure related to foreign exchange rate volatility has not been material to the Company's operating results.  As of March 31, 2012 and 2011, the Company had no foreign currency derivatives outstanding.  The Company recognized an immaterial amount of net realized gains and losses on foreign currency derivatives in the years ended March 31, 2012, 2011 and 2010.

23. NET INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income per common share from continuing operations (in thousands, except per share amounts):

	Year ended March 31,
	2012		2011		2010
Net income from continuing operations	$	336,705	$	429,167	$	217,005
Weighted average common shares outstanding	191,283		187,066		183,642
Dilutive effect of stock options and RSUs	4,207		4,463		3,697
Dilutive effect of convertible debt	8,029		3,186		—
Weighted average common and potential common shares outstanding	203,519		194,715		187,339
Basic net income per common share – continuing operations	$	1.76	$	2.29	$	1.18
Diluted net income per common share – continuing operations	$	1.65	$	2.20	$	1.16

Diluted net income per common share for continuing operations for the years ended March 31, 2012 and 2011 includes 8,029,255 and 3,185,591 shares, respectively, issuable upon the exchange of debentures (see Note 14).  There were no shares issuable upon the exchange of the debentures for the year ended March 31, 2010. The debentures have no impact on diluted net income per common share unless the average price of the Company's common stock exceeds the conversion price because the principal amount of the debentures will be settled in cash upon conversion.  Prior to conversion, the Company will include, in the diluted net income per common share calculation, the effect of the additional shares that may be issued when the Company's common stock price exceeds the conversion price using the treasury stock method.  The weighted average conversion price per share used in calculating the dilutive effect of the convertible debt for years ended March 31, 2012, 2011 and 2010 was $28.50, $29.61 and $31.16, respectively.

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Diluted net loss per common share from discontinued operations for the year ended March 31, 2011 was $0.05. There was no diluted net income or loss from discontinued operations for the years ended March 31, 2012 or 2010.

Weighted average common shares exclude the effect of option shares which are not dilutive.  For the years ended March 31, 2012, 2011 and 2010, the number of option shares that were antidilutive were 53,374, 132,084 and 4,109,841, respectively.

24. QUARTERLY RESULTS (UNAUDITED)

The following table presents the Company's selected unaudited quarterly operating results for the eight quarters ended March 31, 2012.  The Company believes that all adjustments of a normal recurring nature have been made to present fairly the related quarterly results (in thousands, except per share amounts):

Fiscal 2012	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Net sales	$	374,507		$	340,602		$	329,156		$	338,911		$	1,383,176
Gross profit	219,748			194,994			183,779			193,873			792,394
Operating income	116,860			97,620			88,127			93,909			396,516
Net income	99,293			79,287			77,489			80,636			336,705
Diluted net income per common share	0.49			0.40			0.38			0.39			1.65
Fiscal 2011	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Net sales	$	357,125		$	382,271		$	367,824		$	379,985		$	1,487,205
Gross profit	207,443			225,005			216,397			225,591			874,436
Operating income	109,226			123,143			117,453			124,361			474,183
Net income from continuing operations	91,877			104,748			101,930			130,612			429,167
Net loss from discontinued operations	(2,311		)	(1,668		)	(1,154		)	(5,084		)	(10,217		)
Net income	89,566			103,080			100,776			125,528			418,950
Diluted net income per common share – continuing operations	0.48			0.55			0.52			0.65			2.20
Diluted net loss per common share – discontinued operations	(0.01		)	(0.01		)	(0.01		)	(0.03		)	(0.05		)
Diluted net income per common share	0.47			0.54			0.51			0.62			2.15

Refer to Note 4, Special Charges, for an explanation of the special charges included in operating income in fiscal 2012 and fiscal 2011.

25.SUPPLEMENTAL FINANCIAL INFORMATION

Cash paid for income taxes amounted to $20.1 million, $17.0 million and $9.8 million during the years ended March 31, 2012, 2011 and 2010, respectively.  Cash paid for interest on borrowings amounted to $24.4 million in each of fiscal 2012, 2011 and 2010.

A summary of additions and deductions related to the allowance for doubtful accounts for the years ended March 31, 2012, 2011 and 2010 follows (amounts in thousands):

	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions (1)			Balance at End of Year
Allowance for doubtful accounts:
2012	$	2,838	$	7	$	(243	)	$	2,602
2011	3,109		31		(302		)	2,838
2010	3,176		90		(157		)	3,109

⁽¹⁾ Deductions represent uncollectible accounts written off, net of recoveries.

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26.    DIVIDENDS

On October 28, 2002, the Company announced that its Board of Directors had approved and instituted a quarterly cash dividend on its common stock. The Company has continued to pay quarterly dividends and has increased the amount of such dividends on a regular basis. Cash dividends paid per share amounted to $1.390 , $1.374 and $1.359 during the years ended March 31, 2012, 2011 and 2010, respectively. Total dividend payments amounted to $266.2 million , $256.8 million and $249.6 million during the years ended March 31, 2012, 2011 and 2010, respectively.

27.    SUBSEQUENT EVENTS

On May 2, 2012, the Company announced that it had signed a definitive agreement to acquire Standard Microsystems Corporation ("SMSC") for $37.00 per share in cash, which represents a total equity value of approximately $939 million, and a total enterprise value of approximately $766 million, after excluding SMSC's cash and investments on its balance sheet of approximately $173 million at February 29, 2012. The acquisition has been approved by the Boards of Directors of each company and is expected to close in the second quarter of fiscal 2013, subject to approval by SMSC stockholders, regulatory approvals and other customary closing conditions.

On April 19, 2012, the Company announced the acquisition of Roving Networks, a privately held company. Roving Networks is an innovator in low-power embedded Wi-Fi and Bluetooth solutions based in Los Gatos, California. The acquisition was not material to the Company's financial position.

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EX-2.2

EXHIBIT 2.2

AGREEMENT AND PLAN OF MERGER

by and among

MICROCHIP TECHNOLOGY INCORPORATED

MICROCHIP TECHNOLOGY MANAGEMENT CO.

and

STANDARD MICROSYSTEMS CORPORATION

Dated as of May 1, 2012

ARTICLE I

DEFINITIONS & INTERPRETATIONS

1.1	Certain Definitions	2
1.2	Additional Definitions	11
1.3	Certain Interpretations	13

ARTICLE II

THE MERGER

2.1	The Merger	14
2.2	The Effective Time	14
2.3	The Closing	15
2.4	Effect of the Merger	15
2.5	Certificate of Incorporation and Bylaws	15
2.6	Directors and Officers	16
2.7	Effect on Capital Stock	16
2.8	Exchange of Certificates	18
2.9	No Further Ownership Rights in Company Common Stock	19
2.10	Lost, Stolen or Destroyed Certificates	19
2.11	Taking of Necessary Action; Further Action	20

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

3.1	Organization and Standing	20
3.2	Subsidiaries	21
3.3	Authorization	22
3.4	Capitalization	23
3.5	Non-contravention; Required Consents	24
3.6	SEC Reports	25
3.7	Financial Statements	26
3.8	Proxy Statement	28
3.9	No Undisclosed Liabilities	28
3.10	Absence of Certain Changes	28
3.11	Material Contracts	28
3.12	Compliance with Applicable Law	31
3.13	Permits	31
3.14	Litigation	32
3.15	Customers and Suppliers	32
3.16	Taxes	33
3.17	Environmental Matters	35
3.18	Employee Benefit Plans	36
3.19	Labor Matters	38
3.20	Real Property	40
3.21	Assets; Personal Property	40
3.22	Intellectual Property	41
3.23	Export Control and Import Laws	45

3.24	Insurance	45
3.25	Anti-Bribery Laws	45
3.26	Related Party Transactions	46
3.27	Brokers; Fees and Expenses	46
3.28	Opinion of Financial Advisors	46
3.29	State Anti-Takeover Statutes; No Rights Plan	46
3.30	No Other Representations or Warranties	47

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

4.1	Organization and Standing	47
4.2	Authorization	47
4.3	Non-contravention; Required Consents	47
4.4	Litigation	48
4.5	Proxy Statement	48
4.6	Operations of Merger Sub	49
4.7	Section 203 of the DGCL	49
4.8	Funds	49

ARTICLE V

INTERIM CONDUCT OF BUSINESS

5.1	Affirmative Obligations of the Company	49
5.2	Negative Obligations of the Company	49

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1	No Solicitation	52
6.2	Company Board Recommendation; Intervening Events	54
6.3	Company Stockholders' Meeting	56
6.4	Proxy Statement	57
6.5	Reasonable Best Efforts to Complete	58
6.6	Access	60
6.7	Notification	60
6.8	Certain Litigation	62
6.9	Confidentiality	62
6.10	Public Disclosure	62
6.11	Company Compensatory Awards	62
6.12	Employee Matters	66
6.13	Directors' and Officers' Indemnification and Insurance	68
6.14	Obligations of Merger Sub	70
6.15	Director and Officer Resignations	70
6.16	Proprietary Information Agreements	70

ARTICLE VII

CONDITIONS TO THE MERGER

7.1	Conditions to the Obligations of Each Party to Effect the Merger	71
7.2	Additional Conditions to the Obligations of Parent and Merger Sub to Effect the Merger	71
7.3	Additional Conditions to the Obligations of the Company to Effect the Merger	73

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

8.1	Termination	73
8.2	Notice of Termination; Effect of Termination	76
8.3	Fees and Expenses	76
8.4	Amendment	77
8.5	Extension; Waiver	77

ARTICLE IX

GENERAL PROVISIONS

9.1	Survival of Representations, Warranties and Covenants	78
9.2	Notices	78
9.3	Assignment	79
9.4	Entire Agreement	79
9.5	Third Party Beneficiaries	80
9.6	Severability	80
9.7	Other Remedies	80
9.8	Specific Performance	80
9.9	Governing Law	80
9.10	Consent to Jurisdiction	80
9.11	WAIVER OF JURY TRIAL	81
9.12	Counterparts	81

INDEX OF ANNEXES

Annex A     –    Form of Voting Agreement

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of May 1, 2012, by and among MICROCHIP TECHNOLOGY INCORPORATED, a Delaware corporation (“Parent”), MICROCHIP TECHNOLOGY MANAGEMENT CO., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and STANDARD MICROSYSTEMS CORPORATION, a Delaware corporation (the “Company”). All capitalized terms used in this Agreement shall have the respective meanings ascribed thereto in Article I.

W I T N E S S E T H:

WHEREAS, it is proposed that Merger Sub will merge with and into the Company (the “Merger”), and each share of common stock, par value $0.10 per share, of the Company (the “Company Common Stock”) that is then outstanding will thereupon be cancelled and converted into the right to receive cash, without interest, in an amount equal to Thirty Seven Dollars ($37.00) (the “Merger Consideration”), all upon the terms and subject to the conditions set forth herein.

WHEREAS, the Board of Directors of the Company (the “Company Board”) unanimously has (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable, (ii) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to and in the best interests of the Company and its stockholders, (iii) approved this Agreement and the transactions contemplated hereby, including the Merger, and (iv) resolved to recommend that the Company stockholders adopt this Agreement, all upon the terms and subject to the conditions set forth herein.

WHEREAS, the Boards of Directors of Parent and Merger Sub unanimously have (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable, and (ii) approved this Agreement and the transactions contemplated hereby, including the Merger, all upon the terms and subject to the conditions set forth herein.

WHEREAS, concurrently with the execution and delivery of this Agreement, as a condition and inducement to the willingness of Parent and Merger Sub to enter into this Agreement, each of the directors and certain officers of the Company, in their respective capacities as stockholders of the Company, have entered into Voting Agreements with Parent substantially in the form attached hereto as Annex A (each, a “Voting Agreement” and collectively, the “Voting Agreements”).

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

DEFINITIONS & INTERPRETATIONS

1.1Certain Definitions. For all purposes of and under this Agreement, the following capitalized terms shall have the following respective meanings:

“Acquisition Proposal” means any offer, proposal or indication of interest from any Third Party relating to any Acquisition Transaction.

“Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving: (a) any acquisition or purchase by any Third Party, directly or indirectly, of fifteen percent (15%) or more of any class of outstanding voting or equity securities of the Company, or any tender offer or exchange offer that, if consummated, would result in any Third Party beneficially owning fifteen percent (15%) or more of any class of outstanding voting or equity securities of the Company; (b) any merger, consolidation, share exchange, business combination, joint venture or other similar transaction involving the Company pursuant to which the stockholders of the Company immediately preceding such transaction hold less than eighty-five percent (85%) of the equity interests in the surviving or resulting entity of such transaction; (c) any sale, lease (other than in the ordinary course of business), exchange, transfer, license (other than in the ordinary course of business), acquisition or disposition of fifteen percent (15%) or more of the assets of the Company or any of its Subsidiaries (measured by the lesser of book or fair market value thereof as of the last day of the Company’s last fiscal year); (d) any liquidation, dissolution, recapitalization, extraordinary dividend or other significant corporate reorganization of the Company or (e) any combination of the foregoing.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Antitrust Laws” means applicable federal, state, local or foreign antitrust, competition, premerger notification or trade regulation laws, regulations or Orders.

“Applicable Law” means, with respect to any Person, any international, national, federal, state, local, municipal or other law (statutory, common or otherwise), constitution, treaty, convention, resolution, ordinance, directive, code, edict, decree, rule, regulation, ruling or other similar requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

2

“Balance Sheet” means the consolidated balance sheet of the Company and its Subsidiaries as of February 29, 2012 that is set forth in the Annual Report on Form 10-K of the Company for the fiscal year ended February 29, 2012 filed with the SEC.

“Business Day” means any day, other than a Saturday, Sunday or any day that is a legal holiday under the Laws of the State of Arizona or New York or is a day on which banking institutions located in such States are authorized or required by Applicable Law or other action by a Governmental Entity to close.

“Business Facility” means any property including the land, improvements, soil, soil gas, indoor air, groundwater, and surface water that is or at any time has been owned, operated, occupied, controlled or leased by the Company, its Subsidiaries or any of their predecessors in connection with the operation of their respective business.

“Code” means the Internal Revenue Code of 1986, as amended, or any successor statute thereto.

“Company Capital Stock” means the Company Common Stock, the Company Preferred Stock and any other shares of capital stock of the Company.

“Company Compensatory Awards” means Company Options, Company Restricted Stock, Company Restricted Stock Units and Company Stock Appreciation Rights.

“Company ESPP” means the Company’s 2010 Employee Stock Purchase Plan.

“Company IP” means all Intellectual Property Rights that are used by or otherwise licensed to or owned by the Company or any of its Subsidiaries.

“Company Intellectual Property Rights” means all of the Intellectual Property Rights owned by or exclusively licensed to the Company or any of its Subsidiaries.

“Company Material Adverse Effect” means any fact, event, circumstance, change or effect (any such item, an “Effect”) that, individually or when taken together with all other Effects that exist or have occurred prior to or at the date of determination of the occurrence of the Company Material Adverse Effect, is or is reasonably likely to have a material adverse effect on the business, operations, financial condition or results of operations of the Company and its Subsidiaries taken as a whole; provided, however, that in no event shall any Effect resulting from or arising out of any of the following, either alone or in combination, be taken into account when determining whether a Company Material Adverse Effect has occurred or may, would or could occur: (a) general economic conditions in the United States or any other country or region in the world (or changes therein), general conditions in the financial markets in the United States or any other country or region in the world (or changes therein) or general political conditions in the United States or any other country or region in the world (or changes therein); (b) general conditions in the industries in which the Company or any of its

3

Subsidiaries conduct business (or changes therein); (c) changes in Applicable Laws, Orders or GAAP (or the interpretation thereof); (d) acts of war, terrorism or sabotage in the United States or any other country or region in the world (or any escalation with respect thereto); (e) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions and other similar events in the United States or any other country or region in the world (in the case of each of clauses (a), (b), (c), (d) and (e), provided that such Effects may be taken into account when determining whether a Company Material Adverse Effect has occurred to the extent that such Effects have a disproportionate impact on the Company and its Subsidiaries, taken as a whole, relative to other participants in the industries in which the Company and its Subsidiaries conduct business); (f) any failure by the Company to meet published analysts’ estimates, internal or external projections or forecasts of revenues, earnings or other financial or business metrics, in and of itself (it being understood that the underlying cause(s) of any such failure may be taken into account unless otherwise excluded by this definition); (g) any decline in the market price or change in the trading volume of the Company Common Stock, in and of itself (it being understood that the underlying cause(s) of any such decline or change may be taken into account unless otherwise excluded by this definition); or (h) the public announcement or pendency of this Agreement or the transactions contemplated hereby.

“Company Options” means any options to purchase shares of Company Common Stock outstanding, whether granted under any of the Company Plans, assumed by the Company in connection with any merger, acquisition or similar transaction or otherwise issued or granted.

“Company Plans” means the Company’s 1994 Director Stock Option Plan, 2001 Director Stock Option Plan, 1993 Stock Option Plan for Officers and Key Employees, 1994 Stock Option Plan for Officers and Key Employees, 1996 Stock Option Plan for Officers and Key Employees, 1998 Stock Option Plan for Officers and Key Employees, 1999 Stock Option Plan for Officers and Key Employees, 2000 Stock Option Plan for Officers and Key Employees, 2001 Stock Option and Restricted Stock Plan for Officers and Key Employees, 2002 Inducement Stock Option Plan, 2003 Director Stock Option Plan, 2003 Stock Option and Restricted Stock Plan, 2003 Inducement Stock Option Plan, 2004 Employee Stock Appreciation Rights Plan, 2004 Inducement Stock Option Plan, 2005 Inducement Stock Option and Restricted Stock Plan, 2006 Directors Stock Appreciation Rights Plan, 2006 Employee Stock Appreciation Rights Plan and 2009 Long Term Incentive Plan and any other plan or arrangement under which Company Compensatory Awards have been issued, including any sub-plans for non-U.S. employees and consultants.

“Company Preferred Stock” means shares of the undesignated preferred stock, par value $0.10 per share, of the Company.

“Company Products” means any and all products and services, including prior versions, currently marketed, sold, licensed, provided or distributed by Company and its Subsidiaries.

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“Company Restricted Stock” means shares of Company Common Stock subject to vesting or other lapse restrictions (whether granted by the Company pursuant to the Company Plans, assumed by the Company in connection with any merger, acquisition or similar transaction or otherwise issued or granted).

“Company Restricted Stock Unit” means any unit or award granted (whether granted by the Company pursuant to the Company Plans, assumed by the Company in connection with any merger, acquisition or similar transaction or otherwise issued or granted) (i) denominated in units, and (ii) pursuant to which the holder thereof is or may become entitled to acquire one or more shares of Company Common Stock or the cash equivalent thereof upon such holder’s continued service with or employment by the Company or any Subsidiary of the Company and/or upon the satisfaction or attainment of one or more performance milestones.

“Company Stock Appreciation Right” means any stock appreciation right related to Company Common Stock (whether such right will be settled in shares, cash or otherwise), whether granted by the Company pursuant to Company Plans, assumed by the Company in connection with any merger, acquisition or similar transaction, or otherwise issued or granted.

“Continuing Employees” means all employees of the Company or its Subsidiaries who are employed by Parent or any Subsidiary of Parent immediately after the Effective Time.

“Contract” means any written or binding oral contract, subcontract, agreement, commitment, note, bond, mortgage, indenture, lease, license, sublicense, permit, franchise or other instrument, obligation or binding arrangement or understanding of any kind or character.

“Delaware Law” means the DGCL and any other Applicable Law of the State of Delaware.

“DGCL” means the General Corporation Law of the State of Delaware.

“DOJ” means the United States Department of Justice, or any successor thereto.

“DOL” means the United States Department of Labor, or any successor thereto.

“Employee Plans” means (i) all “employee benefit plans” (as defined in Section 3(3) of ERISA), whether or not subject to ERISA and (ii) all other employment, consulting and independent contractor agreement, bonus, stock option, stock purchase or other equity-based, benefit, incentive compensation, profit sharing, savings, retirement (including early retirement and supplemental retirement), disability, holiday, vacation, incentive, deferred compensation (including non-qualified plans of deferred compensation), savings, cafeteria, medical, dental, vision, hospitalization, life insurance, accidental death and dismemberment, medical expense reimbursement, dependent care assistance, tuition reimbursement, disability, sick pay, supplemental retirement (including termination indemnities and seniority payments),

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severance, termination, retention, change of control and other similar fringe, welfare or other employee benefit plans, programs, agreements, contracts, policies, payroll practices or arrangements (whether or not in writing) maintained or contributed to for the benefit of any current or former employee, consultant or independent contractor or director of the Company, any of its Subsidiaries or any ERISA Affiliate, or with respect to which the Company or any of its Subsidiaries has or is reasonably be expected to have any material Liability.

“Environmental Law” means any Applicable Law that relates to protection of human health or safety or the environment, or that prohibits, regulates or controls any Hazardous Material or any Hazardous Material Activity, including, to the extent applicable, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation Act, the Clean Water Act, the Occupational Safety and Health Act, the European Union Directive 2002/96/EC on waste electrical and electronic equipment (“WEEE Directive”), the European Union (“EU”) Directives 2002/95/EC and 2011/65/EU on the restriction on the use of hazardous substances (collectively, the “EU RoHS Directives”), the Administrative Measures on the Control of Pollution Caused by Electronic Information Products (“China RoHS”),and theEuropean Commission Regulation 1907/2006 (“REACH”), or any successor statutes, rules and regulations thereto.

“Environmental Permit” means any approval, permit, registration, certification, license, clearance or consent required by Environmental Law to be obtained from any Governmental Entity with respect to a Hazardous Materials Activity conducted by the Company or any of its Subsidiaries.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“ERISA Affiliate” means any Person under common control with the Company or that, together with the Company or any of its Subsidiaries, would be treated as a single employer with the Company or any of its Subsidiaries under Section 4001(b)(1) of ERISA or Section 414 of the Code and the regulations promulgated thereunder.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“Exchange Ratio” means the quotient obtained by dividing (A) the Merger Consideration by (B) the average closing sales price for a share of Parent Common Stock, rounded to the nearest one-tenth of a cent, as reported on Nasdaq for the ten (10) most recent days ending on the last trading day immediately prior to the date on which the Effective Time occurs.

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“FTC” means the United States Federal Trade Commission, or any successor thereto.

“GAAP” means generally accepted accounting principles, as applied in the United States.

“Governmental Entity” means any government, any governmental or regulatory entity or body, department, commission, board, agency or instrumentality, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial, and whether local or foreign, including any arbitrator or arbitration panel.

“Hazardous Material” means any material, chemical, emission, substance or waste that has been designated by any Governmental Entity to be radioactive, toxic, hazardous, a pollutant, a contaminant, or otherwise a danger to health, reproduction or the environment, including carbon dioxide and other substances deemed by any Governmental Entity to contribute to global warming.

“Hazardous Materials Activity” means the transportation, transfer, recycling, collection, labeling, packaging, storage, use, treatment, manufacture, removal, disposal, remediation, release, exposure of others to, sale, or distribution of any Hazardous Material or any product or waste containing a Hazardous Material, or product manufactured with ozone depleting substances, including any requirement pursuant to Environmental Law for labeling of Hazardous Materials, payment of waste fees or charges (including so-called e-waste fees), recycling, product take-back, or product content.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“Intellectual Property Rights” means any or all of the following and all statutory and/or common law rights throughout the world in, arising out of, or associated therewith: (i) all United States and foreign patents and utility models, including utility patents and design patents, and all registrations and applications therefore (including provisional applications) and all reissues, divisions, renewals, extensions, re-examinations, provisionals, continuations and continuations in part thereof and equivalent or similar rights anywhere in the world in inventions (collectively, “Patents”); (ii) all inventions (whether or not patentable, reduced to practice or made the subject of a pending patent application), invention disclosures and improvements, all trade secrets, know-how, and confidential or proprietary information (collectively, “Trade Secrets”); (iii) all works of authorship, copyrights (registered or otherwise, including in Software), mask works, copyright and mask work registrations and applications and all other rights corresponding thereto throughout the world, and all rights therein provided by international treaties or conventions (collectively, “Copyrights”); (iv) all industrial designs and any registrations and applications therefore; (v) all trade names, trade dress, logos, or other corporate designations, trademarks and service marks, whether or not registered, including all common law rights, and trademark and service mark registrations

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and applications, including all marks registered in the United States Patent and Trademark Office and the Trademark Offices of other nations throughout the world, and all rights therein provided by international treaties or conventions (collectively, “Trademarks”); (vi) all rights in databases and data collections (including knowledge management databases, customer lists and customer databases) and Software; (viii) all rights to Uniform Resource Locators, Web site addresses and domain names and applications and registrations therefore (collectively, “Domain Names”); and (ix) any similar, corresponding or equivalent rights to any of the foregoing.

“International Employee Plan” means any Employee Plan that is maintained in a jurisdiction outside of the United States for the benefit of employees, independent contractors, consultants and/or directors located in such jurisdiction.

“IRS” means the United States Internal Revenue Service, or any successor thereto.

“Knowledge of the Company” means the actual knowledge as of the date hereof of the individuals identified in Section 1.1(a) of the Company Disclosure Letter.

“Legal Proceeding” means any action, claim, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding, public or private), hearing, audit, examination or investigation by or before any Governmental Entity.

“Liabilities” means any liability, indebtedness, obligation or commitment of any kind (whether accrued, absolute, contingent, matured, unmatured or otherwise and whether or not required to be recorded or reflected on a balance sheet under GAAP).

“Lien” means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, option, right of first refusal, preemptive right, community property interest, restriction on the voting of any security, restriction on the transfer of any security or other asset, or restriction on the possession, exercise or transfer of any other attribute of ownership of any asset. For the avoidance of doubt, “Lien” does not include any licenses to Intellectual Property Rights.

“Moral Rights” means any right to claim authorship to or to object to any distortion, mutilation, or other modification or other derogatory action in relation to a work that would be prejudicial to the author’s reputation, and any substantially similar right existing under common or statutory law of any country in the world or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right.”

“Nasdaq” means the Nasdaq Global Select Market.

“Object Code” means computer software, substantially or entirely in binary form, which is intended to be directly executable by a computer after suitable processing and linking but without the intervening steps of compilation or assembly.

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“Order” means, with respect to any Person, any order, judgment, decision, decree, injunction, ruling, writ, assessment or other similar requirement issued, enacted, adopted, promulgated or applied by any Governmental Entity that is binding on or applicable to such Person or its property.

“Parent Common Stock” means shares of common stock, par value $0.001 per share, of Parent.

“Parent Equity Plan” means either Parent’s 2004 Equity Incentive Plan, as amended, or a 2012 Inducement Award Plan adopted by Parent in connection with the Merger.

“Parent Material Adverse Effect” means any Effect that has had or is reasonably likely to have a material adverse effect on the ability of Parent or Merger Sub to timely consummate the Merger and the other transactions contemplated hereby (including having sufficient funds to pay the aggregate Merger Consideration and any other payments, fees or expenses contemplated hereby).

“Permitted Liens” means (a) Liens securing Liabilities reflected on the Balance Sheet, (b) Liens for Taxes not yet due and payable or Taxes being contested in good faith and for which adequate reserves have been established in accordance with GAAP on the Balance Sheet and (c) mechanics’, carriers’, workmen’s, repairmen’s, landlord’s or other like Liens or other similar Liens arising or incurred in the ordinary course of business, (d) Liens imposed by Applicable Law or Order arising in the ordinary course of business, (e) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business consistent with past practice, (e) defects, imperfections or irregularities in title, easements, covenants and rights of way and other similar restrictions, and zoning, building and other similar codes or restrictions, in each case that do not adversely affect in any material respect the current use of the applicable real property owned, leased, used or held for use by the Company or any of its Subsidiaries, and (f) any other liens or encumbrances that, in the aggregate, do not materially impair the value or the present or intended use and operation of the assets of the Company and its Subsidiaries.

“Person” means any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity.

“Public Software” means any Software that is distributed pursuant to a license that (1) requires the licensee to distribute or provide access to the source code of such software or any portion thereof when the object code is distributed, (2) requires the licensee to distribute the software or any portion thereof for free or at some reduced price, or (3) requires that other software or any portion thereof combined with, linked to, or based upon such software (“Combined Software”) be licensed pursuant to the same license or requires the distribution

9

of all or any portion of such Combined Software for free or at some reduced price. The term “Public Software” includes software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (i) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g., PERL); (iii) the Mozilla Public License; (iv) the Netscape Public License; (iv) the Sun Community Source License (SCSL); (vi) the Sun Industry Standards License (SISL); (vii) the BSD License; and (viii) the Apache License.

“Registered IP” means all United States, international and foreign: (i) Patents; (ii) Trademark registrations and applications for registration; (iii) Copyright registrations and applications for registration; (iv) Domain Name registrations; and (v) any other Intellectual Property Rights that are the subject of an application or registration.

“Representatives” means, with respect to any Person, the directors, officers, employees, financial advisors, attorneys, accountants, consultants, agents and other authorized representatives of such Person, acting in such capacity.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“Senior Member of Management” means the individuals identified in Section 1.1(b) of the Company Disclosure Letter.

“Shrink-Wrap Code” means generally commercially available Software where available for a cost of not more than $25,000 for a perpetual license for a single user or work station (or $250,000 in the aggregate for all users and work stations).

“Software” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in Source Code or Object Code and (ii) computerized databases and compilations.

“Source Code” means computer software and code, in form other than Object Code or machine readable form, which may be displayed in human readable form, including related programmer comments and annotations, help text, instructions and procedural, object-oriented and other code.

“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors

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or other persons performing similar functions are at any time directly or indirectly owned by such Person.

“Superior Proposal” means any bona fide, written Acquisition Proposal (except that, for purposes of this definition, each reference in the definition of “Acquisition Transaction” to “15%” or “85%” shall be “50%”) that did not result from a breach of Section 6.1 and that the Company Board has determined in good faith (after consultation with its financial advisor and its outside legal counsel, and after taking into account the financial, legal, regulatory and other aspects of such Acquisition Proposal and all of the terms and conditions of such Acquisition Proposal (including any termination or break-up fees, expense reimbursement provisions and any conditions, potential time delays or other risks to consummation), as well as any counter-offer or proposal made by Parent pursuant hereto in a written offer capable of acceptance) would be more favorable, from a financial point of view, to the holders of Company Common Stock in their capacities as such than the transactions contemplated by this Agreement.

“Tax” means (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, goods and services, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, escheat, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, (ii) any Liability for the payment of any amounts of the type described in clause (i) as a result of being or having been a member of an affiliated, consolidated, combined or unitary group for any period (including any Liability under Treasury Regulation Section 1.1502-6 or any comparable provision of Applicable Law (including any arrangement for group or consortium relief or similar arrangement)) and (iii) any Liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other Person or as a result of any obligations under any agreements or arrangements with any other Person with respect to such amounts and including any Liability for taxes of a predecessor or transferor or by operation of law.

“Tax Returns” means all returns, declarations, estimates, reports, statements and other documents filed or required to be filed in respect of any Taxes.

“Third Party” means any Person or “group” (as defined under Section 13(d) of the Exchange Act) of Persons, other than Parent or any of its Affiliates or Representatives.

“WARN” means the Worker Adjustment Retraining Notification Act of 1988, as amended, or any successor statute, rules and regulations thereto.

1.2Additional Definitions. The following capitalized terms shall have the respective meanings ascribed thereto in the respective sections of this Agreement set forth opposite each of the capitalized terms below:

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Term	Section Reference
401(k) Termination Date	6.12(a)
Agreement	Preamble
Antitrust Restraint	6.5(d)
Antitrust Termination Date	8.1(d)
Assets	3.21
Assumed Option	6.11(d)(ii)
Assumed RSA	6.11(c)
Assumed RSU	6.11(b)
Assumed Stock Appreciation Right	6.11(a)(ii)
Cancelled Option	6.11(d)(i)
Cancelled SAR	6.11(a)(i)
Cancelled RSU	6.11(b)
Capitalization Representation	7.2(a)
Certificate of Merger	2.2
Certificates	2.7(a)(i)
Closing	2.3
Closing Date	2.3
Collective Bargaining Agreements	3.19(a)
Company	Preamble
Company Board	Recitals
Company Board Recommendation	6.2(a)
Company Board Recommendation Change	6.2(b)
Company Common Stock	Recitals
Company Disclosure Letter	Article III Preamble
Company Form 10-K	Article III Preamble
Company IP Agreements	3.22(e)
Company Registered IP	3.22(b)
Company Securities	3.4(c)
Company Stockholders’ Meeting	6.3
Confidentiality Agreement	6.9
Consent	3.5(b)
D&O Insurance	6.13(b)
Delaware Secretary of State	2.2
Dissenting Shares	2.7(c)(i)
Effective Time	2.2
Exchange Fund	2.8(b)
Export Controls	3.23(a)
Import Restrictions	3.23(a)
Incentive Plan	6.12(d)
Indemnified Parties	6.13(a)

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Term	Section Reference
Intervening Event	6.2(c)(ii)
Labor Organization	3.19(a)
Leases	3.20(b)
Material Contract	3.11(a)
Maximum Annual Premium	6.13(b)
Merger	Recitals
Merger Consideration	Recitals
Merger Sub	Preamble
Normal Closing Due Date	2.3
Notice Period	6.2(c)(i)
Option Consideration	6.11(d)(i)
Parent	Preamble
Parent Specified Representations	7.3(a)
Payment Agent	2.8(a)
Permits	3.13
Proxy Statement	3.8
Real Property	3.20(b)
Requisite Stockholder Approval	3.3(c)
SEC Reports	3.6(a)
Significant Customer	3.15(a)
Significant Supplier	3.15(b)
Specified Representations	7.2(a)
Stock Appreciation Right Consideration	6.11(a)(i)
Stub Bonus	6.12(d)
Subsidiary Securities	3.2(d)
Surviving Corporation	2.1
Tail Policy	6.13(b)
Takeover Law	3.29(a)
Tax Incentive	3.16(k)
Termination Date	8.1(d)
Termination Fee Amount	8.3(b)(i)
Triggering Event	8.1(f)(ii)
Uncertificated Shares	2.7(a)(i)
Voting Agreement	Recitals

1.3Certain Interpretations.

(a)Unless otherwise indicated, all references herein to Sections, Articles, Annexes, Exhibits or Schedules, shall be deemed to refer to Sections, Articles, Annexes, Exhibits or Schedules of or to this Agreement, as applicable.

(b)Unless otherwise indicated, the words “include,” “includes” and

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“including,” when used herein, shall be deemed in each case to be followed by the words “without limitation.”

(c)The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.

(d)Unless otherwise specifically provided, all references in this Agreement to “Dollars” or “$” means United States Dollars.

(e)    As used in this Agreement, the singular or plural number shall be deemed to include the other whenever the context so requires. Article, Section, clause and Schedule references contained in this Agreement are references to Articles, Sections, clauses and Schedules in or to this Agreement, unless otherwise specified.

(f)As used in this Agreement, the word “extent” and the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such word or phrase shall not mean simply “if”.

(g)Whenever any reference is made in this Agreement to the Company having “made available” any document or information, such phrase shall include having made such document or information available (i) prior to the date of this Agreement in the electronic data room utilized in connection with the transactions contemplated by this Agreement or (ii) if such document is referred to in the Index to Exhibits in the Company Form 10-K, in the Electronic Data Gathering, Analysis and Retrieval (EDGAR) database of the SEC.

(h)The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Applicable Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

ARTICLE II

THE MERGER

2.1The Merger. Upon the terms and subject to the conditions set forth in this Agreement and the applicable provisions of Delaware Law, at the Effective Time, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall thereupon cease and the Company shall continue as the surviving corporation. The Company, as the surviving corporation of the Merger, is sometimes hereinafter referred to as the “Surviving Corporation.”

2.2The Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, Parent, Merger Sub and the Company shall cause the

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Merger to be consummated under Delaware Law by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”) in accordance with the applicable provisions of Delaware Law (the time of such filing and acceptance by the Delaware Secretary of State, or such later time as may be agreed in writing by Parent and the Company and specified in the Certificate of Merger, being referred to herein as the “Effective Time”).

2.3The Closing. The consummation of the Merger shall take place at a closing (the “Closing”) to occur at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, One Market Street, Spear Tower, San Francisco, California, 94105, on a date and at a time to be agreed upon by Parent, Merger Sub and the Company, which date shall be no later than the second (2^nd) Business Day after the satisfaction or waiver (to the extent permitted hereunder) of the last to be satisfied or waived of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted hereunder), of such conditions) or at such other location, date and time as Parent, Merger Sub and the Company shall mutually agree upon in writing (the “Normal Closing Due Date”); provided, however, that if the Closing would occur on a date that is within fifteen (15) calendar days prior to the end of a fiscal quarter of Parent (other than the fiscal quarter ending on December 31, 2012), Parent may elect, in its sole discretion, to defer the Closing until the first (1^st) Business Day following the end of such fiscal quarter (provided that, in the event of such deferral, the conditions to the obligations of Parent and Merger Sub to consummate the Merger set forth in Sections 7.2(a), 7.2(c) and 7.2(e) shall be deemed to have been satisfied at the Closing if such conditions were satisfied as of the Normal Closing Due Date). The date upon which the Closing shall actually occur pursuant hereto is referred to herein as the “Closing Date”.

2.4Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

2.5Certificate of Incorporation and Bylaws.

(a)Certificate of Incorporation. At the Effective Time, subject to the provisions of Section 6.13, the certificate of incorporation of the Company shall be amended and restated in its entirety to read identically to the certificate of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, and such amended and restated certificate of incorporation shall become the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of Delaware Law and such certificate of incorporation; provided, however, that at the Effective Time the certificate of incorporation of the Surviving Corporation shall be amended so that the name of the Surviving Corporation shall be “Standard Microsystems Corporation.”

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(b)Bylaws. At the Effective Time, subject to the provisions of Section 6.13, the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall become the bylaws of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of Delaware Law, the certificate of incorporation of the Surviving Corporation and such bylaws.

2.6Directors and Officers.

(a)Directors. At the Effective Time, the initial directors of the Surviving Corporation shall be the directors of Merger Sub immediately prior to the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified.

(b)Officers. At the Effective Time, the initial officers of the Surviving Corporation shall be the officers of Merger Sub immediately prior to the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their respective successors are duly appointed and qualified.

2.7Effect on Capital Stock.

(a)Capital Stock. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities, the following shall occur:

(i)Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than (A) shares of Company Common Stock owned by Parent, the Company or any direct or indirect wholly owned Subsidiary of Parent or the Company, in each case immediately prior to the Effective Time, and (B) Dissenting Shares) shall be canceled and extinguished and automatically converted into the right to receive an amount in cash equal to the Merger Consideration, without interest thereon, upon the surrender of (A) certificates representing shares of Company Common Stock (the “Certificates”) and (B) uncertificated shares of Company Common Stock (the “Uncertificated Shares”) in the manner provided in Section 2.8 (or in the case of a lost, stolen or destroyed Certificate, upon delivery of an affidavit (and bond, if required) in the manner provided in Section 2.10).

(ii)Owned Company Common Stock. Each share of Company Common Stock owned by Parent, the Company, or any direct or indirect wholly owned Subsidiary of Parent or the Company, in each case immediately prior to the Effective Time, shall be cancelled and extinguished without any conversion thereof or consideration paid therefor.

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(iii)Capital Stock of Merger Sub. Each share of common stock, par value $0.001 per share, of Merger Sub that is issued and outstanding immediately prior to the Effective Time shall be converted into one (1) validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation, and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. Each certificate evidencing ownership of such shares of common stock of Merger Sub shall thereafter evidence ownership of shares of common stock of the Surviving Corporation.

(b)Adjustment to Merger Consideration. If, during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of Company Capital Stock shall occur as a result of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend, or any record date for any such purpose shall be established, the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted.

(c)Statutory Rights of Appraisal.

(i)Notwithstanding anything to the contrary set forth in this Agreement, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Company Common Stock canceled in accordance with Section 2.7(a)(ii)) and held by a holder who has not voted in favor of adoption of this Agreement or consented thereto in writing and who has properly exercised appraisal rights of such shares in accordance with Section 262 of the DGCL (such shares being referred to collectively as the “Dissenting Shares” until such time as such holder fails to perfect, withdraws or otherwise loses such holder’s appraisal rights under Delaware Law with respect to such shares) shall not be converted into a right to receive the Merger Consideration but instead shall be entitled to payment of the appraised value of such shares in accordance with Section 262 of the DGCL; provided that if, after the Effective Time, such holder fails to perfect, withdraws or loses such holder’s right to appraisal, pursuant to Section 262 of the DGCL or if a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262 of the DGCL, such shares of Company Common Stock shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration in accordance with Section 2.7(a)(i), without interest thereon, upon surrender of such Certificate formerly representing such share or transfer of such Uncertificated Share, as the case may be.

(ii)The Company shall provide Parent prompt written notice of any demands received by the Company for appraisal of shares of Company Common Stock, any withdrawal of any such demand and any other demand, notice or instrument delivered to the Company prior to the Effective Time pursuant to Delaware Law that relates to such demand, and Parent shall have the opportunity and right to participate in and direct all negotiations and Legal Proceedings with respect to such demands. Except with the prior written consent

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of Parent, the Company shall not make any payment with respect to, or offer to settle or settle, any such demands.

(d)Company Compensatory Awards. At the Effective Time, each Company Compensatory Award then outstanding under any of the Company Plans shall be treated in accordance with the provisions of Section 6.11.

2.8Exchange of Certificates.

(a)Payment Agent. Prior to the Effective Time, Parent shall select a bank or trust company reasonably acceptable to the Company to act as the payment agent for the Merger (the “Payment Agent”).

(b)Exchange Fund. Promptly following the Effective Time, Parent shall deposit (or cause to be deposited) with the Payment Agent, for payment to the holders of shares of Company Common Stock pursuant to the provisions of this Article II, an amount of cash equal to the product obtained by multiplying (x) the Merger Consideration by (y) the aggregate number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (excluding shares of Company Common Stock canceled in accordance with Section 2.7(a)(ii)) (such cash amount being referred to herein as the “Exchange Fund”).

(c)Payment Procedures. As promptly as practicable following the Effective Time, Parent and Merger Sub shall cause the Payment Agent to mail to each holder of record (as of immediately prior to the Effective Time) of shares of Company Common Stock (i) a letter of transmittal in customary form and containing customary provisions (which shall specify that delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates or transfer of the Uncertificated Shares to the Payment Agent) and (ii) instructions for use in effecting the surrender of the Certificates or transfer of the Uncertificated Shares in exchange for the Merger Consideration payable in respect thereof pursuant to the provisions of this Article II. Each holder of shares of Company Common Stock that have been converted into the right to receive the Merger Consideration shall be entitled to receive the Merger Consideration in respect of the shares of Company Common Stock represented by a Certificate or Uncertificated Share, upon (x) surrender to the Payment Agent of a Certificate, together with a duly completed and validly executed letter of transmittal and such other documents as may reasonably be requested by the Payment Agent, or (y) receipt of an “agent’s message” by the Payment Agent (or such other evidence, if any, of transfer as the Payment Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares. Until so surrendered or transferred, as the case may be, each such Certificate or Uncertificated Share shall represent after the Effective Time for all purposes only the right to receive the Merger Consideration payable in respect thereof pursuant to the provisions of this Article II. No interest shall be paid or accrued on the cash payable upon the surrender or transfer of such Certificate or Uncertificated Share.

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(d)Transfers of Ownership. If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate or the transferred Uncertificated Share is registered, it shall be a condition to such payment that (i) either such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such Uncertificated Share shall be properly transferred and (ii) the Person requesting such payment shall pay to the Payment Agent any transfer or other similar Tax required as a result of such payment to a Person other than the registered holder of such Certificate or Uncertificated Share or establish to the satisfaction of the Payment Agent that such Tax has been paid or is not payable.

(e)Required Withholding. Each of the Payment Agent, Parent and the Surviving Corporation shall be entitled to deduct and withhold from any amounts payable pursuant to this Agreement such amounts as may be required to be deducted or withheld therefrom under applicable Tax laws. To the extent that such amounts are so deducted or withheld, such amounts (i) shall be remitted by Parent, Merger Sub, the Surviving Corporation or the Payment Agent, as the case may be, to the applicable Governmental Entity and (ii) shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

(f)No Liability. Notwithstanding anything to the contrary set forth in this Agreement, none of the Payment Agent, Parent, the Surviving Corporation or any other party hereto shall be liable to a holder of shares of Company Common Stock for any amount properly paid to a public official pursuant to any abandoned property, escheat or similar Applicable Law.

2.9No Further Ownership Rights in Company Common Stock. From and after the Effective Time, all shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled, retired and cease to exist, and each holder of a Certificate or Uncertificated Share theretofore representing any shares of Company Common Stock (other than Dissenting Shares) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration payable therefor upon the surrender thereof in accordance with the provisions of Section 2.8. The Merger Consideration paid in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Company Common Stock. From and after the Effective Time, there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Common Stock that were issued and outstanding immediately prior to the Effective Time, other than transfers to reflect, in accordance with customary settlement procedures, trades effected prior to the Effective Time. If, after the Effective Time, Certificates or Uncertificated Shares are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged for the Merger Consideration as provided for, and in accordance with the procedures set forth, in this Article II.

2.10Lost, Stolen or Destroyed Certificates. In the event that any Certificates shall have been lost, stolen or destroyed, the Payment Agent shall issue in exchange for such lost,

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stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Merger Consideration payable in respect thereof pursuant to Section 2.7; provided, however, as a condition precedent to the payment of such Merger Consideration, the Payment Agent shall require the owners of such lost, stolen or destroyed Certificates to furnish a bond in form satisfactory to the Payment Agent, Parent and the Surviving Corporation as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Payment Agent with respect to the Certificates alleged to have been lost, stolen or destroyed. The value of the bond of indemnity shall be calculated by the Payment Agent, based on the value of lost, stolen or destroyed Certificates.

2.11Taking of Necessary Action; Further Action. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the directors and officers of the Surviving Corporation shall take all such lawful and necessary action on behalf of the Company and Merger Sub.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except, with respect to any Section of this Article III, as set forth in the section of the disclosure letter delivered by the Company to Parent on the date of this Agreement (the “Company Disclosure Letter”) that specifically relates to such Section or in another section of the Company Disclosure Letter to the extent it is reasonably apparent from the text of such disclosure that such disclosure is applicable to such Section, and except as disclosed in the Annual Report on Form 10-K of the Company for the fiscal year ended February 29, 2012 (the “Company Form 10-K”) (other than disclosures in the “Risk Factors” or “Forward-Looking Statements” sections of such reports, other disclosures that are similarly non-specific or are predictive or forward-looking in nature and excluding any exhibits incorporated by reference in such reports), the Company hereby represents and warrants to Parent and Merger Sub as follows:

3.1Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under Delaware Law. The Company has the requisite power and authority to carry on its business as it is presently being conducted and to own, lease or operate its respective properties and assets. The Company is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), except where the failure to be so qualified or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has delivered or made available to Parent complete and correct copies of its certificate of incorporation and bylaws, as amended to date. The Company is

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not in violation of its certificate of incorporation or bylaws. The Company has delivered or made available to Parent complete and correct copies of the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings of the stockholders, the Company Board and each committee of the Company Board held since January 1, 2010 other than any such minutes relating to this Agreement or the transactions contemplated hereby or any alternatives to this Merger considered by the Company Board.

3.2Subsidiaries.

(a)Section 3.2(a) of the Company Disclosure Letter contains a complete and accurate list of the name and jurisdiction of organization of each Subsidiary of the Company. Except for the Company’s Subsidiaries, the Company does not own, directly or indirectly, any capital stock of, or other equity or voting interest in, any Person.

(b)Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each of the Company’s Subsidiaries (i) is duly organized, validly existing and in good standing under the Applicable Laws of the jurisdiction of its respective organization (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), (ii) has the requisite power and authority to carry on its respective business as it is presently being conducted and to own, lease or operate its respective properties and assets, (iii) is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States) and (iv) is in compliance with its respective certificate of incorporation, bylaws or other applicable constituent documents. The Company has delivered or made available to Parent complete and correct copies of the certificates of incorporation and bylaws or other constituent documents, as amended to date, of each of the Company’s Subsidiaries.

(c)All of the outstanding capital stock of, or other equity or voting interest in, each Subsidiary of the Company (i) have been duly authorized, validly issued and are fully paid and nonassessable and (ii) are owned, directly or indirectly, by the Company, free and clear of all Liens (other than restrictions on transfer imposed by Applicable Law) and free of any other restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity or voting interest) that would prevent the operation by the Surviving Corporation of such Subsidiary’s business as presently conducted.

(d)There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, any Subsidiary of the Company, (ii) options, stock appreciation rights, warrants, restricted stock units, rights or other commitments or agreements to acquire from the Company or any of its Subsidiaries, or that obligate the Company or any of its Subsidiaries to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, any

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Subsidiary of the Company, (iii) obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment (whether payable in equity, cash or otherwise) relating to any capital stock of, or other equity or voting interest (including any voting debt) in, any Subsidiary of the Company (the items in clauses (i), (ii) and (iii), together with the capital stock of the Subsidiaries of the Company, being referred to collectively as “Subsidiary Securities”) or (iv) other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Subsidiary Securities. There are no Contracts of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.

