- Amended Quarterly Report (10-Q/A)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-51349

Advanced Analogic Technologies Incorporated

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


Delaware		77-0462930
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

3230 Scott Blvd., Santa Clara, California		95054
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

(408) 737-4600

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

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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

There were 46,089,056 shares of the Registrant’s common stock issued and 42,924,766 shares outstanding as of April 22, 2009.

EXPLANATORY NOTE

This Form 10-Q/A is an amendment to our Form 10-Q for the period ended March 31, 2009, filed with the Securities and Exchange Commission (“SEC”) on April 24, 2009 (“the Original Filing”). This 10-Q/A reflects the impact of the restatement of our condensed consolidated financial statements as discussed in Note 13 to our condensed consolidated financial statements.

As a result of identifying errors in stock-based compensation expense, we restated our consolidated financial statements for fiscal years 2008, 2007 and 2006 in our Form 10-K/A concurrently filed with the SEC.

The comparative prior fiscal period condensed consolidated financial statements for the three months ended March 31, 2008 are being restated to reflect the effects of adjustments to stock-based compensation expense. The errors in stock-based compensation expense for the three months ended March 31, 2009 were insignificant. Therefore, the only impact to our condensed consolidated financial statements for the three months ended March 31, 2009 is to reflect the cumulative restatement adjustments made to the condensed consolidated balance sheet as of March 31, 2009. These changes are more fully described in Note 13 of the condensed consolidated financial statements included below.

Items 1 and 2 of Part 1 of the Original Filing have been updated to reflect the effects of the restatement to our condensed consolidated financial statements. In connection with the restatement, management has assessed the effectiveness of our disclosure controls and procedures and has included revised disclosure in this Form 10-Q/A under Item 4 of Part 1 “Controls and Procedures.” In addition, the certifications filed as Exhibits 31.1, 31.2 and 32.1 and the Signature Page have been updated.

This Form 10-Q/A sets forth the Original Filing in its entirety and includes items that have been changed as a result of the restatement as well as items that are unchanged from the Original Filing. This Form 10-Q/A speaks as of the original filing date of the Original Filing and has not been updated to reflect other events occurring subsequent to the original filing date, including forward-looking statements and all items contained in this Form 10-Q/A that were not directly impacted by the restatement, which should be read in their historical context.

TABLE OF CONTENTS


			PAGE
PART I. FINANCIAL INFORMATION			4

	ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	4

		CONDENSED CONSOLIDATED BALANCE SHEETS AT MARCH 31, 2009 (RESTATED) AND DECEMBER 31, 2008	4

		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008 (RESTATED)	5

		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008 (RESTATED)	6

		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)	7

	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26

	ITEM 4.	CONTROLS AND PROCEDURES	26

PART II. OTHER INFORMATION			27

	ITEM 1.	LEGAL PROCEEDINGS	27

	ITEM 1A.	RISK FACTORS	28

	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37

	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38

	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	38

	ITEM 5.	OTHER INFORMATION	38

	ITEM 6.	EXHIBITS	38

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

ADVANCED ANALOGIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except shares and par value)


	March 31, 2009			December 31, 2008 (*)
	(as restated) (1)
Assets
Current assets
Cash and cash equivalents	$	45,714		$	52,094
Short-term investments		57,929			57,443

Total cash, cash equivalents and short-term investments		103,643			109,537
Accounts receivable, net of allowances		9,247			6,654
Inventories		8,749			9,016
Prepaid expenses and other current assets		1,905			2,100

Total current assets		123,544			127,307
Property and equipment, net		4,596			5,050
Other assets		4,175			4,060
Deferred income taxes		261			327
Intangibles, net		315			395
Goodwill		16,116			16,116

Total assets	$	149,007		$	153,255

Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	7,374		$	4,601
Accrued liabilities		3,082			3,698
Income tax payable		322			127
Current portion of capital lease obligations		1			41

Total current liabilities		10,779			8,467
Long-term income tax payable		3,742			3,326
Other long-term liabilities		242			228

Total liabilities		14,763			12,021

Stockholders’ equity
Common stock, $0.001 par value—100,000,000 shares authorized; 46,077,756 and 42,913,466 shares issued and outstanding, respectively, as of March 31, 2009; 45,926,052 and 43,851,263 shares issued and outstanding, respectively, as of December 31, 2008		46			46
Treasury stock, at cost; 3,164,290 and 2,074,789 shares as of March 31, 2009 and December 31, 2008, respectively		(8,561	)		(5,262	)
Additional paid-in capital		177,083			175,425
Accumulated other comprehensive loss		(197	)		(56	)
Accumulated deficit		(34,127	)		(28,919	)

Total stockholders’ equity		134,244			141,234

Total liabilities and stockholders’ equity	$	149,007		$	153,255

*	Amounts as of December 31, 2008 were derived from the December 31, 2008 audited consolidated financial statements included in our Form 10-K/A.

(1)	See Note 13—“Restatement” to the unaudited Condensed Consolidated Financial Statements.

See accompanying notes to the unaudited condensed consolidated financial statements.

ADVANCED ANALOGIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended March 31,
	2009			2008
				(as restated) (1)
Net revenue	$	16,549		$	25,101
Cost of revenue		9,118			11,385

Gross profit		7,431			13,716

Operating expenses:
Research and development		6,583			7,913
Sales, general and administrative		5,429			6,877
Patent litigation		301			262

Total operating expenses		12,313			15,052

Loss from operations		(4,882	)		(1,336	)
Interest and other income:
Interest and investment income		371			1,129
Interest and other income (expense), net		(18	)		15

Total interest and other income, net		353			1,144

Income (loss) before income taxes		(4,529	)		(192	)
Provision (benefit) for income taxes		679			(63	)

Net income (loss)	$	(5,208	)	$	(129	)

Net income (loss) per share:
Basic	$	(0.12	)	$	0.00
Diluted	$	(0.12	)	$	0.00
Weighted average shares used in net income (loss) per share calculation:
Basic		43,052			45,491
Diluted		43,052			45,491

(1)	See Note 13—“Restatement” to the unaudited Condensed Consolidated Financial Statements.

See accompanying notes to the unaudited condensed consolidated financial statements.

ADVANCED ANALOGIC TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Three Months Ended March 31,
	2009			2008
				(as restated) (1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(5,208	)	$	(129	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization		537			707
Stock-based compensation		1,575			2,429
Provision for doubtful accounts		8			—
Excess tax benefit from stock options		—			(479	)
Tax benefit from stock option exercises		—			38
Net unrealized loss on trading securities		5			—
(Gain) loss on sales of property and equipment		65			(14	)
Changes in operating assets and liabilities:
Accounts receivable		(2,601	)		575
Inventories		273			(1,816	)
Prepaid expenses and other current assets		202			630
Other assets		15			93
Deferred income taxes		(29	)		(24	)
Accounts payable		2,767			2,697
Accrued liabilities and other long-term liabilities		(593	)		(4,263	)
Income taxes payable		611			(200	)

Net cash (used in) provided by operating activities		(2,373	)		244

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(89	)		(1,171	)
Purchases of short-term investments		(20,759	)		(6,721	)
Proceeds from sales and maturities of short-term investments		20,236			28,754
Purchases of long-term investment		(117	)		—
Proceeds from sales of property and equipment		—			14

Net cash (used in) provided by investing activities		(729	)		20,876

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options		77			505
Excess tax benefits from stock options		—			479
Common stock repurchases		(3,299	)		—
Principal payments on capital lease obligations		(40	)		(37	)

Net cash (used in) provided by financing activities		(3,262	)		947

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(16	)		33

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(6,380	)		22,100
CASH AND CASH EQUIVALENTS—Beginning of period		52,094			53,779

CASH AND CASH EQUIVALENTS—End of period	$	45,714		$	75,879

NONCASH INVESTING AND FINANCING ACTIVITY:
Increases (decreases) in accounts payable and accrued liabilities related to property and equipment purchases	$	(6	)	$	18
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	1		$	4
Cash paid for income taxes	$	27		$	94

(1)	See Note 13—“Restatement” to the unaudited Condensed Consolidated Financial Statements.