3.3Authorization.

(a)The Company has all requisite corporate power and authority to execute and deliver this Agreement and, subject in the case of the Merger to obtaining the Requisite Stockholder Approval, to consummate the transactions contemplated hereby and to perform its obligations hereunder. Assuming that the representations of Parent and Merger Sub set forth in Section 4.6 are accurate, the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the Merger) have been duly authorized by all necessary corporate action on the part of the Company and no additional corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (including the Merger), other than in the case of the Merger obtaining the Requisite Stockholder Approval. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Applicable Law affecting or relating to creditors’ rights generally and (ii) is subject to general principles of equity.

(b)At a meeting duly called and held prior to the execution of this Agreement, the Company Board unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable, (ii) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to and in the best interests of the Company and its stockholders, (iii) approved this Agreement and the transactions contemplated hereby, including the Merger, and the Voting Agreements, (iv) took all actions necessary so that the restrictions on business combinations and stockholder vote requirements contained in Section 203 of the DGCL will not apply with respect to or as a result of the Merger, this Agreement, the Voting Agreements and the transactions contemplated hereby and thereby, (v) directed that the adoption of this Agreement be submitted to a vote of the stockholders of the Company at the Company Stockholder Meeting and (vi) resolved to recommend that the holders of shares of Company Common Stock adopt this Agreement in accordance with the applicable provisions of Delaware Law.

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(c)Assuming that the representations of Parent and Merger Sub set forth in Section 4.6 are accurate, the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock voting to adopt this Agreement (the “Requisite Stockholder Approval”) is the only vote of the holders of any class or series of Company Capital Stock necessary (under Applicable Law or otherwise) to consummate the Merger and the other transactions contemplated by this Agreement.

3.4Capitalization.

(a)The authorized capital stock of the Company consists of (i) eight-five million (85,000,000) shares of Company Common Stock and (ii) one million (1,000,000) shares of Company Preferred Stock. As of March 31, 2012, (A) 22,324,870 shares of Company Common Stock were issued and outstanding (13,784 of which were Company Restricted Stock Awards), (B) no shares of Company Preferred Stock were issued and outstanding or held by the Company as treasury shares and (C) 5,893,957 shares of Company Common Stock were held by the Company as treasury shares. All outstanding shares of Company Common Stock were validly issued, fully paid, nonassessable and free of any preemptive rights. Since March 31, 2012 through (and including) the date of this Agreement, the Company has not issued any shares of Company Capital Stock other than pursuant to Company Restricted Stock Units or the exercise of Company Options or pursuant to the Company ESPP or any 401(k) plans maintained by the Company or any of its Subsidiaries.

(b)Section 3.4(b) of the Company Disclosure Letter lists (i) the number of shares of Company Common Stock that are subject to issuance pursuant to Company Options outstanding as of March 31, 2012, (ii) the number of Company Options with an exercise price in excess of the Merger Consideration outstanding as of March 31, 2012, (iii) the number of shares of Company Common Stock that are subject to Company Stock Appreciation Rights outstanding as of March 31, 2012, (iv) the number of shares of Company Common Stock subject to Company Restricted Stock awards outstanding as of March 31, 2012, and (v) the number of shares of Company Common Stock subject to Company Restricted Stock Unit awards outstanding as of March 31, 2012. Since MArch 31, 2012 through (and including) the date of this Agreement, the Company has not granted any Company Compensatory Awards. Each outstanding Company Compensatory Award was granted subject to the terms of a Company Plan. As of March 31, 2012, 843,260 shares of Company Common Stock were reserved for future issuance pursuant to stock awards not yet granted under the Company Plans. All Company Compensatory Awards have been, in all material respects, validly issued and properly approved by the Company Board in accordance with all Applicable Law, and the Company Plans and all Company Compensatory Awards have been, in all material respects, properly accounted for in accordance with GAAP on the consolidated audited financial statements of the Company and its Subsidiaries filed in or furnished with the SEC Reports.

(c)Except as set forth in this Section 3.4, there are (i) no outstanding shares of capital stock of, or other equity or voting interest in, the Company, (ii) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or

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other equity or voting interest in, the Company, (iii) no outstanding options, stock appreciation rights, warrants, restricted stock units, rights or other commitments or agreements to acquire from the Company, or that obligates the Company to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, the Company, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment (whether payable in equity, cash or otherwise) relating to any capital stock of, or other equity or voting interest (including any voting debt) in, the Company (the items in clauses (i), (ii), (iii) and (iv), together with the capital stock of the Company, being referred to collectively as “Company Securities”) and (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of the Company Securities. There are no outstanding Contracts of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.

(d)Other than this Agreement or the Voting Agreements, neither the Company nor any of its Subsidiaries is a party to any Contracts restricting the transfer of, relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or similar rights with respect to any securities of the Company.

3.5Non-contravention; Required Consents.

(a)The execution, delivery or performance by the Company of this Agreement, the consummation by the Company of the transactions contemplated hereby (including the Merger) and the compliance by the Company with any of the provisions hereof do not and will not (A) violate or conflict with any provision of the certificate of incorporation or bylaws or other constituent documents of the Company or any of its Subsidiaries, (A) subject to obtaining the Consents set forth in Section 3.5(a)(ii) of the Company Disclosure Letter, violate, conflict with, or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the loss of any material benefit or the imposition of any additional payment or other Liability under, any Contract to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of their respective properties or assets may be bound, (A) assuming compliance with the matters referred to in Section 3.5(b) and, in the case of the consummation of the Merger, subject to obtaining the Requisite Stockholder Approval, violate or conflict with any Applicable Law or Order or (A) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company or any of its Subsidiaries, except in the case of each of clauses (ii), (iii) and (iv) above, for such violations, conflicts, defaults, terminations, accelerations or Liens which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect or to prevent, materially delay or materially impair the ability of the Company to consummate the transaction contemplated by this Agreement in

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accordance with the terms hereof and Applicable Law.

(b)No consent, approval, Order or authorization of, or filing or registration with, or notification to (any of the foregoing being a “Consent”), any Governmental Entity is required on the part of the Company or any of its Subsidiaries in connection with the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby (including the Merger), except (i) the filing of the Certificate of Merger with the Delaware Secretary of State as required by Delaware Law, (ii) such filings, approvals and other Consents as may be required by the Nasdaq or any federal or state securities Laws, including compliance with any applicable requirements of the Exchange Act, (iii) compliance with any applicable requirements of the HSR Act and any other Antitrust Laws and (iv) such other Consents, the failure of which to obtain, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect or to prevent, materially delay or materially impair the ability of the Company to consummate the transaction contemplated by this Agreement in accordance with the terms hereof and Applicable Law.

3.6SEC Reports.

(a)Since January 1, 2010, the Company has filed or furnished (as applicable) all forms, reports, schedules, statements and documents with the SEC that have been required to be so filed or furnished (as applicable) by it under Applicable Law at or prior to the time so required, and, after the date of this Agreement and until the Effective Time, the Company will file all forms, reports, schedules, statements and documents with the SEC that are required to be filed by it under Applicable Law at or prior to the time so required (all such forms, reports, schedules, statements and documents, together with any other forms, reports, schedules, statements or other documents filed or furnished (as applicable) by the Company with the SEC after January 1, 2010 and at or prior to the Effective Time that are not required to be so filed or furnished, the “SEC Reports”).

(b)Each SEC Report complied, or will comply, as the case may be, as of its filing date, as to form in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and with all applicable provisions of the Sarbanes-Oxley Act, each as in effect on the date such SEC Report was, or will be, filed.

(c)As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), each SEC Report did not, or will not, as the case may be, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(d)Since January 1, 2010 through the date hereof, neither the Company nor any of its Subsidiaries has received from the SEC or any other Governmental Entity (i) any written comments that have not been resolved with respect to any of the SEC Reports

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(including the financial statements included therein) or any registration statement filed by any of them with the SEC or (ii) any written notice that such SEC Reports (including the financial statements included therein) or registration statements are being reviewed or investigated, and, to the Knowledge of the Company, there is not, as of the date of this Agreement, any investigation or review being conducted by the SEC or any other Governmental Entity of any SEC Reports (including the financial statements included therein).

(e)No Subsidiary of the Company is subject to the reporting requirements of Section 13(a) or Section 15(d) of the Exchange Act.

(f)No executive officer of the Company has failed to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any SEC Report, except as disclosed in certifications filed with the SEC Reports. Since January 1, 2010, neither the Company nor any of its executive officers has received any written notice from any Governmental Entity challenging or questioning the accuracy, completeness, form or manner of filing of such certifications.

3.7Financial Statements.

(a)The consolidated financial statements of the Company and its Subsidiaries filed in or furnished with the SEC Reports have been or will be, as the case may be, prepared in accordance with GAAP consistently applied by the Company during the periods and at the dates involved (except as may be indicated in the notes thereto and, in the case of unaudited interim financial statements as may be permitted by the SEC for Quarterly Reports on Form 10-Q), and fairly present in all material respects, or will fairly present in all material respects, as the case may be, the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of operations and cash flows for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements).

(b)The Company’s system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) is sufficient in all material respects to provide reasonable assurance (i) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, (ii) that receipts and expenditures are executed in accordance with the authorization of management, and (iii) that any unauthorized use, acquisition or disposition of the Company’s assets that would materially affect the Company’s financial statements would be detected or prevented in a timely manner.

(c)The Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are reasonably designed to ensure that (i) all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported to the individuals responsible for preparing such reports within the time periods specified in the rules and forms of the SEC, and (ii) all such information is

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accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of the Company required under the Exchange Act with respect to such reports.

(d)To the Knowledge of the Company, since January 1, 2010, neither the Company nor any of its Subsidiaries (including any employee thereof) nor the Company’s independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its Subsidiaries, (ii) any fraud, whether or not material, that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company and its Subsidiaries or (iii) any claim or allegation regarding any of the foregoing.

(e)Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, partnership agreement or any similar Contract (including any Contract relating to any transaction, arrangement or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand (such as any arrangement described in Section 303(a)(4) of Regulation S-K of the SEC)) where the purpose or effect of such arrangement is to avoid disclosure of any material transaction involving the Company or any its Subsidiaries in the Company’s consolidated financial statements.

(f)Since January 1, 2010, to the Knowledge of the Company, neither the Company nor any of its Subsidiaries nor any director, officer or auditor of the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any substantive complaint, allegation, assertion or claim, whether written or oral, that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices. Since January 1, 2010, no current or former attorney representing the Company or any of its Subsidiaries has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company Board or any committee thereof or to any current director or executive officer of the Company.

(g)Since January 1, 2010, to the Knowledge of the Company, no employee of the Company or any of its Subsidiaries has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any Applicable Law of the type described in Section 806 of the Sarbanes-Oxley Act by the Company or any of its Subsidiaries. Since January 1, 2010, to the Knowledge of the Company, neither the Company nor any of its Subsidiaries nor any director, officer, employee, contractor, subcontractor or agent of the Company or any such Subsidiary has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of the Company or any of its Subsidiaries in the terms and

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conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.

3.8Proxy Statement. The proxy statement, letter to stockholders, notice of meeting and form of proxy that will be provided to stockholders of the Company in connection with the solicitation of proxies for use at the Company Stockholders’ Meeting, and any schedules required to be filed with the SEC in connection therewith (collectively, as amended or supplemented, the “Proxy Statement”), when filed with the SEC and on the date first mailed to stockholders of the Company and at the time of the Company Stockholders’ Meeting, will comply as to form in all material respects with the applicable requirements of the Exchange Act and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that notwithstanding the foregoing, no representation or warranty is made by the Company with respect to information supplied by Parent or Merger Sub or any of their officers, directors, representatives, agents or employees in writing specifically for inclusion or incorporation by reference in the in the Proxy Statement.

3.9No Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries has any Liabilities other than (a) Liabilities reflected or otherwise reserved against in the Balance Sheet (or disclosed in the notes thereto), (b) Liabilities under this Agreement, (c) fees and expenses payable to any accountant, outside legal counsel or financial advisor which are incurred in connection with the negotiation of this Agreement or the consummation of the transactions contemplated by this Agreement (including the Merger), (d) executory obligations under any Contract, other than any such obligations that arose as a result of an existing breach or default (with or without notice or lapse of time or both) thereunder, (e) Liabilities incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet and (f) Liabilities that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

3.10Absence of Certain Changes. (A) Except for actions expressly contemplated by this Agreement, since the date of the Balance Sheet through the date of this Agreement, (i) the business of the Company and its Subsidiaries has been conducted, in all material respects, in the ordinary course consistent with past practice and (ii) the Company has not taken any action that, if taken after the date of this Agreement without the prior written consent of Parent, would constitute a breach of Section 5.2 and (A) since the date of the Balance Sheet, there has not been or occurred or there does not exist any Company Material Adverse Effect or any other Effect that would reasonably be expected to prevent, materially delay or materially impair the ability of the Company to consummate the transaction contemplated by this Agreement in accordance with the terms hereof and Applicable Law.

3.11Material Contracts.

(a)For purposes of this Agreement, a “Material Contract” means each of the following Contracts which is currently in effect and to which the Company or any of its

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Subsidiaries is a party or by which any of their respective properties or assets are bound:

(i)any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC, other than those agreements and arrangements described in Item 601(b)(10)(iii)) with respect to the Company and its Subsidiaries;

(ii)any Collective Bargaining Agreement or other similar Contract with a Labor Organization;

(iii)any Contract (excluding, for the avoidance of doubt, any purchase order) with any Significant Customer (based solely on the fiscal year ended February 29, 2012) or any Significant Supplier (based solely on the fiscal year ended February 29, 2012) providing for indemnification or any guaranty (in each case, under which the Company has continuing obligations as of the date hereof), other than (A) any guaranty by the Company of any of its Subsidiaries’ obligations or (B) any Contract providing for indemnification entered into in connection with the distribution, sale or license of services or hardware or software products in the ordinary course of business consistent with past practice, which indemnification does not materially differ from the provisions embedded in Company’s standard terms of sale as provided or made available to Parent;

(iv)any Contract containing any covenant, commitment or other obligation (A) limiting the right of the Company or any of its Subsidiaries to engage in any line of business or to compete with any Person in any line of business, (B) granting any exclusive rights to any third party, (C) containing a “most favored nation” or similar provision, (D) including any “take or pay” or “requirements” obligation (excluding, for the avoidance of doubt, any purchase order), (E) prohibiting the Company or any of its Subsidiaries (or, after the Effective Time, Parent) from engaging in business with any Person or levying a fine, charge or other payment for doing so (other than any prohibition pertaining to the non-solicitation of employees) or (F) otherwise prohibiting or limiting the right of the Company or its Subsidiaries to sell, distribute or manufacture any products or services or to purchase or otherwise obtain any software, components, parts or subassemblies, in each case other than any such Contracts that may be cancelled without liability to the Company or its Subsidiaries of more than $300,000 and upon notice of ninety (90) days or less;

(v)any Contract (A) relating to the license, disposition or acquisition by the Company or any of its Subsidiaries after the date of this Agreement of a material amount of assets other than in the ordinary course of business, (B) pursuant to which the Company or any of its Subsidiaries will acquire any material ownership interest in any other Person or other business enterprise other than the Company’s Subsidiaries or (C) relating to the formation, control or operation of any joint venture;

(vi)    any Contract for the acquisition or disposition of any business containing any continuing (A) profit sharing arrangements or “earn-out” arrangements or (B) indemnification or similar contingent payment obligations;

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(vii)    any joint marketing or development agreements under which the Company or any of its Subsidiaries have continuing obligations or costs in excess of $300,000 per year, to jointly market any product, technology or service, and which may not be canceled without penalty upon notice of ninety (90) days or less;

(viii)any material outsourcing Contracts (including material Contracts to assemble, manufacture and package any Company Product);

(ix)    Based upon amounts paid or received thereunder during the most recent completed fiscal year of the Company, (A) the top twenty (20) end-user or customer contracts (including OEM contracts), (B) the top five (5) distributor contracts, (C) to top ten (10) supplier contracts, (D) the top three (3) development contracts, and (E) the top five (5) sales representative contracts;

(x)    the top ten (10) Contracts (based upon amounts paid thereunder during the most recent completed fiscal year of the Company) containing any service obligation on the part of the Company or any of its Subsidiaries (as measured by continuing costs to be incurred by the Company or any of its Subsidiaries in connection with those services);

(xi)    any Contract that is listed in Section 3.22(e) of the Company Disclosure Letter;

(xii)    any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money by, or extension of credit to, the Company or any of its Subsidiaries, other than (A) accounts receivables and payables in the ordinary course of business consistent with past practice and (B) loans to direct or indirect wholly-owned Subsidiaries;

(xiii)    any mortgage, lease, loan or other material Contract relating to any sale leaseback transaction of any real property previously owned by the Company or any of its Subsidiaries;

(xiv)    any Contract entered into since January 1, 2009 to settle a Legal Proceeding other than (A) releases entered into with former employees or independent contractors of the Company which do not contain cash settlements in excess of $500,000 or

(B) settlement agreements for cash only (which has been paid) and does not exceed $500,000 as to such settlement; and

(xv)any material Contract with any Governmental Entity.

(b)Section 3.11(b) of the Company Disclosure Letter contains a list that is complete and accurate in all material respects as of the date hereof of all Material Contracts,

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and identifies each subsection of Section 3.11(a) that describes such Material Contract. The Company has delivered or made available to Parent complete and correct copies of each such Material Contract.

(c)Each Material Contract is valid and binding on the Company (and/or each such Subsidiary of the Company, as the case may be) and is in full force and effect, and neither the Company nor any of its Subsidiaries party thereto, nor, to the Knowledge of the Company, any other party thereto, is in breach of, or default under any such Material Contract, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder by the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any other party thereto, except in each of the foregoing cases as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. As of the date hereof, neither the Company nor any of its Subsidiaries has received any written notice or other written communication regarding any actual or possible violation or breach of or default under, or intention to cancel or modify, any Material Contract, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

3.12Compliance with Applicable Law. The Company and each of its Subsidiaries are and since January 1, 2010 have been in compliance with all Applicable Laws and Orders, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. Since January 1, 2010, neither the Company nor any of its Subsidiaries (a) has received any written notice of any administrative, civil or criminal investigation or audit by any Governmental Entity relating to the Company or any of its Subsidiaries, (b) has received any written notice from any Governmental Entity alleging any violation by the Company or any of its Subsidiaries of any Applicable Law or Order nor (c) has provided any written notice to any Governmental Entity regarding any violation by the Company or any of its Subsidiaries of any Applicable Law or Order, and no such notice referred to in clauses (a), (b) or (c) of this Section 3.12 remains outstanding or unresolved as of the date of this Agreement, except in each case as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

3.13Permits. The Company and its Subsidiaries are, and since January 1, 2010 have been, in compliance with the terms of all permits, licenses, authorizations, consents, approvals and franchises from Governmental Entities required to occupy and operate each Real Property and to conduct their businesses as currently conducted (“Permits”), and no suspension or cancellation of any such Permits is pending or, to the Knowledge of the Company, threatened, except for such noncompliance, suspensions or cancellations that, individually or in the aggregate, are not and would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, or to prevent, materially delay or materially impair the ability of the Company to consummate the transaction contemplated by this Agreement in accordance with the terms hereof and Applicable Law. Since January 1,

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2010, neither the Company nor any of its Subsidiaries has received any written notice from any Governmental Entity regarding (a) any violation by the Company or any of its Subsidiaries of any Permits or the failure to have any required Permits, or (b) any revocation, cancellation or termination of any Permits held by the Company or any of its Subsidiaries, and no such notice in either case remains outstanding or unresolved as of the date of this Agreement, except in each case as, individually or in the aggregate, is not and would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, or to prevent, materially delay or materially impair the ability of the Company to consummate the transaction contemplated by this Agreement in accordance with the terms hereof and Applicable Law.

3.14Litigation. As of the date hereof, there is no Legal Proceeding pending or, to the Knowledge of the Company, threatened (a) against the Company or any of its Subsidiaries that (i) involves an amount in controversy in excess of $300,000, (ii) seeks material injunctive relief, or (iii) seeks to impose any legal restraint on or prohibition against or limit the Surviving Corporation’s ability to operate the business of the Company and its Subsidiaries substantially as it was operated immediately prior to the date of this Agreement, (b) to the Knowledge of the Company, against any current or former director or officer of the Company or any of its Subsidiaries (in their respective capacities a such), whether or not naming the Company or any of its Subsidiaries or (c) by the Company or any of its Subsidiaries against any third party that (i) involves an amount in controversy in excess of $300,000 or (ii) seeks material injunctive relief. As of the date hereof, neither the Company nor any of its Subsidiaries nor any of their respective properties, including the Assets and the Real Property, is subject to any outstanding Order that, individually or in the aggregate, is or would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, or to prevent, materially delay or materially impair the ability of the Company to consummate the transaction contemplated by this Agreement in accordance with the terms hereof and Applicable Law.

3.15Customers and Suppliers.

(a)To the Knowledge of the Company, (i) neither the Company nor any of its Subsidiaries has any outstanding material disputes concerning any Company Products with any customer who, in any of the three fiscal years ended February 29, 2012 or the last twelve (12) months prior to the date hereof, was one of the twenty (20) largest customers of Company Products based on amounts paid or payable to the Company or its Subsidiaries by such customers (each, a “Significant Customer”) and (ii) neither the Company nor any of its Subsidiaries has received any written or oral notice from any Significant Customer that such Significant Customer shall not continue as a customer of the Company or any of its Subsidiaries other than, for the avoidance of doubt, in connection with the loss of a design opportunity. Since February 29, 2012, the Company has not had any material quantity of Company Products returned by a purchaser thereof except for normal warranty returns consistent with past history.

(b)To the Knowledge of the Company, (i) neither the Company nor any of its Subsidiaries has any outstanding material dispute concerning products and/or services provided by any supplier who, in any of the three fiscal years ended February 29, 2012 and

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the last twelve (12) months prior to the date hereof, was one of the ten (10) largest suppliers of products and/or services to the Company and its Subsidiaries based on amounts paid or payable by the Company and its Subsidiaries to such supplier (each, a “Significant Supplier”) and (ii) neither the Company nor any of its Subsidiaries has received any written or, to the Knowledge of the Company, oral notice from any Significant Supplier that such Significant Supplier shall not continue as a supplier to the Company or any of its Subsidiaries. The Company and its Subsidiaries have access, in all material respects and on commercially reasonable terms, to all products and services reasonably necessary to carry on the Company’s business, and the Company has no Knowledge of any reason why it will not continue to have such access in all material respects and on commercially reasonable terms.

3.16Taxes.

(a)Each of the Company and its Subsidiaries has prepared and timely filed (taking into account all applicable extensions) all material income, franchise and other U.S. federal, state, local and non-U.S. Tax Returns required to be filed relating to any and all Taxes concerning or attributable to the Company, any of its Subsidiaries or their respective operations, and such Tax Returns in all material respects are true and correct and have been completed in accordance with Applicable Law.

(b)Taking into account all applicable extensions, each of the Company and its Subsidiaries has (i) timely paid all material Taxes it is required to pay (whether or not shown on a Tax Return), and (ii) timely paid or withheld (and timely paid over any withheld amounts to the appropriate Taxing authority) all material federal and state income Taxes, Federal Insurance Contribution Act and Federal Unemployment Tax Act amounts, and other Taxes (including all Taxes required to be reported and withheld on any U.S or non-U.S. Company Compensatory Awards) required to be withheld.

(c)    Neither the Company nor any of its Subsidiaries had any Liabilities for material unpaid Taxes as of the date of the Balance Sheet that had not been accrued or reserved on the Balance Sheet in accordance with GAAP, and neither the Company nor any of its Subsidiaries has incurred any Liability for Taxes since the date of the Balance Sheet other than in the ordinary course of business consistent with past practice.

(d)    Neither the Company nor any of its Subsidiaries has executed any outstanding waiver of any statute of limitations on or extension of the period for the assessment or collection of any Tax.

(e)No audit or other examination of any Tax Return of the Company or any of its Subsidiaries is presently in progress, nor has the Company or any of its Subsidiaries been notified in writing of any request for such an audit or other examination. No material adjustment relating to any Tax Return filed by the Company has been proposed in writing by any Governmental Entity. No written claim has ever been made by any Governmental Entity that the Company or any of its Subsidiaries is or may be subject to taxation in a jurisdiction

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in which it neither pays Taxes nor files Tax Returns.

(f)    There are no Liens on the assets of the Company or any of its Subsidiaries relating or attributable to Taxes, other than Permitted Liens.

(g)Neither the Company nor any of its Subsidiaries has (i) ever been a member of an affiliated group (within the meaning of Code §1504(a)) filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company), (ii) ever been a party to any Tax sharing, indemnification or allocation agreement, other than among the Company and its Subsidiaries, nor does the Company or any of its Subsidiaries owe any amount under any such agreement, (iii) any Liability for the Taxes of any person other than the Company and its Subsidiaries under Treas. Reg. § 1.1502-6 (or any similar provision of Applicable Law, including any arrangement for group or consortium relief or similar arrangement), as a transferee or successor, by contract, by operation of law or otherwise (other than pursuant to customary commercial Contracts not primarily related to Taxes) or (iv) during the period beginning five (5) years prior to the date hereof, been a party to any joint venture, partnership or other agreement that to the Knowledge of the Company and its Senior Director of Tax could be treated as a partnership for Tax purposes (other than any joint venture, partnership or other agreement that could be treated as a partnership for Tax purposes that is a direct or indirect wholly-owned Subsidiary of the Company).

(h)    To the Knowledge of the Company and its Senior Director of Tax, neither the Company nor any of its Subsidiaries will be required to include any material income or gain or exclude any material deduction or loss from Taxable income for any period or portion thereof after the Effective Time as a result of any (i) change in method of accounting made prior to the Effective Time, (ii) closing agreement under Section 7121 of the Code entered into prior to the Effective Time, (iii) deferred intercompany gain or excess loss account under Section 1502 of the Code attributable to transactions occurring prior to the Effective Time (or in the case of clauses (i), (ii) and (iii) above, under any similar provision of Applicable Law), (iv) installment sale or open transaction disposition made prior to the Effective Time, to the extent not reflected in the Balance Sheet, or (v) prepaid amount received prior to the Effective Time.

(i)    Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code during the period beginning five (5) years prior to the date hereof or otherwise that could be treated as part of a plan (or

series of related transactions) pursuant to which the transactions contemplated by this Agreement are a part.

(j)    Neither the Company nor any of its Subsidiaries has engaged in any transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a tax avoidance transaction and identified

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by notice, regulation, or other form of published guidance as a listed transaction, as set forth in Treas. Reg. § 1.6011-4(b)(2).

(k)    The Company and each of its Subsidiaries is in full compliance with all terms and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or order (each, a “Tax Incentive”) and to the Knowledge of the Company and its Senior Director of Tax, the Merger will not have any adverse effect on the continued validity and effectiveness of any such Tax Incentive.

(l)    Each of the Company and its Subsidiaries is in compliance in all material respects with all applicable transfer pricing laws and regulations, including, where applicable, the execution and maintenance of contemporaneous documentation substantiating its transfer pricing practices and methodology. To the extent required by Applicable Law, the prices for any property or services (or for the use of any property) provided by or to the Company or any of its Subsidiaries are arm’s length prices for purposes of the relevant transfer pricing Applicable Laws, including Treasury Regulations promulgated under Section 482 of the Code.

(m)The Company has made available to Parent or its legal counsel or accountants (i) copies of all material income, franchise and other Tax Returns and all ASC 740-10 work papers of the Company and each of its Subsidiaries for all periods from and including March 1, 2009, and (ii) copies of all U.S. federal income Tax Returns of the Company for all periods from and including March 1, 2008.

3.17Environmental Matters.

(a)Except as has not resulted in and would not reasonably be expected to result in material liability to the Company and its Subsidiaries, taken as a whole:

(i)(A) the Company and its Subsidiaries are, and since January 1, 2010 have been, in compliance in all material respects with all applicable Environmental Laws; (B) to the Knowledge of the Company, all Company Products comply, to the extent applicable, with the restricted substance requirements of the EU RoHS Directives; and (C) to the Knowledge of the Company, no Company Product fails to comply with any applicable Environmental Law;

(ii)(A) the Company and its Subsidiaries hold and maintain all of the Environmental Permits necessary for the continued conduct of any Hazardous Material Activity of the Company or any Subsidiary as such activities are currently being conducted; (B) all such Environmental Permits are valid and in full force and effect; (C) the Company and its Subsidiaries are in compliance with all covenants and conditions of all such Environmental Permits; and (D) no circumstances exist which could cause any Environmental Permit to be revoked, modified, or rendered non-renewable upon payment of the permit fee;

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(iii)    no Legal Proceeding is pending, or to the Knowledge of the Company, threatened, concerning or relating to any Environmental Permit or any Hazardous Materials Activity of the Company or any Subsidiary relating to the business, or any Business Facility, and neither the Company nor any Subsidiary has received any written information request from any Governmental Entity pursuant to CERCLA or a similar state Environmental Law; and

(iv)    neither the Company nor any of its Subsidiaries has engaged in any Hazardous Materials Activity that is reasonably likely to result in a Legal Proceeding under Environmental Law or a requirement for investigation or remedial action under applicable Environmental Law.

(b)The Company has delivered or made available to Parent all material records in the Company’s and its Subsidiaries’ possession concerning the Hazardous Materials Activities of the Company and its Subsidiaries, including all notices of non-compliance or violation of Environmental Laws and all environmental audits and environmental assessments of any Business Facility.

3.18Employee Benefit Plans.

(a)Sections 3.18(a) of the Company Disclosure Letter sets forth a complete and accurate list of all material Employee Plans. With respect to each Employee Plan, to the extent applicable, the Company has made available to Parent complete and accurate copies of (i) the most recent annual report on Form 5500 required to have been filed with the IRS for each Employee Plan, including all schedules thereto; (ii) the most recent determination letter, if any, from the IRS for any Employee Plan that is intended to qualify under Section 401(a) of the Code; (iii) the plan documents and summary plan descriptions, if any, including any amendments or statements of material modifications thereto, or a written description of the terms of any Employee Plan that is not in writing; (iv) any related trust agreements, insurance contracts, insurance policies or other documents of any funding arrangements; (v) any notices since January 1, 2007 to or from the IRS or any office or representative of the DOL or any similar Governmental Entity relating to any compliance issues in respect of any such Employee Plan; (vi) with respect to each International Employee Plan, to the extent applicable, the Company has made available to Parent complete and accurate copies of (A) the most recent annual report or similar compliance documents required to be filed with any Governmental Entity with respect to such plan, if any, and (B) any document comparable to the determination letter referenced under clause (ii) above issued by a Governmental Entity, if any; and (vii) all

other material Contracts directly relating to each Employee Plan, including administrative service agreements.

(b)Each Employee Plan has been maintained, operated and administered in compliance in all material respects with its terms and with all Applicable Law, including the applicable provisions of ERISA and the Code, and, to the Knowledge of the Company,

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there is no circumstance that exists that would materially affect such compliance.

(c)    Each Employee Plan that is intended to be “qualified” under Section 401 of the Code may rely on an unrevoked favorable prototype opinion letter or has received a favorable determination letter from the IRS with respect to such Employee Plan’s tax-qualified status under the Code and nothing has occurred or exists since the date of such determination or opinion letter that would reasonably be expected to materially and adversely affect the qualified status of any such Employee Plan.

(d)    All contributions, premiums and other payments required to be made with respect to any Employee Plan have been timely made, accrued or reserved for, except as would not be expected to result in a material liability. Except as required by Applicable Law or the terms of an Employee Plan, neither the Company nor any of its Subsidiaries has any plan or commitment to establish any new material Employee Plan or amend in any material respect an existing Employee Plan.

(e)    There are no material Legal Proceedings pending or, to the Knowledge of the Company, threatened on behalf of or against any Employee Plan, the assets of any trust under any Employee Plan, or the plan sponsor, plan administrator or any fiduciary or any Employee Plan with respect to the administration or operation of such plans, other than routine claims for benefits that have been or are being handled through an administrative claims procedure.

(f)    None of the Company, any of its Subsidiaries, or, to the Knowledge of the Company, any of their respective directors, officers, employees or agents has, with respect to any Employee Plan, engaged in or been a party to any non-exempt “prohibited transaction,” as such term is defined in Section 4975 of the Code or Section 406 of ERISA, which could reasonably be expected to result in the imposition of a material penalty assessed pursuant to Section 502(i) of ERISA or a material tax imposed by Section 4975 of the Code.

(g)    Neither the Company, any of the its Subsidiaries nor any of their respective ERISA Affiliates has in the six (6) years prior to the date hereof maintained, participated in or contributed to (or been obligated to contribute to) (i) an Employee Plan subject to Section 412 of the Code or Title IV of ERISA, (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (iii) a “multiple employer plan” as defined in Section 210 of ERISA or Section 413(c) of the Code, (iv) a “funded welfare plan” within the meaning of Section 419 of the Code or (v) a voluntary employees’ beneficiary association under Section 501(c)(9) of the Code.

(h)    No Employee Plan provides post-termination or retiree life insurance, health or other welfare benefits to any person, other than pursuant to Section 4980B of the Code or any similar Applicable Law.

(i)    Each Employee Plan that is subject to Section 409A of the Code has

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been operated and administered in material compliance with Section 409A of the Code. All Company Options and Company Stock Appreciation Rights have been granted at a per share exercise price that is at least equal to the fair market value of a share of the underlying Company Common Stock as of the date the Company Option or Company Stock Appreciation Right was granted, as determined in accordance with Applicable Law, including Section 409A of the Code.

(j)    Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement (including the Merger) will, either alone or in conjunction with any other event, (i) result in any material payment or benefit becoming due or payable, or required to be provided, to any director, employee, consultant or independent contractor of the Company or any of its Subsidiaries, (ii) materially increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee, consultant or independent contractor, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation or (iv) result in the payment of any amount that would not be deductible by reason of Section 280G of the Code. There is no contract, agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party or by which it is bound to compensate any current or former employee or other disqualified individual for excise taxes which may be required pursuant to Section 4999 of the Code or any Taxes required by Section 409A of the Code.

(k)    No International Employee Plan has Liabilities, other than those Liabilities that would not reasonably be expected to be material to the Company and its Subsidiaries taken as a whole, that as of the Closing Date will not be offset in full by insurance or otherwise be fully accrued.

(l)Section 3.18(l) of the Company Disclosure Letter sets forth a complete and accurate list of all participants in the Company Executive Severance Plan. All participants in the Company’s Non-Executive Severance Plan are United States domestic employees.

3.19Labor Matters.

(a)Neither the Company nor any of its Subsidiaries is a party to any Contract or arrangement between or applying to, one or more employees or other service providers and a union, trade union, works council, group of employees or any other employee representative body, for collective bargaining or other negotiating or consultation purposes or reflecting the outcome of such collective bargaining or negotiation or consultation with respect to their respective employees with any labor organization, union, group, association, works council or other employee representative body, or is bound by any equivalent national or sectoral agreement (“Collective Bargaining Agreements”). There are no pending material activities or proceedings or, to the Knowledge of the Company, threatened or reasonably anticipated by any works council, union, trade union, or other labor-relations organization or entity (“Labor Organization”) to organize any such employees. There are no lockouts, strikes,

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slowdowns, work stoppages or, to the Knowledge of the Company, threats thereof by or with respect to any employees of the Company or any of its Subsidiaries nor have there been any such lockouts, strikes, slowdowns or work stoppages or threats thereof with respect to any employees of the Company or any of its Subsidiaries, except in each case as would not be material to the Company. The consummation of the transactions contemplated by this Agreement (including the Merger) will not entitle any person (including any Labor Organization) to any payments under any Collective Bargaining Agreement, or require the Company or any of its Subsidiaries to consult with, provide notice to, or obtain the consent or opinion of any Labor Organization. Except as would not be expected to result in a material liability, neither the Company nor any of its Subsidiaries, nor to the Knowledge of the Company any of their respective representatives or employees, has committed any unfair labor practice in connection with the operation of their respective businesses of the Company or any of its Subsidiaries, and, except as would not be expected to result in a material liability, there is no charge, complaint or other action against the Company or any of its Subsidiaries by the National Labor Relations Board or any comparable Governmental Entity pending or to the Knowledge of the Company threatened.

(b)    Except as is not and would not reasonably be expected to, individually or in the aggregate, result in a material liability to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries have complied with all Applicable Laws and Orders relating to employment, employment practices, terms and conditions of employment, worker classification (including the proper classification of workers as independent contractors and consultants and for overtime purposes), leased and seconded employees, tax withholding, prohibited discrimination, equal employment, fair employment practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, and hours of work. Neither the Company nor any of its Subsidiaries is a party to any material conciliation agreement, consent decree or other employment-related agreement or order with any Governmental Entity.

(c)Each of the Company and its Subsidiaries is in compliance in all material respects with WARN. In the past two years, (i) neither the Company nor any of its Subsidiaries has effectuated a “plant closing” (as defined in WARN) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of its business, (ii) there has not occurred a “mass layoff” (as defined in WARN) affecting any site of employment or facility of the Company or any of its Subsidiaries, and (iii) neither the Company nor any of its Subsidiaries has been affected by any transaction or engaged in layoffs or employment terminations sufficient in number, including as aggregated, to trigger application of any similar state, local or foreign law or regulation. Neither the Company nor its Subsidiaries has caused any of their respective employees to suffer an “employment loss” (as defined in WARN) during the ninety (90) day period prior to the date hereof, and there has been no termination which would trigger any notice or other obligations under WARN.

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3.20Real Property.

(a)Neither the Company nor any of its Subsidiaries owns any real property.

(b)Section 3.20(b)(i) of the Company Disclosure Letter contains a complete and accurate list of all of the existing leases, subleases, licenses, or other agreements under which the Company or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, any real property (collectively, the “Leases” and, such property, the “Real Property”). The Company has heretofore made available to Parent true and correct copies of all Leases. Each Lease is valid and binding on the Company (and/or each such Subsidiary of the Company, as the case may be) and is in full force and effect, and neither the Company nor any of its Subsidiaries party thereto, nor, to the Knowledge of the Company, any other party thereto, is in breach of, or default under, any such Lease, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder by the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any other party thereto, except in each of the foregoing cases as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries has received any written notice or other written communication regarding any actual or possible violation or breach of or default under, or intention to cancel or modify, any Lease, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. Section 3.20(b)(ii) of the Company Disclosure Letter contains a complete and accurate list of all of the existing leases, subleases, licenses, or other agreements granting to any Person, other than the Company or any of its Subsidiaries, any material right to use or occupy, now or in the future, any of the Real Property. Neither the Company nor any of its Subsidiaries owes broker commissions with respect to any Real Property that have not been accrued on the Balance Sheet and that, individually or in the aggregate, would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. The Company or its Subsidiaries have valid leasehold estates in the Real Property, subject to no Liens other than Permitted Liens, except as, individually or in the aggregate, would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.

3.21Assets; Personal Property. The machinery, equipment, furniture, fixtures and other tangible personal property and assets owned, leased or used by the Company or any of its Subsidiaries (the “Assets”) are, in the aggregate, sufficient and adequate in all material respects to carry on their respective businesses in all material respects as presently conducted, and such Assets are in good operating condition and repair in all material respects (ordinary wear and tear and ongoing maintenance excepted). Except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are in possession of and have good title to, or valid leasehold interests in or valid rights under contract to use such Assets.

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3.22Intellectual Property.

(a)Section 3.22(a) of the Company Disclosure Letter contains a complete and accurate list of all Company Products and all Domain Names under which Company operates its business.

(b)Section 3.22(b) of the Company Disclosure Letter contains a complete and accurate list of the Company Intellectual Property Rights that are Registered IP and material unregistered Trademarks (“Company Registered IP”), in each case listing, as applicable, (i) the name of the current owner, (ii) the jurisdiction where the application/registration is located, (iii) the application or registration number, (iv) the filing date, and issuance/registration/grant date, and (v) the prosecution status thereof.

(c)    To the Knowledge of the Company, the Company Registered IP is valid, sustaining and enforceable.

(d)    To the Knowledge of the Company, with respect to each item of Company Registered IP, all necessary registration, maintenance and renewal fees have been paid.

(e)Section 3.22(e) of the Company Disclosure Letter contains a complete and accurate list of all Contracts (i) under which the Company or any of its Subsidiaries has the right to use any material Company IP, other than Shrink-Wrap Code or (ii) under which the Company or any of its Subsidiaries licenses to others the right to use any material Company Intellectual Property Rights, other than non-disclosure agreements and non-exclusive license agreements entered into in the ordinary course of business (such Contracts, the “Company IP Agreements”). The Company has made available to Parent complete and correct copies of each such Company IP Agreement. To the Knowledge of the Company, (x) each Company IP Agreement is valid and binding on the Company or the Subsidiary of the Company that is a party thereto and is in full force and effect, (y) neither the Company nor any of its Subsidiaries that are a party thereto, nor any other party thereto, is in breach of, or default under, any such Company IP Agreement, and (z) no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder by the Company or any of its Subsidiaries, in each of clauses (x), (y) and (z), except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. To the Knowledge of the Company, there are no pending material disputes regarding the scope of such Company IP Agreements, performance under the Company IP Agreements, or with respect to payments made or received under such Company IP Agreements.

(f)To the Knowledge of the Company, (i) the Company and its Subsidiaries own or have sufficient rights to use all Intellectual Property Rights that are either used in or necessary for the conduct of the business of the Company and its Subsidiaries as currently conducted, and (ii) neither the operation of the business of the Company nor the

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use, provision, support, reproduction, making, distribution, marketing, sale, license or display of the Company Products by Company or its Subsidiaries infringes or misappropriates the Intellectual Property Rights or Moral Rights of any Person, in each of clauses (i) and (ii), except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(g)    To the Knowledge of the Company, the Company and its Subsidiaries own all right, title and interest in the owned Company Intellectual Property Rights, free and clear of all Liens other than (i) obligations arising under the terms of any of the Company IP Agreements listed on Section 3.22(e) of the Company Disclosure Letter (or other Contracts that need not be listed in Section 3.22(e)) and (ii) Permitted Liens. To the Knowledge of the Company, the Company and its Subsidiaries have the exclusive right to bring actions against any person that is infringing any Company Intellectual Property Rights and to retain for themselves any damages recovered in any such action. To the Knowledge of the Company, no Person other than the Company and its Subsidiaries has ownership rights to any Company Intellectual Property Rights.

(h)The Company and each of its Subsidiaries have taken commercially reasonable steps to protect the confidentiality of the Trade Secrets that comprise any part of the Company Intellectual Property Rights, and to the Knowledge of the Company, there is no unauthorized use, disclosure or misappropriation of any such Trade Secrets by any Person. To the Knowledge of the Company, all use and disclosure of Trade Secrets owned by another Person by the Company or any of its Subsidiaries have been pursuant to the terms of a written agreement with such Person or such use and disclosure by the Company or any of its Subsidiaries was otherwise lawful, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. Without limiting the foregoing, the Company and its Subsidiaries have a policy requiring employees, consultants and contractors to execute a confidentiality and assignment agreement which (i) assigns to the Company or one of its Subsidiaries all right, title and interest in any Intellectual Property Rights created by such persons within the scope of their involvement with the Company or applicable Subsidiary and (ii) provides reasonable protection for Trade Secrets of the Company and its Subsidiaries. To the Knowledge of the Company, to the extent permissible under Applicable Law, all current or former employees, consultants and contractors of the Company or any Subsidiary that have created any Company Intellectual Property Rights have executed such agreements, and no party to any such agreement is in breach thereof.

(i)    To the Knowledge of the Company, no Person is infringing upon or otherwise violating any Company Intellectual Property Rights, and neither the Company nor any of its Subsidiaries have asserted or threatened any claim against any Person alleging the same that remains unresolved, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

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(j)There is no unresolved Legal Proceeding brought by a third party that has been served upon, filed or, to the Knowledge of the Company, threatened with respect to (i) any alleged infringement or other violation by the Company or any of its Subsidiaries or any of its or their current products or services or other operation of the Company’s or any of its Subsidiaries’ business of the Intellectual Property Rights of such third party or (ii) any challenge to the validity or enforceability of, or contesting the Company’s or any of its Subsidiaries’ rights with respect to, any Company Intellectual Property Rights except, in each of clauses (i) and (ii), as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. The Company and its Subsidiaries are not subject to any Order of any Governmental Entity that materially restricts or impairs the use, transfer or licensing of any Company Intellectual Property Rights.

(k)    To the Knowledge of the Company, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (including the Merger) will not result in any of the following events that, but for the consummation of the transactions contemplated hereby, would not have occurred: (i) the Company or its Subsidiaries granting to any third party any rights or licenses to any Company Intellectual Property Rights, except to the extent currently licensed, (ii) the vesting of any right of termination or cancellation of the counterparty under any Company IP Agreement, (iii) any payment of fees, penalties or royalties under any Company IP Agreement (other than user, seat-based or similar fees), (iv) a change in the scope of any Intellectual Property Rights granted to, or by, the Company or its Subsidiaries, (v) the imposition of any Lien on any owned Company Intellectual Property Rights (other than Permitted Liens), or (vi) after the Merger, Parent or any of its Subsidiaries or Affiliates being required to grant any third party any rights or licenses to any of Parent’s or any of its Subsidiaries’ or Affiliates’ Intellectual Property Rights (except with respect to the Company Intellectual Property Rights), in each of clauses (i) through (vi), except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(l)    Except as set forth in Section 3.22(l) of the Company Disclosure Letter, no Software that constitutes Public Software was or is contained or included in, incorporated into, or integrated with any Company Product. Section 3.22(l) of the Company Disclosure Letter sets forth a list of all such Public Software, including: (i) the name of the Public Software; (ii) the website at which the license terms are available; (iii) the applicable Company Product referred to in the first sentence of this Section 3.22(l); and (iv) whether or not the Public Software has been modified or distributed.

(m)    The Company and its Subsidiaries are in full compliance with all Public Software license agreements to which the Company or a Subsidiary, as applicable, is a party, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(n)    To the Knowledge of the Company, neither the Company nor any of

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its Subsidiaries have published or disclosed any Source Code owned by the Company or its Subsidiaries, except to their employees, customers or advisers pursuant to non-disclosure agreements, commercial agreements or license agreements subject to confidentiality obligations, nor has any other Person done so, except as authorized by the Company under a non-disclosure agreement, commercial agreement or license agreement subject to confidentiality obligations, in each case, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. The consummation of the transactions contemplated hereby (including the Merger) will not constitute a condition sufficient to entitle the beneficiary under any Source Code escrow arrangement under which the Company or any of its Subsidiaries have deposited any material Source Code for any Company Product to require release of such Source Code.

(o)To the Knowledge of the Company, all personally identifiable information which has been collected, stored, maintained or otherwise used by the Company and its Subsidiaries has been collected, stored, maintained and used in accordance with all Applicable Laws, Contracts, and Company policies and industry standards, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. To the Knowledge of the Company, neither the Company nor its Subsidiaries has received a notice of noncompliance with Applicable Laws, Contracts or Company policies related to personally identifiable information.

(p)    To the Knowledge of the Company, there are no material defects or errors in the Company Products or any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or hardware components that permit unauthorized access or the unauthorized disruption, impairment, disablement or erasure of such Company Product or data or other software of users of the Company Products.

(q)    The Company and its Subsidiaries have taken reasonable steps and implemented reasonable procedures to prevent viruses and other disabling codes from entering Company Products and to otherwise safeguard the information technology systems, and personally identifiable information contained therein, of the Company and its Subsidiaries. To the Knowledge of the Company, there have been no material unauthorized intrusions or breaches of the security of information technology systems of the Company and its Subsidiaries. The Company and its Subsidiaries have reasonable disaster recovery plans procedures and facilities for the business.

(r)    Section 3.22(r) of the Company Disclosure Letter sets forth a true and complete list of all industry standards bodies or similar organizations in which the Company and/or any of its Subsidiaries is a member. To the Knowledge of the Company, there is no obligation to license any of the Company Intellectual Property Rights to any third party as a result of participation or membership in any standards body or similar organization. To the Knowledge of the Company, the Company and its Subsidiaries are in material compliance with their current membership in such organizations.

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(s)To the Knowledge of the Company, no rights have been granted to any Governmental Entity with respect to any Company Product other than substantially the same standard commercial rights as are granted by the Company to commercial end users of the Company Products in the ordinary course of business consistent with past practices.

3.23Export Control and Import Laws.

(a)Since January 1, 2007, (i) the Company and each of its Subsidiaries have been in compliancewith all Applicable Laws regarding export and reexport control (“Export Controls”), including the Export Administration Regulations maintained by the U.S. Department of Commerce, trade and economic sanctions maintained by the Treasury Department’s Office of Foreign Assets Control and the International Traffic in Arms Regulations maintained by the Department of State and any applicable anti-boycott compliance regulations and (ii) the Company and its Subsidiaries have been in compliance with all applicable import Laws (“Import Restrictions”), including Title 19 of the U.S. Code and Title 19 of the Code of Federal Regulations, in each case except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(b)No Legal Proceeding is pending or, to the Knowledge of the Company, threatened, concerning or relating to any export or import activity of the Company or any of its Subsidiaries and no voluntary self disclosures have been filed by or for the Company or any of its Subsidiaries since January 1, 2007 with respect to possible violations of any Export Controls or Import Restrictions.