See accompanying notes to the unaudited condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Advanced Analogic Technologies Incorporated (the “Company”) have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with these rules and regulations. The information in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in its annual report on Form 10-K/A filed with the SEC.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The operating results for the three months ended March 31, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009 or for any other future period. The condensed consolidated balance sheet as of December 31, 2008 is derived from the audited consolidated financial statements as of and for the year then ended.

2. INVESTMENTS

The Company accounts for available-for-sale investments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 115”). As of March 31, 2009, the Company had investments in short-term debt instruments and auction rate securities (ARS), which were classified as available-for-sale under SFAS No. 115. Short-term investments consist primarily of investment grade debt securities with a maturity of greater than 90 days at the time of purchase. The Company classifies certain investments with maturities greater than one year as short-term investments as it considers all investments a potential source of operating cash regardless of maturity date. The Company’s debt securities are carried at fair market value with the related unrealized gains and losses included in accumulated other comprehensive loss, which is a separate component of stockholders’ equity. The cost of securities sold is based on the specific identification method. Interest earned on securities is included in “Interest income” in the Condensed Consolidated Statements of Operations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The following is a summary of cash equivalents and investments classified as available-for-sale as of March 31, 2009 and December 31, 2008:


	March 31, 2009
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Money market funds	$	37,147	$	—	$	—		$	37,147
U.S. Government agency bonds		29,484		117		(6	)		29,595
Municipal bonds		25,471		66		(4	)		25,533
U.S. Corporate Debt Securities		2,799		2		—			2,801
Auction rate securities		2,000		—		(148	)		1,852

Total	$	96,901	$	185	$	(158	)	$	96,928

Amounts included in:
Cash and cash equivalents	$	37,147	$	—	$	—		$	37,147
Short-term investments		57,754		185		(10	)		57,929
Other assets		2,000		—		(148	)		1,852

Total	$	96,901	$	185	$	(158	)	$	96,928


	December 31, 2008
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Money market funds	$	36,489	$	—	$	—		$	36,489
U.S. Government agency bonds		23,091		188		—			23,279
Municipal bonds		26,598		72		(2	)		26,668
U.S. Corporate Debt Securities		5,492		24		—			5,516
U.S. Treasury bills		2,996		4		—			3,000
Auction rate securities		2,000		—		(167	)		1,833

Total	$	96,666	$	288	$	(169	)	$	96,785

Amounts included in:
Cash and cash equivalents	$	37,509	$	—	$	—		$	37,509
Short-term investments		57,157		288		(2	)		57,443
Other assets		2,000		—		(167	)		1,833

Total	$	96,666	$	288	$	(169	)	$	96,785

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

3. FAIR VALUE MEASUREMENTS

On January 1, 2008, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”). The Company applies the provisions of SFAS No. 157 in measuring the fair value of certain of its financial assets required to be measured on a recurring basis.

The following table presents the fair value of the Company’s financial assets as of March 31, 2009, as measured using the SFAS No. 157 input categories:


	Fair Value Measurements as of March 31, 2009 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in thousands)
Available-for-sale securities:
Money market funds	$	37,147	$	—	$	—	$	37,147
Municipal bonds		25,533		—		—		25,533
U.S. government agency bonds		29,595		—		—		29,595
Corporate Debt Securities		—		2,801		—		2,801
U.S. Treasury bills		—		—		—		—
Auction rate securities		—		—		1,852		1,852

Total Available-for-sale securities	$	92,275	$	2,801	$	1,852	$	96,928

Other investments:
Auction rate securities classified as trading securities	$	—	$	—	$	644	$	644
ARS put option		—		—		483		483
Investment in privately-held company (1)		—		—		769		769

Total Other investments	$	—	$	—	$	1,896	$	1,896

Amounts included in:
Cash and cash equivalents	$	37,147	$	—	$	—	$	37,147
Short-term investments		55,128		2,801		—		57,929
Other assets		—		—		3,748		3,748

Total	$	92,275	$	2,801	$	3,748	$	98,824

(1)

The Company’s investment in a privately-held company is accounted for under the cost method. The carrying amount of this investment is adjusted to fair value when impairment charges are recorded for other-than-temporary declines in value. As the impairment assessment is based on unobservable market data, this investment is classified within Level 3 of the SFAS No. 157 fair value hierarchy.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The following table provides a reconciliation of the beginning and ending balances for the assets measured at fair value using unobservable inputs (Level 3):


	Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
	Auction Rate Securities			ARS Put Option		Investment in privately-held company		Total
	(in thousands)
Beginning balances as of December 31, 2008	$	2,553		$	412	$	644	$	3,609
Unrealized gains included in accumulated other comprehensive loss		19			—		—		19
Unrealized gains (losses) recognized in earnings		(76	)		71		—		(5	)
Purchases, sales, issuances and settlements		—			—		125		125

Ending balances as of March 31, 2009	$	2,496		$	483	$	769	$	3,748

The amount of total unrealized gains for the period included in accumulated other comprehensive loss attributable assets still held at the reporting date	$	19		$	—	$	—	$	19

The amount of total unrealized gains (losses) for the period recognized in earnings attributable to assets still held at the reporting date	$	(76	)	$	71	$	—	$	(5	)

Auction Rate Securities

As of March 31, 2009, the Company’s investment portfolio included $3.2 million of interest bearing auction-rate securities (“ARS”) with a fair value of $2.5 million, of which $1.9 million was classified as available-for-sale and $0.6 million was classified as trading securities. The ARS represent investments in debt obligations collateralized by Federal Family Education Program student loans. Since fiscal year 2008, uncertainties in the credit markets affected all of the Company’s ARS in that auctions for the ARS have failed to settle on their respective settlement dates. The ARS are classified as other long-term assets because the Company estimates that it will take longer than one year for a future successful auction to take place or to find a buyer outside of the auction process.

During the quarter-ended December 31, 2008, the Company made an election pursuant to SFAS No. 115 to transfer one of its ARS from available-for-sale to trading securities. The election was made upon the Company entering into a settlement agreement with UBS (“the Agreement”). Under the Agreement, the Company was granted ARS exchange rights (“ARS Put Option”) that provide the Company with the right, but not the obligation, to sell this ARS to UBS for par value during the period of June 30, 2010 to July 2, 2012.

The Company uses a discounted cash flow model to determine the estimated fair value of its ARS. The discounted cash flow model includes the Company’s estimates of future cash flows from its ARS over the expected holding period using a weighted average interest rate of 1.5% as of March 31, 2009. A discount factor which represents the current market conditions for instruments with similar credit quality, adjusted by 300 basis points to reflect the risk in the marketplace for the ARS, was then applied to the estimated cash flows of the ARS.

ARS Put Option

As of March 31, 2009, the Company’s investment portfolio included a $0.5 million ARS Put Option. The Company accounts for the ARS Put Option at fair value. On November 12, 2008, the date on which the Company entered into the Agreement, the Company elected to measure the ARS Put Option at fair value under Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115,” (“SFAS No. 159”). By electing SFAS No. 159, subsequent changes in the fair value of the ARS Put Option will be offset with changes in the fair value of the related ARS in the Company’s condensed consolidated statements of operations. The Company determines the fair value of the ARS Put Option using a discounted cash flow model. To determine the fair value of the ARS Put Option, the total cash flows expected to result from exercising the ARS Put Option were discounted based on the Company’s estimates of the likelihood of default by UBS and the expected term of the ARS Put Option.