3.24Insurance. The Company and its Subsidiaries have material policies of insurance covering the Company, its Subsidiaries or any of their respective employees, properties or assets, including policies of life, property, title, fire, workers’ compensation, products liability, directors’ and officers’ liability and other casualty and liability insurance, in each case in a form and amount that is, to the Knowledge of the Company, in all material respects customarily carried by persons conducting business similar to that of the Company and which the Company believes is adequate for the operation of its business. As of the date hereof, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole, (a) all such insurance policies are in full force and effect, (b) no notice of cancellation has been received in connection with such policies, (c) there is no existing default or event which, with the giving of notice or lapse of time or both, would constitute a default, by any insured thereunder, (d) there is no claim pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies and (e) there has been no threatened termination of, or premium increase with respect to, any such policies.

3.25Anti-Bribery Laws. Since January 1, 2007, neither the Company nor any of its Subsidiaries (including any of their respective officers, directors, agents, employees or other Person associated with or acting on their behalf) has, directly or indirectly, (a) taken

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any action which would cause it to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations thereunder, the U.K. Bribery Act of 2010, as amended, or any other comparable foreign law or statute; (b) used any corporate funds for unlawful contributions, loans, gifts, entertainment or other unlawful expenses relating to political activity; or (c) made, offered or authorized any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns.

3.26Related Party Transactions. Except as set forth in the SEC Reports or compensation or other employment arrangements in the ordinary course of business, there are no transactions, agreements, arrangements or understandings currently in effect that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities Act.

3.27Brokers; Fees and Expenses. Except for Qatalyst Partners LP (true and correct copies of whose engagement letter has been furnished or made available to Parent), there is no investment banker, broker, finder, agent or other Person that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries who is entitled to any financial advisor’s, brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby (including the Merger).

3.28Opinion of Financial Advisors. The Company Board has received the written opinion (or an oral opinion to be confirmed in writing) of Qatalyst Partners LP to the effect that, as of the date of this Agreement, and based upon and subject to the limitations and assumptions set forth therein, the Merger Consideration is fair to the holders of Company Common Stock from a financial point of view, and, as of the date of this Agreement, such opinion has not been withdrawn, revoked or modified.

3.29State Anti-Takeover Statutes; No Rights Plan.

(a)Assuming the accuracy of the representations and warranties of the Parent and Merger Sub set forth in Section 4.6, the Company and the Company Board has taken all action necessary to exempt the Merger, this Agreement, the Voting Agreements and the other transactions contemplated hereby or thereby from the restrictions on business combinations and voting requirements contained in Section 203 of the DGCL. No other “control share acquisition,” “fair price,” “moratorium” or other antitakeover Applicable Law (such Applicable Law, including Section 203 of the DGCL, “Takeover Law”) applies to the Merger, this Agreement, the Voting Agreements or any of the other transactions contemplated hereby or thereby.

(b)The Company has no rights plan, “poison-pill” or other comparable agreement or arrangement designed to have the effect of delaying, deterring or discouraging any Person from acquiring control of the Company. To the Knowledge of the Company, no Contract entered into in by the Company since May 1, 2011 prohibits any Person from making

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any Acquisition Proposal following the execution and announcement of this Agreement.

3.30No Other Representations or Warranties. Except for the representations and warranties contained in this Article III, neither the Company nor any other Person on behalf of the Company or any of its Subsidiaries makes any other representation or warranty, express or implied, to Parent or Merger Sub with respect to the Company or any of its Subsidiaries or any of the transactions contemplated hereby.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby represent and warrant to the Company as follows:

4.1Organization and Standing. Each of Parent and Merger Sub is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its respective properties and assets. Each of Parent and Merger Sub is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary, except where the failure to be so qualified or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

4.2Authorization. Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby (including the Merger) have been duly authorized by all necessary corporate action on the part of Parent and Merger Sub, and no additional corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (including the Merger). This Agreement has been duly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Applicable Laws affecting or relating to creditors’ rights generally and (b) is subject to general principles of equity.

4.3Non-contravention; Required Consents.

(a)The execution, delivery or performance by Parent and Merger Sub of this Agreement, the consummation by Parent and Merger Sub of the transactions contemplated

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hereby (including the Merger) and the compliance by Parent and Merger Sub with any of the provisions hereof do not and will not (i) violate or conflict with any provision of the certificates of incorporation or bylaws or other constituent documents of Parent or Merger Sub, (ii) violate, conflict with or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the termination of, or materially accelerate the performance required by, or result in a right of termination or material acceleration under, or result in the loss of any material benefit or the imposition of any additional material payment or other material Liability under, any Contract to which Parent or Merger Sub is a party or by which Parent, Merger Sub or any of their respective properties or assets may be bound, (iii) assuming compliance with the matters referred to in Section 4.3(b), violate or conflict with any Applicable Law or Order or (iv) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of Parent or Merger Sub, except in the case of each of clauses (ii), (iii) and (iv) above, for such violations, conflicts, defaults, terminations, accelerations or Liens which, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.

(b)No Consent of any Governmental Entity is required on the part of Parent, Merger Sub or any of their Affiliates in connection with the execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions contemplated hereby (including the Merger), except (i) the filing of the Certificate of Merger with the Delaware Secretary of State as required by Delaware Law, (ii) such filings and approvals as may be required by any federal or state securities laws, including compliance with any applicable requirements of the Exchange Act, (iii) compliance with any applicable requirements of the HSR Act and any other Antitrust Laws and (iv) such other Consents, the failure of which to obtain, individually or in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect.

4.4Litigation. As of the date hereof, there are no Legal Proceedings pending or, to the knowledge of Parent, threatened against Parent or Merger Sub or any of their Affiliates that would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. As of the date hereof, neither Parent nor Merger Sub nor any of their Affiliates is subject to any outstanding Order that would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

4.5Proxy Statement. The information supplied by Parent, Merger Sub or their respective officers, directors, representatives, affiliates, agents or employees for inclusion in Proxy Statement, will not, at the time the Proxy Statement is filed with the SEC or at the time of any amendment or supplement thereto, or on the date the Proxy Statement is first sent to stockholders of the Company or at the time of the Company Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

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4.6Operations of Merger Sub. Merger Sub has engaged in no other business activities other than those related to the transactions contemplated by this Agreement. Merger Sub is a direct wholly-owned Subsidiary of Parent.

4.7Section 203 of the DGCL. Neither Parent nor Merger Sub is, nor at any time for the past three years has been, an “interested stockholder” of the Company as defined in Section 203 of the DGCL.

4.8Funds. Parent currently has, and will have (and will cause Merger Sub to have) immediately prior to the Effective Time, sufficient funds to pay the aggregate Merger Consideration contemplated by this Agreement and to perform the other obligations of Parent and Merger Sub contemplated by this Agreement.

ARTICLE V

INTERIM CONDUCT OF BUSINESS

5.1Affirmative Obligations of the Company. Except as (a) expressly required or permitted by this Agreement, (b) set forth in Section 5.1 or Section 5.2 of the Company Disclosure Letter or (c) approved in advance by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed), at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, (i) the Company and each of its Subsidiaries shall carry on its business in the ordinary course consistent with past practice and (ii) to the extent consistent with the foregoing, the Company and each of its Subsidiaries shall use commercially reasonable efforts to (A) keep available the services of its directors, officers and key employees and (B) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has significant business dealings.

5.2Negative Obligations of the Company. Except as (w) expressly required or permitted by this Agreement, (x) set forth in Section 5.1 or Section 5.2 of the Company Disclosure Letter or (y) approved in advance by Parent in writing (which approval shall not be unreasonably withheld, conditioned or delayed), at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall not do any of the following and shall not permit its Subsidiaries to do any of the following:

(a)amend its certificate of incorporation or bylaws or comparable organizational documents;

(b)issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any Company

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Securities or any Subsidiary Securities, other than (i) the issuance and sale of shares of Company Common Stock pursuant to Company Compensatory Awards outstanding as of or prior to the date hereof, (ii) grants to newly hired employees of Company Compensatory Awards issued in the ordinary course of business consistent with past practice or (iii) pursuant to the Company ESPP or any 401(k) plans maintained by the Company or any of its Subsidiaries;

(c)    acquire or redeem, directly or indirectly, any Company Securities or Subsidiary Securities other than (i) in full or partial payment of the exercise price and any applicable Taxes pursuant to any exercise, vesting or settlement of Company Compensatory Awards or (ii) pursuant to the forfeiture of any Company Compensatory Awards;

(d)    other than dividends or distributions made by any direct or indirect wholly-owned Subsidiary of the Company to the Company or one of its Subsidiaries, split, combine or reclassify any shares of capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock;

(e)    adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the transactions contemplated hereby, including the Merger);

(f)(i) incur or assume any long-term or short-term debt or issue any debt securities, except for (A) short-term debt incurred to fund operations of the business in the ordinary course of business consistent with past practice and (B) loans or advances to or from direct or indirect wholly-owned Subsidiaries, (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person except with respect to obligations of direct or indirect wholly-owned Subsidiaries of the Company, (iii) make any loans, advances or capital contributions to or investments in any other Person except for routine advances in the ordinary course of business consistent with past practice to employees of the Company or any of its Subsidiaries or (iv) mortgage or pledge any of its or its Subsidiaries’ material assets, tangible or intangible, or voluntarily create or suffer to exist any Lien thereupon (other than Permitted Liens) other than in the ordinary course of business consistent with past practice;

(g)except as may be required by Applicable Law or as required by the terms of any Employee Plan as in effect as of the date hereof, enter into, adopt, amend (including acceleration of vesting), modify or terminate any bonus, profit sharing, compensation, severance, termination, option, restricted stock, restricted stock unit, appreciation right, performance unit, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the compensation, benefit or welfare of any director, officer, consultant or independent contractor or, other than in the ordinary course

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of business consistent with past practice, any employee, in each case, in any manner or increase in any manner the compensation or fringe benefits of any director, officer or, other than in the ordinary course of business consistent with past practice, employee, pay any special bonus or special remuneration to any director, officer, consultant, independent contractor or employee, or pay any benefit not required by any plan or arrangement as in effect as of the date hereof, other than, with respect to non-officer employees, in the ordinary course of business consistent with past practice;

(h)    forgive any loans to any employees, officers or directors of the Company or any of its Subsidiaries, or any of their respective Affiliates;

(i)    make any deposits or contributions of cash or other property to or take any other action to fund or in any other way secure the payment of compensation or benefits under the Employee Plans or agreements subject to the Employee Plans or any other Contract of the Company other than deposits and contributions that are required pursuant to the terms of the Employee Plans or any agreements subject to the Employee Plans in effect as of the date hereof;

(j)    enter into, amend, or extend any Collective Bargaining Agreement;

(k)    other than terminations or demotions in the ordinary course of business consistent with past practice, hire, terminate, demote or promote or offer to hire, terminate, demote or promote any employees at the level of director or above or potential employee at the level of director or above, or encourage any employee at the level of director or above to resign from or terminate his relationship with the Company or any of its Subsidiaries, in each case, other than as expressly contemplated by this Agreement;

(l)    acquire, sell, lease, license or dispose of any property or assets material to the Company and its Subsidiaries, taken as a whole, in any single transaction or series of related transactions, except in the ordinary course of business consistent with past practice;

(m)except as may be required as a result of a change in Applicable Law or in GAAP, make any change in any of the accounting principles or practices used by it;

(n)    (i) make (other than in accordance with past practice) or change any material Tax election, (ii) amend any material Tax Return, (iii) settle or compromise any material Liability for Taxes, (iv) adopt or change any material Tax accounting method or (v) consent to any extension or waiver of any limitation period with respect to any material claim or assessment for Taxes;

(o)    (i) enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee) or (ii) modify, amend or exercise any right to renew any lease or sublease of real property or waive or violate any term or condition thereof or grant any consents thereunder;

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(p)    abandon, cancel or allow to lapse or fail to maintain or protect any material Company Intellectual Property Rights;

(q)    (i) acquire (by merger, consolidation or acquisition of stock or assets) any other Person or any equity interest therein, (ii) other than in the ordinary course of business consistent with past practice, enter into, renew, amend or grant any release or relinquishment of any material rights under any Material Contract or Company IP Agreement or (iii) other than capital expenditures contemplated by the Company’s capital expenditures set forth in Section 5.2(q) of the Company Disclosure Letter, incur any new capital expenditure(s) that, individually or in the aggregate, would create obligations to the Company or any of its Subsidiaries in excess of $300,000;

(r)    settle or compromise any pending or threatened Legal Proceeding other than the settlement or compromise of a Legal Proceeding (i) reflected or reserved against in full in the Balance Sheet or (ii) that does not include any obligation (other than the payment of money of $300,000 or less) to be performed by the Company or its Subsidiaries following the Effective Time that is or would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole;

(s)except as required by Applicable Law or GAAP, revalue in any material respect any of its properties or assets including writing-off notes or accounts receivable other than in the ordinary course of business consistent with past practice; or

(t)authorize, commit or enter into a Contract to do any of the foregoing.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1No Solicitation.

(a)The Company and its Subsidiaries shall, and shall direct their respective Representatives to, immediately cease and cause to be terminated, and shall not authorize or knowingly permit any of the Company’s or its Subsidiaries’ Representatives to continue, any and all existing activities, discussions or negotiations with any Third Party conducted heretofore with respect to any Acquisition Proposal. The Company shall promptly (and in any event within three (3) Business Days following the date hereof) request in writing that each Third Party that has executed a confidentiality agreement since the date which is one year prior to the date of this Agreement in connection with its consideration of acquiring the Company or any material portion thereof return all confidential information heretofore furnished to such Third Party by or on behalf of the Company, and the Company shall use its reasonable best efforts to have such information returned or destroyed (to the extent destruction of such information is permitted by such confidentiality agreement).

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(b)At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company and its Subsidiaries shall not (and shall not authorize or knowingly permit any of their Representatives to), directly or indirectly, (i) solicit, initiate, or knowingly encourage, facilitate or induce the making, submission or announcement of an Acquisition Proposal or the making of any inquiry, offer or proposal that would reasonably be expected to lead to an Acquisition Proposal, (ii) furnish to any Third Party any non-public information relating to the Company or any of its Subsidiaries for the purpose of assisting or facilitating the making of an Acquisition Proposal or any inquiry, offer or proposal that would reasonably be expected to lead to an Acquisition Proposal, (iii) participate or engage in discussions or negotiations with respect to an Acquisition Proposal with any Third Party that is seeking to make or has made an Acquisition Proposal or (iv) execute or enter into any letter of intent, memorandum of understanding or Contract contemplating or otherwise relating to an Acquisition Transaction (other than a confidentiality agreement pursuant to this Section 6.1(b)); provided, however, that notwithstanding the foregoing, prior to obtaining the Requisite Stockholder Approval, the Company Board may, directly or indirectly through any Representative, with respect to any Third Party that has made (and not withdrawn) a bona fide written Acquisition Proposal after the date of this Agreement that did not result from a breach of this Section 6.1 that the Company Board concludes in good faith (after consultation with its financial advisor and its outside legal counsel) constitutes or is reasonably likely to lead to a Superior Proposal, (A) engage or participate in discussions or negotiations with such Third Party and its Representatives and/or (B) furnish to such Third Party and its Representatives any information (including non-public information) relating to the Company or any of its Subsidiaries pursuant to a confidentiality agreement the terms of which are no less favorable to the Company than those contained in the Confidentiality Agreement (provided that such confidentiality agreement need not contain any “standstill” or similar provision that would prohibit such Third Party from making any Acquisition Proposal) and containing additional provisions that expressly permit the Company to comply with the terms of this Section 6.1 (which confidentiality agreement shall be provided to Parent for informational purposes immediately following the execution and delivery thereof), provided that in the case of any action taken pursuant to the foregoing clauses (A) or (B), (1) the Company Board determines in good faith (after consultation with outside legal counsel) that the failure to take such action would reasonably be likely to constitute a breach of its fiduciary duties to stockholders of the Company under Delaware Law, (2) solely with respect to the initial contact with respect to any Third Party, at least twenty-four (24) hours  prior to engaging or participating in any such discussions or negotiations with, or furnishing any non-public information to, such Third Party, the Company shall have provided the notice required by Section 6.1(d) (and if such Acquisition Proposal is in written form, the Company shall give Parent a copy thereof) and notice of the Company’s intention to engage or participate in discussions or negotiations with, or furnish non-public information to, such Third Party and (3) contemporaneously with furnishing any non-public information to such Person, the Company furnishes such non-public information to Parent (to the extent such information has not been previously furnished or made available by the Company to Parent or any of its Representatives).

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(c)Without limiting the generality of the foregoing, Parent, Merger Sub and the Company acknowledge and hereby agree that any action taken by any Representative of the Company or any of its Subsidiaries that would be a breach of the restrictions set forth in this Section 6.1 if taken by the Company shall be deemed to be a breach of this Section 6.1 by the Company for all purposes of and under this Agreement; provided, however, that any such action taken by any Representative of the Company or any of its Subsidiaries (other than any member of the Company Board, the Company Board’s financial advisor or outside legal counsel or any Senior Member of Management) shall not be deemed to be a breach of this Section 6.1 by the Company, unless such action was authorized, directed or knowingly permitted by any member of the Company Board or any Senior Member of Management.

(d)    The Company shall promptly, and in all cases within twenty-four (24) hours of its receipt, advise Parent orally and in writing of its receipt of any Acquisition Proposal or any request for information or inquiry with respect to, or that would reasonably be expected to lead to, an Acquisition Proposal, including the terms and conditions of, and identity of the Person or group making, such Acquisition Proposal, request or inquiry.

(e)    The Company shall keep Parent promptly informed of the status and material terms and conditions (including all material amendments or proposed amendments) of any such Acquisition Proposal, request or inquiry and, promptly upon receipt of any written material amendment or written proposed amendment of any such Acquisition Proposal, the Company shall give Parent a copy thereof. In addition to the foregoing, the Company shall provide Parent with written notice at least seventy-two (72) hours (or such shorter period as may be provided to the members of the Company Board) in advance of a meeting of the Company Board at which the Company Board is reasonably expected to consider an Acquisition Proposal, an inquiry relating to a potential Acquisition Proposal, or a request to provide non-public information to any Person.

6.2Company Board Recommendation; Intervening Events.

(a)Subject to the terms of this Section 6.2, the Company Board shall (i) unanimously recommend that the Company’s stockholders adopt this Agreement in accordance with the applicable provisions of Delaware Law (the “Company Board Recommendation”) and (ii) include the Company Board Recommendation in the Proxy Statement.

(b)Subject to the terms of this Section 6.2, at all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, neither the Company Board nor any committee thereof shall (i) withdraw, amend or modify (or publicly propose to withhold, withdraw, amend or modify) in a manner adverse to Parent or Merger Sub, the Company Board Recommendation, (ii) approve, endorse, adopt or recommend, or publicly propose to approve, endorse, adopt or recommend, any Acquisition Proposal or Superior Proposal, (iii) fail to recommend against acceptance of any tender offer

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or exchange offer for the Company Common Stock that constitutes an Acquisition Proposal within ten (10) Business Days after the commencement of such offer, or (iv) resolve or publicly propose to take any of the foregoing actions (any of the foregoing, a “Company Board Recommendation Change”; provided that, for the avoidance of doubt, the Company’s delivery to Parent of any notice contemplated by Section 6.2(c) shall not be deemed to be a Company Board Recommendation Change).

(c)Notwithstanding anything to the contrary set forth in this Agreement, the Company Board may effect a Company Board Recommendation Change at any time prior to obtaining the Requisite Stockholder Approval, if and only if:

(i)(A) the Company Board has received a Superior Proposal, (B) the Company Board determines in good faith (after consultation with outside legal counsel) that the failure to effect such Company Board Recommendation Change would reasonably be likely to constitute a breach of its fiduciary duties to stockholders of the Company under Delaware Law, (C) prior to effecting such Company Board Recommendation Change, the Company shall have (1) given Parent at least four (4) Business Days notice (the “Notice Period”) of its intention to take such action (which notice shall include the most current version of the proposed definitive agreement and, to the extent not included therein, all material terms and conditions of such Superior Proposal and the identity of the Person making such Superior Proposal) and (2) caused its financial and legal advisors to, during the Notice Period, negotiate with Parent in good faith any modifications to the terms and conditions of this Agreement proposed by Parent, in its discretion, and (D) Parent shall not have made, within the Notice Period, a written counter-offer or proposal capable of acceptance that the Company Board determines in good faith, after consultation with its financial advisor and its outside legal counsel, is at least as favorable, from a financial point of view, to stockholders of the Company, in their capacity as such, as such Superior Proposal (it being understood that (x) any material revision to the terms of a Superior Proposal, including any revision in price, shall require a new notice pursuant to clause (C) above and (y) there may be more than one Notice Period; or

(ii)(A) a material fact, event, change, development or set of circumstances occurs or exists after the date of this Agreement with respect to the business, operations, financial condition or results of operations of the Company or any of its Subsidiaries (and not relating in any way to (x) an Acquisition Proposal or (y) any fluctuation in the market price or trading volume of the Company Common Stock, in and of itself) that was not known to the Company Board nor reasonably foreseeable by the Company Board as of or prior to the date of this Agreement (such material fact, event, change, development or set of circumstances, an “Intervening Event”) shall have occurred and be continuing, (B) the Company Board determines in good faith (after consultation with outside legal counsel) that the failure to effect such Company Board Recommendation Change would be reasonably likely to constitute a breach of its fiduciary duties to stockholders of the Company under Delaware Law, (C) prior to effecting such Company Board Recommendation Change, the Company shall have (1) given Parent at least four (4) Business Days’ prior written notice of

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its intention to take such action (which notice shall include a written explanation of the Company Board’s basis and rationale for proposing to effect such Company Board Recommendation Change) and (2) if requested by Parent, negotiated with Parent in good faith during such four (4) Business Day notice period any modifications to the terms of this Agreement proposed by Parent, in its discretion, and (D) Parent shall not have made, within the four (4) Business Day notice period, a written offer or proposal capable of acceptance that the Company Board determines in good faith, after consultation with its financial advisor and its outside legal counsel, would obviate the need for the Company Board to effect such Company Board Recommendation Change.

(d)The Company shall ensure that any Company Board Recommendation Change (A) does not change or otherwise affect the approval of this Agreement by the Company Board and (B) does not have the effect of causing any Takeover Law (including Section 203 of the DGCL) to be applicable to this Agreement, the Voting Agreements, the Merger or any of the other transactions contemplated hereby.

(e)    Nothing in this Agreement shall prohibit the Company Board from taking and disclosing to stockholders of the Company a position contemplated by Rule 14e-2(a) under the Exchange Act or complying with the provisions of Rule 14d-9 under the Exchange Act (including by issuing a “stop, look and listen” statement); provided that any statement(s) made by the Company Board pursuant to Rule 14e-2(a) under the Exchange Act or Rule 14d-9 under the Exchange Act other than a “stop, look and listen” communication of the type contemplated by Section 14d-9(f) of the Exchange Act or any similar communication to stockholders of the Company shall be deemed to be a Company Board Recommendation Change unless the Company Board expressly publicly reaffirms the Company Board Recommendation in such communication.

(f)The Company shall not take any action to (i) approve any transaction under, or any Third Party becoming an “interested stockholder” under, Section 203 of the DGCL, (ii) exempt any Person (other than Parent, Merger Sub and their respective Affiliates) from the provisions on “business combinations” contained in any Takeover Law or (iii) otherwise cause such restrictions not to apply, in each case unless such actions are taken simultaneously with a termination of this Agreement by the Company in accordance with the terms hereof.

6.3Company Stockholders’ Meeting. Subject to Applicable Law, the rules and regulations of the Nasdaq and the Company’s certificate of incorporation and bylaws, the Company shall establish a record date for, call, give notice of, convene and hold a meeting of the stockholders of the Company (the “Company Stockholders’ Meeting”) as promptly as practicable following the date of this Agreement (and in no event later than forty (40) days after the commencement of the mailing of the Proxy Statement to the Company’s stockholders) for the purpose of voting upon the adoption of this Agreement in accordance with Delaware Law. Notwithstanding the foregoing, (a) if there are insufficient shares of the Company Common Stock necessary to conduct business at the Company Stockholders’ Meeting, the

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Company may extend the date of the Company Stockholders’ Meeting to the extent (and only to the extent) the Company reasonably determines that such delay is necessary in order to conduct business at the Company Stockholders’ Meeting, (b) the Company may delay the Company Stockholders’ Meeting to the extent (and only to the extent) the Company reasonably determines that such delay is required by Applicable Law, including to comply with comments made by the SEC with respect to the Proxy Statement, and (c) the Company may delay the Company Stockholders’ Meeting to the extent (and only to the extent) the Company reasonably determines that such delay is necessary to solicit sufficient proxies to secure the Requisite Stockholder Approval. Subject to Section 6.1 and Section 6.2, the Company shall solicit from stockholders of the Company proxies in favor of the adoption of this Agreement in accordance with Delaware Law and shall use its reasonable best efforts to secure the Requisite Stockholder Approval at the Company Stockholders’ Meeting. Unless this Agreement is earlier terminated pursuant to Article VIII, the Company shall establish a record date for, call, give notice of, convene and hold the Company Stockholders’ Meeting in accordance with this Section 6.3, whether or not (i) the Company Board at any time subsequent to the date hereof shall have effected a Company Board Recommendation Change or otherwise shall determine that this Agreement is no longer advisable or recommends that stockholders of the Company reject it or (ii) there occurs the commencement, disclosure, announcement or submission to the Company of any Acquisition Proposal. The Company agrees that it shall not submit to the vote of the stockholders of the Company any Acquisition Proposal (whether or not a Superior Proposal) prior to the vote of the Company’s stockholders with respect to the Merger at the Company Stockholders’ Meeting. The notice of such Company Stockholders’ Meeting shall state that a resolution to adopt this Agreement, a non-binding, advisory resolution to approve the compensation that may become payable to the Company’s named executive officers in connection with the Merger, and a resolution to adjourn the Company Stockholders’ Meeting will be considered at the Company Stockholders’ Meeting, and no other matters shall be considered or voted upon at the Company Stockholders’ Meeting without Parent’s prior written consent (not to be unreasonably withheld).

6.4Proxy Statement. As soon as practicable following the date of this Agreement, the Company shall prepare and file with the SEC, the preliminary Proxy Statement, which filing the Company shall use reasonable best efforts to complete by May 17, 2012. The Company and Parent, as the case may be, shall furnish all information concerning the Company or Parent as the other party hereto may reasonably request in connection with the preparation and filing with the SEC of the Proxy Statement. Subject to Applicable Law, the Company shall use its reasonable best efforts to cause the Proxy Statement to be disseminated to stockholders of the Company as promptly as practicable following the filing thereof with the SEC. Notwithstanding anything to the contrary set forth in this Agreement, the Company shall use its reasonable best efforts to file with the SEC the definitive Proxy Statement, and to cause the mailing of the definitive Proxy Statement to the stockholders of the Company, (i) if the Company receives comments from the SEC with respect to the preliminary Proxy Statement, on or prior to the third (3^rd) Business Day immediately following clearance by the SEC with respect to such comments, or (ii) if the Company does not receive comments from the SEC with respect to the preliminary Proxy Statement, on or prior to the third (3^rd) Business Day immediately following the expiration of the 10-day waiting period provided in Rule 14a-6

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(a) promulgated under the Exchange Act. No filing of, or amendment or supplement to, or correspondence with the SEC or its staff with respect to the Proxy Statement shall be made by the Company without providing Parent a reasonable opportunity to review and comment thereon, including in such filings, amendments, supplements and correspondence all comments reasonably and timely proposed by Parent. The Company shall advise Parent, promptly after it receives notice thereof, of any request by the SEC or its staff for an amendment or revisions to the Proxy Statement, or comments thereon and responses thereto, or requests by the SEC or its staff for additional information in connection therewith, and shall provide Parent with copies of all correspondence between the Company or any of its advisors or representatives, on the one hand, and the SEC, or its staff or any other government officials, on the other hand, with respect to the Proxy Statement or other filing with the SEC related to this Agreement or the Merger. If at any time prior to the Company Stockholders’ Meeting, any information relating to the Company or Parent, or any of their respective directors, officers or Affiliates, should be discovered by the Company or Parent which should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement does not include any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other party or parties hereto, as the case may be, and an appropriate amendment or supplement to the Proxy Statement describing such information shall be promptly prepared and filed with the SEC and, to the extent required by Applicable Law, disseminated to the stockholders of the Company. The Company shall cause the Proxy Statement to comply as to form and substance in all material respects with the applicable requirements of the Exchange Act, Delaware Law and the rules of the Nasdaq. Each of Parent and the Company shall share equally all filing and printing fees and expenses incurred in connection with this Section 6.4 (excluding, for the avoidance of doubt, all fees and expenses payable to any attorneys, accountants or other advisors incurred in connection with this Section 6.4, which shall be paid by the party incurring such expenses).

6.5Reasonable Best Efforts to Complete.

(a)Upon the terms and subject to the conditions set forth in this Agreement, each of Parent, Merger Sub and the Company shall use their reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other party or parties hereto in doing, all things reasonably necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement (including the Merger), including using reasonable best efforts to: (i) cause the conditions to the Merger set forth in Article VII hereof to be satisfied or fulfilled; (ii) obtain all necessary consents, waivers and approvals under any Material Contracts, Leases or Company IP Agreements to which the Company or any of its Subsidiaries is a party in connection with this Agreement and the consummation of the transactions contemplated hereby (including the Merger) so as to maintain and preserve the benefits under such Contracts following the consummation of the transactions contemplated hereby (including the Merger); (iii) obtain all necessary actions or non-actions, waivers, consents, approvals, Orders and authorizations from Governmental Entities, the expiration

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or termination of any applicable waiting periods, making all necessary registrations, declarations and filings (including registrations, declarations and filings with Governmental Entities, if any), and (iv) execute or deliver any additional instruments reasonably necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement.

(b)Without limiting the generality of the foregoing provisions of Section 6.5(a), as soon as may be reasonably practicable following the execution and delivery of this Agreement, each of Parent and the Company shall file with the FTC and the Antitrust Division of the DOJ a Notification and Report Form relating to this Agreement and the transactions contemplated hereby (including the Merger) as required by the HSR Act (and each of Parent and the Company shall use reasonable best efforts to file such Form within ten (10) Business Days following the execution and delivery of this Agreement), as well as comparable pre-merger notification filings, forms and submissions with any foreign Governmental Entity that may be required by the Antitrust Laws of any applicable foreign jurisdiction. Each of Parent and the Company shall promptly (i) cooperate and coordinate with the other in the making of such filings, (ii) supply the other with any information that may be required in order to effectuate such filings, (iii) supply any additional information that reasonably may be required or requested by the FTC, the DOJ or the competition or merger control authorities of any other applicable jurisdiction, and (iv) share equally all filing fees and expenses incurred in connection with filings made in connection with this Section 6.5(b) (excluding, for the avoidance of doubt, all fees and expenses payable to any attorneys, accountants or other advisors incurred in connection with this Section 6.5(b), which shall be paid by the party incurring such expenses). Each party hereto shall promptly inform the other party or parties hereto, as the case may be, of any communication from any Governmental Entity regarding any of the transactions contemplated by this Agreement (including the Merger). If any party hereto or Affiliate thereof receives a request for additional information or documentary material from any such Governmental Entity with respect to the transactions contemplated by this Agreement (including the Merger), then such party shall use reasonable best efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. Subject to Applicable Law, no filing of, or amendment or supplement to, or written correspondence with any Governmental Entity or its staff with respect to such Antitrust Laws shall be made by the Company or Parent without providing the other party a reasonable opportunity to review and comment thereon.

(c)    Without limiting the generality of the foregoing provisions of Section 6.5(a), in the event that any Takeover Law is or becomes applicable to this Agreement or any of the transactions contemplated by this Agreement (including the Merger), the Company, at the direction of the Company Board, shall use reasonable best efforts to ensure that the transactions contemplated by this Agreement (including the Merger) may be consummated as promptly as practicable on the terms and subject to the conditions set forth in this Agreement, and otherwise to minimize the effect of such statute or regulation on this Agreement and the transactions contemplated hereby (including the Merger).

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(d)Notwithstanding anything in this Agreement to the contrary, it is expressly understood and agreed that: (i) neither Parent nor Merger Sub shall have any obligation to litigate or contest any administrative or judicial action or proceeding or any decree, judgment, injunction or other order, whether temporary, preliminary or permanent; and (ii) neither Parent nor Merger Sub shall be under any obligation to make proposals, execute or carry out agreements, enter into consent decrees or submit to orders providing for (A) the sale, divestiture, license or other disposition or holding separate (through the establishment of a trust or otherwise) of any assets or categories of assets of Parent or any of its Affiliates or the Company or any of its Subsidiaries, (B) the imposition of any limitation or regulation on the ability of Parent or any of its Affiliates to freely conduct their business or own such assets, or (C) the holding separate of the shares of Company Common Stock or any limitation or regulation on the ability of Parent or any of its Affiliates to exercise full rights of ownership of the shares of Company Common Stock, other than, in the case of clauses (A), (B) or (C) above, for any such sale, divestiture, license, disposition, holding separate, limitation or regulation that would be immaterial to the Parent and/or the Company and their respective Subsidiaries, taken as a whole (any of the foregoing, an “Antitrust Restraint”).

6.6Access. At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall afford Parent and its Representatives reasonable access during normal business hours and in a manner that does not unreasonably disrupt or interfere with business operations, upon reasonable notice, to the properties, books and records, Contracts, Permits, and personnel of the Company, as Parent may reasonably request; provided, however, that no information or knowledge obtained by Parent in any investigation conducted pursuant to this Section 6.6 shall affect or be deemed to modify any representation or warranty of the Company set forth herein or the conditions to the obligations of Parent and Merger Sub to consummate the transactions contemplated hereby, including the Merger, or the remedies available to the parties hereunder; and provided further, that the terms and conditions of the Confidentiality Agreement (as amended pursuant to Section 6.9) shall apply to any information provided to Parent pursuant to this Section 6.6; and provided further, that the Company shall not be required to, nor shall the Company be required to cause its Subsidiaries to, afford access or disclose any information that in the good faith judgment of the Company would (a) violate any obligation of the Company or any of its Subsidiaries to any Third Party, (b) jeopardize protections afforded the Company or any of its Subsidiaries under the attorney-client privilege or attorney work product doctrine, or (c) violate any Applicable Law or Order. In the event that the Company does not provide access to or disclose information to Parent in reliance on the final proviso of the preceding sentence, it shall use reasonable best efforts to communicate such information in a manner that does not result in the violation of any such obligation, Law or Order or the jeopardy of such protections.

6.7Notification.

(a)At all times during the period commencing with the execution and

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delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall give prompt notice to Parent upon becoming aware (i) that any representation or warranty made by the Company in this Agreement has become untrue or inaccurate in any material respect in a manner reasonably likely to cause any condition to Closing set forth in Article VII not to be satisfied, (ii) of any failure of the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement in a manner reasonably likely to cause any condition to Closing set forth in Article VII not to be satisfied or (iii) of any Legal Proceeding pending or, to the Knowledge of the Company, threatened, or any Order, that if existing prior to the date of this Agreement would have caused the representations and warranties in Section 3.14 to be untrue or inaccurate; provided, however, that no such notification shall affect or be deemed to modify any representation or warranty of the Company set forth herein or the conditions to the obligations of Parent and Merger Sub to consummate the transactions contemplated hereby, including the Merger, or the remedies available to the parties hereunder; and provided further, that the terms and conditions of the Confidentiality Agreement (as amended pursuant to Section 6.9) shall apply to any information provided pursuant to this Section 6.7(a).

(b)At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, (i) the Company shall give prompt notice to Parent of any notice or other communication received by it from any third party, subsequent to the date of this Agreement and prior to the Effective Time, alleging any material breach of or material default under any Lease or Material Contract or Company IP Agreement to which the Company or any of its Subsidiaries is a party and (ii) each party shall give prompt notice to the other party of any notice or other communication received by it or any of its Subsidiaries from any third party, subsequent to the date of this Agreement and prior to the Effective Time, alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement (including the Merger); provided, however, that no such notification shall affect or be deemed to modify any representation or warranty set forth herein or the conditions to the obligations of any party to consummate the transactions contemplated hereby, including the Merger, or the remedies available to the parties hereunder; and provided further, that the terms and conditions of the Confidentiality Agreement (as amended pursuant to Section 6.9) shall apply to any information provided pursuant to this Section 6.7(b).

(c)At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, Parent shall give prompt notice to the Company upon becoming aware that any representation or warranty made by it or Merger Sub in this Agreement has become untrue or inaccurate in any material respect in a manner reasonably likely to cause any condition to Closing set forth in Article VII not to be satisfied, or of any failure of Parent or Merger Sub to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement in a manner reasonably likely to cause any condition to Closing set forth in Article

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VII not to be satisfied; provided, however, that no such notification shall affect or be deemed to modify any representation or warranty of Parent set forth herein or the conditions to the obligations of the Company to consummate the transactions contemplated hereby, including the Merger, or the remedies available to the parties hereunder and provided further, that the terms and conditions of the Confidentiality Agreement (as amended pursuant to Section 6.9) shall apply to any information provided pursuant to this Section 6.7(c).

6.8Certain Litigation. The Company shall promptly advise Parent orally and in writing after becoming aware of any Legal Proceeding commenced after the date hereof against the Company or any of its directors by any stockholder of the Company (on their own behalf or on behalf of the Company) relating to this Agreement or the transactions contemplated hereby (including the Merger) and shall keep Parent reasonably informed regarding any such Legal Proceeding. The Company shall give Parent the opportunity to consult with the Company regarding the defense or settlement of any such stockholder litigation and shall consider Parent’s views with respect to such stockholder litigation and shall not settle any such stockholder litigation without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed).

6.9Confidentiality. Parent, Merger Sub and the Company hereby acknowledge that Parent and the Company have previously executed a Confidentiality Agreement, dated February 22, 2012 (as amended, the “Confidentiality Agreement”), which shall continue in full force and effect in accordance with its terms; provided, however, that notwithstanding the foregoing, effective as of the execution and delivery hereof, the Confidentiality Agreement shall be deemed to be amended so as to permit Parent to make any counter-offer or proposal contemplated by Section 6.2(c) or Section 8.1(e)(ii) (which deemed amendment shall survive any termination of this Agreement in accordance with its terms or otherwise).

6.10Public Disclosure. Each of the Company and Parent shall not, without the prior written consent of the other (which consent shall not be unreasonably withheld, delayed or conditioned), issue any press release or otherwise make any public statement or any written communication to employees that would reasonably be expected to be required to be filed with the SEC or any oral communication to more than fifty (50) employees, in each case, with respect to this Agreement or the transactions contemplated hereby (including the Merger), except (a) as may be required by Applicable Law or any listing agreement with a national securities exchange, in which case the Company or Parent, as the case may be, shall make commercially reasonable efforts to consult with the other prior to any such release or public statement and (b) with regard to a Company Board Recommendation Change.

6.11Company Compensatory Awards.

(a)Company Stock Appreciation Rights.

(i)At the Effective Time, each Company Stock Appreciation Right (or portion thereof) that is outstanding and vested as of immediately prior to the Effective

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Time (or vests as a result of the consummation of the transactions contemplated hereby) (each, a “Cancelled SAR”) shall, by virtue of the Merger and at the direction of Parent (which is hereby given pursuant to this Agreement), be cancelled and terminated and converted into the right to receive an amount in cash, without interest, with respect to each share of Company Common Stock underlying such Cancelled SAR, equal to the excess, if any, of the Merger Consideration over the per share exercise price of such Cancelled SAR (such amount being hereinafter referred to as the “Stock Appreciation Right Consideration”). The holder of each Cancelled SAR shall receive at the Effective Time from the Company, or as soon as practicable thereafter (but in no event later than the Company’s first full payroll after the Effective Time) from the Surviving Corporation, an amount in cash equal to the Stock Appreciation Right Consideration. If the exercise price per share of any such Cancelled SAR is equal to or greater than the Merger Consideration, such Cancelled SAR shall, by direction of Parent (which is hereby given pursuant to this Agreement), be cancelled without any cash payment being made in respect thereof. The payment of Stock Appreciation Right Consideration to the holder of a Cancelled SAR shall be reduced by any income or employment tax withholding required under the Code or any Applicable Law or as otherwise agreed by the parties at the time the Company Stock Appreciation Right was granted.

(ii)At the Effective Time, each Company Stock Appreciation Right (or portion thereof) that is outstanding and unvested as of immediately prior to the Effective Time (and does not vest as a result of the consummation of the transactions contemplated hereby) shall be assumed by Parent (each, an “Assumed Stock Appreciation Right”). Each such Assumed Stock Appreciation Right shall be subject to substantially the same terms and conditions as applied to the related Company Stock Appreciation Right immediately prior to the Effective Time, including the vesting schedule applicable thereto, except that (A) such Assumed Stock Appreciation Right shall become a stock-settled award under the Parent Equity Plan as of and following the Effective Time, (B) the number of shares of Parent Common Stock subject to each Assumed Stock Appreciation Right shall be equal to the product of (x) the number of shares of Company Common Stock underlying such Assumed Stock Appreciation Right as of immediately prior to the Effective Time multiplied by (y) the Exchange Ratio (with the resulting number rounded down to the nearest whole share), and (C) the per share exercise price of each Assumed Stock Appreciation Right shall be equal to the quotient determined by dividing (x) the exercise price per share at which such Assumed Option was exercisable immediately prior to the Effective Time by (y) the Exchange Ratio (with the resulting price per share rounded up to the nearest whole cent). The assumption of Assumed Stock Appreciation Rights pursuant to this Section shall be effected in a manner that satisfies the requirements of Sections 409A of the Code and the Treasury Regulations promulgated thereunder, and this Section 6.11(a)(ii) will be construed consistent with this intent.

(b)Company Restricted Stock Units. At the Effective Time, each award of Company Restricted Stock Units (or portion thereof) that is outstanding and unvested immediately prior to the Effective Time (and does not vest as a result of the consummation of the transactions contemplated hereby) shall, by virtue of the Merger, be assumed by Parent (each, an “Assumed RSU”). The number of shares of Parent Common Stock subject to each

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Assumed RSU shall be equal to the product of (x) the number of shares of Company Common Stock underlying such unvested Company Restricted Stock Unit award as of immediately prior to the Effective Time multiplied by (y) the Exchange Ratio (with the resulting number, rounded down to the nearest whole share). Except as otherwise agreed to by Parent and a holder of such Assumed RSUs, such Assumed RSUs will be subject to substantially the same terms and conditions as applied to the related award of Company Restricted Stock Units immediately prior to the Effective Time, including the same vesting schedule applicable thereto. Any Company Restricted Stock Unit (or portion thereof) that is not an Assumed RSU (each, a “Cancelled RSU”) shall, by virtue of the Merger and at the direction of Parent (which is hereby given pursuant to this Agreement), be cancelled and terminated and converted into the right to receive an amount in cash, without interest, with respect to each share of Company Common Stock underlying such Cancelled RSU, equal to the Merger Consideration, except as may otherwise be required by Section 409A of the Code, in which case such Company Restricted Stock Unit shall be treated as an Assumed RSU. The holder of each Cancelled RSU shall, with respect to each share of Company Common Stock underlying such Cancelled RSU, receive at the Effective Time from the Company, or as soon as practicable thereafter (but in no event later than the Company’s first full payroll after the Effective Time) from the Surviving Corporation, an amount in cash equal to the Merger Consideration.

(c)Company Restricted Stock. At the Effective Time, each award of Company Restricted Stock (or portion thereof) that is outstanding and unvested immediately prior to the Effective Time (and does not vest as a result of the consummation of the transactions contemplated hereby) shall, by virtue of the Merger, be assumed by Parent (each, an “Assumed RSA”). The number of shares of Parent Common Stock subject to each Assumed RSA shall be equal to the product of (x) the number of unvested shares of Company Restricted Stock underlying such RSA as of immediately prior to the Effective Time multiplied by (y) the Exchange Ratio (with the resulting number, rounded down to the nearest whole share). Except as otherwise agreed to by Parent and a holder of such Assumed RSAs, such Assumed RSAs will be subject to substantially the same terms and conditions as applied to the related award of Company Restricted Stock immediately prior to the Effective Time, including the same vesting schedule applicable thereto. Any award of Company Restricted Stock that is not an Assumed RSA shall, with respect to each such share of Company Restricted Stock, be treated as a share of Company Common Stock that shall be canceled and extinguished and automatically converted into the right to receive an amount in cash equal to the Merger Consideration pursuant to Section 2.7(a)(i).

(d)Company Options.

(i)At the Effective Time, each Company Option (or portion thereof) that is outstanding and vested as of immediately prior to the Effective Time (or vests as a result of the consummation of the transactions contemplated hereby) (each, a “Cancelled Option”) shall, by virtue of the Merger and at the direction of Parent (which is hereby given pursuant to this Agreement), be cancelled and terminated and converted into the right to receive an amount in cash, without interest, with respect to each share underlying such Cancelled

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Option, equal to the excess, if any, of the Merger Consideration over the per share exercise price of such Cancelled Option (such amount being hereinafter referred to as the “Option Consideration”). The holder of each Cancelled Option shall receive at the Effective Time from the Company, or as soon as practicable thereafter (but in no even later than the Company’s first full payroll after the Effective Time) from the Surviving Corporation, an amount in cash equal to the Option Consideration. If the exercise price per share of any such Cancelled Option is equal to or greater than the Merger Consideration, such Company Option shall, by direction of Parent (which is hereby given pursuant to this Agreement), be cancelled without any cash payment being made in respect thereof. The payment of Option Consideration to the holder of a Cancelled Option shall be reduced by any income or employment tax withholding required under the Code any Applicable Law or as otherwise agreed by the parties at the time the Company Option was granted.

(ii)At the Effective Time, each Company Option (or portion thereof) that is outstanding and unvested as of immediately prior to the Effective Time (and does not vest as a result of the consummation of the transactions contemplated hereby) shall be assumed by Parent (each, an “Assumed Option”). Each such Assumed Option shall be subject to substantially the same terms and conditions as applied to the related Company Option immediately prior to the Effective Time, including the vesting schedule applicable thereto, except that (A) the number of shares of Parent Common Stock subject to each Assumed Option shall be equal to the product of (x) the number of shares of Company Common Stock underlying such unvested Assumed Option as of immediately prior to the Effective Time multiplied by (y) the Exchange Ratio (with the resulting number rounded down to the nearest whole share), and (B) the per share exercise price of each Assumed Option shall be equal to the quotient determined by dividing (x) the exercise price per share at which such Assumed Option was exercisable immediately prior to the Effective Time by (y) the Exchange Ratio (with the resulting price per share rounded up to the nearest whole cent). Each Assumed Option so assumed by Parent shall qualify following the Effective Time as an incentive stock option as defined in Section 422 of the Code to the extent permitted under Section 422 of the Code and to the extent such Assumed Option qualified as an incentive stock option prior to the Effective Time, and, further, that the assumption of Assumed Options pursuant to this Section shall be effected in a manner that satisfies the requirements of Sections 409A and 424(a) of the Code and the Treasury Regulations promulgated thereunder, and this Section 6.11(d) will be construed consistent with this intent.

(e)Termination of Non-U.S. Company Compensatory Awards. Notwithstanding the provisions above, Parent may, prior to the Effective Time, determine reasonably and in good faith, subject to the consent of the Company, which shall not be unreasonably withheld (it being understood that withholding consent in reliance on advice of Company counsel shall not be deemed unreasonable) that any Company Compensatory Award that is subject to the Applicable Laws of a non-U.S. jurisdiction may be treated in a manner other than prescribed by Section 6.11(a) through 6.11(d), as applicable, to the extent that (i) Parent and the Company reasonably and in good faith determine that (A) the manner in which such Company Compensatory Award would otherwise be treated pursuant to Section 6.11(a) through 6.11(d), as applicable, would result in a violation of Applicable Laws or a materially

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adverse tax consequence to the individual holding such Company Compensatory Award in the applicable non-U.S. jurisdiction and (B) such different treatment is necessary to comply with such Applicable Laws and (ii) such different treatment is, to the maximum extent practicable, consistent with Section 6.11(a) through 6.11(d), as applicable. Parent and the Company shall agree at least ten (10) days prior to the Effective Time to the treatment of any Company Compensatory Award that will be treated in a manner other than prescribed by Section 6.11(a) through 6.11(d), as applicable.

(f)    Necessary Actions; Form S-8. The Company shall, at Parent’s direction (which is hereby given pursuant to this Agreement), take all actions necessary to effect the transactions contemplated by this Section 6.11 under all Company Plans and Company Compensatory Awards or any other plan or arrangement of the Company, including delivering all required notices, obtaining all necessary consents, and making any determinations and/or resolutions of the Company Board or a committee thereof. Promptly after the Effective Time (but in no event later than fifteen (15) Business Days following the Effective Time), if available for use by Parent, Parent shall prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) relating to the shares of Parent Common Stock issuable with respect to assumed or converted Company Compensatory Awards under this Section 6.11.