Investment in a Privately-Held Company

As of March 31, 2009, the Company’s investment portfolio included a $0.8 million investment in a privately-held company which develops analog memory products. The investment consists of preferred stock and represents less than a 20% ownership interest. The investment previously included interest-bearing bridge loans which were converted to additional shares of preferred stock during the three months ended March 31, 2009. The Company accounts for this investment using the cost method. The investment in a privately-held company is included in other long-term assets on the condensed consolidated balance sheets.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

4. STOCKHOLDERS’ EQUITY

Common Stock Repurchases

On October 29, 2008, the Company’s board of directors authorized a program to repurchase shares of the Company’s outstanding common stock. Under the stock repurchase program, the Company was authorized to use up to $30 million to repurchase its outstanding common stock in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased depended upon market conditions and other factors, in accordance with SEC requirements.

During the three months ended March 31, 2009, the Company repurchased a total of 1.1 million shares of its common stock for a total cost of $3.3 million. As of March 31, 2009, the Company has $21.4 million of remaining funds authorized to purchase shares under the stock repurchase plan. Shares repurchased are accounted for as treasury stock and the total cost of shares repurchased is recorded as a reduction to stockholders’ equity.

Stock-Based Compensation Expense and Valuation of Awards

The Company accounts for stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS No. 123(R)”). The following table summarizes stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2009 and March 31, 2008:


	Three Months Ended March 31,
(in thousands)	2009		2008
Cost of revenue	$	63	$	93
Research and development		700		1,044
Sales, general and administrative		812		1,292

Total stock-based compensation expense	$	1,575	$	2,429

The related tax effect for stock-based compensation expense for the three months ended March 31, 2009 and March 31, 2008 was zero and $0.4 million, respectively. The related tax effect was determined using the applicable tax rates in jurisdictions to which this expense relates. No benefit was recognized for stock-based compensation for the three months ended March 31, 2009 because the Company has a full valuation allowance against its deferred tax assets.

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of stock options. The Company used the following weighted average assumptions to calculate the fair values of stock options granted during the three months ended March 31, 2009 and March 31, 2008:


	Three Months Ended March 31,
	2009		2008
Volatility	61	%	53	%
Expected option term (in years)	3.59		4.04
Expected annual dividend yield	0	%	0	%
Risk-free interest rate	1.29	%	2.68	%

For purposes of estimating volatility, the Company uses a combination of historical and market-based implied volatility in accordance with SFAS No. 123(R) and Staff Accounting Bulletin No. 107, Share-Based Payment (“SAB No. 107”). The estimated expected term of the Company’s stock options represents the weighted-average period that the stock options are expected to remain outstanding. The Company derives the expected term assumption based on the weighted average vesting period of its stock options combined with the average post-vesting holding period of an industry peer group. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of the Company’s stock options. The dividend yield is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on common stock, and it does not anticipate paying cash dividends in the foreseeable future. Compensation expense for all share-based payment awards is recognized using the straight-line single-option method.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company generally grants stock options with a vesting period of four years. During the three months ended March 31, 2009, the Company granted options to purchase 600,000 shares of its common stock with a one year vesting period. As a result of granting stock options with a one year vesting period, the Company’s weighted average expected term assumption for the three months ended March 31, 2009 was lower compared to the three months ended March 31, 2008.

5. NET INCOME (LOSS) PER SHARE

The Company calculates net income (loss) per share in accordance with Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“SFAS No. 128”). Under SFAS No. 128, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period excluding shares subject to repurchase. Diluted net income per common share reflects the effects of potentially dilutive securities, which consist of common stock options, warrants and common stock subject to repurchase, under the treasury stock method. The effect of potentially dilutive securities is excluded from the computation of diluted net income (loss) per share when their effect is anti-dilutive.

A reconciliation of shares used in the calculation of basic and diluted net income (loss) per share is as follows:


	Three Months Ended March 31,
	2009	2008
	(in thousands)
Weighted average common shares outstanding	43,052	45,516
Weighted average shares subject to repurchase	—	(25	)

Shares used to calculate basic net income (loss) per share	43,052	45,491

Effect of dilutive securities:
Common stock warrants	—	—
Common stock options	—	—
Weighted average shares subject to repurchase	—	—

Dilutive potential common stock	—	—

Weighted average common shares outstanding, assuming dilution	43,052	45,491

Approximately 9.0 million and 8.2 million shares of potentially dilutive common shares were excluded from the net income (loss) per share calculation for the three months ended March 31, 2009 and March 31, 2008, respectively, as their inclusion would have been anti-dilutive.

6. OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) includes charges or credits to equity that are not the result of transactions with owners. The components of comprehensive income (loss) are as follows:


	Three Months Ended March 31,
(in thousands)	2009			2008
Net income (loss), as reported	$	(5,208	)	$	(129	)
Changes in cumulative translation adjustment		(26	)		168
Changes in unrealized gains/losses on investments		(115	)		(192	)

Total other comprehensive income (loss)	$	(5,349	)	$	(153	)

Total other comprehensive income (loss) for the three months ended March 31, 2009 includes less than $0.1 million of unrealized loss on the Company’s available-for-sale auction rate securities, compared to $0.2 million for the three months ended March 31, 2008. See Note 2 for further information regarding the Company’s auction rate securities.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

7. DETAILS OF CERTAIN BALANCE SHEET COMPONENTS


	March 31, 2009			December 31, 2008
	(in thousands)
Inventories
Work in process	$	5,885		$	5,034
Finished goods		2,864			3,982

Total inventories	$	8,749		$	9,016

Property and equipment, net
Computers and software	$	5,265		$	5,426
Office and test equipment		6,514			6,513
Leasehold improvements		1,443			1,448

Gross property and equipment		13,222			13,387
Accumulated depreciation and amortization		(8,626	)		(8,337	)

Total property and equipment, net	$	4,596		$	5,050

Accrued liabilities
Accrued payroll and benefits	$	1,477		$	1,269
Deferred revenue		77			97
Accrued legal and accounting services		345			746
Warranty reserve		92			81
Restructuring reserve		—			280
Accrued payables and other		1,091			1,225

Total accrued liabilities	$	3,082		$	3,698

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired in a business combination. As of March 31, 2009, the Company’s goodwill balance was $16.1 million, of which $15.7 million relates to the Company’s October 2006 acquisition of Analog Power Semiconductor Corporation and $0.4 million relates to the Company’s June 2008 acquisition of Elite Micro Devices, Inc.

The Company follows the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), under which goodwill is no longer subject to amortization. The Company evaluates goodwill for impairment, at a minimum, on an annual basis on September 30 and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. During the three months ended March 31, 2009, the Company determined that impairment indicators were not present.

Intangible Assets

The following table summarizes intangible assets as of March 31, 2009 and December 31, 2008, respectively, (in thousands):


	Intangible Assets, Gross				Accumulated Amortization						Intangible Assets, Net
	March 31, 2009		December 31, 2008		March 31, 2009			December 31, 2008			March 31, 2009		December 31, 2008
Core technology	$	2,900	$	2,900	$	(2,777	)	$	(2,724	)	$	123	$	176
Customer relationships		580		580		(554	)		(544	)		26		36
Technology license		200		200		(34	)		(17	)		166		183

Total	$	3,680	$	3,680	$	(3,365	)	$	(3,285	)	$	315	$	395

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company amortizes intangible assets on a straight-line basis over the estimated useful life of the assets. Intangible asset amortization expense was $0.1 million and $0.3 million for the three months ended March 31, 2009 and March 31, 2008, respectively. Future amortization expense is expected to be $0.2 million for the remainder of 2009, $0.1 million in 2010 and less than $0.1 million in 2011.