(g)Director Stock Appreciation Rights. The Company shall take all reasonable steps to enter into an amendment with each member of the Company’s board of directors who holds an outstanding Company Stock Appreciation Right under the Company’s 2006 Directors Stock Appreciation Rights Plan, as amended, which provides for (i) an irrevocable waiver of any right, claim or entitlement to (A) assumption of such Company Stock Appreciation Right by Parent and/or Merger Sub, and (B) advance notice regarding treatment of such Company Stock Appreciation Right in the Merger, and (ii) the director’s consent and agreement with the treatment of such Company Stock Appreciation Right under Section 6.11 hereof. The form and substance of the foregoing amendments shall be subject to the prior approval of Parent, which shall not be unreasonably withheld or delayed.

6.12Employee Matters.

(a)The Company shall terminate, effective as of the day immediately preceding the date the Company becomes a member of the same Controlled Group of Corporations (as defined in Section 414(b) of the Code) as Parent (the “401(k) Termination Date”), any and all 401(k) plans maintained by the Company or any of its Subsidiaries, unless Parent provides written notice to the Company that such 401(k) plan(s) shall not be terminated. The Company shall provide Parent evidence that the 401(k) plan(s) of the Company and its Subsidiaries have been terminated pursuant to resolutions of the Company Board or the board of directors of its Subsidiaries, as applicable. The Company Board shall in any case adopt resolutions effective no later than the Effective Time eliminating Company stock as the funding vehicle for matching contributions and as an available investment under any such 401(k) plan, as applicable. The form and substance of such resolutions shall be subject to the reasonable review and approval of Parent, which shall not be unreasonably withheld or delayed. As soon

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as practicable following the 401(k) Termination Date, Parent shall permit all Continuing Employees who were eligible to participate in any 401(k) plan maintained by the Company or any of its Subsidiaries immediately prior to the 401(k) Termination Date to participate in Parent’s 401(k) plan, and shall permit each such Continuing Employee to elect to transfer his or her account balance when distributed from any terminated 401(k) plan maintained by the Company or any of its Subsidiaries, including any outstanding participant loans from such 401(k) plans, to Parent’s 401(k) plan, except to the extent accepting such transfers would adversely affect the tax-qualified status of the Parent 401(k) plan.

(b)    The Company shall take all action that may be necessary to: (i) cause the rights of participants in the Company ESPP with respect to all current offering periods to terminate on or prior to thirty (30) days from the date of this Agreement, and all accumulated payroll deductions allocated to each participant’s account as of such date under the Company ESPP shall be returned to such participant as soon as reasonably practicable following such date (without interest) and in any event in accordance with the terms of the Company ESPP, and (ii) to cause the Company ESPP to terminate effective as of the close of business on the day immediately prior to the Effective Time. The Company shall take all necessary actions so that no new offering is commenced or made under the Company ESPP on or following the date of this Agreement. Prior to the date actions must be taken under this Section 6.12(b), and subject to the reasonable review and approval by Parent, the Company shall take all actions necessary give effect to the transactions contemplated by this Section 6.12(b).

(c)    As of the Effective Time, with respect to Continuing Employees, Parent shall cause the service of each such Continuing Employee with the Company and its Subsidiaries prior to the Effective Time to be recognized for purposes of eligibility to participate, levels of benefits and vesting (but not for purposes of benefit accrual) under each compensation, severance, vacation, fringe or other welfare benefit plan, program or arrangement of the Parent or the Surviving Corporation, as applicable, but in which any Continuing Employee is or becomes eligible to participate, but solely to the extent permitted by Applicable Law and to the extent such credit would not result in a duplication of benefits. From and after the Effective Time, Parent shall, to the extent permitted by Applicable Law and the terms of the applicable plans, (i) cause any pre-existing conditions or limitations and eligibility waiting periods under any U.S. group health plans of Parent or its Subsidiaries to be waived with respect to the Continuing Employees and their eligible dependents and (ii) give each of the Continuing Employee in the U.S. credit for the plan year in which the Effective Time occurs toward applicable deductibles and annual out of pocket limits for expenses incurred prior to the Effective Time for which payment has been made. Unused vacation days accrued by Continuing Employees located in the U.S. under the plans and policies of the Company and its Subsidiaries shall carry over to Parent or the Surviving Corporation to the maximum extent permitted by Applicable Law, and each Continuing Employee shall be paid by the Company in cash for any accrued and unused vacation days that Parent and the Company mutually determine are not permitted by Applicable Law to be carried over.

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(d)Notwithstanding the terms of any Employee Plan, the Company shall pay to each individual who is employed by the Company or any of its Subsidiaries as of immediately prior to the Closing Date and who is a participant in the Company’s Management Incentive Plan, Selected Officer Management Incentive Plan, Employee Incentive Plan or Sales Incentive Plan (each, an “Incentive Plan”) a bonus under the applicable Incentive Plan (the “Stub Bonus”) in respect of the performance period under such Incentive Plan in which the Closing Date occurs. The Stub Bonus shall be (i) calculated based on the Company’s reasonable estimate of the extent to which it projects that the performance targets otherwise applicable to such individual’s bonus under such Incentive Plan would have been achieved, (ii) prorated based on the number of days elapsed in the applicable performance period as of the Closing Date, and (iii) allocated among such employees substantially in accordance with the preliminary allocations shared with Parent's Chief Executive Officer prior to the date of this Agreement; provided, however, that no discretion permitted under the terms of the relevant Incentive Plan may be exercised to increase the Stub Bonus payable to any such employee in excess of the preliminary allocation described in the preceding (iii) applicable to such employee. Such calculations, estimates, prorations, Stub Bonus amounts and allocations shall be based on the Company's reasonable good faith determination, subject to the review and consent of Parent, which consent shall not be unreasonably withheld.

(e)Prior to the Effective Time, the Company shall request that each participant in the Company’s 2008 Supplemental Executive Retirement Plan consent to a distribution of their benefit under such Employee Plan in the form of a single lump sum as soon as practicable following the Effective Time.

(f)Nothing contained herein shall be construed as requiring Parent, the Company or any of their Affiliates to continue any specific benefit plan or program, or to continue the employment of any specific person. No provision of this Agreement shall be construed to create any right to any compensation or benefits on the part of any Continuing Employee or other future, present or former employee of Parent, the Company or their respective Affiliates. Sections 6.11 and 6.12 are intended to be for the sole benefit of the parties to this Agreement, and nothing in Sections 6.11 and 6.12 or elsewhere in this Agreement shall be deemed to confer upon any other person any rights or remedies hereunder or make any employee or other service provider of the parties or their respective Subsidiaries a third party beneficiary of this Agreement. No provision of this Agreement shall operate as an amendment to any benefit plan maintained by the Company or Parent or their respective Affiliates. Further, Parent, the Company and their respective Affiliates retain the right to amend or terminate their benefit plans at any time and from time to time, subject to the provisions of this Agreement and the terms of such plans.

6.13Directors’ and Officers’ Indemnification and Insurance.

(a)    For six (6) years after the Effective Time, Parent shall cause the Surviving Corporation and its Subsidiaries to honor and fulfill in all respects the obligations of the Company and its Subsidiaries under their respective certificates of incorporation and

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bylaws (and other similar organizational documents) and all agreements for indemnification, exculpation of liability or advancement of expenses, in effect as of the date hereof between the Company or any of its Subsidiaries and any of their respective current or former directors and officers or any person who becomes a director or officer prior to the Effective Time (the “Indemnified Parties”). For six (6) years after the Effective Time, Parent shall cause the certificate of incorporation and bylaws of the Surviving Corporation and its Subsidiaries to contain provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers of the Company and its Subsidiaries than are presently set forth in the certificate of incorporation and bylaws of the Company and its Subsidiaries.

(b)For a period of six (6) years after the Effective Time, Parent and the Surviving Corporation shall maintain in effect the Company’s current directors’ and officers’ liability insurance (“D&O Insurance”) in respect of acts or omissions occurring at or prior to the Effective Time, covering each person covered by the D&O Insurance immediately prior to the Effective Time, on terms with respect to the coverage and amounts no less favorable than those of the D&O Insurance in effect on the date of this Agreement; provided, however, that the Surviving Corporation may, at its option, substitute therefor policies of Parent, the Surviving Corporation or any of their respective Subsidiaries containing terms with respect to coverage and amounts no less favorable to such persons than the D&O Insurance, provided further, however, that in satisfying its obligations under this Section 6.13(b), Parent and the Surviving Corporation shall not be obligated to pay annual premiums in excess of two hundred percent (200%) of the amount paid by the Company for coverage for its last full fiscal year (such two hundred percent (200%) amount, the “Maximum Annual Premium”) (which premiums the Company represents and warrants to be as set forth in Section 6.13 of the Company Disclosure Letter), provided further that if the annual premiums of such insurance coverage exceed such amount, Parent and the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding the Maximum Annual Premium. Prior to the Effective Time, notwithstanding anything to the contrary set forth in this Agreement, the Company may purchase a six-year “tail” prepaid policy (the “Tail Policy”) on the D&O Insurance on terms and conditions no less favorable, in the aggregate, than the D&O Insurance and for an amount not to exceed three hundred percent (300%) of the amount paid by the Company for coverage for its last full fiscal year. In the event that the Company does not purchase the Tail Policy, Parent may purchase a Tail Policy on the D&O Insurance on terms and conditions no less favorable, in the aggregate, than the D&O Insurance. In the event that either the Company or Parent shall purchase such a Tail Policy prior to the Effective Time, Parent and the Surviving Corporation shall maintain such Tail Policy in full force and effect and continue to honor their respective obligations thereunder, in lieu of all other obligations of Parent and the Surviving Corporation under the first sentence of this Section 6.13(b) for so long as such Tail Policy shall be maintained in full force and effect.

(c)    The obligations under this Section 6.13 shall not be terminated, amended or otherwise modified in such a manner as to adversely affect any Indemnified Party (or any other person who is a beneficiary under a Tail Policy referred to in Section 6.13(b)

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(and their heirs and representatives)) without the prior written consent of such person. Each of the Indemnified Parties or other persons who are beneficiaries under the D&O Insurance or the Tail Policy referred to in Section 6.13(b) (and their heirs and representatives) are intended to be third party beneficiaries of this Section 6.13, with full rights of enforcement as if a party thereto.

(d)In the event Parent or the Surviving Corporation (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then proper provision shall be made so that such continuing or surviving corporation or entity or transferee of such assets, as the case may be, shall assume the obligations set forth in this Section 6.13. The rights of the Indemnified Parties (and other persons who are beneficiaries under the D&O Insurance or the Tail Policy referred to in Section 6.13(b) (and their heirs and representatives)) under this Section 6.13 shall be in addition to, and not in substitution for, any other rights that such persons may have under the certificate or articles of incorporation, bylaws or other equivalent organizational documents and any and all indemnification agreements of or entered into by the Company or any of its Subsidiaries, or applicable Law (whether at law or in equity).

6.14Obligations of Merger Sub. Parent shall take all action necessary to cause Merger Sub and the Surviving Corporation to perform their respective obligations under this Agreement and to consummate the transactions contemplated by this Agreement, including the Merger and payment of any amounts payable hereunder, upon the terms and subject to the conditions set forth in this Agreement.

6.15Director and Officer Resignations. Prior to the Closing Date, unless Parent instructs the Company otherwise, the Company shall use reasonable best efforts to obtain the resignation (in form and substance acceptable to Parent) of each individual serving as a director or officer of (or comparable position with) the Company and its Subsidiaries from his or her position as a director or officer of (or comparable position with) the Company and its Subsidiaries (and not as an employee, if applicable, of the Company or any of its Subsidiaries). For the avoidance of doubt, such resignation shall not (i) prejudice in any manner any contractual rights such officer or director may have with the Company or any of its Subsidiaries or (ii) cause such officer to cease to become entitled to any benefit under any Employee Plan to which he/she would otherwise be entitled in his or her position as an officer.

6.16Proprietary Information Agreements. Prior to the Closing Date, the Company shall use commercially reasonable efforts to obtain from each current employee of the Company and its Subsidiaries in Germany and Korea, a valid and enforceable Employee Proprietary Information Agreement that retroactively assigns all intellectual property created by each such employee during his/her employment to the Company or its relevant Subsidiary, in a form to be agreed upon by Parent and the Company.

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ARTICLE VII

CONDITIONS TO THE MERGER

7.1Conditions to the Obligations of Each Party to Effect the Merger. The respective obligations of Parent, Merger Sub and the Company to consummate the Merger shall be subject to the satisfaction or waiver (where permissible under Applicable Law) prior to the Effective Time, of each of the following conditions:

(a)Requisite Stockholder Approval. The Requisite Stockholder Approval shall have been obtained.

(b)Antitrust and Other Governmental Approvals. All waiting periods (and extensions thereof) applicable to the transactions contemplated by this Agreement (including the Merger) under the HSR Act shall have expired or been terminated and all other antitrust, competition or merger control or regulatory consents set forth on Section 7.1(b) of the Company Disclosure Letter shall have been received (or been deemed to have been received by virtue of the expiration or termination of any applicable waiting period).

(c)No Legal Prohibition. No Governmental Entity of competent jurisdiction shall have (i) enacted, issued, promulgated, entered, enforced or deemed applicable to the Merger any Applicable Law that is in effect and has the effect of making the Merger illegal in any jurisdiction or which has the effect of prohibiting or otherwise preventing the consummation of the Merger in any jurisdiction or (ii) issued or granted any Order (whether temporary, preliminary or permanent) that has the effect of making the Merger illegal in any jurisdiction or which has the effect of prohibiting or otherwise preventing the consummation of the Merger in any jurisdiction.

7.2Additional Conditions to the Obligations of Parent and Merger Sub to Effect the Merger. The obligations of Parent and Merger Sub to consummate the Merger shall be further subject to the satisfaction or waiver (where permissible under Applicable Law) prior to the Effective Time, of each of the following conditions, any of which may be waived (in writing) exclusively by Parent and Merger Sub:

(a)Representations and Warranties. (A) Each of the representations and warranties of the Company set forth in this Agreement (other than the Capitalization Representation and the Specified Representations) shall have been true and correct in all respects as of the date of this Agreement and shall be true and correct in all respects on and as of the Closing Date with the same force and effect as if made on and as of such date, except for any failure to be so true and correct that, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect or to prevent, materially delay or materially impair the ability of the Company to consummate the transaction contemplated by this Agreement in accordance with the terms hereof and Applicable Law, (A) each of the representations and warranties set forth in Section 3.1 (Organization and Standing), Section 3.3 (Authorization), Section 3.27 (Brokers; Fees and Expenses),

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Section 3.28 (Opinion of Financial Advisor) and Section 3.29 (State Anti-Takeover Statutes) (collectively, the “Specified Representations”) shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on and as of such date, and (A) the representations and warranties set forth in Section 3.4 (Capitalization) (the “Capitalization Representation”) shall have been true and correct in all respects as of the date of this Agreement and shall be true and correct in all respects as of the Closing Date with the same force and effect as if made on and as of such date, except for any failure to be so true and correct in all but a de minimis amount; except in the case of each of the foregoing clauses (i)-(iii) inclusive, for those representations and warranties which address matters only as of a particular date (the accuracy of which shall be determined as of such particular date); and provided that, for purposes of determining the accuracy of the representations and warranties of the Company set forth in this Agreement for purposes of Section 7.2(a)(i), (A) all “Company Material Adverse Effect” and materiality qualifications and other qualifications based on the word “material” or similar phrases contained in such representations and warranties shall be disregarded (it being understood and hereby agreed that (x) the phrase “similar phrases” as used in this proviso shall not be deemed to include any dollar thresholds contained in any such representations and warranties and (y) such qualifications shall not be disregarded pursuant to the terms of this proviso in the representation and warranty set forth in Section 3.10(b)) and (B) any update of or modification to the Company Disclosure Letter made or purported to have been made after the date of this Agreement shall be disregarded).

(b)Covenants and Agreements. The Company shall have performed in all material respects all of its obligations under this Agreement required to be performed at or prior to the Closing Date and shall have complied in all material respects with all covenants or other agreements of the Company required to be performed or complied with by it under this Agreement.

(c)    Company Material Adverse Effect. No Company Material Adverse Effect shall have occurred or exist following the execution and delivery of this Agreement (whether or not events or circumstances occurring prior to the execution and delivery of this Agreement caused or contributed to the occurrence of such Company Material Adverse Effect).

(d)    Closing Certificate. Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and chief financial officer of the Company certifying as to the satisfaction of the matters set forth in paragraphs (a), (b) and (c) of this Section 7.2.

(e)Legal Proceedings. There shall not be pending any Legal Proceeding by a Governmental Entity (i) seeking to enjoin, restrain or prohibit the consummation of the Merger or (ii) seeking to impose any Antitrust Restraint.

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7.3Additional Conditions to the Obligations of the Company to Effect the Merger. The obligations of the Company to consummate the Merger shall be further subject to the satisfaction or waiver (where permissible under Applicable Law) prior to the Effective Time, of each of the following conditions, any of which may be waived (in writing) exclusively by the Company:

(a)Representations and Warranties. (A) Each of the representations and warranties of Parent and Merger Sub set forth in this Agreement (other than the Parent Specified Representations) shall have been true and correct in all respects as of the date of this Agreement and shall be true and correct in all respects on and as of the Closing Date with the same force and effect as if made on and as of such date, except for any failure to be so true and correct that, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, and (A) each of the representations and warranties set forth in Section 4.2 (Authorization) and Section 4.8 (Section 203 of the DGCL) (collectively, the “Parent Specified Representations”) shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on and as of such date, except in the case of each of the foregoing clauses (i) and (ii), for those representations and warranties which address matters only as of a particular date (the accuracy of which shall be determined as of such particular date); and provided that, for purposes of determining the accuracy of the representations and warranties of Parent and Merger Sub set forth in this Agreement for purposes of Section 7.3(a)(i), all “Parent Material Adverse Effect” and materiality qualifications and other qualifications based on the word “material” or similar phrases contained in such representations and warranties shall be disregarded.

(b)    Covenants and Agreements. Each of Parent and Merger Sub shall have performed in all material respects all of their respective obligations under this Agreement required to be performed at or prior to the Closing Date and complied in all material respects with all covenants or other agreements of Parent and Merger Sub required to be performed or complied with by them under this Agreement.

(c)Closing Certificate. The Company shall have received a certificate signed on behalf of Parent and Merger Sub by a duly authorized officer of Parent and Merger Sub as to the satisfaction of the matters set forth in paragraphs (a) and (b) of this Section 7.3.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

8.1Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after receipt of the Requisite Stockholder Approval (except as provided below), provided that the party desiring to terminate this Agreement pursuant to this Section 8.1 (other than pursuant to Section 8.1(a)) shall give notice of such termination to the other party or parties hereto, only as follows:

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(a)by mutual written agreement of Parent and the Company; or

(b)by either Parent or the Company, if the Company Stockholders’ Meeting shall have been held and the Requisite Stockholder Approval shall not have been obtained thereat or at any adjournment or postponement thereof; provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(b) shall not be available to any party hereto whose action or failure to fulfill any obligation under this Agreement has been the principal cause of or resulted in the failure to obtain the Requisite Stockholder Approval; or

(c)by either Parent or the Company if any Governmental Entity of competent jurisdiction shall have (i) enacted, issued, promulgated, entered, enforced or deemed applicable to any of the transactions contemplated hereby (including the Merger) any Applicable Law that is in effect and has the effect of making the consummation of the Merger illegal in any jurisdiction or which has the effect of prohibiting or otherwise preventing the consummation of the Merger in any jurisdiction or (ii) issued or granted any Order that has the effect of the Merger illegal in any jurisdiction or which has the effect of prohibiting or otherwise preventing the consummation of the Merger and such Order shall have become final and nonappealable; or

(d)by either Parent or the Company, if the Effective Time shall not have occurred on or before October 2, 2012 (the “Termination Date”); provided, however, that if on such date all of the conditions to the Closing set forth in Article VII, other than (i) those conditions that by their terms are to be satisfied at the Closing and (ii) any or all of the conditions set forth in Section 7.1(b), Section 7.1(c) or Section 7.2(e) (but solely, in the case of Section 7.1(c) or Section 7.2(e), to the extent the matter giving rise to the failure of such condition is related to Antitrust Laws), have been satisfied, then neither Parent nor the Company may terminate this Agreement and abandon the Merger pursuant to this Section 8.1(d) until February 1, 2013 (the “Antitrust Termination Date”) (it being understood and agreed that no party shall be entitled to object to, or otherwise impede or prevent, such extension if such party’s action or failure to fulfill any obligation under this Agreement has been the principal cause of or resulted in the failure of the Effective Time to have occurred on or before the first date referred to in this Section 8.1(d)); and provided, further, that the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to any party hereto whose action or failure to fulfill any obligation under this Agreement has been the principal cause of or resulted in the failure of the Effective Time to have occurred on or before the Termination Date or the Antitrust Termination Date, as applicable; or

(e)by the Company:

(i)in the event (A) of a breach of any covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement or (B) that any of the representations and warranties of Parent and Merger Sub set forth in this Agreement shall have been inaccurate when made or shall have become inaccurate, in either case such that the

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conditions set forth in Section 7.3(a) or Section 7.3(b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become inaccurate; provided, however, that notwithstanding the foregoing, in the event that such breach by Parent or Merger Sub or such inaccuracies in the representations and warranties of Parent or Merger Sub are curable by Parent or Merger Sub through the exercise of commercially reasonable efforts, then the Company shall not be permitted to terminate this Agreement pursuant to this Section 8.1(e)(i) until thirty (30) calendar days after delivery of written notice from the Company to Parent of such breach or inaccuracy (it being understood that the Company may not terminate this Agreement pursuant to this Section 8.1(e)(i) if such breach or inaccuracy by Parent or Merger Sub is cured within such thirty (30) calendar day period); or

(ii)prior to obtaining the Requisite Stockholder Approval, in order to enter into a definitive agreement with respect to a Superior Proposal, provided that (A) the Company has complied with the terms of Section 6.2(c)(i), (B) concurrently with the termination of this Agreement, the Company enters into a definitive agreement to effect such Superior Proposal and (C) concurrently with the termination of this Agreement, the Company pays to Parent the Termination Fee Amount payable pursuant to and in accordance with Section 8.3(b)(ii); or

(f)by Parent:

(i)in the event (A) of a breach of any covenant or agreement on the part of the Company set forth in this Agreement or (B) that any representation or warranty of the Company set forth in this Agreement shall have been inaccurate when made or shall have become inaccurate, in either case such that such that the conditions set forth in Section 7.2(a) or Section 7.2(b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become inaccurate; provided, however, that notwithstanding the foregoing, in the event that such breach by the Company or such inaccuracies in the representations and warranties of the Company are curable by the Company through the exercise of commercially reasonable efforts, then Parent shall not be permitted to terminate this Agreement pursuant to this Section 8.1(f)(i) until thirty (30) calendar days after delivery of written notice from Parent to the Company of such breach or inaccuracy, as applicable (it being understood that Parent may not terminate this Agreement pursuant to this Section 8.1(f)(i) if such breach or inaccuracy by the Company is cured within such thirty (30) calendar day period); or

(ii)in the event that a Triggering Event shall have occurred. For all purposes of and under this Agreement, a “Triggering Event” shall be deemed to have occurred if, prior to the Effective Time, any of the following shall have occurred: (A) the Company shall have breached the provisions of Section 6.1 or Section 6.2 (or be deemed, pursuant to the terms thereof, to have breached) in any material respect (without regard to whether such breach results in an Acquisition Proposal); (B) the Company Board or any committee thereof shall have for any reason effected a Company Board Recommendation Change; (C) the Company shall have failed to include the Company Board Recommendation

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in the Proxy Statement; (D) the Company shall have entered into a letter of intent, memorandum of understanding or Contract (other than a confidentiality agreement contemplated by Section 6.1(b)) contemplating or otherwise relating to an Acquisition Transaction (whether or not a Superior Proposal); or (E) the Company Board shall have failed to unconditionally reaffirm (publicly, if so requested by Parent or Merger Sub) the Company Board Recommendation within five (5) Business Days after Parent or Merger Sub delivers to the Company a request in writing to do so after an Acquisition Proposal shall have been publicly announced or shall have become publicly known; provided, however, that the Company Board shall not be required to make any such reaffirmation (x) prior to ten (10) Business Days after the initial Acquisition Proposal is received by the Company, (y) during any Notice Period or (z) during any notice period pursuant to Section 6.2(c)(ii).

8.2Notice of Termination; Effect of Termination. Any proper termination of this Agreement pursuant to Section 8.1 hereof shall be effective immediately upon the delivery of written notice of the terminating party to the other party or parties hereto, as applicable. In the event of the termination of this Agreement pursuant to Section 8.1, this Agreement shall be of no further force or effect without Liability of any party or parties hereto, as applicable (or any stockholder, director, officer, employee, agent, consultant or representative of such party or parties) to the other party or parties hereto, as applicable, except (a) for the terms of Section 6.9, this Section 8.2, and Section 8.3 and Article IX, each of which shall survive the termination of this Agreement and (b) that nothing herein shall relieve any party or parties hereto, as applicable, from Liability for any willful and material breach of, or fraud in connection with, this Agreement. In addition to the foregoing, no termination of this Agreement shall affect the obligations of the parties hereto set forth in the Confidentiality Agreement (as amended pursuant to Section 6.9), all of which obligations shall survive termination of this Agreement in accordance with their terms.

8.3Fees and Expenses.

(a)General. Except as set forth in Section 6.4, Section 6.5(b)(iv) and Section 8.3(b), all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby (including the Merger) shall be paid by the party or parties, as applicable, incurring such expenses whether or not the Merger is consummated.

(b)Company Payments.

(i)In the event that this Agreement is terminated pursuant to Section 8.1(f)(ii), within two (2) Business Days after demand by Parent, the Company shall pay to Parent a fee equal to Thirty Two Million Eight Hundred Fifty Thousand Dollars ($32,850,000.00) (the “Termination Fee Amount”) by wire transfer of immediately available funds to an account or accounts designated in writing by Parent.

(ii)    In the event that this Agreement is terminated pursuant to Section 8.1(e)(ii), concurrently with and as a condition to the effectiveness of such termination,

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the Company shall pay to Parent a fee equal to the Termination Fee Amount by wire transfer of immediately available funds to an account or accounts designated in writing by Parent.

(iii)    The Company shall pay to Parent a fee equal to the Termination Fee Amount, by wire transfer of immediately available funds to an account or accounts designated in writing by Parent, within two (2) Business Days after demand by Parent, in the event that (A) (1) this Agreement is terminated pursuant to Section 8.1(b) or (2) this Agreement is terminated pursuant to Section 8.1(f)(i), (B) following the execution and delivery of this Agreement and prior to the Company Stockholders’ Meeting (in the case of any termination referred to in clause (A)(1) above) or prior to the breach or inaccuracy that forms the basis for the termination of this Agreement (in the case of any termination referred to in clause (A)(2) above), an Acquisition Proposal shall have been publicly announced or shall have become publicly known, or shall have been communicated or otherwise made known to the Company and (C) within twelve (12) months following the termination of this Agreement, either an Acquisition Transaction (whether or not the Acquisition Transaction referenced in the preceding clause (B)) is consummated or the Company enters into a letter of intent, memorandum of understanding or Contract providing for an Acquisition Transaction (whether or not the Acquisition Transaction referenced in the preceding clause (B)). For purposes of this Section 8.3(b)(iii), all references to “15%” and “85%” in the definition of “Acquisition Transaction” shall be deemed to be references to “50%”.

(c)Enforcement. The Company acknowledges and hereby agrees that the provisions of Section 8.3(b) are an integral part of the transactions contemplated by this Agreement (including the Merger), and that, without such provisions, Parent would not have entered into this Agreement. Accordingly, if the Company shall fail to pay in a timely manner the amounts due pursuant to Section 8.3(b), and, in order to obtain such payment, Parent makes a claim that results in a judgment against the Company for payment of the Termination Fee Amount, the Company shall pay to Parent its reasonable costs and expenses (including its reasonable attorneys’ fees and expenses) incurred in connection with such suit, together with interest on the amounts set forth in Section 8.3(b) at the prime rate of Citibank N.A. in effect on the date such payment was required to be made.

8.4Amendment. Subject to Applicable Law and subject to the other provisions of this Agreement, this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each of Parent, Merger Sub and the Company; provided, however, that in the event that this Agreement has been approved by stockholders of the Company in accordance with Delaware Law, no amendment shall be made to this Agreement that requires the approval of such stockholders of the Company without such approval.

8.5Extension; Waiver. At any time and from time to time prior to the Effective Time, any party or parties hereto may, to the extent legally allowed and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of the other party or parties hereto, as applicable, (b) waive any inaccuracies in the

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representations and warranties made to such party or parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions for the benefit of such party or parties hereto contained herein. Any agreement on the part of a party or parties hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party or parties, as applicable. Any delay in exercising any right under this Agreement shall not constitute a waiver of such right.

ARTICLE IXGENERAL PROVISIONS

9.1Survival of Representations, Warranties and Covenants. The representations, warranties and covenants of the Company, Parent and Merger Sub contained in this Agreement shall terminate at the Effective Time, and only the covenants that by their terms survive the Effective Time shall so survive the Effective Time in accordance with their respective terms.

9.2Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) or e-mail transmission to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):

(a)if to Parent or Merger Sub, to:

Microchip Technology Incorporated

2355 W. Chandler Blvd.

Chandler, AZ 85224

Attention: Kim van Herk, Director, Managing Counsel

Telecopy No.: (480) 792-4112

E-mail: kim.vanherk@microchip.com

with copies (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati
Professional Corporation
900 South Capital of Texas Highway
Las Cimas IV, Fifth Floor
Austin, TX 78746
Attention:    J. Robert Suffoletta, Jr.

Telecopy No.:    (512) 338-5499

E-mail: rsuffoletta@wsgr.com

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and copies (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati
Professional Corporation
One Market Street
Spear Tower, Suite 3300
San Francisco, CA 94105
Attention:    Robert T. Ishii        Denny Kwon

Telecopy No.:    (415) 947-2099

E-mail: rishii@wsgr.com and dkwon@wsgr.com

(b)if to the Company, to:

Standard Microsystems Corporation

80 Arkay Drive

Hauppauge, NY 11788

Attention: Walter Siegel, Senior Vice President and General Counsel

Telecopy No.: (631) 434-1348

E-mail: walter.siegel@smsc.com

with copies (which shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

Attention: Benet J. O’Reilly

Telecopy No.: (212) 225-3999

E-mail: boreilly@cgsh.com

9.3Assignment. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

9.4Entire Agreement. This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Company Disclosure Letter and the Exhibits and Schedules hereto, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties and their Affiliates with respect to the subject matter hereof; provided, however, the Confidentiality Agreement (as amended pursuant to Section 6.9) shall not be superseded, shall survive any termination

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of this Agreement and shall continue in full force and effect until the earlier to occur of (a) the Effective Time and (b) the date on which the Confidentiality Agreement is terminated in accordance with its terms.

9.5Third Party Beneficiaries. Except (a) as set forth in or contemplated by the provisions of Section 6.13 and (b) from and after the Effective Time, the rights of the holders of Company Common Stock to receive the Merger Consideration in accordance with Article II, this Agreement is not intended to confer upon any other Person any rights or remedies hereunder.

9.6Severability. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

9.7Other Remedies. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

9.8Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to equitable relief without the requirement of posting a bond or other security, including to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

9.9Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.

9.10Consent to Jurisdiction. Each of the parties hereto (a) irrevocably consents to the service of the summons and complaint and any other process in any action or proceeding relating to the transactions contemplated by this Agreement, for and on behalf of itself or any of its properties or assets, in accordance with Section 9.2 or in such other manner as may be permitted by Applicable Law, and nothing in this Section 9.10 shall affect the right of any party to serve legal process in any other manner permitted by Applicable Law; (b) irrevocably and unconditionally consents and submits itself and its properties and assets in any action or proceeding to the exclusive jurisdiction of the Court of Chancery of the State of Delaware

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(or, only if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware) in the event any dispute or controversy arises out of this Agreement or the transactions contemplated hereby (including the Merger), or for recognition and enforcement of any judgment in respect thereof; (c) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; (d) agrees that any actions or proceedings arising in connection with this Agreement or the transactions contemplated hereby (including the Merger) shall be brought, tried and determined only in the Court of Chancery of the State of Delaware (or, only if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware); (e) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and (f) agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereby (including the Merger) in any court other than the aforesaid courts. Each of Parent, Merger Sub and the Company agrees that a final judgment in any action or proceeding in such courts as provided above shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

9.11WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

9.12Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective duly authorized officers to be effective as of the date first above written.

MICROCHIP TECHNOLOGY INCORPORATED
By:	/s/ Steve Sanghi
Name: Steve Sanghi
Title: Chairman, President and Chief Executive Officer

MICROCHIP TECHNOLOGY MANAGEMENT CO.
By:	/s/ Steve Sanghi
Name: Steve Sanghi
Title: Director and President

STANDARD MICROSYSTEMS CORPORATION
By:	/s/ Christine King
Name: Christine King
Title: President and Chief Executive Officer

VOTING AGREEMENT

THIS VOTING AGREEMENT (this “Agreement”) is made and entered into as of May 1, 2012 by and between Microchip Technology Incorporated, a Delaware corporation (“Parent”), and the undersigned Stockholder (the “Stockholder”) of Standard Microsystems Corporation, a Delaware corporation (the “Company”).

WITNESSETH:

WHEREAS, Parent, Microchip Technology Management Co., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and the Company have entered into an Agreement and Plan of Merger of even date herewith (as it may be amended from time to time, the “Merger Agreement”), which provides for, among other things, the merger of Merger Sub with and into the Company (the “Merger”) with the Company continuing as the surviving corporation of the Merger and pursuant to which all outstanding shares of Company Common Stock will be converted into the right to receive the consideration set forth in the Merger Agreement.

WHEREAS, the Stockholder is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of shares of Company Common Stock (as defined in the Merger Agreement), and the holder of Company Compensatory Awards (as defined in the Merger Agreement) that are exercisable or vest for shares of Company Common Stock.

WHEREAS, as a condition and inducement to the willingness of Parent and Merger Sub to enter into the Merger Agreement, the Stockholder (in the Stockholder’s capacity as such) has agreed to enter into this Agreement.

NOW, THEREFORE, intending to be legally bound, the parties hereto agree as follows:

1.Certain Definitions. All capitalized terms that are used but not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. For all purposes of and under this Agreement, the following terms shall have the following respective meanings:

(a)“Expiration Date” shall mean the earlier to occur of (i) such date and time as the Merger Agreement shall have been validly terminated pursuant to Article VIII thereof and (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement.

(b)“Person” shall mean any individual, corporation, limited liability company, general or limited partnership, trust, unincorporated association or other entity of any kind or nature, or any governmental authority.

(c)“Shares” shall mean (i) all equity securities of the Company (including all shares of Company Common Stock, all shares of Company Preferred Stock and all Company Compensatory Awards and other rights to acquire shares of Company Common Stock) owned by the Stockholder as of the date hereof, and (ii) all additional equity securities of the Company (including all additional shares of Company Common Stock, all additional shares of Company Preferred Stock and all additional Company Compensatory Awards, warrants and other rights to acquire shares of Company Common Stock) of which the Stockholder acquires ownership during the period from the date of this Agreement through the Expiration Date (including by way of stock dividend or distribution, split-up, recapitalization, combination, exchange of shares and the like).

(d)“Transfer” A Person shall be deemed to have effected a “Transfer” of a Share if such Person directly or indirectly (i) sells, pledges, encumbers, assigns, grants an option with respect to, transfers, tenders or disposes of such Share or any interest in such Share, or (ii) enters into an agreement or commitment providing for the sale of, pledge of, encumbrance of, assignment of, grant of an option with respect to, transfer, tender of or disposition of such Share or any interest therein, in each case other than in connection with the exercise or vesting of any Company Compensatory Award (it being understood and agreed that any shares of Company Common Stock issued upon the

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exercise or vesting of any Company Compensatory Award shall be subject to the restrictions set forth in Section 2 and clauses (i), (ii) and (iii) of Section 3), provided that, for the avoidance of doubt, “Transfer” does not include granting a proxy or voting or consent instructions with respect to any matter other than those specified in clauses (i), (ii) or (iii) of Section 3(a).

2.Transfer of Shares.

(a)Transfer Restrictions. The Stockholder shall not Transfer (or cause or permit the Transfer of) any of the Shares, or enter into any agreement relating thereto, except (i) by selling already-owned Shares either to pay the exercise price upon the exercise of a Company Option or to satisfy the Stockholder’s tax withholding obligation upon the exercise of a Company Compensatory Award, in each case as permitted by any Company Plan, (ii) Transfers to Affiliates, immediate family members, a trust established for the benefit of the Stockholder and/or for the benefit of one or more members of the Stockholder’s immediate family or charitable organizations or upon the death of the Stockholder, providedthat, as a condition to such Transfer, the recipient agrees to be bound by this Agreement and delivers a Proxy (as defined below) in the form attached hereto as Exhibit A, (iii) Transfers pursuant to any Rule 10b5-1 trading plans existing as of the date hereof, or (iv) with Parent’s prior written consent and in Parent’s sole discretion. Any Transfer, or purported Transfer, of Shares in breach or violation of this Agreement shall be void and of no force or effect.

(b)Transfer of Voting Rights. The Stockholder shall not deposit (or cause or permit the deposit of) any Shares in a voting trust or grant any proxy or enter into any voting agreement or similar agreement in contravention of the obligations of the Stockholder under this Agreement with respect to any of the Shares.

3.Agreement to Vote Shares.

(a)At every meeting of the stockholders of the Company, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of Company, the Stockholder (in the Stockholder’s capacity as such), to the extent not voted by the Person(s) appointed under the Proxy, shall, or shall cause the holder of record on any applicable record date to, vote all Shares that are then-owned by such Stockholder and entitled to vote or act by written consent:

(i)    in favor of the adoption of the Merger Agreement, and in favor of each of the other actions contemplated by the Merger Agreement and any action required in furtherance thereof;

(ii)    against approval of any proposal made in opposition to, made in competition with, or that would result in a breach of, the Merger Agreement or the Merger or any other transactions contemplated by the Merger Agreement; and

(iii)    against any of the following actions (other than those actions that relate to the Merger and any other transactions contemplated by the Merger Agreement): (A) any merger, consolidation, business combination, sale of assets, reorganization or recapitalization of or involving the Company or any of its Subsidiaries, (B) any sale, lease or transfer of all or substantially all of the assets of the Company or any of its Subsidiaries, (C) any reorganization, recapitalization, dissolution, liquidation or winding up of the Company or any of its Subsidiaries, (D) any material change in the capitalization of the Company or any of its Subsidiaries, or the corporate structure of the Company or any of its Subsidiaries, (E) any Acquisition Proposal with respect to the Company, or (F) any other action that is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone, discourage or adversely affect the Merger or any other transactions contemplated by the Merger Agreement.

The Stockholder shall retain at all times the right to vote its Shares in its sole discretion and without any other limitation on those matters other than those set forth in clauses (i), (ii) and (iii) that are at any time or from time to time presented for consideration to the Company’s stockholders generally. For the avoidance of doubt, clauses (i), (ii) and (iii) of this

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Section 3(a) shall not apply to votes, if any, solely on the election or removal of directors as recommended by the Company’s Board of Directors (provided such recommendation is not in violation of the terms of the Merger Agreement).

(b)In the event that a meeting of the stockholders of the Company is held, the Stockholder shall, or shall cause the holder of record of the Shares on any applicable record date to, appear at such meeting or otherwise cause the Shares to be counted as present thereat for purposes of establishing a quorum.

(c)The Stockholder shall not enter into any agreement or understanding with any Person to vote or give instructions in any manner inconsistent with the terms of this Section 3.

4.Agreement Not to Exercise Appraisal Rights. The Stockholder shall not exercise, and hereby irrevocably and unconditionally waives, any statutory rights (including under Section 262 of the DGCL) to demand appraisal of any Shares that may arise in connection with the Merger.

5.Directors and Officers. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict a Stockholder who is a director or officer of the Company from acting in such capacity or fulfilling the obligations of such office, including by voting, in his or her capacity as a director of the Company, in the Stockholder’s sole discretion on any matter (it being understood that this Agreement shall apply to the Stockholder solely in the Stockholder’s capacity as a Stockholder of the Company), including with respect to the matters set forth in Section 6.2 of the Merger Agreement. In this regard, the Stockholder shall not be deemed to make any agreement or understanding in this Agreement in the Stockholder’s capacity as a director or officer of the Company, including with respect to the matters set forth in Section 6.2 of the Merger Agreement. For the avoidance of doubt, nothing in this Agreement shall limit in any way the Company or its officers or directors from taking actions permitted by the Merger Agreement.

6.Irrevocable Proxy. Concurrently with the execution of this Agreement, the Stockholder shall deliver to Parent a proxy in the form attached hereto as Exhibit A (the “Proxy”), which shall be irrevocable to the fullest extent permissible by law, with respect to the Shares.

7.Waiver of Trust. If the Stockholder is party to an Indemnity Agreement with the Company substantially in the form attached as Exhibit 10.1 to the Company’s Form 8-K filed on November 23, 2005 (an “Indemnity Agreement”), the Stockholder hereby waives the Stockholder's rights pursuant to Section 15 of the Indemnity Agreement, but solely with respect to (a) the Potential Change in Control (as defined in the Indemnity Agreement) deemed to have occurred, for purposes of the Indemnity Agreement, upon the entry by the Company into the Merger Agreement and (b) the Change in Control (as defined in the Indemnity Agreement) contemplated by the Merger Agreement, to occur at the Effective Time (as defined in the Merger Agreement).

8.Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Parent as follows:

(a)Power; Binding Agreement. The Stockholder has full power and authority to execute and deliver this Agreement and the Proxy, to perform the Stockholder’s obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Stockholder, and, assuming this Agreement constitutes a valid and binding obligation of Parent, constitutes a valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms, except that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Applicable Laws affecting or relating to creditors’ rights generally and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).

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(b)No Conflicts. None of the execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder or the consummation by the Stockholder of the transactions contemplated hereby will (i) result in a violation or breach of any agreement to which the Stockholder is a party or by which the Stockholder may be bound, including any voting agreement or voting trust, except for violations, breaches or defaults that would not in any material respect impair or adversely effect the ability of the Stockholder to perform its obligations under this Agreement, or (ii) violate any order, writ, injunction, decree, judgment, statute, rule, or regulation applicable to the Stockholder.

(c)Voting Power. The Stockholder has or will have sole voting power, sole power of disposition, sole power to issue instructions with respect to the matters set forth in Section 2 and clauses (i), (ii) and (iii) of Section 3(a) and sole power to agree to all of the matters set forth in Section 2 and clauses (i), (ii) and (iii) of Section 3(a), in each case with respect to all of the Shares, with no limitations, qualifications or restrictions on such rights, subject to applicable federal securities laws and the terms of this Agreement.

(d)No Finder’s Fees. No broker, investment banker, financial advisor, finder, agent or other Person is entitled to any broker’s, finder’s, financial adviser’s or other similar fee or commission in connection with this Agreement based upon arrangements made by or on behalf of the Stockholder in his or her capacity as such.

(e)No Legal Actions. Stockholder agrees that Stockholder will not in Stockholder’s capacity as a stockholder of the Company bring, commence, institute, maintain, prosecute or voluntarily aid any action, claim, suit or cause of action, in law or in equity, in any court or before any governmental entity, which (i) challenges the validity of or seeks to enjoin the operation of any provision of this Agreement or (ii) alleges that the execution and delivery of this Agreement by Stockholder, either alone or together with the other Company voting agreements and proxies to be delivered in connection with the execution of the Merger Agreement, or the approval of the Merger Agreement by the Company Board, breaches any fiduciary duty of the Company Board or any member thereof.

(f)Reliance by Parent. The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder’s execution and delivery of this Agreement.

9.Representations and Warranties of Parent. Parent hereby represents and warrants to the Stockholder as follows:

(a)Power; Binding Agreement. Parent has full power and authority to execute and deliver this Agreement, to perform Parent’s obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent, and, assuming this Agreement constitutes a valid and binding obligation of the Stockholder, constitutes a valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Applicable Laws affecting or relating to creditors’ rights generally and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).

(b)No Conflicts. None of the execution and delivery by Parent of this Agreement, the performance by Parent of its obligations hereunder or the consummation by Parent of the transactions contemplated hereby will (i) result in a violation or breach of any agreement to which Parent is a party or by which Parent may be bound, except for violations, breaches or defaults that would not in any material respect impair or adversely effect the ability of Parent to perform its obligations under this Agreement, or (ii) violate any order, writ, injunction, decree, judgment, statute, rule, or regulation applicable to Parent.

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10.Certain Restrictions. The Stockholder shall not, directly or indirectly, take any voluntary action that would make any representation or warranty of the Stockholder contained herein untrue or incorrect in any material respect.

11.Disclosure. The Stockholder shall permit Parent to publish and disclose in all documents and schedules filed with the SEC, and any press release or other disclosure document that Parent reasonably determines to be necessary or desirable in connection with the Merger and any transactions related to the Merger, the Stockholder’s identity and ownership of Shares and the nature of the Stockholder’s commitments, arrangements and understandings under this Agreement.

12.No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership of or with respect to any Shares. Except as provided in this Agreement, all rights, ownership and economic benefits relating to the Shares shall remain vested in and belong to the Stockholder.

13.Further Assurances. Subject to the terms and conditions of this Agreement, upon request of Parent, the Stockholder shall use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary to fulfill such Stockholder’s obligations under this Agreement.

14.Stop Transfer Instructions. At all times commencing with the execution and delivery of this Agreement and continuing until the Expiration Date, in furtherance of this Agreement, the Stockholder hereby authorizes the Company or its counsel to notify the Company’s transfer agent that, from the date hereof until the Expiration Date, there is a stop transfer order with respect to all of the Shares of the Stockholder (and that this Agreement places limits on the voting and transfer of such Shares until the Expiration Date).

15.Termination. This Agreement and the Proxy, and all rights and obligations of the parties hereunder and thereunder, shall terminate and shall have no further force or effect as of the Expiration Date. Notwithstanding the foregoing, nothing set forth in this Section 15 or elsewhere in this Agreement shall relieve either party hereto from liability, or otherwise limit the liability of either party hereto, for any intentional breach of this Agreement prior to such termination. This Section 15 and Sections1, 5, and 16 (as applicable) shall survive any termination of this Agreement.

16.Miscellaneous.

(a)Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which will remain in full force and effect. In the event any Governmental Entity of competent jurisdiction holds any provision of this Agreement to be null, void or unenforceable, the parties hereto shall negotiate in good faith and execute and deliver an amendment to this Agreement in order, as nearly as possible, to effectuate, to the extent permitted by Applicable Law, the original intent of the parties hereto with respect to such provision.

(b)Binding Effect and Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations of the parties hereto may be assigned by either of the parties (whether by operation of law or otherwise) without prior written consent of the other.

(c)Amendments;Waiver. This Agreement may be amended by the parties hereto, and the terms and conditions hereof may be waived, only by an instrument in writing signed on behalf of each of the parties hereto, or, in the case of a waiver, by an instrument signed on behalf of the party waiving compliance.

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(d)Specific Performance; Injunctive Relief. The parties hereto acknowledge that Parent shall be irreparably harmed and that there shall be no adequate remedy at law for a violation of any of the covenants or agreements of the Stockholder set forth herein. Therefore, it is agreed that, in addition to any other remedies that may be available to Parent upon any such violation, Parent shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to Parent at law or in equity.

(e)Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) or e-mail transmission to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):

If to Parent:

Microchip Technology Incorporated

2355 W. Chandler Blvd.

Chandler, AZ 85224
Attention: Kim van Herk, Director, Managing Counsel

Telecopy No.: (480) 792-4112
E-mail: kim.vanherk@microchip.com

with a copy (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati
Professional Corporation
900 South Capital of Texas Highway

Las Cimas IV, Fifth Floor
Austin, TX 78746
Attention: J. Robert Suffoletta, Jr.
Telecopy No.: (512) 338-5499E-mail: rsuffoletta@wsgr.com

and copies (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati

Professional Corporation

One Market Street

Spear Tower, Suite 3300

San Francisco, CA 94105

Attention:    Robert T. Ishii

Denny Kwon

Telecopy No.: (415) 947-2099

E-mail: rishii@wsgr.com and dkwon@wsgr.com

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If to the Stockholder:

C/O Standard Microsystems Corporation

80 Arkay Drive

Hauppauge, NY 11788

Attention: Walter Siegel, Senior Vice President and General Counsel

Telecopy No.: (631) 434-1348    E-mail: walter.siegel@smsc.com

with a copy (which shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton LLP One Liberty PlazaNew York, NY 10006
Attention: Benet O’Reilly
Telecopy No.: (212) 225-3999
E-mail: boreilly@cgsh.com

(f)No Waiver. The failure of either party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect of this Agreement at law or in equity, or to insist upon compliance by any other party with its obligation under this Agreement, and any custom or practice of the parties at variance with the terms of this Agreement, shall not constitute a waiver by such party of such party’s right to exercise any such or other right, power or remedy or to demand such compliance.