9. SEGMENT INFORMATION

As defined by the requirements of SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information,” the Company operates in one reportable segment: the design, development, marketing and sale of power management semiconductor products and solutions for the communications, computing and consumer portable and personal electronics marketplace. The Company’s chief operating decision maker is its chief executive officer.

The following is a summary of net revenue by geographic region based on the location to which the product is shipped:


	Three Months Ended March 31,
	2009		2008
	(in thousands)
South Korea	$	11,797	$	14,619
China		2,953		4,742
Taiwan		889		4,578
Europe		375		447
North America (principally United States)		350		489
Japan		185		226

Total	$	16,549	$	25,101

The following table summarizes net revenue and accounts receivable for customers who accounted for 10% or more of accounts receivable or net revenue, respectively:


	Accounts Receivable as of				Net Revenue Three Months Ended March 31,
	March 31, 2009		December 31, 2008		2009		2008
Customer
A	39	%	30	%	32	%	12	%
B	33	%	30	%	25	%	29	%
C	5	%	8	%	7	%	10	%

10. INCOME TAXES

In accordance with Accounting Principles Board Opinion No. 28, “Interim Financial Reporting” (APB No. 28), the Company adjusts its effective tax rate each quarter to be consistent with the estimated annual effective tax rate. The Company also records the tax effect of unusual or infrequently occurring discrete items including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. The Company’s effective tax rate reflects the impact of a significant amount of its earnings being taxed in foreign jurisdictions at rates below the United States statutory tax rate and a valuation allowance maintained on the Company’s deferred tax assets.

The Company recorded a tax provision of approximately $0.7 million and a tax benefit of $0.1 million for the three months ended March 31, 2009 and 2008, respectively. The increase in the Company’s tax provision compared to prior year is primarily due to a full valuation allowance against its United States deferred tax assets at March 31, 2009. Accordingly, no benefit is recognized for stock-based compensation as any increase in the Company’s related deferred tax asset will have a corresponding increase in the Company’s valuation allowance.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company established a full valuation allowance against its United States deferred tax assets on December 31, 2008. The Company has established valuation allowances for deferred tax assets based on a “more likely than not” threshold. The Company’s ability to realize its deferred tax assets depends on its ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The Company considers the following possible sources of taxable income when assessing the realization of its deferred tax assets:

•

Future reversals of existing taxable temporary differences;

•

Future taxable income exclusive of reversing temporary differences and carryforwards;

•

Taxable income in prior carryback years; and

•

Tax-planning strategies.

The Company concludes that a valuation allowance is required when there is significant negative evidence which is objective and verifiable, such as cumulative losses in recent years. The Company utilizes a rolling three years of actual results as its primary measure of its cumulative losses in recent years. As of March 31, 2009, the Company continues to have a three year cumulative loss and, therefore, concludes that a valuation allowance is still required.

During the three months ended March 31, 2009, the Company increased its total amount of unrecognized tax benefits as calculated under FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN No. 48”) by approximately $0.4 million, including an accrual of interest and penalties of less than $0.1 million. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

11. LEGAL PROCEEDINGS

In May 2003, the Company received a letter from Linear Technology Corporation (“Linear Technology”) alleging that certain of its charge pump products infringed United States Patent No. 6,411,531 (‘531 Patent) owned by Linear Technology. In August 2004, the Company received a letter from Linear Technology alleging that certain of its switching regulator products infringed United States Patent Nos. 5,481,178, 6,304,066 and 6,580,258 (‘258 Patent). In response to these letters, the Company contacted Linear Technology to convey its good faith belief that it does not infringe the patents in question. Subsequently, the Company became aware of a marketing campaign conducted by Linear Technology in which it sought to disrupt the Company’s business relationships and sales by suggesting to the Company’s customers that its products infringe the same United States patents mentioned in its two letters to the Company. As a result, in February 2006, the Company initiated a lawsuit against Linear Technology for unfair business practices, interference with existing and prospective customers and trade libel, as well as a declaration of patent invalidity and non-infringement. This case is currently stayed pending the outcome of the United States International Trade Commission (“USITC”) investigation described in the following paragraphs.