(g)No Third Party Beneficiaries. This Agreement is not intended to confer and does not confer upon any Person other than the parties hereto any rights or remedies hereunder.

(h)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.

(i)Consent to Jurisdiction. Each of the parties hereto (a) irrevocably consents to the service of the summons and complaint and any other process in any action or proceeding relating to the this Agreement, the Merger Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby, for and on behalf of itself or any of its properties or assets, in accordance with Section 16(e) or in such other manner as may be permitted by Applicable Law, and nothing in this Section 16(i) shall affect the right of any party to serve legal process in any other manner permitted by Applicable Law; (b) irrevocably and unconditionally consents and submits itself and its properties and assets in any action or proceeding to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, only if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware) in the event any dispute or controversy arises out of this Agreement, the Merger Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby (including the Merger), or for recognition and enforcement of any judgment in respect thereof; (c) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; (d) agrees that any actions or proceedings arising in connection with this Agreement, the Merger Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby (including the Merger) shall be brought, tried and determined only in the Court of Chancery of the State of Delaware (or, only if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware); (e) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and (f) agrees that it will not bring any action relating to this Agreement, the Merger Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby (including the Merger) in any court other than the aforesaid

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courts. Each of Parent and Stockholder agrees that a final judgment in any action or proceeding in such courts as provided above shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

(j)Rules of Construction. The parties hereto hereby waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

(k)Entire Agreement. This Agreement and the Proxy contain the entire understanding of the parties hereto in respect of the subject matter hereof, and supersede all prior negotiations, agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof.

(l)Interpretation.

(i)Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.”

(ii)The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties hereto and shall not in any way affect or be deemed to affect the meaning or interpretation of this Agreement.

(m)Expenses. All fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs and expenses.

(n)Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.

(o)No Obligation to Exercise Company Compensatory Awards or Warrants. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall obligate the Stockholder to exercise any Company Compensatory Awards, warrant or other right to acquire any shares of Company Common Stock.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the undersigned have executed and caused to be effective this Agreement as of the date first above written.

MIRCOCHIP TECHNOLOGY INCORPORATED	STOCKHOLDER
By:	By:
Name:	Name:
Title:

EXHIBIT A

IRREVOCABLE PROXY

The undersigned Stockholder (the “Stockholder”) of Standard Microsystems Corporation, a Delaware corporation (the “Company”), hereby irrevocably (to the fullest extent permitted by law) appoints Microchip Technology Incorporated, a Delaware corporation (“Parent”), acting through any of its Chief Executive Officer, Chief Operating Officer or Chief Financial Officer, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to vote and exercise all voting and related rights (to the full extent that the undersigned is entitled to do so) with respect to all of the shares of capital stock of the Company that now are or hereafter may be beneficially owned by the undersigned, and any and all other shares or equity securities of the Company issued or issuable in respect thereof on or after the date hereof (collectively, the “Shares”) in accordance with the terms of this Irrevocable Proxy until the Expiration Date (as defined below); provided, however, that such proxy and voting and related rights are expressly limited to the matters discussed in clauses (i) through (iii) in the fourth paragraph of this Irrevocable Proxy. Upon the undersigned’s execution of this Irrevocable Proxy, any and all prior proxies given by the undersigned with respect to any Shares are hereby revoked and the undersigned agrees not to grant any subsequent proxies with respect to the Shares until after the Expiration Date, provided that, the undersigned may grant subsequent proxies with respect to any matter other than those discussed in clauses (i) through (iii) in the fourth paragraph of this Irrevocable Proxy.

This Irrevocable Proxy is irrevocable to the fullest extent permitted by law, is coupled with an interest and is granted pursuant to that certain Voting Agreement of even date herewith by and between Parent and the undersigned Stockholder (the “Voting Agreement”), and is granted as a condition and inducement to the willingness of Parent, Microchip Technology Management Co., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”) to enter into that certain Agreement and Plan of Merger of even date herewith (as it may be amended from time to time, the “Merger Agreement”), among Parent, Merger Sub and the Company. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into the Company (the “Merger”) with the Company continuing as the surviving corporation of the Merger and pursuant to which all outstanding shares of Company Common Stock will be converted into the right to receive the consideration set forth in the Merger Agreement.

As used herein, the term “Expiration Date” shall mean the earlier to occur of (i) such date and time as the Merger Agreement shall have been validly terminated pursuant to Article VIII thereof and (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement.

The attorneys and proxies named above, and each of them, are hereby authorized and empowered by the undersigned, at any time prior to the Expiration Date, to act as the undersigned’s attorney and proxy to vote the Shares, and to exercise all voting, consent and similar rights of the undersigned with respect to the Shares (including, without limitation, the power to execute and deliver written consents) at every annual, special, adjourned or postponed meeting of stockholders of the Company and in every written consent in lieu of such meeting:

(i) in favor of the adoption of the Merger Agreement, and in favor of each of the other actions contemplated by the Merger Agreement and any action required in furtherance thereof;

(ii) against approval of any proposal made in opposition to, made in competition with, or that would result in a breach of, the Merger Agreement or the Merger or any other transactions contemplated by the Merger Agreement; and

(iii) against any of the following actions (other than those actions that relate to the Merger and any other transactions contemplated by the Merger Agreement): (A) any merger, consolidation, business combination, sale of assets, reorganization or recapitalization of or involving the Company or any of its Subsidiaries, (B) any sale, lease or

transfer of all or substantially all of the assets of the Company or any of its Subsidiaries, (C) any reorganization, recapitalization, dissolution, liquidation or winding up of the Company or any of its Subsidiaries, (D) any material change in the capitalization of the Company or any of its Subsidiaries, or the corporate structure of the Company or any of its Subsidiaries, (E) any Acquisition Proposal with respect to the Company or (F) any other action that is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone, discourage or adversely affect the Merger or any other transactions contemplated by the Merger Agreement.

The attorneys and proxies named above may not exercise this Irrevocable Proxy on any other matter. The undersigned Stockholder may vote the Shares in its sole discretion on all other matters. For the avoidance of doubt, clauses (i) through (iii) in the fourth paragraph of this Irrevocable Proxy shall not apply to votes, if any, on the election or removal of directors as recommended by the Company’s Board of Directors (provided such recommendation is not in violation of the terms of the Merger Agreement).

Any obligation of the undersigned hereunder shall be binding upon the successors and permitted assigns of the undersigned.

This Irrevocable Proxy shall terminate, and be of no further force and effect, automatically upon the Expiration Date.

Dated: May 1, 2012    

STOCKHOLDER

By:

Name:

EX-10.2

EXHIBIT 10.2

AMENDMENT NO. 1

Dated as of February 6, 2012

to

CREDIT AGREEMENT

Dated as of August 12, 2011

THIS AMENDMENT NO. 1 (this “Amendment”) is made as of February 6, 2012 by and among Microchip Technology Incorporated, a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent’), under that certain Credit Agreement dated as of August 12, 2011 by and among the Borrower, the Lenders and the Administrative Agent (as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.

WHEREAS, the Borrower has requested that the requisite Lenders and the Administrative Agent agree to an amendment to the Credit Agreement;

WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent have so agreed on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby agree to enter into this Amendment.

1.Amendment to the Credit Agreement. Effective as of the Amendment No. 1 Effective Date (as defined below), the parties hereto agree the parties hereto agree that the definition of “Permitted Acquisition” appearing in Section 1.01 of the Credit Agreement is amended to add the parenthetical “(or another Person that merges or consolidates with such Subsidiary and that, immediately after the consummation of such merger or consolidation, becomes a Subsidiary)” immediately after the phrase “such Subsidiary” appearing in clause (d) thereof.

2.Conditions of Effectiveness. The effectiveness of this Amendment (the “Amendment No. 1 Effective Date”) is subject to the conditions precedent that the Administrative Agent shall have received (a) counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent and (b) counterparts of the Consent and Reaffirmation attached as Exhibit A hereto duly executed by the Subsidiary Guarantors.

1

3.Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows:

(a)This Amendment and the Credit Agreement as modified hereby constitute valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(b)As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default or Event of Default shall have occurred and be continuing, and (ii) the representations and warranties of the Borrower set forth in the Credit Agreement are true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects), except, in each case, to the extent any such representation or warranty specifically refers to an earlier date, in which case it shall be true and correct in all material respects as of such earlier date.

4.Reference to and Effect on the Credit Agreement.

(a)Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.

(b)Each Loan Document and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

(c)Except with respect to the subject matter hereof, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement, the Loan Documents or any other documents, instruments and agreements executed and/or delivered in connection therewith.

5.Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.

6.Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

7.Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

[Signature Pages Follow]

2

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

MICROCHIP TECHNOLOGY INCORPORATED,

as the Borrower

By:	/s/ J. Eric Bjornholt
Name:	J. Eric Bjornholt
Title:	VP and CFO

JPMORGAN CHASE BANK, N.A. individually as a Lender and as Administrative Agent
By:	/s/ Gregory T. Martin
Name: Gregory T. Martin
Title: Vice President

Name of Lender:

Wells Fargo Bank, N.A.

By	/s/ Michael K. Walker
Name:	Michael K. Walker
Title:	Vice President

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

Branch Banking and Trust Company

By	/s/ Mark B. Grover
Name:	Mark B. Grover
Title:	Senior Vice President

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

HSBC Bank USA, National Association

By	/s/ Steven F. Larsen
Name:	Steven F. Larsen
Title:	Vice President

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

U.S. Bank National Association

By	/s/ Jacob Payne
Name:	Jacob Payne
Title:	Vice President

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender: Morgan Stanley Bank, N.A.

By	/s/ Allen Chang
Name:	Allen Chang
Title:	Authorized Signatory

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

The Bank of Tokyo-Mitsubishi UFI, Ltd.

By	/s/ Victor Pierzchalski
Name:	Victor Pierzchalski
Title:	Authorized Signatory

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

Fifth Third Bank

By	/s/ Glen Mastey
Name:	Glen Mastey
Title:	VP

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

Sumitomo Mitsui Banking Corporation

By	/s/ David W. Kee
Name:	David W. Kee
Title:	Managing Director

Name of Lender:

National Bank of Arizona

By	/s/ L J Willis
Name:	L J Willis
Title:	AVP

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

Alliance Bank of Arizona, a division of Western Alliance Bank, an Arizona Corporation as Lender

By	/s/ William E. Koenig
Name:	William E. Koenig
Title:	SVP

For any Lender Requiring a second signature line:

By

Name:

Title:

BOKF, N.A. d/b/a BANK OF ARIZONA

By:	/s/ Christine A. Nowaczyk
Name:	Christine A. Nowaczyk
Title:	Senior Vice President

Name of Lender:

Bank of the West

By	/s/ Joshua R. Shade
Name:	Joshua R. Shade
Title:	VP

For any Lender requiring a second signature line:

By

Name:

Title:

Name of Lender:

BANKERS TRUST COMPANY

By	/s/ Steven Krenzel
Name:	Steven Krenzel
Title:	VP - Commercial Lending

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

UBS Loan Finance LLC

By	/s/ Irja R. Otsa
Name:	Irja R. Otsa
Title:	Associate Director

For any Lender Requiring a second signature line:

By	/s/ Mary E. Evans
Name:	Mary E. Evans
Title:	Associate Director

Name of Lender:

THE NORTHERN TRUST COMPANY

By	/s/ John Lascody
Name:	John Lascody
Title:	Second Vice President

For any Lender Requiring a second signature line:

By

Name:

Title:

Name of Lender:

Compass Bank

By	/s/ Nancy Zezza
Name:	Nancy Zezza
Title:	SVP

For any Lender Requiring a second signature line:

By

Name:

Title:

EXHIBIT A

Consent and Reaffirmation

Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 1 to the Credit Agreement (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Microchip Technology Incorporated, a Delaware corporation (the “Borrower”), the Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), which Amendment No. 1 is dated as of February 6, 2012 and is by and among the Borrower, the financial institutions listed on the signature pages thereof and the Administrative Agent (the “Amendment”). Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement. Without in any way establishing a course of dealing by the Administrative Agent or any Lender, each of the undersigned consents to the Amendment and reaffirms the terms and conditions of the Subsidiary Guaranty and any other Loan Document executed by it and acknowledges and agrees that the Subsidiary Guaranty and each and every such Loan Document executed by the undersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed. All references to the Credit Agreement contained in the above‑referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment and as the same may from time to time hereafter be amended, modified or restated.

Dated: February 6, 2012

[Signature Page Follows]

IN WITNESS WHEREOF, this Consent and Reaffirmation has been duly executed as of the day and year above written.

MICROCHIP TECHNOLOGY LLC

By: Microchip Technology Incorporated,

Its sole member

By:	/s/ J. Eric Bjornholt
Name:	J. Eric Bjornholt
Title:	VP and CFO

SILICON STORAGE TECHNOLOGY, INC.

By:	/s/ Gordon W. Parnell
Name:	Gordon W. Parnell
Title:	VP and CFO

SILICON STORAGE TECHNOLOGY LLC

By: Silicon Storage Technology, Inc., its sole member

By:	/s/ Gordon W. Parnell
Name:	Gordon W. Parnell
Title:	VP and CFO

EX-10.3

EXHIBIT 10.3

AMENDMENT NO. 2

Dated as of April 10, 2012

to

CREDIT AGREEMENT

Dated as of August 12, 2011

THIS AMENDMENT NO. 2 (this “Amendment”) is made as of April 10, 2012 by and among Microchip Technology Incorporated, a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent’), under that certain Credit Agreement dated as of August 12, 2011 by and among the Borrower, the Lenders and the Administrative Agent (as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.

WHEREAS, the Borrower has requested that the requisite Lenders and the Administrative Agent agree to an amendment to the Credit Agreement;

WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent have so agreed on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby agree to enter into this Amendment.

1.Amendment to the Credit Agreement. Effective as of the Amendment No. 2 Effective Date (as defined below), the parties hereto agree that the Credit Agreement is hereby amended as follows:

(a)The definition of “Permitted Investments” appearing in Section 1.01 of the Credit Agreement is amended to restate clause (d) thereof in its entirety as follows:

“(d) fully collateralized repurchase agreements with a term of not more than ninety (90) days for securities (i) described in clause (a) above, or (ii) included in the investment policy described in clause (g) below and, in each case, entered into with a financial institution satisfying the criteria described in clause (c) above;”

(b)Section 6.01(p) of the Credit Agreement is amended to delete the reference to “in clause (a)” appearing therein and replace such reference with a reference to “in any of clauses (a), (b) or (g)”.

1

(c)Section 6.02(p) of the Credit Agreement is amended to delete the reference to “permitted under Section 6.01(p)” appearing therein and replace such reference with a reference to “permitted under Section 6.01(p) (or any Indebtedness of the Borrower consisting of obligations described in Section 6.01(p))”.

(d)Section 6.02(p) of the Credit Agreement is further amended to delete the reference to “in clause (a)” appearing therein and replace such reference with a reference to “in any of clauses (a), (b) or (g)”.

2.Conditions of Effectiveness. The effectiveness of this Amendment (the “Amendment No. 2 Effective Date”) is subject to the conditions precedent that the Administrative Agent shall have received (a) counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent and (b) counterparts of the Consent and Reaffirmation attached as Exhibit A hereto duly executed by the Subsidiary Guarantors.

3.Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows:

(a)This Amendment and the Credit Agreement as modified hereby constitute valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(b)As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default or Event of Default shall have occurred and be continuing, and (ii) the representations and warranties of the Borrower set forth in the Credit Agreement are true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects), except, in each case, to the extent any such representation or warranty specifically refers to an earlier date, in which case it shall be true and correct in all material respects as of such earlier date.

4.Reference to and Effect on the Credit Agreement.

(a)Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.

(b)Each Loan Document and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

(c)Except with respect to the subject matter hereof, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement, the Loan Documents or any other documents, instruments and agreements executed and/or delivered in connection therewith.

2

5.Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.

6.Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

7.Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Signatures delivered by facsimile or PDF shall have the same force and effect as manual signatures delivered in person.

[Signature Pages Follow]

3

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

MICROCHIP TECHNOLOGY INCORPORATED,

as the Borrower

By:	/s/ J. Eric Bjornholt
Name:	J. Eric Bjornholt
Title:	Vice President and Chief Operating Officer

JPMORGAN CHASE BANK, N.A.

Individually as a Lender and as Administrative Agent

By:	/s/ Gregory T. Martin
Name:	Gregory T. Martin
Title:	Vice President

Name of Lender:

National Bank of Arizona

By	/s/ L.J. Willis
Name:	L.J. Willis
Title:	Assistant Vice President

Name of Lender:

MidFirst Bank

By:	/s/ James Wessel
Name:	James Wessel
Title:	VP

Name of Lender:

Branch Banking and Trust Company

By:	/s/ Mark B. Grover
Name:	Mark B. Grover
Title:	Senior Vice President

Name of Lender:

THE NORTHERN TRUST COMPANY

By:	/s/ John Lascody
Name:	John Lascody
Title:	Vice President

Name of Lender:

Bankers Trust Company

By:	/s/ Patrick Joyce
Name:	Patrick Joyce
Title:	SVP - Commercial Lending Manager

Name of Lender:

WELLS FARGO BANK, N.A.

By:	/s/ Brenda K. Robinson
Name:	Brenda K. Robinson
Title:	Vice President

Name of Lender:

HSBC Bank USA, National Association

By:	/s/ Steven Larsen
Name:	Steven Larsen
Title:	Vice President

Name of Lender:

U.S. Bank National Association

By:	/s/ Blake Malia
Name:	Blake Malia
Title:	Vice President

Name of Lender:

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

By:	/s/ Victor Pierzchalski
Name:	Victor Pierzchalski
Title:	Authorized Signatory

Name of Lender:

MORGAN STANLEY BANK, N.A.

By:	/s/ Sharon Bazbaz
Name:	Sharon Bazbaz
Title:	Authorized Signatory

Name of Lender:

Sumitomo Mitsui Banking Corporation

By:	/s/ David W. Kee
Name:	David W. Kee
Title:	Managing Director

Name of Lender:

Bank of the West

By:	/s/ Joshua R. Shade
Name:	Joshua R. Shade
Title:	VP

Name of Lender:

Compass Bank

By:	/s/ Nancy Zezza
Name:	Nancy Zezza
Title:	SVP

BOKF, NA d/b/a Bank of Arizona

By:	/s/ Christine A. Nowaczyk
	Christine A. Nowaczyk
	Senior Vice President

EXHIBIT A

Consent and Reaffirmation

Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 2 to the Credit Agreement (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Microchip Technology Incorporated, a Delaware corporation (the “Borrower”), the Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), which Amendment No. 2 is dated as of April 10, 2012 and is by and among the Borrower, the financial institutions listed on the signature pages thereof and the Administrative Agent (the “Amendment”). Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement. Without in any way establishing a course of dealing by the Administrative Agent or any Lender, each of the undersigned consents to the Amendment and reaffirms the terms and conditions of the Subsidiary Guaranty and any other Loan Document executed by it and acknowledges and agrees that the Subsidiary Guaranty and each and every such Loan Document executed by the undersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed. All references to the Credit Agreement contained in the above‑referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment and as the same may from time to time hereafter be amended, modified or restated.

Dated: April 10, 2012

[Signature Page Follows]

IN WITNESS WHEREOF, this Consent and Reaffirmation has been duly executed as of the day and year above written.

MICROCHIP TECHNOLOGY LLC

By: Microchip Technology Incorporated,

its sole member

By:	/s/ J. Eric Bjornholt
Name:	J. Eric Bjornholt
Title:	Vice President and Chief Operating Officer

SILICON STORAGE TECHNOLOGY, INC.

By:	/s/ J. Eric Bjornholt
Name:	J. Eric Bjornholt
Title:	Secretary

SILICON STORAGE TECHNOLOGY LLC

By: Silicon Storage Technology, Inc., its sole member

By:	/s/ J. Eric Bjornholt
Name:	J. Eric Bjornholt
Title:	Secretary

EX-21.1

Exhibit 21.1

MICROCHIP TECHNOLOGY INCORPORATED

LIST OF SIGNIFICANT SUBSIDIARIES

Microchip Technology (Thailand) Co., Ltd.

14 Moo 1, T. Wangtakien

A. Muang Chacherngsao

Chacherngsao 24000

Thailand

Microchip Technology (Barbados) II Incorporated

Hastings Business Services Limited

Hastings, Christ Church

Barbados

Microchip Technology Ireland Limited

Block 3.1

Woodford Business Park

Northern Cross

Santry

Dublin 9 Ireland

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

(1) Form S-3 No. 333-149999,

(2) Form S-8 No. 33-59686,

(3) Form S-8 No. 33-80072,

(4) Form S-8 No. 33-81690,

(5) Form S-8 No. 33-83196,

(6) Form S-8 No. 333-872,

(7) Form S-8 No. 333-40791,

(8) Form S-8 No. 333-67215,

(9) Form S-8 No. 333-93571,

(10) Form S-8 No. 333-51322,

(11) Form S-8 No. 333-53876,

(12) Form S-8 No. 333-73506,

(13) Form S-8 No. 333-96791,

(14) Form S-8 No. 333-99655,

(15) Form S-8 No. 333-101696,

(16) Form S-8 No. 333-103764,

(17) Form S-8 No. 333-109486,

(18) Form S-8 No. 333-119939,

(19) Form S-8 No. 333-140773,

(20) Form S-8 No. 333-149460 and

(21) Form S-8 No. 333-177889;

of our reports dated May 30, 2012, with respect to the consolidated financial statements of Microchip Technology Incorporated and subsidiaries, and the effectiveness of internal control over financial reporting of Microchip Technology Incorporated and subsidiaries, included in this Annual Report (Form 10-K) for the year ended March 31, 2012.

/s/ Ernst & Young LLP

Phoenix, Arizona

May 30, 2012

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Steve Sanghi, certify that:

1. I have reviewed this Form 10-K of Microchip Technology Incorporated;

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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and l5d-l5(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.

5. The registrant's other certifying officer 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:	May 30, 2012	/s/ Steve Sanghi
		Steve Sanghi
		President and CEO

EX-31.2

Exhibit 31.2

CERTIFICATION

I, J. Eric Bjornholt, certify that:

1. I have reviewed this Form 10-K of Microchip Technology Incorporated;

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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and l5d-l5(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.

5. The registrant's other certifying officer 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:	May 30, 2012	/s/ J. Eric Bjornholt
		J. Eric Bjornholt
		Vice President and CFO

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C.  SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve Sanghi, certify, pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Microchip Technology Incorporated on Form 10-K for the period ended March 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Microchip Technology Incorporated.

By:	/s/ Steve Sanghi
Name:	Steve Sanghi
Title:	President and Chief Executive Officer
Date:	May 30, 2012

I, J. Eric Bjornholt, certify, pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Microchip Technology Incorporated on Form 10-K for the period ended March 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Microchip Technology Incorporated.

By:	/s/ J. Eric Bjornholt
Name:	J. Eric Bjornholt
Title:	Vice President and Chief Financial Officer
Date:	May 30, 2012

XML

Fair Value Measurements (Tables)

12 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Assets measured at fair value on a recurring basis (in details)

Assets measured at fair value on a recurring basis at March 31, 2012 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for  Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant  Unobservable Inputs (Level 3)		Total Balance
Assets
Money market fund deposits	$	232,219	$	—	$	—	$	232,219
Marketable equity securities	5,264		—		—		5,264
Corporate bonds & debt	—		769,479		4,625		774,104
Government agency bonds	—		342,104		—		342,104
Deposit accounts	—		403,536		—		403,536
Municipal bonds	—		20,122		—		20,122
Auction rate securities	—		—		10,246		10,246
Total assets measured at fair value	$	237,483	$	1,535,241	$	14,871	$	1,787,595

Assets measured at fair value on a recurring basis at March 31, 2011 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market fund deposits	$	464,669	$	—	$	—	$	464,669
Marketable equity securities	26,861		—		—		26,861
Corporate bonds & debt	—		519,526		3,500		523,026
Government agency bonds	—		430,591		—		430,591
Deposit accounts	—		239,255		—		239,255
Municipal bonds	—		11,457		—		11,457
Auction rate securities	—		—		12,475		12,475
Total assets measured at fair value	$	491,530	$	1,200,829	$	15,975	$	1,708,334

Reconciliation for all assets measured at fair value on a recurring basis

The following tables present a reconciliation for all assets measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs (Level 3) for the years ended March 31, 2012 and March 31, 2011 (amounts in thousands):

Year ended March 31, 2012	Auction Rate  Securities			Corporate Debt		Total Gains (Losses)
Balance at March 31, 2011	$	12,475		$	3,500	$	—
Total gains or losses (realized and unrealized):
Included in earnings	271			—		271
Included in other comprehensive income (loss)	—			—		—
Purchases, sales, issuances, and settlements, net	(2,500		)	1,125		—
Transfer into Level 3	—			—		—
Transfer out of Level 3	—			—		—
Balance at March 31, 2012	$	10,246		$	4,625	$	271

Year ended March 31, 2011	Auction Rate Securities			Put Option on Auction Rate Securities			Corporate Debt		Total Gains (Losses)
Balance at March 31, 2010	$	37,237		$	1,814		$	—	$	—
Total gains or losses (realized and unrealized):
Included in earnings	138			(1,814		)	—		(1,676		)
Included in other comprehensive income (loss)	—			—			—		—
Purchases, sales, issuances, and settlements, net	(24,900		)	—			3,500		—
Transfer into Level 3	—			—			—		—
Transfer out of Level 3	—			—			—		—
Balance at March 31, 2011	$	12,475		$	—		$	3,500	$	(1,676	)

Fair Value, by Balance Sheet Grouping [Table Text Block]

Assets measured at fair value on a recurring basis are presented/classified on the consolidated balance sheets at March 31, 2012 as follows (amounts in thousands):

	Quoted Prices  in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	232,219	$	403,536	$	—	$	635,755
Short-term investments	782		822,472		—		823,254
Long-term investments	4,482		309,233		14,871		328,586
Total assets measured at fair value	$	237,483	$	1,535,241	$	14,871	$	1,787,595

Assets and liabilities measured at fair value on a recurring basis are presented/classified in the consolidated balance sheets at March 31, 2011 as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	464,669	$	239,255	$	—	$	703,924
Short-term investments	16,553		523,019		—		539,572
Long-term investments	10,308		438,555		15,975		464,838
Total assets measured at fair value	$	491,530	$	1,200,829	$	15,975	$	1,708,334

XML

Discontinued Operations and Assets Held for Sale (Details) (USD $)	3 Months Ended				12 Months Ended
	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Results of discontinued operations [Abstract]
Net sales						$ 25,177,000
Cost of sales						(32,627,000)
Operating expenses						(3,676,000)
Income tax benefit					0	909,000	0
Net loss from discontinued operations	(5,084,000)	(1,154,000)	(1,668,000)	(2,311,000)	0	(10,217,000)	0
Amount of assets disposed of in sale of various parts of the SST acquisition						$ 23,600,000

XML

Segment Information (Tables)

12 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Revenues and gross profit for each segment

The following table represents revenues and gross profit for each segment (amounts in thousands):

	Years ended March 31,
	2012				2011				2010
	Net Sales		Gross Profit		Net Sales		Gross Profit		Net Sales		Gross Profit
Semiconductor products	$	1,296,175	$	709,754	$	1,415,137	$	806,398	$	947,729	$	534,242
Technology licensing	87,001		82,640		72,068		68,038		—		—
	$	1,383,176	$	792,394	$	1,487,205	$	874,436	$	947,729	$	534,242

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block]

Identifiable long-lived assets (consisting of property, plant and equipment) by geographic area are as follows (amounts in thousands):

	March 31,
	2012		2011
United States	$	314,339	$	330,046
Thailand	186,098		193,729
Various other countries	16,174		16,738
Total long-lived assets	$	516,611	$	540,513

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Income Taxes Income tax (benefit) provision from continuing operations (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Current Income Tax Expense (Benefit), Continuing Operations [Abstract]
Current Federal Tax Expense (Benefit)	$ 7,611,000	$ 294,000	$ (4,358,000)
Current State and Local Tax Expense (Benefit)	544,000	21,000	(436,000)
Current Foreign Tax Expense (Benefit)	21,174,000	22,877,000	6,981,000
Current Income Tax Expense (Benefit)	29,329,000	23,192,000	2,187,000
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract]
Deferred Federal Income Tax Expense (Benefit)	14,942,000	11,035,000	16,663,000
Deferred State and Local Income Tax Expense (Benefit)	1,067,000	788,000	1,668,000
Deferred Foreign Income Tax Expense (Benefit)	(2,348,000)	(3,484,000)	290,000
Deferred Income Tax Expense (Benefit)	13,661,000	8,339,000	18,621,000
Income Tax Expense (Benefit), Continuing Operations	42,990,000	31,531,000	20,808,000
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	11,000,000	7,500,000	3,700,000
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract]
Income Tax Reconciliation, Income Tax Expense (Benefit), at Federal Statutory Income Tax Rate	132,894,000	161,244,000	83,235,000
Income Tax Reconciliation, State and Local Income Taxes	1,280,000	1,746,000	915,000
Income Tax Reconciliation, Tax Credits, Research	(3,750,000)	(3,691,000)	(1,500,000)
Income Tax Reconciliation, Tax Credits, Research, Prior Years	(5,894,000)	0	0
Income Tax Reconciliation, Foreign Income Tax Rate Differential	(81,540,000)	(103,373,000)	(53,390,000)
Income Tax Reconciliation, Tax Settlements	0	(24,395,000)	(8,452,000)
Income Tax Expense (Benefit), Continuing Operations	42,990,000	31,531,000	20,808,000
Income (Loss) from Continuing Operations before Income Taxes, Foreign	328,500,000	390,900,000	201,200,000
Unremitted Foreign Earnings	$ 1,900,000,000
Effective Income Tax Rate Reconciliation, Tax Settlements		5.30%	3.60%

XML

Special (Income) Charges (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Unusual or Infrequent Item [Line Items]
Special (Income) Charges	$ 837,000	$ 1,865,000	$ 1,238,000
Other Nonrecurring Income	700,000
Severance Costs	300,000	1,900,000
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	1,000,000
Unusual or Infrequent Item [Member]
Unusual or Infrequent Item [Line Items]
Total Payment for Patent License Settlement	2,800,000		1,400,000
Patent License Expense Charged to Operations	1,500,000		1,200,000
Patent License Settlement Recorded as Prepaid Royalty	$ 1,300,000		$ 200,000

XML

Employee Benefit Plans (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended			121 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010	Mar. 31, 2012
Defined contribution pension [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Percentage of employee's base salary allowed as employee contribution (in hundredths)	60.00%			60.00%
Percentage of company's match (in hundredths)	25.00%			25.00%
Percentage of eligible compensation matched by the company (in hundredths)	4.00%			4.00%
Percentage of company's additional discretionary match (in hundredths)	25.00%			25.00%
Amount of company contributions	1.6	2.3
Employee stock purchase plan, 2001 plan [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Percentage of fair market value of common stock for employee purchase (in hundredths)	85.00%
Number of additional shares reserved under purchase plan (in shares)	960,269	941,530	921,171
Number of shares of common stock reserved for issuance (in shares)	11,277,862			11,277,862
Shares issued under purchase plan (in shares)				4,639,761
Employee stock purchase plan, 2001 plan [Member] | Overlapping Stock Purchase Period 1 [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Overlapping period on purchase of common stock under purchase plan (in number of months)	24 months
Employee stock purchase plan, 2001 plan [Member] | Overlapping Stock Purchase Period 2 [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Overlapping period on purchase of common stock under purchase plan (in number of months)	18 months
Employee stock purchase plan, 2001 plan [Member] | Overlapping Stock Purchase Period 3 [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Overlapping period on purchase of common stock under purchase plan (in number of months)	12 months
Employee stock purchase plan, 2001 plan [Member] | Overlapping Stock Purchase Period 4 [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Overlapping period on purchase of common stock under purchase plan (in number of months)	6 months
Employee stock purchase plan, employees in non-US locations [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Percentage of fair market value of common stock for employee purchase (in hundredths)	85.00%
Number of shares of common stock reserved for issuance (in shares)	1,500,285			1,500,285
Shares issued under purchase plan (in shares)	610,507
Percentage of fair market value of common stock at the beginning or end of semi-annual purchase plan period, during fiscal 1995 (in hundredths)	100.00%
Management incentive compensation plan [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Compensation expense charged against operations	7.8	28.3	16.5
Cash bonus plan [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Compensation expense charged against operations	3.2	16.0	4.3
Maximum [Member] | Employee stock purchase plan, 2001 plan [Member]
Deferred compensation arrangement, by type of deferred compensation [Line Items]
Maximum automatic increase in number of common stock shares under purchase plan (in shares)	1,500,000
Percentage of outstanding shares of common stock used to determine automatic annual increase in common stock (in hundredths)	0.50%

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Equity Incentive Plans (Tables)

12 Months Ended

Mar. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based compensation expense

The following table presents the details of the Company's share-based compensation expense (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Cost of sales	$	5,648	(1)	$	6,825	(1)	$	7,054	(1)
Research and development	14,719			12,874			12,194
Selling, general and administrative	17,922			17,113			17,530
Pre-tax effect of share-based compensation	38,289			36,812			36,778
Income tax benefit	4,889			4,493			4,563
Net income effect of share-based compensation	$	33,400		$	32,319		$	32,215

Schedule of Share-based Compensation, Restricted Stock Units Award Activity

RSU share activity under the 2004 Plan is set forth below:

	Number of Shares
Nonvested shares at March 31, 2009	3,601,772
Granted	1,846,241
Forfeited/expired	(120,198	)
Vested	(689,867	)
Nonvested shares at March 31, 2010	4,637,948
Granted	1,766,257
Forfeited/expired	(171,967	)
Vested	(990,932	)
Nonvested shares at March 31, 2011	5,241,306
Granted	1,627,191
Forfeited/expired	(184,926	)
Vested	(1,191,351	)
Nonvested shares at March 31, 2012	5,492,220

Schedule of Share-based Compensation, Stock Options, Activity

Option activity under the Company's stock inventive plans in the three years ended March 31, 2012 is set forth below:

			Weighted
	Number of		Average Exercise
	Shares		Price per Share
Outstanding at March 31, 2009	10,081,533		$	24.20
Granted	12,000		27.03
Exercised	(1,492,866	)	22.03
Canceled	(140,888	)	27.79
Outstanding at March 31, 2010	8,459,779		24.52
Granted	—		—
Exercised	(2,885,365	)	23.09
Canceled	(77,490	)	29.39
Outstanding at March 31, 2011	5,496,924		25.21
Granted	—		—
Exercised	(2,129,260	)	25.53
Canceled	(6,667	)	25.05
Outstanding at March 31, 2012	3,360,997		$	25.00

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair values per share of stock options granted in the year ended March 31, 2010 were estimated utilizing the following assumptions:

	Year Ended March 31,
	2010
Expected term (in years)	6.50
Volatility	36	%
Risk-free interest rate	2.57	%
Dividend yield	5.00	%

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Supplemental Financial Information

12 Months Ended

Mar. 31, 2012

Supplemental Cash Flow Information [Abstract]

Supplemental Financial Information

SUPPLEMENTAL FINANCIAL INFORMATION

Cash paid for income taxes amounted to $20.1 million, $17.0 million and $9.8 million during the years ended March 31, 2012, 2011 and 2010, respectively.  Cash paid for interest on borrowings amounted to $24.4 million in each of fiscal 2012, 2011 and 2010.

A summary of additions and deductions related to the allowance for doubtful accounts for the years ended March 31, 2012, 2011 and 2010 follows (amounts in thousands):

	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions (1)			Balance at End of Year
Allowance for doubtful accounts:
2012	$	2,838	$	7	$	(243	)	$	2,602
2011	3,109		31		(302		)	2,838
2010	3,176		90		(157		)	3,109

⁽¹⁾ Deductions represent uncollectible accounts written off, net of recoveries.

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Equity Incentive Plans, Stock Compensation Expensed (Details) (USD $)	12 Months Ended
	Mar. 31, 2012		Mar. 31, 2011		Mar. 31, 2010
Stock-based compensation expense [Line Items]
Allocated share based compensation expense	$ 33,400,000		$ 32,319,000		$ 32,215,000
Inventory [Member]
Stock-based compensation expense [Line Items]
Amount of share-based compensation expense capitalized to inventory	6,800,000		7,100,000		7,000,000
Cost of sales [Member]
Stock-based compensation expense [Line Items]
Allocated share based compensation expense	5,648,000	[1]	6,825,000	[1]	7,054,000	[1]
Research and development [Member]
Stock-based compensation expense [Line Items]
Allocated share based compensation expense	14,719,000		12,874,000		12,194,000
Selling, general and administrative [Member]
Stock-based compensation expense [Line Items]
Allocated share based compensation expense	17,922,000		17,113,000		17,530,000
Pre-tax effect of share based compensation [Member]
Stock-based compensation expense [Line Items]
Allocated share based compensation expense	38,289,000		36,812,000		36,778,000
Income tax benefit [Member]
Stock-based compensation expense [Line Items]
Allocated share based compensation expense	$ 4,889,000		$ 4,493,000		$ 4,563,000

[1] During the year ended March 31, 2012, $6.8 million of share-based compensation expense was capitalized to inventory, and $5.6 million of previously capitalized share-based compensation expenses in inventory was sold. During the year ended March 31, 2011, $7.1 million of share-based compensation expense was capitalized to inventory, and $6.8 million of previously capitalized share-based compensation expense in inventory was sold. During the year ended March 31, 2010, $7.0 million of share-based compensation expense was capitalized to inventory, and $7.1 million of previously capitalized share-based compensation expense in inventory was sold.

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Income Taxes Tax credit carryforward (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Tax Credit Carryforward [Line Items]
Income Tax Holiday, Aggregate Dollar Amount	$ 6,500,000	$ 20,900,000	$ 17,300,000
Income Tax Holiday, Income Tax Benefits Per Share	$ 0.03	$ 0.10	$ 0.09
State and Local Jurisdiction [Member]
Tax Credit Carryforward [Line Items]
Tax Credit Carryforward, Amount	53,200,000
Tax Credit Carryforward, Expiration Dates	2012 and 2027
Tax Credit Carryforward, Valuation Allowance	53,200,000
Foreign Country [Member]
Tax Credit Carryforward [Line Items]
Tax Credit Carryforward, Amount	20,000,000
Tax Credit Carryforward, Expiration Dates	2013 and 2017
Tax Credit Carryforward, Valuation Allowance	19,900,000
Research [Member]
Tax Credit Carryforward [Line Items]
Tax Credit Carryforward, Amount	28,500,000
Tax Credit Carryforward, Expiration Dates	2017 and 2032
Alternative Minimum Tax [Member]
Tax Credit Carryforward [Line Items]
Tax Credit Carryforward, Amount	$ 2,200,000

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Dividends (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Dividends [Abstract]
Total dividends per share for the period	$ 1.390	$ 1.374	$ 1.359
Cash dividend	$ (266,178)	$ (256,811)	$ (249,556)

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Investments AFS (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Investments [Abstract]
Amount of short-term investments	$ 823,254,000	$ 539,572,000
Amount of long-term investments	328,586,000	464,838,000
Impairment amount in value of auction rate securities failed		1,600,000
Net recognized gain on auction rate securities	300,000
Amount of corporate debt securities with no contractual maturity excluded from estimated fair value of available-for-sale securities	4,600,000	3,500,000
Amount of net realized gains (losses) on sales of available-for-sale marketable equity securities	400,000	3,200,000
Amount of net realized gains (losses) on sales of available-for-sale debt securities	400,000		1,200,000
Marketable Securities, Realized Loss, Other than Temporary Impairments, Amount	$ 2,400,000

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Contingencies (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012
Indemnification agreement [Member]
Loss contingencies [Line Items]
Loss contingencies, estimate of possible loss	$ 98
Pending or Threatened Litigation [Member]
Loss contingencies [Line Items]
Loss contingencies, estimate of possible loss	$ 13

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Net income per common share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				12 Months Ended
	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Computation of basic and diluted earnings per share [Abstract]
Net income from continuing operations	$ 130,612	$ 101,930	$ 104,748	$ 91,877	$ 336,705	$ 429,167	$ 217,005
Weighted average common shares outstanding					191,283,000	187,066,000	183,642,000
Dilutive effect of stock options and RSUs					4,207,000	4,463,000	3,697,000
Dilutive effect of convertible debt					8,029,255	3,185,591	0
Weighted average common and common equivalent shares outstanding					203,519,000	194,715,000	187,339,000
Basic net income per common share					$ 1.76	$ 2.29	$ 1.18
Diluted net income per common share - continuing operations	$ 0.65	$ 0.52	$ 0.55	$ 0.48	$ 1.65	$ 2.20	$ 1.16
Weighted average conversion price per share used in calculating dilutive effect of convertible debt (amount per share)					$ 28.50	$ 29.61	$ 31.16
Diluted net loss per common share - discontinued operations	$ (0.03)	$ (0.01)	$ (0.01)	$ (0.01)	$ 0.00	$ (0.05)	$ 0.00
Number of antidilutive option shares (in shares)					53,374	132,084	4,109,841

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Equity Incentive Plans, Stock Options Outstanding (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Summary of information about stock options outstanding [Line Items]
Aggregate intrinsic value of options exercisable related to stock incentive plans	$ 41.0
Closing price of company's common stock related to calculation of aggregate intrinsic value of stock options (in dollars per share)	$ 37.20
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Option shares outstanding beginning balance (in shares)	5,496,924	8,459,779	10,081,533
Options granted (in shares)	0	0	12,000
Options exercised (shares)	(2,129,260)	(2,885,365)	(1,492,866)
Options canceled (in shares)	(6,667)	(77,490)	(140,888)
Option shares outstanding ending balance (in shares)	3,360,997	5,496,924	8,459,779
Option shares outstanding beginning balance (in dollars per share)	$ 25.21	$ 24.52	$ 24.20
Options granted (in dollars per shares)	$ 0.00	$ 0.00	$ 27.03
Options exercised (in dollars per share)	$ 25.53	$ 23.09	$ 22.03
Options canceled (in dollars per share)	$ 25.05	$ 29.39	$ 27.79
Option shares outstanding ending balance (in dollars per share)	$ 25.00	$ 25.21	$ 24.52
Stock Option [Member]
Summary of information about stock options outstanding [Line Items]
Total intrinsic value of options exercised related to stock incentive plans	26.7	29.8	7.6
Aggregate intrinsic value of options outstanding related to stock incentive plans	$ 41.0
Exercisable number of option shares (in shares)	3,360,997,000	5,491,363,000
Weighted average exercise price per share of exercisable options (in dollars per share)	$ 25.00	$ 25.20
Weighted average fair value per share of stock options granted			$ 5.90
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected term			6.50
Volatility			36.00%
Risk free interest rate			3.00%
Dividend yield			5.00%

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Quarterly Results (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Quarterly Financial Information Disclosure [Abstract]
Net sales	$ 338,911	$ 329,156	$ 340,602	$ 374,507	$ 379,985	$ 367,824	$ 382,271	$ 357,125	$ 1,383,176	$ 1,487,205	$ 947,729
Gross profit	193,873	183,779	194,994	219,748	225,591	216,397	225,005	207,443	792,394	874,436	534,242
Operating income	93,909	88,127	97,620	116,860	124,361	117,453	123,143	109,226	396,516	474,183	244,959
Net income from continuing operations					130,612	101,930	104,748	91,877	336,705	429,167	217,005
Net loss from discontinued operations					(5,084)	(1,154)	(1,668)	(2,311)	0	(10,217)	0
Net income	$ 80,636	$ 77,489	$ 79,287	$ 99,293	$ 125,528	$ 100,776	$ 103,080	$ 89,566	$ 336,705	$ 418,950	$ 217,005
Diluted net income per common share - continuing operations					$ 0.65	$ 0.52	$ 0.55	$ 0.48	$ 1.65	$ 2.20	$ 1.16
Diluted net loss per common share - discontinued operations					$ (0.03)	$ (0.01)	$ (0.01)	$ (0.01)	$ 0.00	$ (0.05)	$ 0.00
Diluted net income per common share	$ 0.39	$ 0.38	$ 0.40	$ 0.49	$ 0.62	$ 0.51	$ 0.54	$ 0.47	$ 1.65	$ 2.15	$ 1.16

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Stock Repurchase Activity (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2012
Treasury stock repurchase [Abstract]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased	10.0
Repurchased shares under authorization (in shares)	7.5
Amount of repurchased shares under authorization	$ 234.7

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Income Taxes Components of deferred tax assets and liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
Components of Deferred Tax Assets [Abstract]
Deferred intercompany profit	$ 14,624	$ 11,031
Deferred income on shipments to distributors	23,646	33,304
Inventory valuation	6,245	5,740
Net operating loss carryforward	33,639	2,884
Share-based compensation	25,693	25,195
Income tax credits	103,882	68,647
Accrued expenses and other	10,770	11,052
Gross deferred tax assets	218,499	157,853
Valuation allowances	(78,506)	(50,346)
Deferred tax assets, net of valuation allowances	139,993	107,507
Components of Deferred Tax Liabilities [Abstract]
Property, plant and equipment, principally due to differences in depreciation	(7,844)	(5,036)
Junior convertible debentures	(445,826)	(407,477)
Other	(6,500)	(5,699)
Deferred tax liabilities	460,170	418,212
Net deferred tax liability	(320,177)	(310,705)
Deferred Tax Assets, Net, Current	91,191	88,822
Deferred Tax Liabilities, Noncurrent	(411,368)	(399,527)
Net deferred tax liability	$ (320,177)	$ (310,705)

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Stock Repurchase Activity (Notes)

12 Months Ended

Mar. 31, 2012

Treasury stock repurchase [Abstract]

Treasury Stock

STOCK REPURCHASE ACTIVITY

On December 11, 2007, the Company announced that its Board of Directors had authorized the repurchase of up to 10.0 million shares of its common stock in the open market or in privately negotiated transactions.  As of March 31, 2012, the Company had repurchased 7.5 million shares under this authorization for $234.7 million.  There is no expiration date associated with this program.

During the years ended March 31, 2012, 2011 and 2010, the Company did not purchase any of its shares of common stock. 

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Quarterly Results (Unaudited) (Tables)

12 Months Ended

Mar. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Quarterly financial data

The following table presents the Company's selected unaudited quarterly operating results for the eight quarters ended March 31, 2012.  The Company believes that all adjustments of a normal recurring nature have been made to present fairly the related quarterly results (in thousands, except per share amounts):

Fiscal 2012	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Net sales	$	374,507		$	340,602		$	329,156		$	338,911		$	1,383,176
Gross profit	219,748			194,994			183,779			193,873			792,394
Operating income	116,860			97,620			88,127			93,909			396,516
Net income	99,293			79,287			77,489			80,636			336,705
Diluted net income per common share	0.49			0.40			0.38			0.39			1.65
Fiscal 2011	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Net sales	$	357,125		$	382,271		$	367,824		$	379,985		$	1,487,205
Gross profit	207,443			225,005			216,397			225,591			874,436
Operating income	109,226			123,143			117,453			124,361			474,183
Net income from continuing operations	91,877			104,748			101,930			130,612			429,167
Net loss from discontinued operations	(2,311		)	(1,668		)	(1,154		)	(5,084		)	(10,217		)
Net income	89,566			103,080			100,776			125,528			418,950
Diluted net income per common share – continuing operations	0.48			0.55			0.52			0.65			2.20
Diluted net loss per common share – discontinued operations	(0.01		)	(0.01		)	(0.01		)	(0.03		)	(0.05		)
Diluted net income per common share	0.47			0.54			0.51			0.62			2.15

Refer to Note 4, Special Charges, for an explanation of the special charges included in operating income in fiscal 2012 and fiscal 2011.

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Property, Plant and Equipment (Tables)

12 Months Ended

Mar. 31, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consists of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Land	$	46,529	$	46,497
Building and building improvements	374,042		375,611
Machinery and equipment	1,314,303		1,306,367
Projects in process	83,676		101,202
	1,818,550		1,829,677
Less accumulated depreciation and amortization	1,301,939		1,289,164
	$	516,611	$	540,513

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Credit facility (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2012	Aug. 12, 2011
Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Initiation Date	August 12, 2011
Line of Credit Facility, Maximum Borrowing Capacity		$ 750
Line of Credit Facility, Expiration Date	August 12, 2016
Line of Credit Facility Increase Option		250
Line of Credit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Period For Leverage Ratio To Determine Interest Rate Spread	preceding four fiscal quarter period
Debt Instrument Interest Rate Spread On Overdue Principal In Event Of Default		2.00%
Debt Instrument Interest Rate Spread On Overdue Amounts In Event Of Default		2.00%
Line of Credit Facility Foreign Currency Sublimit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		100
Line of Credit Facility Swingline Loan Sublimit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		15
Line of Credit Facility Letter of Credit Sublimit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 25
Debt Instrument Interest Rate Option1 [Member] | Line of Credit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Description of Variable Rate Basis	the highest of JPMorgan Chase Bank, N.A.'s prime rate, the federal funds rate plus a margin equal to 0.50% and the adjusted LIBOR rate for a 1-month interest period plus a margin equal to 1.00%
Debt Instrument Additional Basis On Variable Rate Base		0.50%
Debt Instrument Interest Rate Option1 [Member] | Minimum [Member] | Line of Credit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		0.50%
Debt Instrument Interest Rate Option1 [Member] | Maximum [Member] | Line of Credit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.50%
Debt Instrument Interest Rate Option 2 [Member] | Line of Credit [Member] | Credit Agreement Maturity August 12, 2016 [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Description of Variable Rate Basis	adjusted LIBOR rate (based on one, two, three, or six-month interest periods)
Debt Instrument Additional Basis On Variable Rate Base		1.00%
Debt Instrument Interest Rate Option 2 [Member] | Minimum [Member] | Line of Credit [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.50%
Debt Instrument Interest Rate Option 2 [Member] | Maximum [Member] | Line of Credit [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		2.50%

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Discontinued Operations and Assets Held for Sale (Tables)

12 Months Ended

Mar. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Results of discontinued operations

The results of discontinued operations for the year ended March 31, 2011 are as follows (amounts in thousands):

	Year ended
	March 31, 2011
Net sales	$	25,177
Cost of sales	(32,627		)
Operating expenses	(3,676		)
Income tax benefit	909
Net loss from discontinued operations	$	(10,217	)

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Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Accounting Policies [Abstract]
Percentage Of Outstanding Stock Of All Subsidiaries Owned	100.00%
Amount of deferred revenue (gross)	$ 159,100,000	$ 208,100,000
Amount of deferred cost of sales	50,400,000	68,100,000
Amount of deferred Income on shipments to distributors	108,709,000	140,044,000
Estimated useful lives, lower range (in years)	3
Estimated useful lives, upper range (in years)	30
Junior subordinated convertible debentures conversion price per share (in dollars per share)	$ 27.94
Amount of distributor advances, included in deferred income on shipments to distributors in consolidated balance sheets	$ 51,700,000	$ 71,900,000
Number of days requiring distributor to settle receivable balances (in days)	30

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Goodwill by Reporting Segment (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Goodwill [Roll Forward]
Goodwill, ending balance	$ 93,513,000	$ 76,018,000
Amount of contingent consideration payments made to the previous owners of R and E international		12,100,000
Amount of derecognition of negative goodwill recorded on the acquisition		2,400,000
Semiconductor products [Member]
Goodwill [Roll Forward]
Goodwill, beginning balance	56,818,000	40,338,000
Additions due to contingent consideration payments to previousowners of R and E International	120,000	9,747,000
Goodwill, ending balance	74,313,000	56,818,000
Semiconductor products [Member] | SST acquisition [Member]
Goodwill [Roll Forward]
Additions due to business combination		5,761,000
Semiconductor products [Member] | Other acquisitions
Goodwill [Roll Forward]
Additions due to business combination	17,375,000	972,000
Technology licensing [Member]
Goodwill [Roll Forward]
Goodwill, beginning balance	19,200,000	0
Additions due to contingent consideration payments to previousowners of R and E International	0	0
Goodwill, ending balance	19,200,000	19,200,000
Technology licensing [Member] | SST acquisition [Member]
Goodwill [Roll Forward]
Additions due to business combination		19,200,000
Technology licensing [Member] | Other acquisitions
Goodwill [Roll Forward]
Additions due to business combination	$ 0	$ 0

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Measured on recurring basis (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010	Mar. 31, 2009
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Money Market Fund Deposits Fair Value Disclosure	$ 232,219	$ 464,669
Marketable Equity Securities Fair Value Disclosure	5,264	26,861
Corporate Bonds and Debt Fair Value Disclosure	774,104	523,026
Government Agency Bonds Fair Value Disclosure	342,104	430,591
Cash Deposit Accounts Fair Value Disclosure	403,536	239,255
Municipal Bonds Fair Value Disclosure	20,122	11,457
Auction Rate Securities Fair Value Disclosure	10,246	12,475
Fair Value, Assets and Liabilities, as Classified on the Condensed Consolidated Balance Sheets [Abstract]
Cash and cash equivalents	635,755	703,924	492,130	446,329
Short-term investments	823,254	539,572
Long-term investments	328,586	464,838
Total assets measured at fair value	1,787,595	1,708,334
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Money Market Fund Deposits Fair Value Disclosure	232,219	464,669
Marketable Equity Securities Fair Value Disclosure	5,264	26,861
Corporate Bonds and Debt Fair Value Disclosure	0	0
Government Agency Bonds Fair Value Disclosure	0	0
Cash Deposit Accounts Fair Value Disclosure	0	0
Municipal Bonds Fair Value Disclosure	0	0
Auction Rate Securities Fair Value Disclosure	0	0
Fair Value, Assets and Liabilities, as Classified on the Condensed Consolidated Balance Sheets [Abstract]
Cash and cash equivalents	232,219	464,669
Short-term investments	782	16,553
Long-term investments	4,482	10,308
Total assets measured at fair value	237,483	491,530
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Money Market Fund Deposits Fair Value Disclosure	0	0
Marketable Equity Securities Fair Value Disclosure	0	0
Corporate Bonds and Debt Fair Value Disclosure	769,479	519,526
Government Agency Bonds Fair Value Disclosure	342,104	430,591
Cash Deposit Accounts Fair Value Disclosure	403,536	239,255
Municipal Bonds Fair Value Disclosure	20,122	11,457
Auction Rate Securities Fair Value Disclosure	0	0
Fair Value, Assets and Liabilities, as Classified on the Condensed Consolidated Balance Sheets [Abstract]
Cash and cash equivalents	403,536	239,255
Short-term investments	822,472	523,019
Long-term investments	309,233	438,555
Total assets measured at fair value	1,535,241	1,200,829
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Money Market Fund Deposits Fair Value Disclosure	0	0
Marketable Equity Securities Fair Value Disclosure	0	0
Corporate Bonds and Debt Fair Value Disclosure	4,625	3,500
Government Agency Bonds Fair Value Disclosure	0	0
Cash Deposit Accounts Fair Value Disclosure	0	0
Municipal Bonds Fair Value Disclosure	0	0
Auction Rate Securities Fair Value Disclosure	10,246	12,475
Fair Value, Assets and Liabilities, as Classified on the Condensed Consolidated Balance Sheets [Abstract]
Cash and cash equivalents	0	0
Short-term investments	0	0
Long-term investments	14,871	15,975
Total assets measured at fair value	$ 14,871	$ 15,975

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Commitments (Tables)

12 Months Ended

Mar. 31, 2012

Leases, Operating [Abstract]

Future Minimum lease commitments

The future minimum lease commitments under these operating leases at March 31, 2012 were as follows (amounts in thousands):

Year Ending March 31,	Amount
2013	$	9,293
2014	7,221
2015	4,594
2016	3,438
2017	3,238
Thereafter	2,693
Total minimum payments	$	30,477

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Significant Accounting Policies (Notes)

12 Months Ended

Mar. 31, 2012

Accounting Policies [Abstract]

Summary of significant accounting policies

SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Microchip develops, manufactures and sells specialized semiconductor products used by its customers for a wide variety of embedded control applications.  Microchip's product portfolio comprises 8-bit, 16-bit and 32-bit PIC^® microcontrollers and 16-bit dsPIC^® digital signal controllers, which feature on-board Flash (reprogrammable) memory technology.  In addition, Microchip offers a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety and security and interface devices, as well as serial EEPROMs, Serial Flash memories and Parallel Flash memories.  Microchip also licenses Flash-IP solutions that are incorporated in a broad range of products.

Principles of Consolidation

The consolidated financial statements include the accounts of Microchip Technology Incorporated and its wholly-owned subsidiaries (Microchip or the Company).  The Company does not have any subsidiaries in which it does not own 100% of the outstanding stock.  All of the Company's subsidiaries are included in the consolidated financial statements.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, as evidenced by an agreement with the customer, transfer of title as well as fixed or determinable pricing and collectability is reasonably assured.  The Company recognizes revenue from product sales to original equipment manufacturers (OEMs) upon shipment and records reserves for estimated customer returns.

For license and other arrangements for SuperFlash^® technology that the Company is continuing to enhance and refine or under which it is obligated to provide unspecified enhancements, non-royalty revenue is recognized over the lesser of (1) the estimated period that the Company has historically enhanced and developed refinements to the specific technology, typically one to three years (the "upgrade period"), and (2) the remaining portion of the upgrade period after the date of delivery of all specified technology and documentation, provided that the fee is fixed or determinable and collection of the fee is reasonably assured.  Royalties received during the upgrade period are recognized as revenue based on an amortization calculation of the elapsed portion of the upgrade period compared to the entire estimated upgrade period.  Royalties received after the upgrade period has elapsed are recognized when reported to the Company, which generally coincides with the receipt of payment.  For licenses or other technology arrangements without an upgrade period, non-royalty revenue from license is recognized upon delivery of the technology if the fee is fixed or determinable and collection of the fee is reasonably assured.  Royalties are recognized when reported to the Company, which generally coincides with the receipt of payment.

Distributors worldwide generally have broad price protection and product return rights, so the Company defers revenue recognition until the distributor sells the product to their customer.  Revenue is recognized when the distributor sells the product to their end customer, at which time the sales price becomes fixed or determinable.  Revenue is not recognized upon the Company's shipment to the distributors since, due to discounts from list price as well as price protection rights, the sales price is not substantially fixed or determinable at that time.  At the time of shipment to these distributors, the Company records a trade receivable for the selling price as there is a legally enforceable right to payment, relieves inventory for the carrying value of goods shipped since legal title has passed to the distributor, and records the gross margin in deferred income on shipments to distributors on the consolidated balance sheets.

Deferred income on shipments to distributors effectively represents the gross margin on the sale to the distributor; however, the amount of gross margin recognized by the Company in future periods will be less than the deferred margin as a result of credits granted to distributors on specifically identified products and customers to allow the distributors to earn a competitive gross margin on the sale of the Company's products to their end customers and price protection concessions related to market pricing conditions.

The Company sells the majority of the items in its product catalog to its distributors worldwide at a uniform list price.  However, distributors resell the Company's products to end customers at a very broad range of individually negotiated price points.  The majority of the Company's distributors' resales require a reduction from the original list price paid.  Often, under these circumstances, the Company remits back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors' outstanding accounts receivable balance.  The credits are on a per unit basis and are not given to the distributor until they provide information regarding the sale to their end customer.  The price reductions vary significantly based on the customer, product, quantity ordered, geographic location and other factors and discounts to a price less than the Company's cost have historically been rare.  The effect of granting these credits establishes the net selling price from the Company to its distributors for the product and results in the net revenue recognized by the Company when the product is sold by the distributors to their end customers.  Thus, a portion of the "deferred income on shipments to distributors" balance represents the amount of distributors' original purchase price that will be credited back to the distributor in the future.  The wide range and variability of negotiated price concessions granted to distributors does not allow the Company to accurately estimate the portion of the balance in the deferred income on shipments to distributors account that will be credited back to the distributors.  Therefore, the Company does not reduce deferred income on shipments to distributors or accounts receivable by anticipated future price concessions; rather, price concessions are recorded against deferred income on shipments to distributors when incurred, which is generally at the time the distributor sells the product.

At March 31, 2012, the Company had approximately $159.1 million of deferred revenue and $50.4 million in deferred cost of sales recognized as $108.7 million of deferred income on shipments to distributors.  At March 31, 2011, the Company had approximately $208.1 million of deferred revenue and $68.1 million of deferred cost of sales recognized as $140.0 million of deferred income on shipments to distributors.  The deferred income on shipments to distributors that will ultimately be recognized in the Company's income statement will be lower than the amount reflected on the balance sheet due to price credits to be granted to the distributors when the product is sold to their customers.  These price credits historically have resulted in the deferred income approximating the overall gross margins that the Company recognizes in the distribution channel of its business.

The Company reduces product pricing through price protection based on market conditions, competitive considerations and other factors.  Price protection is granted to distributors on the inventory they have on hand at the date the price protection is offered.  When the Company reduces the price of its products, it allows the distributor to claim a credit against its outstanding accounts receivable balances based on the new price of the inventory it has on hand as of the date of the price reduction.  There is no immediate revenue impact from the price protection, as it is reflected as a reduction of the deferred income on shipments to distributors' balance.

Products returned by distributors and subsequently scrapped have historically been immaterial to the Company's consolidated results of operations.  The Company routinely evaluates the risk of impairment of the deferred cost of sales component of the deferred income on shipments to distributors account.  Because of the historically immaterial amounts of inventory that have been scrapped, and historically rare instances where discounts given to a distributor result in a price less than the Company's cost, the Company believes the deferred costs have a low risk of material impairment.

Shipping charges billed to customers are included in net sales, and the related shipping costs are included in cost of sales.

Product Warranty

The Company generally sells its products with a limited warranty related to product quality and a limited indemnification of customers against intellectual property infringement claims related to the Company's products.  Due to comprehensive product testing, the short time between product shipment and the detection and correction of product failures, and a low historical rate of payments on indemnification claims, the accrual based on historical activity and the related expense were immaterial as of and for the fiscal years ended March 31, 2012, 2011 and 2010.

Advertising Costs

The Company expenses all advertising costs as incurred.  Advertising costs were immaterial for the fiscal years ended March 31, 2012, 2011 and 2010.

Research and Development

Research and development costs are expensed as incurred.  Assets purchased to support the Company's ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their estimated useful lives.  Research and development expenses include expenditures for labor, share-based payments, depreciation, masks, prototype wafers, and expenses for development of process technologies, new packages, and software to support new products and design environments.

Foreign Currency Translation and Forward Contracts

The Company's foreign subsidiaries are considered to be extensions of the U.S. Company and any translation gains and losses related to these subsidiaries are included in other income (expense) in the consolidated statements of income.  As the U.S. dollar is utilized as the functional currency, gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the subsidiaries' functional currency) are also included in income.  Gains and losses associated with currency rate changes on forward contracts are recorded currently in income.  These gains and losses have been immaterial to the Company's financial statements.

Income Taxes

As part of the process of preparing its consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates.  This process involves estimating the Company's actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes.  These differences result in deferred tax assets and liabilities, which are included within the Company's consolidated balance sheet.  The Company must then assess the likelihood that its deferred tax assets will be recovered from future taxable income and to the extent it believes that recovery is not likely, it must establish a valuation allowance.  The Company has provided valuation allowances for certain of its deferred tax assets where it is more likely than not that some portion, or all of such assets, will not be realized.  

Cash and Cash Equivalents

All highly liquid investments, including marketable securities purchased with a remaining maturity of three months or less when acquired are considered to be cash equivalents.

Investments – Available-for-Sale and Trading Securities

The Company classifies its investments in debt and marketable equity securities as available-for-sale or trading securities based upon management's intent with regard to the investments and the nature of the underlying securities. 

The Company's available-for-sale investments consist of government agency bonds, municipal bonds, auction rate securities (ARS), corporate bonds and marketable equity securities.  The Company's investments are carried at fair value with unrealized gains and losses reported in stockholders' equity.  Premiums and discounts are amortized or accreted over the life of the related available-for-sale security.  Dividend and interest income are recognized when earned.  The cost of securities sold is calculated using the specific identification method. 

The Company includes within short-term investments its trading securities, as well as its income yielding available-for-sale securities that can be readily converted to cash and includes within long-term investments those income yielding available-for-sale securities with maturities of over one year that have unrealized losses attributable to them or those that cannot be readily liquidated.  Except as discussed in Note 5, the Company intends and has the ability to hold its long-term investments with temporary impairments until such time as these assets are no longer impaired.  Such recovery of unrealized losses is not expected to occur within the next year.

Due to the lack of availability of observable market quotes on certain of the Company's investment portfolio of ARS, it utilizes valuation models including those that are based on expected cash flow streams and collateral values, including assessments of counterparty credit quality, default risk underlying the security, discount rates and overall capital market liquidity.  The valuation of the Company's ARS investment portfolio is subject to uncertainties that are difficult to predict.  Factors that may impact the Company's ARS valuation include changes to credit ratings of the securities as well as to the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk, the ongoing strength and quality of the credit markets and market liquidity.

The credit markets experienced significant deterioration and uncertainty beginning in the second half of fiscal 2008.  If these conditions recur, or the Company experiences any additional ratings downgrades on any investments in its portfolio (including its ARS), the Company may incur additional impairments to its investment portfolio, which could negatively affect the Company's financial condition, cash flows and reported earnings.

Non-Marketable Investments

The Company's non-marketable equity investments are recorded using adjusted cost basis or the equity method of accounting, depending on the circumstances of each investment.  The Company's non-marketable investments are classified within other assets on the Company's consolidated balance sheet.  The Company's non-marketable equity investments include:

Equity Method Investments:  When the Company has the ability to exercise significant influence, but not control, over the investee, it records equity method gain or loss as "gain or loss from equity investments."  Equity method adjustments include the Company's proportionate share of the investee's income or loss.

Cost Method Investments:  When the Company does not have the ability to exercise significant influence over the investee, it records such investments at cost.

The Company reviews its investments quarterly for indicators of impairment.  The impairment review requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances that impact the fair value of the investment, such as:

• the investee's revenue and trends in earnings or losses relative to pre-defined milestones and overall business prospects;

• the technological feasibility of the investee's products and technologies;

• the general market conditions in the investee's industry or geographic area, including adverse regulatory or economic changes;

• factors related to the investee's ability to remain in business, such as the investee's liquidity, debt ratios, and the rate at which the investee is using its cash; and

• the investee's receipt of additional funding at a lower valuation.

If the fair value of an investment is below the Company's carrying value, the Company determines if the investment is other than temporarily impaired based on a quantitative and qualitative analysis, which includes assessing the severity and duration of the impairment and the likelihood of recovery before disposal.  If the investment is considered to be other than temporarily impaired, the Company writes down the investment to its fair value.  

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which is included in bad debt expense.  The Company determines the adequacy of this allowance by regularly reviewing the composition of its accounts receivable aging and evaluating individual customer receivables, considering such customer's financial condition, credit history and current economic conditions.

Inventories

Inventories are valued at the lower of cost or market using the first-in, first-out method.  The Company writes down its inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.  If actual market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required.  Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable.  In estimating reserves for obsolescence, the Company primarily evaluates estimates of demand over a twelve-month period and provides reserves for inventory on hand in excess of the estimated twelve-month demand.

In periods where the Company's production levels are substantially below normal operating capacity, such as in the first half of fiscal 2010 and the second half of fiscal 2012, unabsorbed overhead production associated with the reduced production levels of the Company's manufacturing facilities are charged directly to cost of sales.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred.  The Company's property and equipment accounting policies incorporate estimates, assumptions and judgments relative to the useful lives of its property and equipment.  Depreciation is provided for assets placed in service on a straight-line basis over the estimated useful lives of the relative assets, which range from 3 to 30 years.  The Company evaluates the carrying value of its property and equipment when events or changes in circumstances indicate that the carrying value of such assets may be impaired.  Asset impairment evaluations are, by nature, highly subjective.

Junior Subordinated Convertible Debentures

The Company separately accounts for the liability and equity components of its junior subordinated convertible debentures in a manner that reflects its nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized.  This results in a bifurcation of a component of the debt, classification of that component in equity and the accretion of the resulting discount on the debt to be recognized as part of interest expense in its consolidated statements of income.  Additionally, certain embedded features of the debentures qualify as derivatives and are bundled as a compound embedded derivative that is measured at fair value.  Lastly, the Company includes the dilutive effect of the shares of its common stock issuable upon conversion of the outstanding junior subordinated convertible debentures in its diluted income per share calculation regardless of whether the market price trigger or other contingent conversion feature has been met.  The Company applies the treasury stock method as it has the intent and current ability to settle the principal amount of the junior subordinated convertible debentures in cash.  This method results in incremental dilutive shares when the average market value of the Company's common stock for a reporting period exceeds the conversion price per share which was $27.94 at March 31, 2012 and adjusts as dividends are recorded in the future.

Litigation

The Company's estimated range of liability related to pending litigation is based on claims for which management believes a loss is probable and it can estimate the amount or range of loss.  Because of the uncertainties related to both the outcome and range of any potential losses on the pending litigation, the Company is generally unable to make a reasonable estimate of the liability that could result from an unfavorable outcome.  As additional information becomes available, the Company will assess the potential liability related to its pending litigation and revise its estimates, if necessary.

Goodwill and Other Intangible Assets

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.  The Company is required to perform an annual impairment review, and more frequently under certain circumstances.  The goodwill is subjected to this test during the fourth quarter of the Company's fiscal year.  The Company engages primarily in the design, development, manufacture and marketing of semiconductor products as well as technology licensing.  As a result, the Company concluded there are two reporting units, semiconductor products and technology licensing.  The Company has early adopted the qualitative goodwill impairment assessment standard which it applied as of March 31, 2012. Under this standard, management evaluates whether it is more likely than not that goodwill is impaired. If it is determined that it is more likely than not, the Company proceeds with the next step of the impairment test, which compares the fair value of the reporting unit to its carrying value.  If the Company determines through the impairment process that goodwill has been impaired, the Company will record the impairment charge in its results of operation.  Through March 31, 2012, the Company has not had impaired goodwill.  The Company's other intangible assets represent existing technologies, core and developed technology, in-process research and development, trademarks and trade names, and customer-related intangibles. Other intangible assets are amortized over their respective estimated lives, ranging from one year to ten years.  In the event that facts and circumstances indicate intangibles or other long-lived assets may be impaired, the Company evaluates the recoverability and estimated useful lives of such assets.  In-process research and development is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.

Impairment of Long-Lived Assets

The Company assesses whether indicators of impairment of long-lived assets are present.  If such indicators are present, the Company determines whether the sum of the estimated undiscounted cash flows attributable to the assets in question is less than their carrying value.  If less, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their respective fair values.  Fair value is determined by discounted future cash flows, appraisals or other methods.  If the assets determined to be impaired are to be held and used, the Company recognizes an impairment loss through a charge to operating results to the extent the present value of anticipated net cash flows attributable to the asset are less than the asset's carrying value.  The Company would depreciate the remaining value over the remaining estimated useful life of the asset.

Share-Based Compensation

The Company has equity incentive plans under which non-qualified stock options and restricted stock units (RSUs) have been granted to employees and non-employee members of the Board of Directors.  In the second half of fiscal 2006, the Company adopted RSUs as its primary equity incentive compensation instrument for employees.  The Company also has an employee stock purchase plan for all eligible employees.

The Company estimates the fair value of share-based payment awards on the date of grant using an option pricing model.  The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods.  The Company has estimated the fair value of each award as of the date of grant using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable.  The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of the Company's stock price.

Determining the appropriate fair-value model and calculating the fair value of share-based awards at the date of grant requires judgment.  The fair value of RSUs is based on the fair market value of the Company's common stock on the date of grant discounted for expected future dividends.  The Company uses the Black-Scholes option pricing model to estimate the fair value of employee stock options and rights to purchase shares under stock participation plans.  Option pricing models, including the Black-Scholes model, also require the use of input assumptions, including expected volatility, expected life, expected dividend rate, and expected risk-free rate of return.  The Company uses a blend of historical and implied volatility based on options freely traded in the open market as it believes this is more reflective of market conditions and a better indicator of expected volatility than using purely historical volatility.  The expected life of the awards is based on historical and other economic data trended into the future.  The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of the Company's awards.  The dividend yield assumption is based on the Company's history and expectation of future dividend payouts.  The Company estimates the number of share-based awards which will be forfeited due to employee turnover.  Quarterly changes in the estimated forfeiture rate would affect share-based compensation, as the effect of adjusting the rate for all expense amortization after April 1, 2006 is recognized in the period the forfeiture estimate is changed.  If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the financial statements.  If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase to the expense recognized in the financial statements.  If forfeiture adjustments are made, they would affect the Company's results of operations.  The effect of forfeiture adjustments in the years ended March 31, 2012, 2011 and 2010 was immaterial.

The Company evaluates the assumptions used to value its awards on a quarterly basis.  If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what was recorded in the past.  If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate or increase any remaining unearned share-based compensation expense.  Future share-based compensation expense and unearned share-based compensation will increase to the extent that the Company grants additional equity awards to employees or it assumes unvested equity awards in connection with acquisitions.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments in debt securities and trade receivables.  Investments in debt securities with original maturities of greater than six months consist primarily of AAA and AA rated financial instruments and counterparties.  The Company's investments are primarily in direct obligations of the U.S. government or its agencies, corporate bonds, and municipal bonds.

Concentrations of credit risk with respect to accounts receivable are generally not significant due to the diversity of the Company's customers and geographic sales areas.  The Company sells its products primarily to OEMs and distributors in the Americas, Europe and Asia.  The Company performs ongoing credit evaluations of its customers' financial condition and, as deemed necessary, may require collateral, primarily letters of credit.

Distributor advances, included in deferred income on shipments to distributors in the consolidated balance sheets, totaled $51.7 million at March 31, 2012 and $71.9 million at March 31, 2011.  On sales to distributors, the Company's payment terms generally require the distributor to settle amounts owed to the Company for an amount in excess of their ultimate cost.  The Company's sales price to its distributors may be higher than the amount that the distributors will ultimately owe the Company because distributors often negotiate price reductions after purchasing the product from the Company and such reductions are often significant.  It is the Company's practice to apply these negotiated price discounts to future purchases, requiring the distributor to settle receivable balances, on a current basis, generally within 30 days, for amounts originally invoiced.  This practice has an adverse impact on the working capital of the Company's distributors.  As such, the Company has entered into agreements with certain distributors whereby it advances cash to the distributors to reduce the distributor's working capital requirements.  These advances are reconciled at least on a quarterly basis and are estimated based on the amount of ending inventory as reported by the distributor multiplied by a negotiated percentage.  Such advances have no impact on revenue recognition or the Company's consolidated statements of income.  The Company processes discounts taken by distributors against its deferred income on shipments to distributors' balance and trues-up the advanced amounts generally after the end of each completed fiscal quarter.  The terms of these advances are set forth in binding legal agreements and are unsecured, bear no interest on unsettled balances and are due upon demand.  The agreements governing these advances can be canceled by the Company at any time.

Use of Estimates

The Company has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare its consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles.  Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In the fourth quarter of fiscal 2012, the Company early adopted a new standard for the assessment of goodwill impairment, which permits an entity to first assess qualitative factors to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. After assessing qualitative factors, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further testing is necessary. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the traditional two-step goodwill impairment test must be performed. The Company applied this standard to its March 31, 2012 goodwill impairment test, concluding that it was not more likely than not that the fair value of its two reporting units were less than the carrying amounts.

In the first quarter of fiscal 2012, the Company adopted new standards for revenue recognition with multiple deliverables. These new standards change the determination of whether the individual deliverables included in a multiple-element arrangement may be treated as separate units for accounting purposes. Additionally, these new standards modify the method in which revenue is allocated to the separately identified deliverables. The adoption of these new standards did not have a significant impact on the Company's consolidated financial statements.

In the first quarter of fiscal 2012, the Company adopted new standards that remove certain tangible products and associated software from the scope of the software revenue recognition guidance. The adoption of these new standards did not have a significant impact on the Company's consolidated financial statements.

In the first quarter of fiscal 2012, the Company adopted new standards for the application of the milestone method of revenue recognition for certain research and development arrangements entered into by its technology licensing segment. Under this standard, the Company will recognize arrangement consideration received for achieving specified performance measures during the period in which the milestones are achieved, provided certain criteria are met for the milestones to be considered substantive. This standard was adopted prospectively, and its adoption is not expected to have a significant impact on the Company's consolidated financial statements.

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Fair Value of Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
Fair Value Disclosures [Abstract]
Fair value of junior subordinated convertible debentures based on the trading price of the bonds	$ 1,585	$ 1,574

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Intangible Assets and Goodwill (Tables)

12 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets consist of the following (amounts in thousands):

	March 31, 2012
	Gross Amount		Accumulated Amortization			Net Amount
Developed technology	$	94,681	$	(35,920	)	$	58,761
Customer-related	20,400		(4,633		)	15,767
Trademarks and trade names	1,730		(684		)	1,046
Backlog	2,410		(2,410		)	—
In-process technology	14,086		—			14,086
Distribution rights	5,236		(4,660		)	576
Covenants not to compete	400		(200		)	200
	$	138,943	$	(48,507	)	$	90,436

	March 31, 2011
	Gross Amount		Accumulated Amortization			Net Amount
Developed technology	$	83,751	$	(27,705	)	$	56,046
Customer-related	15,600		(1,621		)	13,979
Trademarks and trade names	1,730		(250		)	1,480
Backlog	2,410		(1,709		)	701
In-process technology	4,300		—			4,300
Distribution rights	5,236		(4,147		)	1,089
Covenants not to compete	400		(66		)	334
	$	113,427	$	(35,498	)	$	77,929

Projected Amortization Expense

$9.8 million of in-process technology which will begin amortization once the technology reaches technological feasibility. The following is an expected amortization schedule for the intangible assets for fiscal year 2013 through fiscal year 2017, absent any future acquisitions or impairment charges (amounts in thousands):

Year ending March 31,	Projected Amortization Expense
2013	$13,218
2014	13,042
2015	12,901
2016	10,784
2017	9,134

Goodwill Activity

Goodwill activity for fiscal years 2012 and 2011 was as follows (amounts in thousands):

	Semiconductor Products Reporting Unit		Technology Licensing Reporting Unit
Balance at March 31, 2010	$	40,338	$	—
Additions due to the acquisition of SST	5,761		19,200
Additions due to contingent consideration payments to previous owners of R&E International	9,747		—
Additions due to other acquisitions	972		—
Balance at March 31, 2011	56,818		19,200
Additions due to contingent consideration payments to previous owners of R&E International	120		—
Additions due to other acquisitions	17,375		—
Balance at March 31, 2012	$	74,313	$	19,200

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Segment Information (Notes)

12 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

GEOGRAPHIC AND SEGMENT INFORMATION

The Company's reporting segments include semiconductor products and technology licensing.  The Company does not allocate operating expenses, interest income, interest expense, other income or expense, or provision for or benefit from income taxes to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance.  Additionally, the Company does not allocate assets to segments for internal reporting purposes as it does not manage its segments by such metrics. The technology licensing segment is the result of the acquisition of SST in the first quarter of fiscal 2011 and thus for fiscal 2010, net sales and gross profit are solely attributable to the semiconductor product segment.

The following table represents revenues and gross profit for each segment (amounts in thousands):

	Years ended March 31,
	2012				2011				2010
	Net Sales		Gross Profit		Net Sales		Gross Profit		Net Sales		Gross Profit
Semiconductor products	$	1,296,175	$	709,754	$	1,415,137	$	806,398	$	947,729	$	534,242
Technology licensing	87,001		82,640		72,068		68,038		—		—
	$	1,383,176	$	792,394	$	1,487,205	$	874,436	$	947,729	$	534,242

The Company sells its products to distributors and original equipment manufacturers (OEMs) in a broad range of market segments, performs on-going credit evaluations of its customers and, as deemed necessary, may require collateral, primarily letters of credit.  The Company's operations outside the U.S. consist of product assembly and final test facilities in Thailand, and sales and support centers and design centers in certain foreign countries.  Domestic operations are responsible for the design, development and wafer fabrication of products, as well as the coordination of production planning and shipping to meet worldwide customer commitments.  The Thailand assembly and test facility is reimbursed in relation to value added with respect to assembly and test operations and other functions performed, and certain foreign sales offices receive compensation for sales within their territory.  Accordingly, for financial statement purposes, it is not meaningful to segregate sales or operating profits for the assembly and test and foreign sales office operations.  Identifiable long-lived assets (consisting of property, plant and equipment) by geographic area are as follows (amounts in thousands):

	March 31,
	2012		2011
United States	$	314,339	$	330,046
Thailand	186,098		193,729
Various other countries	16,174		16,738
Total long-lived assets	$	516,611	$	540,513

Sales to unaffiliated customers located outside the U.S., primarily in Asia and Europe, aggregated approximately 82%, 80% and 77% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales to customers in Europe represented 23%, 23% and 25% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales to customers in Asia represented 56%, 57% and 51% of consolidated net sales for each of the years ended March 31, 2012, 2011 and 2010, respectively.  Within Asia, sales into China, including Hong Kong, represented 24%, 25% and 25% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales into Taiwan represented 15%, 13% and 10% of consolidated net sales for the years ended March 31, 2012, 2011 and 2010, respectively.  Sales into any other individual foreign country did not exceed 10% of the Company's net sales for any of the years presented.

No single end customer accounted for 10% or more of the Company's net sales or accounts receivable balances during the years ended March 31, 2012, 2011 and 2010. The Company's largest distributor accounted for approximately 10% of its net sales in each of fiscal 2012 and fiscal 2011 and approximately 12% of its net sales in fiscal 2010. These net sales are reported in the semiconductor products segment.

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Commitments (Notes)

12 Months Ended

Mar. 31, 2012

Leases, Operating [Abstract]

Lease commitments

COMMITMENTS

The Company leases office space, transportation and other equipment under operating leases which expire at various dates through March 31, 2018.  The future minimum lease commitments under these operating leases at March 31, 2012 were as follows (amounts in thousands):

Year Ending March 31,	Amount
2013	$	9,293
2014	7,221
2015	4,594
2016	3,438
2017	3,238
Thereafter	2,693
Total minimum payments	$	30,477

Rental expense under operating leases totaled $15.1 million, $13.0 million and $10.7 million for fiscal years 2012, 2011 and 2010, respectively.

Commitments for construction or purchase of property, plant and equipment totaled $13.3 million as of March 31, 2012, all of which will be due within the next year. Other purchase obligations and commitments totaled approximately $21.4 million as of March 31, 2012. Other purchase obligations and commitments include payments due under various types of licenses and outstanding purchase commitments with the Company's wafer foundries of approximately $19.5 million for delivery in fiscal 2013.

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Summary of Available for Sale (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
Summary of available-for-sale securities [Line Items]
Available-for-sale, adjusted cost	$ 1,148,914	$ 1,000,947
Available-for-sale, gross unrealized gains	5,048	4,997
Available-for-sale, gross unrealized losses	(2,122)	(1,534)
Available-for-sale, estimated fair value	1,151,840	1,004,410
Government agency bonds [Member]
Summary of available-for-sale securities [Line Items]
Available-for-sale, adjusted cost	342,025	431,355
Available-for-sale, gross unrealized gains	476	159
Available-for-sale, gross unrealized losses	(397)	(923)
Available-for-sale, estimated fair value	342,104	430,591
Municipal bonds [Member]
Summary of available-for-sale securities [Line Items]
Available-for-sale, adjusted cost	19,888	11,445
Available-for-sale, gross unrealized gains	234	34
Available-for-sale, gross unrealized losses	0	(22)
Available-for-sale, estimated fair value	20,122	11,457
Auction rate securities [Member]
Summary of available-for-sale securities [Line Items]
Available-for-sale, adjusted cost	10,246	12,475
Available-for-sale, gross unrealized gains	0	0
Available-for-sale, gross unrealized losses	0	0
Available-for-sale, estimated fair value	10,246	12,475
Corporate bonds and debt [Member]
Summary of available-for-sale securities [Line Items]
Available-for-sale, adjusted cost	770,891	519,499
Available-for-sale, gross unrealized gains	4,150	4,116
Available-for-sale, gross unrealized losses	(937)	(589)
Available-for-sale, estimated fair value	774,104	523,026
Equity Securities [Member]
Summary of available-for-sale securities [Line Items]
Available-for-sale, adjusted cost	5,864	26,173
Available-for-sale, gross unrealized gains	188	688
Available-for-sale, gross unrealized losses	(788)	0
Available-for-sale, estimated fair value	$ 5,264	$ 26,861

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Accrued Liabilities (Tables)

12 Months Ended

Mar. 31, 2012

Liabilities, Current [Abstract]

Accrued liabilities

Accrued liabilities consist of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Bankruptcy reorganization liability	$	—	$	19,385
Other accrued expenses	88,877		112,454
	$	88,877	$	131,839

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Derivative Instruments (Notes)

12 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

DERIVATIVE INSTRUMENTS

The Company has international operations and is thus subject to foreign currency rate fluctuations.  To manage the risk of changes in foreign currency rates, the Company periodically enters into derivative contracts comprised of foreign currency forward contracts to hedge its asset and liability foreign currency exposure and a portion of its foreign currency operating expenses.  Approximately 99% of the Company's sales are U.S. Dollar denominated.  To date, the exposure related to foreign exchange rate volatility has not been material to the Company's operating results.  As of March 31, 2012 and 2011, the Company had no foreign currency derivatives outstanding.  The Company recognized an immaterial amount of net realized gains and losses on foreign currency derivatives in the years ended March 31, 2012, 2011 and 2010.

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Net income per common share (Notes)

12 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

Net income per common share

NET INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income per common share from continuing operations (in thousands, except per share amounts):

	Year ended March 31,
	2012		2011		2010
Net income from continuing operations	$	336,705	$	429,167	$	217,005
Weighted average common shares outstanding	191,283		187,066		183,642
Dilutive effect of stock options and RSUs	4,207		4,463		3,697
Dilutive effect of convertible debt	8,029		3,186		—
Weighted average common and potential common shares outstanding	203,519		194,715		187,339
Basic net income per common share – continuing operations	$	1.76	$	2.29	$	1.18
Diluted net income per common share – continuing operations	$	1.65	$	2.20	$	1.16

Diluted net income per common share for continuing operations for the years ended March 31, 2012 and 2011 includes 8,029,255 and 3,185,591 shares, respectively, issuable upon the exchange of debentures (see Note 14).  There were no shares issuable upon the exchange of the debentures for the year ended March 31, 2010. The debentures have no impact on diluted net income per common share unless the average price of the Company's common stock exceeds the conversion price because the principal amount of the debentures will be settled in cash upon conversion.  Prior to conversion, the Company will include, in the diluted net income per common share calculation, the effect of the additional shares that may be issued when the Company's common stock price exceeds the conversion price using the treasury stock method.  The weighted average conversion price per share used in calculating the dilutive effect of the convertible debt for years ended March 31, 2012, 2011 and 2010 was $28.50, $29.61 and $31.16, respectively.

Diluted net loss per common share from discontinued operations for the year ended March 31, 2011 was $0.05. There was no diluted net income or loss from discontinued operations for the years ended March 31, 2012 or 2010.

Weighted average common shares exclude the effect of option shares which are not dilutive.  For the years ended March 31, 2012, 2011 and 2010, the number of option shares that were antidilutive were 53,374, 132,084 and 4,109,841, respectively.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (PARENTHETICAL) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax	$ 281	$ 493	$ 1,778

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Quarterly Results (Unaudited)

12 Months Ended

Mar. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results (Unaudited)

QUARTERLY RESULTS (UNAUDITED)

The following table presents the Company's selected unaudited quarterly operating results for the eight quarters ended March 31, 2012.  The Company believes that all adjustments of a normal recurring nature have been made to present fairly the related quarterly results (in thousands, except per share amounts):

Fiscal 2012	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Net sales	$	374,507		$	340,602		$	329,156		$	338,911		$	1,383,176
Gross profit	219,748			194,994			183,779			193,873			792,394
Operating income	116,860			97,620			88,127			93,909			396,516
Net income	99,293			79,287			77,489			80,636			336,705
Diluted net income per common share	0.49			0.40			0.38			0.39			1.65
Fiscal 2011	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Net sales	$	357,125		$	382,271		$	367,824		$	379,985		$	1,487,205
Gross profit	207,443			225,005			216,397			225,591			874,436
Operating income	109,226			123,143			117,453			124,361			474,183
Net income from continuing operations	91,877			104,748			101,930			130,612			429,167
Net loss from discontinued operations	(2,311		)	(1,668		)	(1,154		)	(5,084		)	(10,217		)
Net income	89,566			103,080			100,776			125,528			418,950
Diluted net income per common share – continuing operations	0.48			0.55			0.52			0.65			2.20
Diluted net loss per common share – discontinued operations	(0.01		)	(0.01		)	(0.01		)	(0.03		)	(0.05		)
Diluted net income per common share	0.47			0.54			0.51			0.62			2.15

Refer to Note 4, Special Charges, for an explanation of the special charges included in operating income in fiscal 2012 and fiscal 2011.

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Segment Reporting Information [Line Items]
Segment Net Sales	$ 338,911	$ 329,156	$ 340,602	$ 374,507	$ 379,985	$ 367,824	$ 382,271	$ 357,125	$ 1,383,176	$ 1,487,205	$ 947,729
Segment Gross Profit	193,873	183,779	194,994	219,748	225,591	216,397	225,005	207,443	792,394	874,436	534,242
Semiconductor products [Member]
Segment Reporting Information [Line Items]
Segment Net Sales									1,296,175	1,415,137	947,729
Segment Gross Profit									709,754	806,398	534,242
Technology licensing [Member]
Segment Reporting Information [Line Items]
Segment Net Sales									87,001	72,068	0
Segment Gross Profit									$ 82,640	$ 68,038	$ 0

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Accounts Receivable (Tables)

12 Months Ended

Mar. 31, 2012

Accounts Receivable, Net [Abstract]

Accounts Receivable Schedule

Accounts receivable consists of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Trade accounts receivable	$	171,274	$	181,840
Other	1,529		2,200
	172,803		184,040
Less allowance for doubtful accounts	2,602		2,838
	$	170,201	$	181,202

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Business Acquisitions (Details) (USD $)	12 Months Ended		12 Months Ended					12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2011 Other non material business acquisitions [Member]	Mar. 31, 2010 Other non material business acquisitions [Member]	Mar. 31, 2010 Other non material business acquisitions [Member] In-process research and development [Member]	Feb. 09, 2012 Ident Technology AG acquisition [Member]	Feb. 09, 2012 Ident Technology AG acquisition [Member] In-process research and development [Member]	Mar. 31, 2011 Silicon Storage Technology, Inc. acquisition [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member] Semiconductor products [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member] Technology licensing [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member] Core/developed technology [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member] In-process research and development [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member] Trademarks and trade names [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member] Customer-related [Member]	Apr. 08, 2010 Silicon Storage Technology, Inc. acquisition [Member] Backlog [Member]
Business Acquisition, Cost of Acquired Entity, Purchase Price [Abstract]
Price per share at fair value (in amount per share)									$ 3.05
Total consideration				$ 9,300,000		$ 39,500,000			$ 353,800,000
Total cash consideration paid									295,400,000
Cost to acquire company, cash paid, net of cash acquired			6,500,000
Total equity consideration paid									58,400,000
Assets acquired [Abstract]
Cash and cash equivalents			2,500,000
Goodwill			1,000,000	4,200,000		17,400,000			25,000,000	5,800,000	19,200,000
Purchased intangible assets			5,600,000	7,000,000	2,900,000	18,100,000	8,200,000		50,900,000			32,900,000	900,000	1,700,000	13,100,000	2,300,000
Liabilities assumed [Abstract]
Bankruptcy reorganization liability	0	19,385,000	19,400,000
Contingent consideration			$ 2,000,000	$ 1,300,000
Acquired Finite-lived Intangible Asset, Weighted Average Useful Life			7	7
Useful life minimum	1							5
Useful life maximum	10							10

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Income Taxes Operating loss carryforwards (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2012
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	$ 33.6
Operating Loss Carryforwards, Expiration Dates	2014 and 2029
Other Tax Carryforward, Valuation Allowance	5.4
Alternative Minimum Tax [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	$ 52.7
Operating Loss Carryforwards, Expiration Dates	2032

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
ASSETS
Cash and cash equivalents	$ 635,755	$ 703,924
Short-term investments	823,254	539,572
Accounts receivable, net	170,201	181,202
Inventories	217,278	180,800
Prepaid expenses	25,658	22,234
Deferred tax assets	91,191	88,822
Other current assets	52,524	58,429
Total current assets	2,015,861	1,774,983
Property, plant and equipment, net	516,611	540,513
Long-term investments	328,586	464,838
Goodwill	93,513	76,018
Intangible assets, net	90,436	77,929
Other assets	38,769	33,777
Total assets	3,083,776	2,968,058
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	50,287	68,433
Accrued liabilities	88,877	131,839
Deferred income on shipments to distributors	108,709	140,044
Total current liabilities	247,873	340,316
Junior convertible debentures	355,050	347,334
Long-term income tax payable	70,490	58,125
Deferred tax liability	411,368	399,527
Other long-term liabilities	8,322	10,318
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding.	0	0
Common stock, $0.001 par value; 450,000,000 shares authorized; 218,789,994 shares issued and 193,150,532 shares outstanding at March 31, 2012; 218,789,994 shares issued and 189,541,707 shares outstanding at March 31, 2011	193	190
Additional paid-in capital	1,268,907	1,268,128
Common stock held in treasury: 25,639,462 shares at March 31, 2012; 29,248,287 shares at March 31, 2011	(780,893)	(888,075)
Accumulated other comprehensive income	3,101	3,357
Retained earnings	1,499,365	1,428,838
Total stockholders' equity	1,990,673	1,812,438
Total liabilities and stockholders' equity	$ 3,083,776	$ 2,968,058

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Income taxes (Tables)

12 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Abstract]

Rollforward of unrecognized tax benefits

The following table summarizes the activity related to the Company's gross unrecognized tax benefits from April 1, 2009 to March 31, 2012 (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Beginning balance	$	58,125		$	57,140		$	70,051
Increases related to acquisitions	—			36,587			—
Decreases related to prior year tax positions	(2,153		)	(49,932		)	(25,492		)
Increases related to current year tax positions	11,992			13,951			11,332
Increases related to prior year tax positions	2,526			379			1,249
Ending balance	$	70,490		$	58,125		$	57,140

Components of income tax expense (benefit)

The income tax (benefit) provision from continuing operations consists of the following (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Current (benefit) expense:
Federal	$	7,611		$	294		$	(4,358	)
State	544			21			(436		)
Foreign	21,174			22,877			6,981
Total current	$	29,329		23,192			2,187
Deferred expense (benefit):
Federal	$	14,942		11,035			16,663
State	1,067			788			1,668
Foreign	(2,348		)	(3,484		)	290
Total deferred	13,661			8,339			18,621
	$	42,990		$	31,531		$	20,808

Reconciliation of expected federal income tax expense to actual

The sources and tax effects of the differences in the total income tax (benefit) provision from continuing operations are as follows (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Computed expected income tax provision	$	132,894		$	161,244		$	83,235
State income taxes, net of federal benefits	1,280			1,746			915
Research and development tax credits - current year	(3,750		)	(3,691		)	(1,500		)
Research and development tax credits - prior years	(5,894		)	—			—
Foreign income taxed at lower than the federal rate	(81,540		)	(103,373		)	(53,390		)
Tax benefit from audit settlements net of restructuring taxes	—			(24,395		)	(8,452		)
	$	42,990		$	31,531		$	20,808

Schedule of deferred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (amounts in thousands):

	March 31,
	2012			2011
Deferred tax assets:
Deferred intercompany profit	$	14,624		$	11,031
Deferred income on shipments to distributors	23,646			33,304
Inventory valuation	6,245			5,740
Net operating loss carryforward	33,639			2,884
Share-based compensation	25,693			25,195
Income tax credits	103,882			68,647
Accrued expenses and other	10,770			11,052
Gross deferred tax assets	218,499			157,853
Valuation allowances	(78,506		)	(50,346		)
Deferred tax assets, net of valuation allowances	139,993			107,507
Deferred tax liabilities:
Property, plant and equipment, principally due to differences in depreciation	(7,844		)	(5,036		)
Junior convertible debentures	(445,826		)	(407,477		)
Other	(6,500		)	(5,699		)
Deferred tax liabilities	(460,170		)	(418,212		)
Net deferred tax liability	$	(320,177	)	$	(310,705	)
Reported as:
Current deferred tax assets	$	91,191		$	88,822
Non-current deferred tax liability	(411,368		)	(399,527		)
Net deferred tax liability	(320,177		)	(310,705		)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Cash flows from operating activities:
Net income	$ 336,705	$ 418,950	$ 217,005
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	99,424	106,612	90,057
Deferred income taxes	21,954	24,003	22,330
Share-based compensation expense related to equity incentive plans	38,289	36,812	36,778
Excess tax benefit from share-based compensation	(576)	(1,854)	(2,094)
Convertible debt derivatives - revaluation and amortization	204	(185)	230
Amortization of convertible debenture issuance costs	219	219	215
Amortization of debt discount on convertible debentures	7,512	6,847	6,258
Losses (gains) on equity method investments	195	(157)	0
Gain on sale of assets	(411)	(89)	(100)
Unrealized impairment loss on available-for-sale investments	2,158	4,659	4,750
Special (income) charges	(1,000)	0	1,238
Sales of trading securities, net	0	0	86,970
Gain on trading securities	0	0	(7,425)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	11,845	6,341	(49,078)
(Increase) decrease in inventories	(35,240)	(22,068)	15,239
(Decrease) increase in deferred income on shipments to distributors	(31,335)	38,781	15,010
(Decrease) increase in accounts payable and accrued liabilities	(61,455)	(638)	29,583
Change in other assets and liabilities	7,970	(35,572)	(14,919)
Net cash provided by operating activities	396,458	582,661	452,047
Cash flows from investing activities:
Purchases of available-for-sale investments	(1,133,625)	(1,008,056)	(1,576,044)
Sales and maturities of available-for-sale investments	983,500	1,055,286	1,502,127
Purchase of Silicon Storage Technology, Inc, net of cash received	0	(112,707)	0
Investment in Silicon Storage Technology, Inc.	0	0	(58,402)
Investment in other assets	(44,398)	(29,587)	(15,439)
Proceeds from sale of assets	411	31,668	100
Capital expenditures	(62,370)	(124,454)	(47,604)
Net cash used in investing activities	(256,482)	(187,850)	(195,262)
Cash flows from financing activities:
Payment of cash dividend	(266,178)	(256,811)	(249,556)
Proceeds from sale of common stock	57,457	71,940	36,478
Excess tax benefit from share-based compensation	576	1,854	2,094
Net cash used in financing activities	(208,145)	(183,017)	(210,984)
Net (decrease) increase in cash and cash equivalents	(68,169)	211,794	45,801
Cash and cash equivalents at beginning of period	703,924	492,130	446,329
Cash and cash equivalents at end of period	$ 635,755	$ 703,924	$ 492,130

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Investments Non Marketable Equity (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012
Investments [Abstract]
Fair value of investment in privately held companies at acquisition	$ 7.7

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Subsequent Events

12 Months Ended

Mar. 31, 2012

Subsequent Events [Abstract]

Subsequent Events [Text Block]

SUBSEQUENT EVENTS

On May 2, 2012, the Company announced that it had signed a definitive agreement to acquire Standard Microsystems Corporation ("SMSC") for $37.00 per share in cash, which represents a total equity value of approximately $939 million, and a total enterprise value of approximately $766 million, after excluding SMSC's cash and investments on its balance sheet of approximately $173 million at February 29, 2012. The acquisition has been approved by the Boards of Directors of each company and is expected to close in the second quarter of fiscal 2013, subject to approval by SMSC stockholders, regulatory approvals and other customary closing conditions.

On April 19, 2012, the Company announced the acquisition of Roving Networks, a privately held company. Roving Networks is an innovator in low-power embedded Wi-Fi and Bluetooth solutions based in Los Gatos, California. The acquisition was not material to the Company's financial position.

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Property, Plant and Equipment (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Property, Plant and Equipment [Line Items]
Property, plant, and equipment costs	$ 1,818,550,000	$ 1,829,677,000
Accumulated depreciation	1,301,939,000	1,289,164,000
Property, plant and equipment, net	516,611,000	540,513,000
Depreciation expense	86,400,000	92,700,000	86,400,000
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment costs	46,529,000	46,497,000
Buildings and building improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment costs	374,042,000	375,611,000
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment costs	1,314,303,000	1,306,367,000
Projects in progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment costs	$ 83,676,000	$ 101,202,000

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2.125% Junior subordinated convertible debentures (Notes)

12 Months Ended

Mar. 31, 2012

Convertible Debt [Abstract]

Junior subordinated convertible debentures

2.125% JUNIOR SUBORDINATED CONVERTIBLE DEBENTURES

The Company's $1.15 billion principal amount of 2.125% junior subordinated convertible debentures due December 15, 2037, are subordinated in right of payment to any future senior debt of the Company and are effectively subordinated in right of payment to the liabilities of the Company's subsidiaries.  The debentures are convertible, subject to certain conditions, into shares of the Company's common stock at an initial conversion rate of 29.2783 shares of common stock per $1,000 principal amount of debentures, representing an initial conversion price of approximately $34.16 per share of common stock.  As of March 31, 2012, none of the conditions allowing holders of the debentures to convert had been met.  As a result of cash dividends paid since the issuance of the debentures, the conversion rate has been adjusted to 35.7905 shares of common stock per $1,000 of principal amount of debentures, representing a conversion price of approximately $27.94 per share of common stock.

As the debentures can be settled in cash upon conversion, for accounting purposes, the debentures were bifurcated into a liability component and an equity component, which are both initially recorded at fair value.  The carrying value of the equity component at March 31, 2012 and at March 31, 2011 was $822.4 million.  The estimated fair value of the liability component of the debentures at the issuance date was $327.6 million, resulting in a debt discount of $822.4 million which was further discounted due to embedded features as described below.  The unamortized debt discount was $794.4 million at March 31, 2012 and $801.9 million at March 31, 2011.  The carrying value of the debentures was $355.1 million at March 31, 2012 and $347.3 million at March 31, 2011.  The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 25.75 years.  In the years ended March 31, 2012, 2011 and 2010 the Company recognized $7.5 million, $6.8 million and $6.3 million, respectively, in non-cash interest expense related to the amortization of the debt discount.  The Company recognized $24.4 million of interest expense related to the 2.125% coupon on the debentures in each of fiscal 2012, fiscal 2011 and fiscal 2010.

The debentures also include certain embedded features related to the contingent interest payments, the Company making specific types of distributions (e.g., extraordinary dividends), the redemption feature in the event of changes in tax law, and penalty interest in the event of a failure to maintain an effective registration statement.  These features qualify as derivatives and are bundled as a compound embedded derivative that is measured at fair value.  The fair value of the derivatives as of March 31, 2012 was $0.6 million, compared to the value at March 31, 2011 of $0.4 million, resulting in an increase in interest expense in the year ended March 31, 2012 of $0.2 million.  The fair value of the derivatives as of March 31, 2011 was $0.4 million, compared to the value at March 31, 2010 of $0.7 million, resulting in a reduction of interest expense in the year ended March 31, 2011 of approximately $0.3 million.  The fair value of the derivatives as of March 31, 2010 was $0.7 million, compared to the value at March 31, 2009 of $0.5 million, resulting in an increase of interest expense in the year ended March 31, 2010 of approximately $0.2 million. The balance of the debentures on the Company's consolidated balance sheet at March 31, 2012 of $355.1 million includes the fair value of the embedded derivatives.

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Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2012

Accounting Policies [Abstract]

Principles of consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Microchip Technology Incorporated and its wholly-owned subsidiaries (Microchip or the Company).  The Company does not have any subsidiaries in which it does not own 100% of the outstanding stock.  All of the Company's subsidiaries are included in the consolidated financial statements.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue recognition

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, as evidenced by an agreement with the customer, transfer of title as well as fixed or determinable pricing and collectability is reasonably assured.  The Company recognizes revenue from product sales to original equipment manufacturers (OEMs) upon shipment and records reserves for estimated customer returns.

For license and other arrangements for SuperFlash^® technology that the Company is continuing to enhance and refine or under which it is obligated to provide unspecified enhancements, non-royalty revenue is recognized over the lesser of (1) the estimated period that the Company has historically enhanced and developed refinements to the specific technology, typically one to three years (the "upgrade period"), and (2) the remaining portion of the upgrade period after the date of delivery of all specified technology and documentation, provided that the fee is fixed or determinable and collection of the fee is reasonably assured.  Royalties received during the upgrade period are recognized as revenue based on an amortization calculation of the elapsed portion of the upgrade period compared to the entire estimated upgrade period.  Royalties received after the upgrade period has elapsed are recognized when reported to the Company, which generally coincides with the receipt of payment.  For licenses or other technology arrangements without an upgrade period, non-royalty revenue from license is recognized upon delivery of the technology if the fee is fixed or determinable and collection of the fee is reasonably assured.  Royalties are recognized when reported to the Company, which generally coincides with the receipt of payment.

Distributors worldwide generally have broad price protection and product return rights, so the Company defers revenue recognition until the distributor sells the product to their customer.  Revenue is recognized when the distributor sells the product to their end customer, at which time the sales price becomes fixed or determinable.  Revenue is not recognized upon the Company's shipment to the distributors since, due to discounts from list price as well as price protection rights, the sales price is not substantially fixed or determinable at that time.  At the time of shipment to these distributors, the Company records a trade receivable for the selling price as there is a legally enforceable right to payment, relieves inventory for the carrying value of goods shipped since legal title has passed to the distributor, and records the gross margin in deferred income on shipments to distributors on the consolidated balance sheets.

Deferred income on shipments to distributors effectively represents the gross margin on the sale to the distributor; however, the amount of gross margin recognized by the Company in future periods will be less than the deferred margin as a result of credits granted to distributors on specifically identified products and customers to allow the distributors to earn a competitive gross margin on the sale of the Company's products to their end customers and price protection concessions related to market pricing conditions.

The Company sells the majority of the items in its product catalog to its distributors worldwide at a uniform list price.  However, distributors resell the Company's products to end customers at a very broad range of individually negotiated price points.  The majority of the Company's distributors' resales require a reduction from the original list price paid.  Often, under these circumstances, the Company remits back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors' outstanding accounts receivable balance.  The credits are on a per unit basis and are not given to the distributor until they provide information regarding the sale to their end customer.  The price reductions vary significantly based on the customer, product, quantity ordered, geographic location and other factors and discounts to a price less than the Company's cost have historically been rare.  The effect of granting these credits establishes the net selling price from the Company to its distributors for the product and results in the net revenue recognized by the Company when the product is sold by the distributors to their end customers.  Thus, a portion of the "deferred income on shipments to distributors" balance represents the amount of distributors' original purchase price that will be credited back to the distributor in the future.  The wide range and variability of negotiated price concessions granted to distributors does not allow the Company to accurately estimate the portion of the balance in the deferred income on shipments to distributors account that will be credited back to the distributors.  Therefore, the Company does not reduce deferred income on shipments to distributors or accounts receivable by anticipated future price concessions; rather, price concessions are recorded against deferred income on shipments to distributors when incurred, which is generally at the time the distributor sells the product.

At March 31, 2012, the Company had approximately $159.1 million of deferred revenue and $50.4 million in deferred cost of sales recognized as $108.7 million of deferred income on shipments to distributors.  At March 31, 2011, the Company had approximately $208.1 million of deferred revenue and $68.1 million of deferred cost of sales recognized as $140.0 million of deferred income on shipments to distributors.  The deferred income on shipments to distributors that will ultimately be recognized in the Company's income statement will be lower than the amount reflected on the balance sheet due to price credits to be granted to the distributors when the product is sold to their customers.  These price credits historically have resulted in the deferred income approximating the overall gross margins that the Company recognizes in the distribution channel of its business.

The Company reduces product pricing through price protection based on market conditions, competitive considerations and other factors.  Price protection is granted to distributors on the inventory they have on hand at the date the price protection is offered.  When the Company reduces the price of its products, it allows the distributor to claim a credit against its outstanding accounts receivable balances based on the new price of the inventory it has on hand as of the date of the price reduction.  There is no immediate revenue impact from the price protection, as it is reflected as a reduction of the deferred income on shipments to distributors' balance.

Products returned by distributors and subsequently scrapped have historically been immaterial to the Company's consolidated results of operations.  The Company routinely evaluates the risk of impairment of the deferred cost of sales component of the deferred income on shipments to distributors account.  Because of the historically immaterial amounts of inventory that have been scrapped, and historically rare instances where discounts given to a distributor result in a price less than the Company's cost, the Company believes the deferred costs have a low risk of material impairment.

Shipping charges billed to customers are included in net sales, and the related shipping costs are included in cost of sales.

Product warranty

Product Warranty

The Company generally sells its products with a limited warranty related to product quality and a limited indemnification of customers against intellectual property infringement claims related to the Company's products.  Due to comprehensive product testing, the short time between product shipment and the detection and correction of product failures, and a low historical rate of payments on indemnification claims, the accrual based on historical activity and the related expense were immaterial as of and for the fiscal years ended March 31, 2012, 2011 and 2010.

Advertising cost

Advertising Costs

The Company expenses all advertising costs as incurred.  Advertising costs were immaterial for the fiscal years ended March 31, 2012, 2011 and 2010.

Research and development

Research and Development

Research and development costs are expensed as incurred.  Assets purchased to support the Company's ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their estimated useful lives.  Research and development expenses include expenditures for labor, share-based payments, depreciation, masks, prototype wafers, and expenses for development of process technologies, new packages, and software to support new products and design environments.

Foreign currency translation and forward contracts

Foreign Currency Translation and Forward Contracts

The Company's foreign subsidiaries are considered to be extensions of the U.S. Company and any translation gains and losses related to these subsidiaries are included in other income (expense) in the consolidated statements of income.  As the U.S. dollar is utilized as the functional currency, gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the subsidiaries' functional currency) are also included in income.  Gains and losses associated with currency rate changes on forward contracts are recorded currently in income.  These gains and losses have been immaterial to the Company's financial statements.

Income taxes

Income Taxes

As part of the process of preparing its consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates.  This process involves estimating the Company's actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes.  These differences result in deferred tax assets and liabilities, which are included within the Company's consolidated balance sheet.  The Company must then assess the likelihood that its deferred tax assets will be recovered from future taxable income and to the extent it believes that recovery is not likely, it must establish a valuation allowance.  The Company has provided valuation allowances for certain of its deferred tax assets where it is more likely than not that some portion, or all of such assets, will not be realized.  

Cash and cash equivalents

Cash and Cash Equivalents

All highly liquid investments, including marketable securities purchased with a remaining maturity of three months or less when acquired are considered to be cash equivalents.

Investments

Investments – Available-for-Sale and Trading Securities

The Company classifies its investments in debt and marketable equity securities as available-for-sale or trading securities based upon management's intent with regard to the investments and the nature of the underlying securities. 

The Company's available-for-sale investments consist of government agency bonds, municipal bonds, auction rate securities (ARS), corporate bonds and marketable equity securities.  The Company's investments are carried at fair value with unrealized gains and losses reported in stockholders' equity.  Premiums and discounts are amortized or accreted over the life of the related available-for-sale security.  Dividend and interest income are recognized when earned.  The cost of securities sold is calculated using the specific identification method. 

The Company includes within short-term investments its trading securities, as well as its income yielding available-for-sale securities that can be readily converted to cash and includes within long-term investments those income yielding available-for-sale securities with maturities of over one year that have unrealized losses attributable to them or those that cannot be readily liquidated.  Except as discussed in Note 5, the Company intends and has the ability to hold its long-term investments with temporary impairments until such time as these assets are no longer impaired.  Such recovery of unrealized losses is not expected to occur within the next year.

Due to the lack of availability of observable market quotes on certain of the Company's investment portfolio of ARS, it utilizes valuation models including those that are based on expected cash flow streams and collateral values, including assessments of counterparty credit quality, default risk underlying the security, discount rates and overall capital market liquidity.  The valuation of the Company's ARS investment portfolio is subject to uncertainties that are difficult to predict.  Factors that may impact the Company's ARS valuation include changes to credit ratings of the securities as well as to the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk, the ongoing strength and quality of the credit markets and market liquidity.

The credit markets experienced significant deterioration and uncertainty beginning in the second half of fiscal 2008.  If these conditions recur, or the Company experiences any additional ratings downgrades on any investments in its portfolio (including its ARS), the Company may incur additional impairments to its investment portfolio, which could negatively affect the Company's financial condition, cash flows and reported earnings.

Non-Marketable Investments

The Company's non-marketable equity investments are recorded using adjusted cost basis or the equity method of accounting, depending on the circumstances of each investment.  The Company's non-marketable investments are classified within other assets on the Company's consolidated balance sheet.  The Company's non-marketable equity investments include:

Equity Method Investments:  When the Company has the ability to exercise significant influence, but not control, over the investee, it records equity method gain or loss as "gain or loss from equity investments."  Equity method adjustments include the Company's proportionate share of the investee's income or loss.

Cost Method Investments:  When the Company does not have the ability to exercise significant influence over the investee, it records such investments at cost.

The Company reviews its investments quarterly for indicators of impairment.  The impairment review requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances that impact the fair value of the investment, such as:

• the investee's revenue and trends in earnings or losses relative to pre-defined milestones and overall business prospects;

• the technological feasibility of the investee's products and technologies;

• the general market conditions in the investee's industry or geographic area, including adverse regulatory or economic changes;

• factors related to the investee's ability to remain in business, such as the investee's liquidity, debt ratios, and the rate at which the investee is using its cash; and

• the investee's receipt of additional funding at a lower valuation.

If the fair value of an investment is below the Company's carrying value, the Company determines if the investment is other than temporarily impaired based on a quantitative and qualitative analysis, which includes assessing the severity and duration of the impairment and the likelihood of recovery before disposal.  If the investment is considered to be other than temporarily impaired, the Company writes down the investment to its fair value.  

Allowance for doubtful accounts

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which is included in bad debt expense.  The Company determines the adequacy of this allowance by regularly reviewing the composition of its accounts receivable aging and evaluating individual customer receivables, considering such customer's financial condition, credit history and current economic conditions.

Inventories

Inventories

Inventories are valued at the lower of cost or market using the first-in, first-out method.  The Company writes down its inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.  If actual market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required.  Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable.  In estimating reserves for obsolescence, the Company primarily evaluates estimates of demand over a twelve-month period and provides reserves for inventory on hand in excess of the estimated twelve-month demand.

In periods where the Company's production levels are substantially below normal operating capacity, such as in the first half of fiscal 2010 and the second half of fiscal 2012, unabsorbed overhead production associated with the reduced production levels of the Company's manufacturing facilities are charged directly to cost of sales.

Property, plant and equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred.  The Company's property and equipment accounting policies incorporate estimates, assumptions and judgments relative to the useful lives of its property and equipment.  Depreciation is provided for assets placed in service on a straight-line basis over the estimated useful lives of the relative assets, which range from 3 to 30 years.  The Company evaluates the carrying value of its property and equipment when events or changes in circumstances indicate that the carrying value of such assets may be impaired.  Asset impairment evaluations are, by nature, highly subjective.

Junior subordinated convertible debentures

Junior Subordinated Convertible Debentures

The Company separately accounts for the liability and equity components of its junior subordinated convertible debentures in a manner that reflects its nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized.  This results in a bifurcation of a component of the debt, classification of that component in equity and the accretion of the resulting discount on the debt to be recognized as part of interest expense in its consolidated statements of income.  Additionally, certain embedded features of the debentures qualify as derivatives and are bundled as a compound embedded derivative that is measured at fair value.  Lastly, the Company includes the dilutive effect of the shares of its common stock issuable upon conversion of the outstanding junior subordinated convertible debentures in its diluted income per share calculation regardless of whether the market price trigger or other contingent conversion feature has been met.  The Company applies the treasury stock method as it has the intent and current ability to settle the principal amount of the junior subordinated convertible debentures in cash.  This method results in incremental dilutive shares when the average market value of the Company's common stock for a reporting period exceeds the conversion price per share which was $27.94 at March 31, 2012 and adjusts as dividends are recorded in the future.

Litigation

Litigation

The Company's estimated range of liability related to pending litigation is based on claims for which management believes a loss is probable and it can estimate the amount or range of loss.  Because of the uncertainties related to both the outcome and range of any potential losses on the pending litigation, the Company is generally unable to make a reasonable estimate of the liability that could result from an unfavorable outcome.  As additional information becomes available, the Company will assess the potential liability related to its pending litigation and revise its estimates, if necessary.

Goodwill and other intangible assets

Goodwill and Other Intangible Assets

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.  The Company is required to perform an annual impairment review, and more frequently under certain circumstances.  The goodwill is subjected to this test during the fourth quarter of the Company's fiscal year.  The Company engages primarily in the design, development, manufacture and marketing of semiconductor products as well as technology licensing.  As a result, the Company concluded there are two reporting units, semiconductor products and technology licensing.  The Company has early adopted the qualitative goodwill impairment assessment standard which it applied as of March 31, 2012. Under this standard, management evaluates whether it is more likely than not that goodwill is impaired. If it is determined that it is more likely than not, the Company proceeds with the next step of the impairment test, which compares the fair value of the reporting unit to its carrying value.  If the Company determines through the impairment process that goodwill has been impaired, the Company will record the impairment charge in its results of operation.  Through March 31, 2012, the Company has not had impaired goodwill.  The Company's other intangible assets represent existing technologies, core and developed technology, in-process research and development, trademarks and trade names, and customer-related intangibles. Other intangible assets are amortized over their respective estimated lives, ranging from one year to ten years.  In the event that facts and circumstances indicate intangibles or other long-lived assets may be impaired, the Company evaluates the recoverability and estimated useful lives of such assets.  In-process research and development is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.

Impairment of long-lived assets

Impairment of Long-Lived Assets

The Company assesses whether indicators of impairment of long-lived assets are present.  If such indicators are present, the Company determines whether the sum of the estimated undiscounted cash flows attributable to the assets in question is less than their carrying value.  If less, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their respective fair values.  Fair value is determined by discounted future cash flows, appraisals or other methods.  If the assets determined to be impaired are to be held and used, the Company recognizes an impairment loss through a charge to operating results to the extent the present value of anticipated net cash flows attributable to the asset are less than the asset's carrying value.  The Company would depreciate the remaining value over the remaining estimated useful life of the asset.

Share-based compensation

Share-Based Compensation

The Company has equity incentive plans under which non-qualified stock options and restricted stock units (RSUs) have been granted to employees and non-employee members of the Board of Directors.  In the second half of fiscal 2006, the Company adopted RSUs as its primary equity incentive compensation instrument for employees.  The Company also has an employee stock purchase plan for all eligible employees.

The Company estimates the fair value of share-based payment awards on the date of grant using an option pricing model.  The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods.  The Company has estimated the fair value of each award as of the date of grant using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable.  The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of the Company's stock price.

Determining the appropriate fair-value model and calculating the fair value of share-based awards at the date of grant requires judgment.  The fair value of RSUs is based on the fair market value of the Company's common stock on the date of grant discounted for expected future dividends.  The Company uses the Black-Scholes option pricing model to estimate the fair value of employee stock options and rights to purchase shares under stock participation plans.  Option pricing models, including the Black-Scholes model, also require the use of input assumptions, including expected volatility, expected life, expected dividend rate, and expected risk-free rate of return.  The Company uses a blend of historical and implied volatility based on options freely traded in the open market as it believes this is more reflective of market conditions and a better indicator of expected volatility than using purely historical volatility.  The expected life of the awards is based on historical and other economic data trended into the future.  The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of the Company's awards.  The dividend yield assumption is based on the Company's history and expectation of future dividend payouts.  The Company estimates the number of share-based awards which will be forfeited due to employee turnover.  Quarterly changes in the estimated forfeiture rate would affect share-based compensation, as the effect of adjusting the rate for all expense amortization after April 1, 2006 is recognized in the period the forfeiture estimate is changed.  If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the financial statements.  If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase to the expense recognized in the financial statements.  If forfeiture adjustments are made, they would affect the Company's results of operations.  The effect of forfeiture adjustments in the years ended March 31, 2012, 2011 and 2010 was immaterial.

The Company evaluates the assumptions used to value its awards on a quarterly basis.  If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what was recorded in the past.  If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate or increase any remaining unearned share-based compensation expense.  Future share-based compensation expense and unearned share-based compensation will increase to the extent that the Company grants additional equity awards to employees or it assumes unvested equity awards in connection with acquisitions.

Concentration of credit risk

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments in debt securities and trade receivables.  Investments in debt securities with original maturities of greater than six months consist primarily of AAA and AA rated financial instruments and counterparties.  The Company's investments are primarily in direct obligations of the U.S. government or its agencies, corporate bonds, and municipal bonds.

Concentrations of credit risk with respect to accounts receivable are generally not significant due to the diversity of the Company's customers and geographic sales areas.  The Company sells its products primarily to OEMs and distributors in the Americas, Europe and Asia.  The Company performs ongoing credit evaluations of its customers' financial condition and, as deemed necessary, may require collateral, primarily letters of credit.

Distributor advances, included in deferred income on shipments to distributors in the consolidated balance sheets, totaled $51.7 million at March 31, 2012 and $71.9 million at March 31, 2011.  On sales to distributors, the Company's payment terms generally require the distributor to settle amounts owed to the Company for an amount in excess of their ultimate cost.  The Company's sales price to its distributors may be higher than the amount that the distributors will ultimately owe the Company because distributors often negotiate price reductions after purchasing the product from the Company and such reductions are often significant.  It is the Company's practice to apply these negotiated price discounts to future purchases, requiring the distributor to settle receivable balances, on a current basis, generally within 30 days, for amounts originally invoiced.  This practice has an adverse impact on the working capital of the Company's distributors.  As such, the Company has entered into agreements with certain distributors whereby it advances cash to the distributors to reduce the distributor's working capital requirements.  These advances are reconciled at least on a quarterly basis and are estimated based on the amount of ending inventory as reported by the distributor multiplied by a negotiated percentage.  Such advances have no impact on revenue recognition or the Company's consolidated statements of income.  The Company processes discounts taken by distributors against its deferred income on shipments to distributors' balance and trues-up the advanced amounts generally after the end of each completed fiscal quarter.  The terms of these advances are set forth in binding legal agreements and are unsecured, bear no interest on unsettled balances and are due upon demand.  The agreements governing these advances can be canceled by the Company at any time.

Use of estimates

Use of Estimates

The Company has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare its consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles.  Actual results could differ from those estimates.

Adopted and Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In the fourth quarter of fiscal 2012, the Company early adopted a new standard for the assessment of goodwill impairment, which permits an entity to first assess qualitative factors to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. After assessing qualitative factors, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further testing is necessary. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the traditional two-step goodwill impairment test must be performed. The Company applied this standard to its March 31, 2012 goodwill impairment test, concluding that it was not more likely than not that the fair value of its two reporting units were less than the carrying amounts.

In the first quarter of fiscal 2012, the Company adopted new standards for revenue recognition with multiple deliverables. These new standards change the determination of whether the individual deliverables included in a multiple-element arrangement may be treated as separate units for accounting purposes. Additionally, these new standards modify the method in which revenue is allocated to the separately identified deliverables. The adoption of these new standards did not have a significant impact on the Company's consolidated financial statements.

In the first quarter of fiscal 2012, the Company adopted new standards that remove certain tangible products and associated software from the scope of the software revenue recognition guidance. The adoption of these new standards did not have a significant impact on the Company's consolidated financial statements.

In the first quarter of fiscal 2012, the Company adopted new standards for the application of the milestone method of revenue recognition for certain research and development arrangements entered into by its technology licensing segment. Under this standard, the Company will recognize arrangement consideration received for achieving specified performance measures during the period in which the milestones are achieved, provided certain criteria are met for the milestones to be considered substantive. This standard was adopted prospectively, and its adoption is not expected to have a significant impact on the Company's consolidated financial statements.

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Contingencies (Notes)

12 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Contingencies

CONTINGENCIES

In the ordinary course of the Company's business, it is involved in a limited number of legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them.  The Company also periodically receives notifications from various third parties alleging infringement of patents, intellectual property rights or other matters.  With respect to pending legal actions to which the Company is a party, although the outcomes of these actions are not generally determinable, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position, cash flows or results of operations.  Litigation relating to the semiconductor industry is not uncommon, and the Company is, and from time to time has been, subject to such litigation.  No assurances can be given with respect to the extent or outcome of any such litigation in the future.

The Company's technology license agreements generally include an indemnification clause that indemnifies the licensee against liability and damages (including legal defense costs) arising from any claims of patent, copyright, trademark or trade secret infringement by the Company's proprietary technology.  The terms of these indemnification provisions approximate the terms of the technology license agreements, which typically range from five to ten years.  The Company's current license agreements expire from 2012 through 2030.  The possible amount of future payments the Company could be required to make based on agreements that specify indemnification limits, if such indemnifications were required on all of these agreements, is approximately $98 million. There are some licensing agreements in place that do not specify indemnification limits.  The Company had not recorded any liabilities related to these indemnification obligations as of March 31, 2012, as there are no amounts considered to be probable.

Contingent liabilities in the amount of $13.0 million were recorded in connection with the SST acquisition as an adverse outcome was determined to be probable and estimable.  At March 31, 2012, there were no material changes to the amount recognized at the acquisition date for these contingencies.

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Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
Liabilities, Current [Abstract]
Bankruptcy reorganization liability	$ 0	$ 19,385
Other accrued expenses	88,877	112,454
Accrued Liabilities, Current	$ 88,877	$ 131,839

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock and Additional Paid-in Capital	Common Stock Held in Treasury	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Balance at Mar. 31, 2009	$ 1,490,311	$ 1,282,119	$ (1,095,370)	$ 4,312	$ 1,299,250
Balance (in shares) at Mar. 31, 2009		218,790,000	(36,021,000)
Components of other comprehensive income:
Net Income	217,005				217,005
Net unrealized gains (losses) on available-for-sale securities, net of tax	(1,280)			(1,280)
Total comprehensive income	215,725
Issuances from equity incentive plans (in shares)		1,955,000
Issuances from equity incentive plans (amount)	27,108	27,108
Employee stock purchase plans (shares)		605,000
Employee stock purchase plans (amount)	9,370	9,370
Treasury stock used for new issuances (shares)		(2,560,000)	2,560,000
Treasury stock used for new issuances (amount)		(82,012)	82,012
Tax benefit from equity incentive plans	3,709	3,709
Share-based compensation	36,713	36,713
Cash dividend	(249,556)				(249,556)
Balance at Mar. 31, 2010	1,533,380	1,277,007	(1,013,358)	3,032	1,266,699
Balance (in shares) at Mar. 31, 2010		218,790,000	(33,461,000)
Components of other comprehensive income:
Net Income	418,950				418,950
Net unrealized gains (losses) on available-for-sale securities, net of tax	325			325
Total comprehensive income	419,275
Issuances from equity incentive plans (in shares)		3,591,000
Issuances from equity incentive plans (amount)	57,396	57,396
Employee stock purchase plans (shares)		622,000
Employee stock purchase plans (amount)	14,544	14,544
Treasury stock used for new issuances (shares)		(4,213,000)	4,213,000
Treasury stock used for new issuances (amount)		(125,283)	125,283
Tax benefit from equity incentive plans	7,523	7,523
Share-based compensation	37,131	37,131
Cash dividend	(256,811)				(256,811)
Balance at Mar. 31, 2011	1,812,438	1,268,318	(888,075)	3,357	1,428,838
Balance (in shares) at Mar. 31, 2011	189,541,707	218,790,000	(29,248,000)
Components of other comprehensive income:
Net Income	336,705				336,705
Net unrealized gains (losses) on available-for-sale securities, net of tax	(256)			(256)
Total comprehensive income	336,449
Issuances from equity incentive plans (in shares)		3,000,000
Issuances from equity incentive plans (amount)	42,596	42,596
Employee stock purchase plans (shares)		609,000
Employee stock purchase plans (amount)	14,861	14,861
Treasury stock used for new issuances (shares)		(3,609,000)	3,609,000
Treasury stock used for new issuances (amount)		(107,182)	107,182
Tax benefit from equity incentive plans	10,980	10,980
Share-based compensation	39,527	39,527
Cash dividend	(266,178)				(266,178)
Balance at Mar. 31, 2012	$ 1,990,673	$ 1,269,100	$ (780,893)	$ 3,101	$ 1,499,365
Balance (in shares) at Mar. 31, 2012	193,150,532	218,790,000	(25,639,000)

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CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $)	Mar. 31, 2012	Mar. 31, 2011
Statement of Financial Position [Abstract]
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	450,000,000	450,000,000
Common Stock, Shares, Issued	218,789,994	218,789,994
Common Stock, Shares, Outstanding	193,150,532	189,541,707
Treasury Stock, Shares	25,639,462	29,248,287

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Inventories (Notes)

12 Months Ended

Mar. 31, 2012

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

The components of inventories consist of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Raw materials	$	8,065	$	8,174
Work in process	139,045		141,462
Finished goods	70,168		31,164
	$	217,278	$	180,800

Inventories are valued at the lower of cost or market using the first-in, first-out method. Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable.

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Document and Entity Information (USD $)	12 Months Ended
	Mar. 31, 2012	May 25, 2012	Sep. 30, 2011
Document And Entity Information [Abstract]
Entity Registrant Name	MICROCHIP TECHNOLOGY INC
Entity Central Index Key	0000827054
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		193,583,220
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 5,787,068,543

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Property, Plant and Equipment (Notes)

12 Months Ended

Mar. 31, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Land	$	46,529	$	46,497
Building and building improvements	374,042		375,611
Machinery and equipment	1,314,303		1,306,367
Projects in process	83,676		101,202
	1,818,550		1,829,677
Less accumulated depreciation and amortization	1,301,939		1,289,164
	$	516,611	$	540,513

Depreciation expense attributed to property, plant and equipment was $86.4 million, $92.7 million and $86.4 million for the fiscal years ending March 31, 2012, 2011 and 2010, respectively.

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Equity Incentive Plans, Share-based Payment Award (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of unearned share-based compensation expected to be recognized (in years)	2.02
Closing price of company's common stock related to calculation of aggregate intrinsic value of stock options (in dollars per share)	$ 37.20
Restricted stock units' weighted average remaining expense recognition period (in years)	2.02
Amount of unearned share-based compensation estimated to be expensed related to unvested share-based payment awards	$ 69.6
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
RSU nonvested shares beginning balance	5,241,306	4,637,948	3,601,772
RSU shares granted	1,627,000	1,766,257	1,846,241
RSU shares forfeited/expired	(185,000)	(171,967)	(120,198)
RSU shares vested	(1,191,000)	(990,932)	(689,867)
RSU nonvested shares ending balance	5,492,220	5,241,306	4,637,948
Restricted stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of unearned share-based compensation expected to be recognized (in years)	2.06
Total intrinsic value of RSU's vested during the period	43.7	32.6	17.5
Total intrinsic value of RSU's outstanding	$ 204.3
Restricted stock units' weighted average remaining expense recognition period (in years)	2.06
Weighted average fair values per share of restricted stock units awarded (amount per share)	$ 30.48	26.05	20.75

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Subsequent Events Subsequent Events (Details) (Acquisition [Member], SMSC Acquisition [Member], USD $)	2 Months Ended
	May 30, 2012	May 02, 2012
Acquisition [Member] | SMSC Acquisition [Member]
Subsequent Event [Line Items]
Subsequent Event, Date	May 02, 2012
Price for share business acquisition agreement	$ 37.00
Total expected equity value of business acquisition at close		$ 939,000,000
Total expected enterprise value of business acquisition at close		766,000,000
Total cash and investment of acquired company expected at close		$ 173,000,000

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CONSOLIDATED STATEMENTS OF INCOME (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2012		Mar. 31, 2011		Mar. 31, 2010
Income Statement
Net sales	$ 1,383,176,000		$ 1,487,205,000		$ 947,729,000
Cost of sales	590,782,000	[1]	612,769,000	[1]	413,487,000	[1]
Gross profit	792,394,000		874,436,000		534,242,000
Operating expenses:
Research and development	182,650,000	[1]	170,607,000	[1]	120,823,000	[1]
Selling, general and administrative	212,391,000	[1]	227,781,000	[1]	167,222,000	[1]
Special charges, net	837,000		1,865,000		1,238,000
Total operating expenses	395,878,000		400,253,000		289,283,000
Operating income	396,516,000		474,183,000		244,959,000
(Losses) gains on equity method investments	(195,000)		157,000		0
Other income (expense):
Interest income	17,992,000		16,002,000		15,325,000
Interest expense	(34,266,000)		(31,521,000)		(31,150,000)
Other (expense) income, net	(352,000)		1,877,000		8,679,000
Income from continuing operations before income taxes	379,695,000		460,698,000		237,813,000
Income tax provision	42,990,000		31,531,000		20,808,000
Net income from continuing operations	336,705,000		429,167,000		217,005,000
Discontinued operations:
Loss from discontinued operations before income taxes	0		(11,126,000)		0
Income tax benefit	0		(909,000)		0
Net loss from discontinued operations	0		(10,217,000)		0
Net income	$ 336,705,000		$ 418,950,000		$ 217,005,000
Basic net income per common share - continuing operations	$ 1.76		$ 2.29		$ 1.18
Basic net loss per common share - discontinued operations	$ 0.00		$ (0.05)		$ 0.00
Basic net income per common share	$ 1.76		$ 2.24		$ 1.18
Diluted net income per common share - continuing operations	$ 1.65		$ 2.20		$ 1.16
Diluted net loss per common share - discontinued operations	$ 0.00		$ (0.05)		$ 0.00
Diluted net income per common share	$ 1.65		$ 2.15		$ 1.16
Dividends declared per common share	$ 1.390		$ 1.374		$ 1.359
Basic common shares outstanding	191,283		187,066		183,642
Diluted common shares outstanding	203,519		194,715		187,339

[1] Includes share-based compensation expense as follows:Cost of sales 5,648 6,825 7,054Research and development 14,719 12,874 12,194Selling, general and administrative 17,922 17,113 17,530

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Special (Income) Charges (Notes)

12 Months Ended

Mar. 31, 2012

Other Nonrecurring (Income) Expense [Abstract]

Special charges

SPECIAL CHARGES

Acquisition Related Expenses

During fiscal 2012, special charges included a benefit of $0.7 million of special income comprised of a $1.0 million favorable adjustment to contingent consideration offset by $0.3 million of severance-related charges related to a prior year acquisition. During fiscal 2011, the Company incurred $1.9 million of severance-related and office closing costs associated with the acquisition of SST.

Patent Licenses

During the fourth quarter of fiscal 2012, the Company agreed to the terms of a patent license with an unrelated third party and signed an agreement on March 20, 2012.  The patent license settled alleged infringement claims.  The total payment made to the third-party in March 2012 was $2.8 million, $1.5 million of which was expensed in the fourth quarter of fiscal 2012 and the remaining $1.3 million was recorded as a prepaid royalty which will be amortized over the remaining life of the patents, which expires in December 2018.

During the first quarter of fiscal 2010, the Company agreed to the terms of a patent license with an unrelated third party and signed an agreement on July 9, 2009.  The patent license settled alleged infringement claims.  The total payment made to the third-party in July 2009 was $1.4 million, $1.2 million of which was expensed in the first quarter of fiscal 2010 and the remaining $0.2 million was recorded as a prepaid royalty that was amortized over the remaining life of the patents, which expired in June 2010.

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Discontinued Operations and Assets Held for Sale (Notes)

12 Months Ended

Mar. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Assets Held for Sale

DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued operations includes the following product families that were acquired in the acquisition of SST: NAND Drives, NAND controllers, Smart Card ICs, Combo Memory, Concurrent SuperFlash, Small-Sector Flash and many-time Programmable Flash memories and certain serial NOR Flash products from 512K to 64MB density in the geographic regions of Taiwan, China, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, Vietnam and Philippines.  These product lines were marketed for sale since the acquisition of SST on April 8, 2010 based on management's decision regarding them not being a strategic fit into the Company's product portfolio.  On May 21, 2010, the Company completed a transaction to sell the NAND Drives, NAND controllers, Smart Card ICs, Combo Memory, Concurrent SuperFlash, Small-Sector Flash and many-time Programmable Flash memories to Greenliant Systems Ltd.  The sale price in this transaction was determined by management to represent fair value, and accordingly, no gain or loss was recognized on the sale of the net assets.  In this sale, the Company disposed of approximately $23.6 million of assets held for sale, primarily comprised of inventory, property, plant and equipment, intangible assets and non-marketable securities.  

On July 8, 2010, the Company granted an exclusive limited license for the manufacture of certain Serial NOR-Flash products to Professional Computer Technology, Ltd. (PCT).  The license to PCT is limited to the industry segments of optical disc drives, set top boxes, electronic books, video games, digital displays, DVD player/recorder, notebook computers, netbooks, desktop computers, PC monitors, mass storage devices, printers/scanners/copiers/faxes, PC-CAM, point of sale devices, graphic cards, servers/clients/workstations, and mobile phones.  PCT has no license to sell these products to any other industry segment or geographic region other than those listed above.  Certain multi-national customers are excluded from this license.

For financial statement purposes, the results of operations for these discontinued businesses have been segregated from those of the continuing operations and are presented in the Company's consolidated financial statements as discontinued operations.

The results of discontinued operations for the year ended March 31, 2011 are as follows (amounts in thousands):

	Year ended
	March 31, 2011
Net sales	$	25,177
Cost of sales	(32,627		)
Operating expenses	(3,676		)
Income tax benefit	909
Net loss from discontinued operations	$	(10,217	)

There were no discontinued operations during fiscal years 2012 or 2010.

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Credit facility (Notes)

12 Months Ended

Mar. 31, 2012

Credit Facility [Abstract]

Debt Disclosure [Text Block]

CREDIT FACILITY

On August 12, 2011, the Company entered into a credit agreement among the Company, the lenders from time to time that are parties thereto and JPMorgan Chase Bank, N.A., as administrative agent (the "Credit Agreement"). The Credit Agreement provides for a $750 million revolving credit facility, with a $100 million foreign currency sublimit, a $25 million letter of credit sublimit and a $15 million swingline loan sublimit, terminating on August 12, 2016 (the "Maturity Date"). The Credit Agreement also contains an increase option permitting the Company, subject to certain requirements, to arrange with existing lenders and/or new lenders for them to provide up to an aggregate of $250 million in additional commitments, which may be for revolving loans or term loans. Proceeds of loans made under the Credit Agreement may be used for working capital and general corporate purposes. No loans were made nor letters of credit issued under the Credit Agreement at closing, and no amounts were outstanding and no letters of credit were issued at March 31, 2012.

The loans bear interest, at the Company's option, at the base rate plus a spread of 0.50% to 1.50% or an adjusted LIBOR rate (based on one, two, three, or six-month interest periods) plus a spread of 1.50% to 2.50%, in each case with such spread being determined based on the consolidated leverage ratio for the preceding four fiscal quarter period. The base rate means the highest of JPMorgan Chase Bank, N.A.'s prime rate, the federal funds rate plus a margin equal to 0.50% and the adjusted LIBOR rate for a 1-month interest period plus a margin equal to 1.00%. Swingline loans accrue interest at a per annum rate based on the base rate plus the applicable margin for base rate loans. Base rate loans may only be made in U.S. Dollars. The Company is also obligated to pay other administration fees and letter of credit fees for a credit facility of this size and type.

Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted LIBOR rate. Principal, together with all accrued and unpaid interest, is due and payable on the maturity date. The Company may prepay the loans and terminate the commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions including minimum amounts in the case of commitment reductions and reimbursement of certain costs in the case of prepayments of LIBOR loans.

The Company's obligations under the Credit Agreement are guaranteed by certain of its subsidiaries meeting materiality thresholds set forth in the Credit Agreement. To secure the Company's obligations under the Credit Agreement, the Company and its domestic subsidiaries will be required to pledge the equity securities of certain of their respective material subsidiaries, subject to certain exceptions and limitations.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, incur subsidiary indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, repurchase stock, enter into restrictive agreements and enter into sale and leaseback transactions, in each case subject to customary exceptions for a credit facility of this size and type. The Company is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio. At March 31, 2012, the Company was in compliance with these covenants.

The Credit Agreement includes customary events of default that, include among other things, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts.

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Intangible Assets and Goodwill (Notes)

12 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

INTANGIBLE ASSETS AND GOODWILL

Intangible assets consist of the following (amounts in thousands):

	March 31, 2012
	Gross Amount		Accumulated Amortization			Net Amount
Developed technology	$	94,681	$	(35,920	)	$	58,761
Customer-related	20,400		(4,633		)	15,767
Trademarks and trade names	1,730		(684		)	1,046
Backlog	2,410		(2,410		)	—
In-process technology	14,086		—			14,086
Distribution rights	5,236		(4,660		)	576
Covenants not to compete	400		(200		)	200
	$	138,943	$	(48,507	)	$	90,436

	March 31, 2011
	Gross Amount		Accumulated Amortization			Net Amount
Developed technology	$	83,751	$	(27,705	)	$	56,046
Customer-related	15,600		(1,621		)	13,979
Trademarks and trade names	1,730		(250		)	1,480
Backlog	2,410		(1,709		)	701
In-process technology	4,300		—			4,300
Distribution rights	5,236		(4,147		)	1,089
Covenants not to compete	400		(66		)	334
	$	113,427	$	(35,498	)	$	77,929

The Company amortizes intangible assets over their expected useful lives, which range between 1 and 10 years.  In fiscal 2012, the Company acquired $10.9 million of developed technology which has a weighted average amortization period of 10 years, $4.8 million of customer-related intangible assets which has a weighted average amortization period of 10 years and $9.8 million of in-process technology which will begin amortization once the technology reaches technological feasibility. The following is an expected amortization schedule for the intangible assets for fiscal year 2013 through fiscal year 2017, absent any future acquisitions or impairment charges (amounts in thousands):

Year ending March 31,	Projected Amortization Expense
2013	$13,218
2014	13,042
2015	12,901
2016	10,784
2017	9,134

Amortization expense attributed to intangible assets was $13.0 million, $13.9 million and $3.7 million for fiscal years 2012, 2011 and 2010, respectively.  In fiscal year 2012, approximately $8.2 million was charged to cost of sales and approximately $4.8 million was charged to operating expenses.  In fiscal year 2011, approximately $7.8 million was charged to cost of sales and approximately $6.1 million was charged to operating expenses.  In fiscal 2010, approximately $1.9 million was charged to cost of sales and $1.8 million was charged to operating expenses.  The Company found no indication of impairment of its intangible assets in fiscal years 2012, 2011 or 2010.

Goodwill activity for fiscal years 2012 and 2011 was as follows (amounts in thousands):

	Semiconductor Products Reporting Unit		Technology Licensing Reporting Unit
Balance at March 31, 2010	$	40,338	$	—
Additions due to the acquisition of SST	5,761		19,200
Additions due to contingent consideration payments to previous owners of R&E International	9,747		—
Additions due to other acquisitions	972		—
Balance at March 31, 2011	56,818		19,200
Additions due to contingent consideration payments to previous owners of R&E International	120		—
Additions due to other acquisitions	17,375		—
Balance at March 31, 2012	$	74,313	$	19,200

In the year ended March 31, 2011, the Company completed the process of allocating goodwill to its reporting units as it related to the acquisition of SST. As a result, approximately $19.2 million was allocated to the technology licensing reporting unit and approximately $5.8 million was allocated to the semiconductor products reporting unit.

In the years ended March 31, 2012 and 2011, the Company made contingent consideration payments to the previous owners of R&E International in the amount of $0.1 million and $12.1 million, respectively.  The Company acquired R&E International on March 31, 2009.  The fiscal 2011 contingent consideration payment resulted in the de-recognition of negative goodwill in the amount of approximately $2.4 million recorded on the acquisition date and the recognition of approximately $9.7 million of goodwill which was allocated to the semiconductor products reporting unit.

In the year ended March 31, 2012, the Company acquired Ident Technology AG. This acquisition resulted in approximately $17.4 million of goodwill which was allocated to the semiconductor products reporting unit.

At March 31, 2012, $74.3 million of goodwill was recorded in the Company's semiconductor products reporting unit and $19.2 million was recorded in the Company's technology licensing reporting unit. At March 31, 2012, the Company applied a qualitative goodwill impairment screen to its two reporting units, concluding it was not more likely than not that goodwill was impaired. Through March 31, 2012, the Company has never recorded an impairment charge against its goodwill balance.

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Revenue and Assets by Geographic Segment (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Segment Reporting Information [Line Items]
Amount of identifiable long-lived assets (consisting of property, plant and equipment)	$ 516,611	$ 540,513
Geographic Areas, Revenues from External Customers [Abstract]
Percentage of net sales from largest distributor (in hundredths)	10.00%	10.00%	12.00%
United States [Member]
Segment Reporting Information [Line Items]
Amount of identifiable long-lived assets (consisting of property, plant and equipment)	314,339	330,046
Thailand [Member]
Segment Reporting Information [Line Items]
Amount of identifiable long-lived assets (consisting of property, plant and equipment)	186,098	193,729
All other countries except United States and Thailand [Member]
Segment Reporting Information [Line Items]
Amount of identifiable long-lived assets (consisting of property, plant and equipment)	$ 16,174	$ 16,738
Located outside US, in aggregate [Member]
Geographic Areas, Revenues from External Customers [Abstract]
Percentage of net sales to unaffiliated customers	82.00%	80.00%	77.00%
Europe [Member]
Geographic Areas, Revenues from External Customers [Abstract]
Percentage of net sales to unaffiliated customers	23.00%	23.00%	25.00%
Asia [Member]
Geographic Areas, Revenues from External Customers [Abstract]
Percentage of net sales to unaffiliated customers	56.00%	57.00%	51.00%
China, including Hong-Kong [Member]
Geographic Areas, Revenues from External Customers [Abstract]
Percentage of net sales to unaffiliated customers	24.00%	25.00%	25.00%
Taiwan [Member]
Geographic Areas, Revenues from External Customers [Abstract]
Percentage of net sales to unaffiliated customers	15.00%	13.00%	10.00%

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Fair Value of Financial Instruments (Notes)

12 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash equivalents approximates fair value because their maturity is less than three months.  Management believes the carrying amount of the equity and cost-method investments materially approximated fair value at March 31, 2012 based upon unobservable inputs. The fair values of these investments have been determined as level 3 fair value measurements. The carrying amount of accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term maturity of the amounts.  The fair value of the Company's junior subordinated convertible debentures was $1.585 billion at March 31, 2012 and $1.574 billion at March 31, 2011based on observable market prices for these debentures, which are traded in less active markets and are therefore classified as a Level 2 fair value measurement.

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Unobservable Input Reconciliation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Auction rate securities [Member]
Reconciliation for all assets measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs [Rollforward]
Fair value, measurement with unobservable inputs reconciliation, beginning	$ 12,475	$ 37,237
Included in earnings	271	138
Included in other comprehensive income (loss)	0	0
Purchases, sales, issuances, and settlements, net	(2,500)	(24,900)
Transfer into Level 3	0	0
Transfers out of Level 3	0	0
Fair value, measurement with unobservable inputs reconciliation, ending	10,246	12,475
Put Option on Auction Rate Securities [Member]
Reconciliation for all assets measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs [Rollforward]
Fair value, measurement with unobservable inputs reconciliation, beginning		1,814
Included in earnings		(1,814)
Included in other comprehensive income (loss)		0
Purchases, sales, issuances, and settlements, net		0
Transfer into Level 3		0
Transfers out of Level 3		0
Fair value, measurement with unobservable inputs reconciliation, ending		0
Corporate Debt [Member]
Reconciliation for all assets measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs [Rollforward]
Fair value, measurement with unobservable inputs reconciliation, beginning	3,500	0
Included in earnings	0	0
Included in other comprehensive income (loss)	0	0
Purchases, sales, issuances, and settlements, net	1,125	3,500
Transfer into Level 3	0	0
Transfers out of Level 3	0	0
Fair value, measurement with unobservable inputs reconciliation, ending	4,625	3,500
Total Gains (Losses) [Member]
Reconciliation for all assets measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs [Rollforward]
Fair value, measurement with unobservable inputs reconciliation, beginning
Included in earnings	271	(1,676)
Included in other comprehensive income (loss)
Purchases, sales, issuances, and settlements, net
Transfer into Level 3
Transfers out of Level 3
Fair value, measurement with unobservable inputs reconciliation, ending

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Investments (Notes)

12 Months Ended

Mar. 31, 2012

Investments [Abstract]

Investments

INVESTMENTS

The Company's investments are intended to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relationship to the Company's investment guidelines and market conditions.  The following is a summary of available-for-sale securities at March 31, 2012 (amounts in thousands):

	Available-for-sale Securities
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Government agency bonds	$	342,025	$	476	$	(397	)	$	342,104
Municipal bonds	19,888		234		—			20,122
Auction rate securities	10,246		—		—			10,246
Corporate bonds and debt	770,891		4,150		(937		)	774,104
Marketable equity securities	5,864		188		(788		)	5,264
	$	1,148,914	$	5,048	$	(2,122	)	$	1,151,840

The following is a summary of available-for-sale securities at March 31, 2011 (amounts in thousands):

	Available-for-sale Securities
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Government agency bonds	$	431,355	$	159	$	(923	)	$	430,591
Municipal bonds	11,445		34		(22		)	11,457
Auction rate securities	12,475		—		—			12,475
Corporate bonds and debt	519,499		4,116		(589		)	523,026
Marketable equity securities	26,173		688		—			26,861
	$	1,000,947	$	4,997	$	(1,534	)	$	1,004,410

At March 31, 2012, the Company's available-for-sale debt securities, and marketable equity securities are presented on the consolidated balance sheets as short-term investments of $823.3 million and long-term investments of $328.6 million.  At March 31, 2011, the Company’s available-for-sale debt securities and marketable equity securities are presented on the consolidated balance sheets as short-term investments of $539.6 million and long-term investments of $464.8 million.

At March 31, 2012, $10.2 million of the fair value of the Company's investment portfolio was invested in ARS.  With the continuing liquidity issues in the global credit and capital markets, the Company's ARS have experienced multiple failed auctions from September 2007 through the date of this report.  While the Company continues to earn interest on these investments based on a pre-determined formula with spreads tied to particular interest rate indices, the estimated market value for these ARS no longer approximates the original purchase value.

The fair value of the failed ARS of $10.2 million has been estimated based on market information and estimates determined by management and could change significantly based on market conditions.  The Company evaluated the impairments in the value of these ARS, determining its intent to sell these securities prior to the recovery of its amortized cost basis resulted in the securities being other-than-temporarily impaired. In fiscal 2012, the Company recognized a net gain of $0.3 million on these investments due to a redemption at par value of one ARS position offsetting impairment charges. In fiscal 2011, the Company recognized an impairment charge on these investments of $1.6 million.

The Company believes that, based on its current unrestricted cash, cash equivalents and short-term investment balances, the current lack of liquidity in the credit and capital markets for ARS will not have a material impact on its liquidity, cash flow or ability to fund its operations.

At March 31, 2012, the Company evaluated its investment portfolio and noted unrealized losses of $1.3 million on its debt securities, and $0.8 million on its marketable equity securities which were due to fluctuations in interest rates, credit market conditions, and/or market prices.  Management does not believe any of the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of March 31, 2012 and the Company's intent is to hold these investments until these assets are no longer impaired, except for the ARS described above and certain equity investments that are actively being sold.  For those debt securities not scheduled to mature until after March 31, 2013, such recovery is not anticipated to occur in the next year and these investments have been classified as long-term investments.

The amortized cost and estimated fair value of the available-for-sale securities at March 31, 2012, by maturity, excluding marketable equity securities of $5.3 million and corporate debt of $4.6 million, which have no contractual maturity, are shown below (amounts in thousands).  Expected maturities can differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties, and the Company views its available-for-sale securities as available for current operations.

	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale
Due in one year or less	$	268,501	$	1,537	$	(21	)	$	270,017
Due after one year and through five years	839,677		3,323		(1,297		)	841,703
Due after five years and through ten years	25,177		—		(16		)	25,161
Due after ten years	5,069		—		—			5,069
	$	1,138,424	$	4,860	$	(1,334	)	$	1,141,950

The amortized cost and estimated fair value of the available-for-sale securities at March 31, 2011, by maturity, excluding marketable equity securities of $26.9 million and corporate debt of $3.5 million, which have no contractual maturity, are shown below (amounts in thousands). 

	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale
Due in one year or less	$	143,447	$	903	$	(2	)	$	144,348
Due after one year and through five years	815,352		3,406		(1,532		)	817,226
Due after five years and through ten years	—		—		—			—
Due after ten years	12,475		—		—			12,475
	$	971,274	$	4,309	$	(1,534	)	$	974,049

During the year ended March 31, 2012, the Company had net realized gains of $0.4 million from sales of available-for-sale marketable equity securities compared to net realized gains of $3.2 million and $1.1 million, respectively, for the years ended March 31, 2011 and March 31, 2010. The Company had a net realized gain of $0.4 million from sales of available-for-sale debt securities during the year ended March 31, 2012, compared to an immaterial amount of net realized gains and losses during the year ended March 31, 2011 and a net realized gain of $1.2 million during the year ended ended March 31, 2010.

Marketable Equity Investments

The Company had investments in public companies with a fair value of $5.3 million as of March 31, 2012. Cash dividends and other distributions of earnings from the investees, if any, are included in other income at the date of record.  The Company has classified the shares owned in these companies as marketable securities.  As of March 31, 2012, the Company had a net unrealized loss in other comprehensive income of $0.6 million on these marketable securities compared to an unrealized gain of $0.7 million for the year ended March 31, 2011. During the years ended March 31, 2012 and March 31, 2011, the Company recorded impairment charges of $2.4 million and $3.0 million, respectively, on certain shares that it held due to the current market price and active selling of the shares.

Non-marketable Equity Investments

The Company has certain non-marketable equity investments in several companies with a carrying value of $7.7 million at March 31, 2012.  The investments in privately held companies are accounted for using the cost or the equity method of accounting, as appropriate.  Each period the Company evaluates whether an event or change in circumstances has occurred that may indicate an investment has been impaired.  If upon further investigation of such events the Company determines the investment has suffered a decline in value that is other than temporary, the Company writes down the investment to its estimated fair value.  At March 31, 2012, the Company determined there were no such impairments and there were no impairment charges recognized in any of the three years then ended.  These investments are included in other assets on the consolidated balance sheet.

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Fair Value Measurements (Notes)

12 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Accounting rules for fair value clarify that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1- Observable inputs such as quoted prices in active markets;

Level 2- Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3- Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Marketable Debt Instruments

Marketable debt instruments include instruments such as corporate bonds and debt, government agency bonds, bank deposits, municipal bonds, and money market fund deposits. When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis at March 31, 2012 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for  Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant  Unobservable Inputs (Level 3)		Total Balance
Assets
Money market fund deposits	$	232,219	$	—	$	—	$	232,219
Marketable equity securities	5,264		—		—		5,264
Corporate bonds & debt	—		769,479		4,625		774,104
Government agency bonds	—		342,104		—		342,104
Deposit accounts	—		403,536		—		403,536
Municipal bonds	—		20,122		—		20,122
Auction rate securities	—		—		10,246		10,246
Total assets measured at fair value	$	237,483	$	1,535,241	$	14,871	$	1,787,595

Assets measured at fair value on a recurring basis at March 31, 2011 are as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market fund deposits	$	464,669	$	—	$	—	$	464,669
Marketable equity securities	26,861		—		—		26,861
Corporate bonds & debt	—		519,526		3,500		523,026
Government agency bonds	—		430,591		—		430,591
Deposit accounts	—		239,255		—		239,255
Municipal bonds	—		11,457		—		11,457
Auction rate securities	—		—		12,475		12,475
Total assets measured at fair value	$	491,530	$	1,200,829	$	15,975	$	1,708,334

The Company estimated the fair value of its ARS, which are classified as Level 3 securities, based on the following: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (iii) consideration of the probabilities of default, auction failure, or repurchase at par for each period; and (iv) estimates of the recovery rates in the event of default for each security.  The estimated fair values that are categorized as Level 3 as well as the marketable equity securities could change significantly based on future market conditions.

When the Company uses observable market prices for identical securities that are traded in less active markets, it classifies such securities as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. There were no transfers between Level 1 and Level 2 during the years ended March 31, 2012 and 2011.

The following tables present a reconciliation for all assets measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs (Level 3) for the years ended March 31, 2012 and March 31, 2011 (amounts in thousands):

Year ended March 31, 2012	Auction Rate  Securities			Corporate Debt		Total Gains (Losses)
Balance at March 31, 2011	$	12,475		$	3,500	$	—
Total gains or losses (realized and unrealized):
Included in earnings	271			—		271
Included in other comprehensive income (loss)	—			—		—
Purchases, sales, issuances, and settlements, net	(2,500		)	1,125		—
Transfer into Level 3	—			—		—
Transfer out of Level 3	—			—		—
Balance at March 31, 2012	$	10,246		$	4,625	$	271

Year ended March 31, 2011	Auction Rate Securities			Put Option on Auction Rate Securities			Corporate Debt		Total Gains (Losses)
Balance at March 31, 2010	$	37,237		$	1,814		$	—	$	—
Total gains or losses (realized and unrealized):
Included in earnings	138			(1,814		)	—		(1,676		)
Included in other comprehensive income (loss)	—			—			—		—
Purchases, sales, issuances, and settlements, net	(24,900		)	—			3,500		—
Transfer into Level 3	—			—			—		—
Transfer out of Level 3	—			—			—		—
Balance at March 31, 2011	$	12,475		$	—		$	3,500	$	(1,676	)

Assets measured at fair value on a recurring basis are presented/classified on the consolidated balance sheets at March 31, 2012 as follows (amounts in thousands):

	Quoted Prices  in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	232,219	$	403,536	$	—	$	635,755
Short-term investments	782		822,472		—		823,254
Long-term investments	4,482		309,233		14,871		328,586
Total assets measured at fair value	$	237,483	$	1,535,241	$	14,871	$	1,787,595

Assets and liabilities measured at fair value on a recurring basis are presented/classified in the consolidated balance sheets at March 31, 2011 as follows (amounts in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs  (Level 3)		Total Balance
Assets
Cash and cash equivalents	$	464,669	$	239,255	$	—	$	703,924
Short-term investments	16,553		523,019		—		539,572
Long-term investments	10,308		438,555		15,975		464,838
Total assets measured at fair value	$	491,530	$	1,200,829	$	15,975	$	1,708,334

Financial Assets Not Recorded at Fair Value on a Recurring Basis

The Company's non-marketable equity and cost method investments are not recorded at fair value on a recurring basis.  These investments were recorded at fair value as of April 8, 2010, the date of the SST acquisition, and are monitored on a quarterly basis for impairment charges.  The investments will only be recorded at fair value when an impairment charge is recognized.  During the year ended March 31, 2012, there were no impairment charges recognized on these investments. These investments are included in other assets on the consolidated balance sheet.  See further discussion of non-marketable investments in Note 5.

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Accounts Receivable (Notes)

12 Months Ended

Mar. 31, 2012

Accounts Receivable, Net [Abstract]

Accounts Receivable

ACCOUNTS RECEIVABLE

Accounts receivable consists of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Trade accounts receivable	$	171,274	$	181,840
Other	1,529		2,200
	172,803		184,040
Less allowance for doubtful accounts	2,602		2,838
	$	170,201	$	181,202

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
Inventories [Abstract]
Raw materials	$ 8,065	$ 8,174
Work in process	139,045	141,462
Finished goods	70,168	31,164
Inventory, Net	$ 217,278	$ 180,800

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Derivative Instruments (Details)	12 Months Ended
	Mar. 31, 2012
Derivative Instrument Detail [Abstract]
Percentage of company sales denominated in U.S. dollars (in hundredths)	99.00%

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Intangible Assets, by Major Class (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	$ 138,943,000	$ 113,427,000
Accumulated Amortization	(48,507,000)	(35,498,000)
Net Amount	90,436,000	77,929,000
Minimum expected useful life of finite lived intangible assets	1
Maximum expected useful life of finite lived intangible assets	10
Amortization of Intangible Assets	13,000,000	13,900,000	3,700,000
Projected Amortization Expense
2013	13,218,000
2014	13,042,000
2015	12,901,000
2016	10,784,000
2017	9,134,000
Cost of sales [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Amortization of Intangible Assets	8,200,000	7,800,000	1,900,000
Operating Expense [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Amortization of Intangible Assets	4,800,000	6,100,000	1,800,000
Developed technology [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	94,681,000	83,751,000
Accumulated Amortization	(35,920,000)	(27,705,000)
Net Amount	58,761,000	56,046,000
Acquired Finite-lived Intangible Asset, Amount	10,900,000
Acquired Finite-lived Intangible Asset, Weighted Average Useful Life	10
Customer-related [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	20,400,000	15,600,000
Accumulated Amortization	(4,633,000)	(1,621,000)
Net Amount	15,767,000	13,979,000
Acquired Finite-lived Intangible Asset, Amount	4,800,000
Acquired Finite-lived Intangible Asset, Weighted Average Useful Life	10
Trademarks and trade names [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	1,730,000	1,730,000
Accumulated Amortization	(684,000)	(250,000)
Net Amount	1,046,000	1,480,000
Backlog [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	2,410,000	2,410,000
Accumulated Amortization	(2,410,000)	(1,709,000)
Net Amount	0	701,000
In-process technology [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	14,086,000	4,300,000
Accumulated Amortization	0	0
Net Amount	14,086,000	4,300,000
Acquired Finite-lived Intangible Asset, Amount	9,800,000
Distribution rights [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	5,236,000	5,236,000
Accumulated Amortization	(4,660,000)	(4,147,000)
Net Amount	576,000	1,089,000
Covenants not to compete [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	400,000	400,000
Accumulated Amortization	(200,000)	(66,000)
Net Amount	$ 200,000	$ 334,000

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Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivable amounts	$ 172,803	$ 184,040
Less allowance for doubtful accounts	2,602	2,838
Accounts receivable, net	170,201	181,202
Trade Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivable amounts	171,274	181,840
Other Receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivable amounts	$ 1,529	$ 2,200

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Dividends (Notes)

12 Months Ended

Mar. 31, 2012

Dividends [Abstract]

Dividends [Text Block]

DIVIDENDS

On October 28, 2002, the Company announced that its Board of Directors had approved and instituted a quarterly cash dividend on its common stock. The Company has continued to pay quarterly dividends and has increased the amount of such dividends on a regular basis. Cash dividends paid per share amounted to $1.390 , $1.374 and $1.359 during the years ended March 31, 2012, 2011 and 2010, respectively. Total dividend payments amounted to $266.2 million , $256.8 million and $249.6 million during the years ended March 31, 2012, 2011 and 2010, respectively.

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Supplemental Financial Information (Tables)

12 Months Ended

Mar. 31, 2012

Supplemental Cash Flow Information [Abstract]

Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

A summary of additions and deductions related to the allowance for doubtful accounts for the years ended March 31, 2012, 2011 and 2010 follows (amounts in thousands):

	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions (1)			Balance at End of Year
Allowance for doubtful accounts:
2012	$	2,838	$	7	$	(243	)	$	2,602
2011	3,109		31		(302		)	2,838
2010	3,176		90		(157		)	3,109

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Income taxes (Notes)

12 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions.  The Company files U.S. federal, U.S. state, and foreign income tax returns.  For U.S. federal, and in general for U.S. state tax returns, the fiscal 2009 through fiscal 2012 tax years remain open for examination by tax authorities.  For foreign tax returns, the Company is generally no longer subject to income tax examinations for years prior to fiscal 2005.

Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes.  Although the Company believes that it has appropriately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different than expectations.  The Company will adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate, the closing of a statutory audit period or changes in applicable tax law.  To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.  The provision for income taxes includes the impact of reserve provisions and changes to the reserves that are considered appropriate, as well as related net interest.

The Company recognizes liabilities for anticipated tax audit issues in the U.S. and other domestic and international tax jurisdictions based on its estimate of whether, and the extent to which, additional tax payments are more likely than not.  The Company believes it maintains appropriate reserves to offset potential income tax liabilities that may arise upon final resolution of matters for open tax years.  The U.S. Internal Revenue Service (IRS) is currently auditing the Company's fiscal years 2009 and 2010.  Fiscal 2011 and fiscal 2012 are currently open for examination by the IRS.  The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are appropriate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.  If such accrued amounts ultimately prove to be unnecessary, the resulting reversal of such reserves would result in tax benefits being recorded in the period the reserves are no longer deemed necessary.  If such assessments ultimately prove to be greater than anticipated, a future charge to expense would be recorded in the period in which the assessment is determined.  Timing of the resolution and/or closure on audits is highly uncertain; however, the Company does not believe that it is reasonably possible that the unrecognized tax benefits could significantly change within the next 12 months as the result of a tax examination closure.

The following table summarizes the activity related to the Company's gross unrecognized tax benefits from April 1, 2009 to March 31, 2012 (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Beginning balance	$	58,125		$	57,140		$	70,051
Increases related to acquisitions	—			36,587			—
Decreases related to prior year tax positions	(2,153		)	(49,932		)	(25,492		)
Increases related to current year tax positions	11,992			13,951			11,332
Increases related to prior year tax positions	2,526			379			1,249
Ending balance	$	70,490		$	58,125		$	57,140

The Company made certain corrections to the presentation of its March 31, 2011 gross unrecognized tax benefits compared to the amounts presented in its fiscal 2011 Notes to Consolidated Financial Statements. The March 31, 2011 corrected balance of gross unrecognized tax benefits is $58.1 million compared to the $45.9 million reflected in the prior year Notes to Consolidated Financial Statements. There were no changes to the consolidated balance sheet as of March 31, 2011, or the results of operations or cash flows for the years then ended resulting from the presentation correction.

As of March 31, 2012, the Company had accrued approximately $3.1 million related to the potential payment of interest on the Company's uncertain tax positions.  As of March 31, 2011, the Company had accrued approximately $2.1 million related to the potential payment of interest on the Company's uncertain tax positions. Interest was included in the provision for income taxes.  The Company has accrued for approximately $0.9 million and $1.0 million in penalties related to its uncertain tax positions related to its international locations as of March 31, 2012 and March 31, 2011, respectively.  Interest and penalties charged or (credited) to operations during the years ended March 31, 2012, 2011 and 2010 related to the Company's uncertain tax positions were $0.9 million, $(3.6) million and $2.5 million, respectively.

The income tax (benefit) provision from continuing operations consists of the following (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Current (benefit) expense:
Federal	$	7,611		$	294		$	(4,358	)
State	544			21			(436		)
Foreign	21,174			22,877			6,981
Total current	$	29,329		23,192			2,187
Deferred expense (benefit):
Federal	$	14,942		11,035			16,663
State	1,067			788			1,668
Foreign	(2,348		)	(3,484		)	290
Total deferred	13,661			8,339			18,621
	$	42,990		$	31,531		$	20,808

The tax benefit associated with the Company's equity incentive plans reduced taxes currently payable by $11.0 million, $7.5 million and $3.7 million for the years ended March 31, 2012, 2011 and 2010, respectively.  These amounts were credited to additional paid-in capital in each of the three fiscal years.

The provision for income taxes differs from the amount computed by applying the statutory federal tax rate to income before income taxes.  The sources and tax effects of the differences in the total income tax (benefit) provision from continuing operations are as follows (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Computed expected income tax provision	$	132,894		$	161,244		$	83,235
State income taxes, net of federal benefits	1,280			1,746			915
Research and development tax credits - current year	(3,750		)	(3,691		)	(1,500		)
Research and development tax credits - prior years	(5,894		)	—			—
Foreign income taxed at lower than the federal rate	(81,540		)	(103,373		)	(53,390		)
Tax benefit from audit settlements net of restructuring taxes	—			(24,395		)	(8,452		)
	$	42,990		$	31,531		$	20,808

Pretax income from foreign continuing operations was $328.5 million, $390.9 million and $201.2 million for the years ended March 31, 2012, 2011 and 2010, respectively.  Unremitted foreign earnings that are considered to be permanently invested outside the U.S., and on which no deferred taxes have been provided, amounted to approximately $1.9 billion at March 31, 2012.  The Company has the ability and intent to indefinitely reinvest the foreign earnings.  Should the Company elect in the future to repatriate a portion of the foreign earnings so invested, the Company would incur income tax expense on such repatriation, net of any available deductions and foreign tax credits.  This would result in additional income tax expense beyond the computed effective tax rate in such periods.

During the year ended March 31, 2011, the Company settled an IRS examination of fiscal years 2006, 2007 and 2008.  In addition, the Company benefited from the expiration of the statute of limitations related to previously accrued tax reserves and incurred a tax charge related to a corporate restructuring.  The total tax benefit associated with these items resulted in a reduction of income tax provision of approximately $24.4 million and a decrease in the effective tax rate from continuing operations of 5.3%.

In December 2010, the U.S. Congress retroactively reinstated the research and development tax credit from January 1, 2010.  As a result, the Company recognized a one-time tax benefit of $1.5 million in the quarter ended December 31, 2010.

During the year ended March 31, 2010, the Company settled an IRS examination of fiscal years 2002, 2003 and 2004 which resulted in a one-time tax benefit of $8.5 million.  This tax benefit decreased the Company's effective tax rate by approximately 3.6%.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (amounts in thousands):

	March 31,
	2012			2011
Deferred tax assets:
Deferred intercompany profit	$	14,624		$	11,031
Deferred income on shipments to distributors	23,646			33,304
Inventory valuation	6,245			5,740
Net operating loss carryforward	33,639			2,884
Share-based compensation	25,693			25,195
Income tax credits	103,882			68,647
Accrued expenses and other	10,770			11,052
Gross deferred tax assets	218,499			157,853
Valuation allowances	(78,506		)	(50,346		)
Deferred tax assets, net of valuation allowances	139,993			107,507
Deferred tax liabilities:
Property, plant and equipment, principally due to differences in depreciation	(7,844		)	(5,036		)
Junior convertible debentures	(445,826		)	(407,477		)
Other	(6,500		)	(5,699		)
Deferred tax liabilities	(460,170		)	(418,212		)
Net deferred tax liability	$	(320,177	)	$	(310,705	)
Reported as:
Current deferred tax assets	$	91,191		$	88,822
Non-current deferred tax liability	(411,368		)	(399,527		)
Net deferred tax liability	(320,177		)	(310,705		)

The Company had federal, state and foreign net operating loss carryforwards with an estimated tax effect of $33.6 million available at March 31, 2012.  The state net operating loss carryforwards expire at various times between 2014 and 2029.  The Company believes that it is more likely than not that the benefit from certain state net operating loss carryforwards will not be realized.  In recognition of this risk, at March 31, 2012, the Company has provided a valuation allowance of $5.4 million.  The Company also has state tax credits with an estimated tax effect of $53.2 million available at March 31, 2012.  These state tax credits expire at various times between 2012 and 2027.  The Company believes that it is more likely than not that the benefit from these state tax credits will not be realized, and therefore has provided a valuation allowance against the full amount.  The Company has U.S foreign tax credits with an estimated tax effect of $20.0 million that expire at various times between 2013 and 2017.  The Company believes it is more likely than not that the benefit from these credits will not be fully realized and has provided a valuation allowance of $19.9 million.  At March 31, 2012, the Company had credits for increasing research activity in the amount of $28.5 million that expire at various times between 2017 and 2032. In addition, the Company had $2.2 million of alternative minimum tax credits that do not expire. At March 31, 2012, the Company had alternative minimum tax net operating loss carryforwards of approximately $52.7 million that expire in 2032.

The Company's Thailand manufacturing operations currently benefit from numerous tax holidays granted to the Company based on its investment in property, plant and equipment in Thailand.  The Company's tax holiday periods in Thailand expire at various times in the future, however, the Company actively seeks to acquire new tax holidays.  The Company does not expect the future expiration of any of its tax holiday periods in Thailand to have a material impact on its effective tax rate.  The aggregate dollar benefits derived from these tax holidays approximated $6.5 million, $20.9 million and $17.3 million for the years ended March 31, 2012, 2011 and 2010, respectively.  The benefit the tax holiday had on diluted net income per share approximated $0.03 in the year ended March 31, 2012, $0.10 for the year ended March 31, 2011 and $0.09 for the year ended March 31, 2010.

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Employee Benefit Plans

12 Months Ended

Mar. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans [Text Block]

EMPLOYEE BENEFIT PLANS

The Company maintains a contributory profit-sharing plan for its domestic employees meeting certain eligibility and service requirements.  The plan qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended, and allows employees to contribute up to 60% of their base salary, subject to maximum annual limitations prescribed by the IRS.  Through December 31, 2008, the Company made matching contributions of up to 25% of the first 4% of the participant's eligible compensation and could award up to an additional 25% under the discretionary match.  The Company eliminated the mandatory matching contribution as of January 1, 2009.  All matches are provided on a quarterly basis and require the participant to be an active employee at the end of each quarter.  For the fiscal year ended March 31, 2012, the Company contributions to the plan totaled $1.6 million.  For the fiscal year ended March 31, 2011, the Company contributions to the plan totaled $2.3 million. Due to expense reduction actions taken in response to adverse economic conditions, the Company did not contribute to the plan for the fiscal year ended March 31, 2010.

The Company's 2001 Employee Stock Purchase Plan (the 2001 Purchase Plan) became effective on March 1, 2002.  The Board of Directors approved the 2001 Purchase Plan in May 2001 and the stockholders approved it in August 2001.  Under the 2001 Purchase Plan, eligible employees of the Company may purchase shares of common stock at semi-annual intervals through periodic payroll deductions.  The purchase price in general will be 85% of the lower of the fair market value of the common stock on the first day of the participant's entry date into the offering period or of the fair market value on the semi-annual purchase date.  Depending upon a participant's entry date into the 2001 Purchase Plan, purchase periods under the 2001 Purchase Plan consist of overlapping periods of either 24, 18, 12 or 6 months in duration.  In May 2003 and August 2003, the Company's Board and stockholders, respectively, each approved an annual automatic increase in the number of shares reserved under the 2001 Purchase Plan.  The automatic increase took effect on January 1, 2005, and on each January 1 thereafter during the term of the plan, and is equal to the lesser of (i) 1,500,000, (ii) one half of one percent (0.5%) of the then outstanding shares of the Company's common stock, or (iii) such lesser amount as is approved by board of directors.  On January 1, 2012, an additional 960,269 shares were reserved under the 2001 Purchase Plan based on the automatic increase.  On January 1, 2011 an additional 941,530 shares were reserved under the 2001 Purchase Plan based on the automatic increase.  On January 1, 2010, an additional 921,171 shares were reserved under the 2001 Purchase Plan based on the automatic increase.  Since the inception of the 2001 Purchase Plan, 11,277,862 shares of common stock have been reserved for issuance and 4,639,761 shares have been issued under this purchase plan.

During fiscal 1995, a purchase plan was adopted for employees in non-U.S. locations.  Such plan provided for the purchase price per share to be 100% of the lower of the fair market value of the common stock at the beginning or end of the semi-annual purchase plan period.  Effective May 1, 2006, the Company's Board approved a purchase price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of the semi-annual purchase plan period.  Since the inception of this purchase plan, 1,500,285 shares of common stock have been reserved for issuance and 610,507 shares have been issued under this purchase plan.

Effective January 1, 1997, the Company adopted a non-qualified deferred compensation arrangement.  This plan is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of highly compensated employees as defined in ERISA Sections 201, 301 and 401.  There are no Company matching contributions made under this plan.

The Company has management incentive compensation plans which provide for bonus payments, based on a percentage of base salary, from an incentive pool created from operating profits of the Company, at the discretion of the Board of Directors.  During the years ended March 31, 2012, 2011 and 2010, $7.8 million, $28.3 million and $16.5 million were charged against operations for these plans, respectively.

The Company also has a plan that, at the discretion of the Board of Directors, provides a cash bonus to all employees of the Company based on the operating profits of the Company.  During the years ended March 31, 2012, 2011 and 2010, $3.2 million, $16.0 million and $4.3 million, respectively, were charged against operations for this plan.

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Net income per common share (Tables)

12 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

Schedule computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted net income per common share from continuing operations (in thousands, except per share amounts):

	Year ended March 31,
	2012		2011		2010
Net income from continuing operations	$	336,705	$	429,167	$	217,005
Weighted average common shares outstanding	191,283		187,066		183,642
Dilutive effect of stock options and RSUs	4,207		4,463		3,697
Dilutive effect of convertible debt	8,029		3,186		—
Weighted average common and potential common shares outstanding	203,519		194,715		187,339
Basic net income per common share – continuing operations	$	1.76	$	2.29	$	1.18
Diluted net income per common share – continuing operations	$	1.65	$	2.20	$	1.16

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Inventories (Tables)

12 Months Ended

Mar. 31, 2012

Inventory Disclosure [Abstract]

Components of inventories

The components of inventories consist of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Raw materials	$	8,065	$	8,174
Work in process	139,045		141,462
Finished goods	70,168		31,164
	$	217,278	$	180,800

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CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF INCOME (PARENTHETICAL) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2012		Mar. 31, 2011		Mar. 31, 2010
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 33,400		$ 32,319		$ 32,215
Cost of sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	5,648	[1]	6,825	[1]	7,054	[1]
Research and Development Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	14,719		12,874		12,194
Selling General And Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 17,922		$ 17,113		$ 17,530

[1] During the year ended March 31, 2012, $6.8 million of share-based compensation expense was capitalized to inventory, and $5.6 million of previously capitalized share-based compensation expenses in inventory was sold. During the year ended March 31, 2011, $7.1 million of share-based compensation expense was capitalized to inventory, and $6.8 million of previously capitalized share-based compensation expense in inventory was sold. During the year ended March 31, 2010, $7.0 million of share-based compensation expense was capitalized to inventory, and $7.1 million of previously capitalized share-based compensation expense in inventory was sold.

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Supplemental Financial Information (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Supplemental Cash Flow Information [Abstract]
Cash paid for income taxes	$ 20,100,000	$ 17,000,000	$ 9,800,000
Cash paid for interest on borrowings	24,400,000	24,400,000	24,400,000
Allowance for Doubtful Accounts [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balances at Beginning of Year	2,838,000	3,109,000	3,176,000
Charged to Cost and Expense	7,000	31,000	90,000
Deductions	(243,000)	(302,000)	(157,000)
Balance at End of Year	$ 2,602,000	$ 2,838,000	$ 3,109,000

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Business Acquisitions (Notes)

12 Months Ended

Mar. 31, 2012

Business Combinations [Abstract]

Business acquisitions

BUSINESS ACQUISITIONS

Acquisition of Ident Technology AG

On February 9, 2012, the Company acquired Ident Technology AG, a privately-held semiconductor company that offers intellectual property and semiconductor solutions for the touch screen markets of the semiconductor and consumer electronics industries. The business acquisition was accounted for under the purchase method of accounting.  Total consideration paid for this business was approximately $39.5 million.  The initial purchase price of the acquisition resulted in purchased intangible assets of approximately $18.1 million, of which $8.2 million relates to in-process technology, and goodwill of approximately $17.4 million.  Goodwill recognized in this transaction is non-deductible. The purchased intangible assets (other than goodwill and the in-process technology intangible asset) are being amortized over a period of 10 years. The Company's purchase price allocation is not yet finalized, as management is still evaluating the deferred taxes associated with the transaction.

Acquisition of Silicon Storage Technology, Inc. (SST)

On April 8, 2010, the Company acquired SST, a publicly traded company based in Sunnyvale, California, in a merger transaction for $3.05 per share, or a total of $353.8 million, which included $295.4 million of cash consideration for the outstanding shares of SST common stock, and $58.4 million of SST shares acquired by the Company on March 8, 2010.  The SST business acquired included a variety of different business units including a licensing business focused on opportunities in the embedded control market, a microcontroller business, a variety of memory businesses and a Wi-Fi power-amplifier business. The Company's primary reason for this acquisition was to gain access to SST's SuperFlash^® technology and extensive patent portfolio, which it believes are critical building blocks for advanced microcontrollers.

The acquisition was accounted for under the acquisition method of accounting, with the Company identified as the acquirer, and the operating results of SST have been included in the Company's consolidated financial statements as of the effective date of the acquisition. The purchase price of the acquisition resulted in purchased intangible assets of approximately $50.9 million and goodwill of approximately $25.0 million of which $19.2 million was allocated to the technology licensing reporting unit and approximately $5.8 million was allocated to the semiconductor products reporting unit. Purchased intangible assets included $32.9 million of core and developed technology, $13.1 million of customer-related intangibles, $2.3 million of acquisition-date backlog, $1.7 million of trademarks and trade names and $0.9 million of in-process research and development. The purchased intangible assets, other than acquisition-date backlog and in-process research and development, are being amortized over their expected useful lives which range between five to ten years. Acquisition-date backlog was amortized over one year and in-process research and development is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.

Other Acquisitions

During the year ended March 31, 2011, the Company completed two business acquisitions, in addition to SST, which were accounted for under the purchase method of accounting.  Total consideration paid for these businesses, net of cash acquired of $2.5 million, was $6.5 million.  As part of one of the acquisitions, the Company assumed a bankruptcy reorganization liability in the amount of approximately $19.4 million which was partially funded by the acquired company prior to the acquisition.    The bankruptcy reorganization liability was settled in the second quarter of fiscal 2012. The purchase price of the acquisitions resulted in purchased intangible assets of approximately $5.6 million and goodwill of approximately $1.0 million.  The purchased intangible assets are being amortized over a weighted average period of approximately seven years.  In addition, one of the acquisitions resulted in contingent consideration with an estimated fair value at the date of purchase of $2.0 million.

During the year ended March 31, 2010, the Company completed one business acquisition which was accounted for under the purchase method of accounting.  Total consideration paid for this business was approximately $9.3 million.  The purchase price of the acquisition resulted in purchased intangible assets of approximately $7.0 million, of which $2.9 million relates to in-process technology, and goodwill of approximately $4.2 million.  The purchased intangible assets (other than goodwill and the in-process technology intangible asset) are being amortized over an average period of seven years.  In addition, the acquisition resulted in contingent consideration with an estimated fair value at the date of purchase of $1.3 million. During the year ended March 31, 2012, a favorable adjustment to the contingent consideration of $1.0 million was included in special charges on the consolidated statements of income.

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AFS, Debt Maturities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Mar. 31, 2011
Schedule of available-for-sale securities, debt maturities [Line Items]
Available-for-sale, adjusted cost	$ 1,148,914	$ 1,000,947
Available-for-sale, gross unrealized gains	5,048	4,997
Available-for-sale, gross unrealized losses	(2,122)	(1,534)
Available-for-sale, estimated fair value	1,151,840	1,004,410
Total maturities [Member]
Schedule of available-for-sale securities, debt maturities [Line Items]
Available-for-sale, adjusted cost	1,138,424	971,274
Available-for-sale, gross unrealized gains	4,860	4,309
Available-for-sale, gross unrealized losses	(1,334)	(1,534)
Available-for-sale, estimated fair value	1,141,950	974,049
Due in one year or less [Member]
Schedule of available-for-sale securities, debt maturities [Line Items]
Available-for-sale, adjusted cost	268,501	143,447
Available-for-sale, gross unrealized gains	1,537	903
Available-for-sale, gross unrealized losses	(21)	(2)
Available-for-sale, estimated fair value	270,017	144,348
Due after one year and through five years [Member]
Schedule of available-for-sale securities, debt maturities [Line Items]
Available-for-sale, adjusted cost	839,677	815,352
Available-for-sale, gross unrealized gains	3,323	3,406
Available-for-sale, gross unrealized losses	(1,297)	(1,532)
Available-for-sale, estimated fair value	841,703	817,226
Due after five years and through ten years [Member]
Schedule of available-for-sale securities, debt maturities [Line Items]
Available-for-sale, adjusted cost	25,177	0
Available-for-sale, gross unrealized gains	0	0
Available-for-sale, gross unrealized losses	(16)	0
Available-for-sale, estimated fair value	25,161	0
Due after ten years [Member]
Schedule of available-for-sale securities, debt maturities [Line Items]
Available-for-sale, adjusted cost	5,069	12,475
Available-for-sale, gross unrealized gains	0	0
Available-for-sale, gross unrealized losses	0	0
Available-for-sale, estimated fair value	$ 5,069	$ 12,475

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Commitments (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Future minimum lease commitments under operating leases [Abstract]
Operating Leases, Future Minimum Payments Due, Current	$ 9,293,000
Operating Leases, Future Minimum Payments, Due in Two Years	7,221,000
Operating Leases, Future Minimum Payments, Due in Three Years	4,594,000
Operating Leases, Future Minimum Payments, Due in Four Years	3,438,000
Operating Leases, Future Minimum Payments, Due in Five Years	3,238,000
Operating Leases, Future Minimum Payments, Due Thereafter	2,693,000
Operating Leases, Total Future Minimum Payments Due	30,477,000
Rental expense under operating lease	15,100,000	13,000,000	10,700,000
Property, Plant and Equipment Purchase Commitment [Member]
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	13,300,000
Purchase Commitment, Other Obligations [Member]
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	21,400,000
Wafer Foundry Purchase Commitment [Member]
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	$ 19,500,000

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Income Taxes Unrecognized tax benefits (Details) (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2010
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized Tax Benefits Beginning Balance	$ 58,125,000	$ 57,140,000	$ 70,051,000
Unrecognized Tax Benefits Increases Related To Acquisitions	0	36,587,000	0
Unrecognized Tax Benefits, Decreases Resulting from Prior Period Tax Positions	(2,153,000)	(49,932,000)	(25,492,000)
Unrecognized Tax Benefits, Increases Resulting from Current Period Tax Positions	11,992,000	13,951,000	11,332,000
Unrecognized Tax Benefits, Increases Resulting from Prior Period Tax Positions	2,526,000	379,000	1,249,000
Unrecognized Tax Benefits Ending Balance	70,490,000	58,125,000	57,140,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract]
Unrecognized Tax Benefits, Interest on Income Taxes Accrued	3,100,000	2,100,000
Unrecognized Tax Benefits, Income Tax Penalties Accrued	900,000	1,000,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense	900,000	(3,600,000)	2,500,000
Scenario, Previously Reported [Member]
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized Tax Benefits Ending Balance		$ 45,900,000

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Equity Incentive Plans (Notes)

12 Months Ended

Mar. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity incentive plans

EQUITY INCENTIVE PLANS

Share-Based Compensation Expense

The following table presents the details of the Company's share-based compensation expense (amounts in thousands):

	Year Ended March 31,
	2012			2011			2010
Cost of sales	$	5,648	(1)	$	6,825	(1)	$	7,054	(1)
Research and development	14,719			12,874			12,194
Selling, general and administrative	17,922			17,113			17,530
Pre-tax effect of share-based compensation	38,289			36,812			36,778
Income tax benefit	4,889			4,493			4,563
Net income effect of share-based compensation	$	33,400		$	32,319		$	32,215

⁽¹⁾ During the year ended March 31, 2012, $6.8 million of share-based compensation expense was capitalized to inventory, and $5.6 million of previously capitalized share-based compensation expenses in inventory was sold.  During the year ended March 31, 2011, $7.1 million of share-based compensation expense was capitalized to inventory, and $6.8 million of previously capitalized share-based compensation expense in inventory was sold. During the year ended March 31, 2010, $7.0 million of share-based compensation expense was capitalized to inventory, and $7.1 million of previously capitalized share-based compensation expense in inventory was sold.

The amount of unearned share-based compensation currently estimated to be expensed in the remainder of fiscal 2013 through fiscal 2017 related to unvested share-based payment awards at March 31, 2012 is $69.6 million.  The weighted average period over which the unearned share-based compensation is expected to be recognized is approximately 2.02 years.

Combined Incentive Plan Information

RSU share activity under the 2004 Plan is set forth below:

	Number of Shares
Nonvested shares at March 31, 2009	3,601,772
Granted	1,846,241
Forfeited/expired	(120,198	)
Vested	(689,867	)
Nonvested shares at March 31, 2010	4,637,948
Granted	1,766,257
Forfeited/expired	(171,967	)
Vested	(990,932	)
Nonvested shares at March 31, 2011	5,241,306
Granted	1,627,191
Forfeited/expired	(184,926	)
Vested	(1,191,351	)
Nonvested shares at March 31, 2012	5,492,220

The total intrinsic value of RSUs which vested during the years ended March 31, 2012, 2011 and 2010 was $43.7 million, $32.6 million and $17.5 million, respectively.  The aggregate intrinsic value of RSUs outstanding at March 31, 2012 was $204.3 million, calculated based on the closing price of the Company's common stock of $37.20 per share on March 31, 2012.  At March 31, 2012, the weighted average remaining expense recognition period was 2.06 years.

The weighted average fair value per share of the RSUs awarded is calculated based on the fair market value of the Company's common stock on the respective grant dates discounted for the Company's expected dividend yield.  The weighted average fair value per share of RSUs awarded in the years ended March 31, 2012, 2011 and 2010 was $30.48, $26.05 and $20.75, respectively. 

Option activity under the Company's stock inventive plans in the three years ended March 31, 2012 is set forth below:

			Weighted
	Number of		Average Exercise
	Shares		Price per Share
Outstanding at March 31, 2009	10,081,533		$	24.20
Granted	12,000		27.03
Exercised	(1,492,866	)	22.03
Canceled	(140,888	)	27.79
Outstanding at March 31, 2010	8,459,779		24.52
Granted	—		—
Exercised	(2,885,365	)	23.09
Canceled	(77,490	)	29.39
Outstanding at March 31, 2011	5,496,924		25.21
Granted	—		—
Exercised	(2,129,260	)	25.53
Canceled	(6,667	)	25.05
Outstanding at March 31, 2012	3,360,997		$	25.00

The total intrinsic value of options exercised during the years ended March 31, 2012, 2011 and 2010 was $26.7 million, $29.8 million and $7.6 million, respectively.  This intrinsic value represents the difference between the fair market value of the Company's common stock on the date of exercise and the exercise price of each equity award.

The aggregate intrinsic value of options outstanding and options exercisable at March 31, 2012 was $41.0 million.  The aggregate intrinsic values were calculated based on the closing price of the Company's common stock of $37.20 per share on March 31, 2012.

As of March 31, 2012 and 2011, the number of option shares exercisable was 3,360,997 and 5,491,363, respectively, and the weighted average exercise price per share was $25.00 and $25.20, respectively.

There were no stock options granted in either of the years ended March 31, 2012 and 2011. The weighted average fair values per share of stock options granted in the year ended March 31, 2010 was $5.90.  The fair values per share of stock options granted in the year ended March 31, 2010 were estimated utilizing the following assumptions:

	Year Ended March 31,
	2010
Expected term (in years)	6.50
Volatility	36	%
Risk-free interest rate	2.57	%
Dividend yield	5.00	%

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2.125% Junior subordinated convertible debentures (Details) (USD $)	12 Months Ended
	Mar. 31, 2012 Y	Mar. 31, 2011	Mar. 31, 2010	Mar. 31, 2009
Debt Instrument [Line Items]
Principal amount of junior subordinated convertible debentures	$ 1,150,000,000
Interest rate of junior subordinated convertible debentures	2.125%
Due date of junior subordinated convertible debentures	Dec. 15, 2037
Conversion rate, in shares, of junior subordinated convertible debt (in shares per $1,000)	29.2783
Principal amount of junior subordinated convertible debentures used as conversion unit	1,000
Convertible Debt Instrument Initial Conversion Price Per Share	$ 34.16
Debt Instrument, Convertible, Conversion Ratio	35.7905
Debt Instrument, Convertible, Conversion Price	$ 27.94
Carrying value of equity component of the debentures that were bifurcated into a liability and equity component	822,400,000	822,400,000
Estimated fair value of liability component of debentures at issuance date	327,600,000
Debt discount of estimated fair value of liability component of debentures	822,400,000
Amount of unamortized debt discount of debentures	794,400,000	801,900,000
Carrying value of debentures	355,050,000	347,334,000
Remaining period, in years, over which unamortized debt discount will be recognized as non-cash interest expense (in years)	25.75
Amortization of Debt Discount (Premium)	7,512,000	6,847,000	6,258,000
Recognized amount of interest expense related to debentures	24,400,000	24,400,000	24,400,000
Fair value of derivative on certain embedded features of debentures	600,000	400,000	700,000	500,000
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	$ 200,000	$ (300,000)	$ 200,000

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Investments (Tables)

12 Months Ended

Mar. 31, 2012

Investments [Abstract]

Summary of available-for-sale securities

The following is a summary of available-for-sale securities at March 31, 2012 (amounts in thousands):

	Available-for-sale Securities
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Government agency bonds	$	342,025	$	476	$	(397	)	$	342,104
Municipal bonds	19,888		234		—			20,122
Auction rate securities	10,246		—		—			10,246
Corporate bonds and debt	770,891		4,150		(937		)	774,104
Marketable equity securities	5,864		188		(788		)	5,264
	$	1,148,914	$	5,048	$	(2,122	)	$	1,151,840

The following is a summary of available-for-sale securities at March 31, 2011 (amounts in thousands):

	Available-for-sale Securities
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Government agency bonds	$	431,355	$	159	$	(923	)	$	430,591
Municipal bonds	11,445		34		(22		)	11,457
Auction rate securities	12,475		—		—			12,475
Corporate bonds and debt	519,499		4,116		(589		)	523,026
Marketable equity securities	26,173		688		—			26,861
	$	1,000,947	$	4,997	$	(1,534	)	$	1,004,410

Summary of amortized cost and estimated fair value of available-for-sale securities, by maturity

The amortized cost and estimated fair value of the available-for-sale securities at March 31, 2012, by maturity, excluding marketable equity securities of $5.3 million and corporate debt of $4.6 million, which have no contractual maturity, are shown below (amounts in thousands).  Expected maturities can differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties, and the Company views its available-for-sale securities as available for current operations.

	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale
Due in one year or less	$	268,501	$	1,537	$	(21	)	$	270,017
Due after one year and through five years	839,677		3,323		(1,297		)	841,703
Due after five years and through ten years	25,177		—		(16		)	25,161
Due after ten years	5,069		—		—			5,069
	$	1,138,424	$	4,860	$	(1,334	)	$	1,141,950

The amortized cost and estimated fair value of the available-for-sale securities at March 31, 2011, by maturity, excluding marketable equity securities of $26.9 million and corporate debt of $3.5 million, which have no contractual maturity, are shown below (amounts in thousands). 

	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale
Due in one year or less	$	143,447	$	903	$	(2	)	$	144,348
Due after one year and through five years	815,352		3,406		(1,532		)	817,226
Due after five years and through ten years	—		—		—			—
Due after ten years	12,475		—		—			12,475
	$	971,274	$	4,309	$	(1,534	)	$	974,049

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Accrued Liabilities (Notes)

12 Months Ended

Mar. 31, 2012

Liabilities, Current [Abstract]

Accrued liabilities

ACCRUED LIABILITIES

Accrued liabilities consist of the following (amounts in thousands):

	March 31, 2012		March 31, 2011
Bankruptcy reorganization liability	$	—	$	19,385
Other accrued expenses	88,877		112,454
	$	88,877	$	131,839

The bankruptcy reorganization liability was incurred as part of an acquisition completed in fiscal 2011 for which the liability was settled in the second quarter of fiscal 2012.