In March 2006, the USITC responded to a complaint filed by Linear Technology by initiating an investigation under Section 337 of the Tariff Act to determine if certain of the Company’s products infringe certain patents owned by Linear Technology. The accused products include charge pumps and switching regulators and are similar to the products involved in the Company’s lawsuit with Linear Technology.

In a Final Determination issued September 24, 2007, the USITC left unchanged its earlier initial determination that the Company’s charge pumps do not violate Section 337 of the Tariff Act because they do not infringe any valid claim of ‘531 Patent owned by Linear Technology.

The Final Determination also found that a majority of the Company’s switching regulator designs do not infringe Linear Technology’s ‘258 Patent. The USITC also found that one family of switching regulator products infringes certain claims of the ‘258 Patent. Following normal USITC procedure, the USITC issued a limited exclusion order under Section 337 of the Tariff Act prohibiting the direct importation by the Company of this particular product family. This exclusion order does not, however, prevent the Company’s customers from importing their products into the United States. To date, the Company’s sales of this product family in the United States have been minimal. Linear Technology’s request that downstream products be barred from importation was denied.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Linear Technology has appealed portions of the Final Determination to the United States Court of Appeals for the Federal Circuit. This appeal is bifurcated into separate charge pump and switching regulator portions. On August 28, 2008, the Court of Appeals issued a ruling on the charge pump portion and upheld the invalidity of the ‘531 Patent. The Company believes that this ends the unsuccessful attempt by Linear Technology to assert its ‘531 Patent against the Company at the International Trade Commission. The separate appeal for the switching regulator portion remains pending at the United States Court of Appeals for the Federal Circuit.

On October 1, 2008, the USITC served notice that it will begin a formal enforcement proceeding for the limited exclusion order originally issued on September 24, 2007. The enforcement proceeding has been undertaken at the request of Linear Technology which has alleged that the Company has violated the limited exclusion order by importing certain switching regulator products. The Company believes that these allegations are not based in fact and that none of its products infringe the Linear Technology patents in question. The Company’s domestic sales of these products have been minimal to date and the Company expects domestic sales of these products to be minimal in future periods. However, whether or not the Company prevails in this proceeding, the Company expects to incur significant legal expenses which will be expensed when incurred.

In March 2009, the Company initiated a lawsuit against a small, privately held semiconductor manufacturing company alleging patent infringement of certain of its patented product designs. This case is pending in the United States District Court for the Northern District of California. The Company does not believe that this lawsuit will have a material impact on its business or financial condition.

12. RECENT ACCOUNTING PRONOUNCEMENTS

The Company adopted the provisions of Statement of Financial Accounting Standards No. 141(R), “Business Combinations”, as of January 1, 2009. The adoption did not have a material impact on the condensed consolidated financial statements.

In April 2009, the FASB issued Staff Position (“FSP”) FAS 157-4, “Determining Fair Value When the Volume or Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased and requires that companies provide interim and annual disclosures of the inputs and valuation technique(s) used to measure fair value. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009 and is to be applied prospectively. The Company does not expect the adoption of FSP FAS 157-4 to have a significant impact on its financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” FSP FAS 115-2 and FAS 124-2 amends the other-than-temporary impairment guidance to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. The Company does not expect the adoption of FSP FAS 115-2 and FAS 124-2 to have a significant impact on its financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” FSP FAS 107-1 and APB 28-1 requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP FAS 107-1 and APB 28-1 is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of FSP 107-1 and APB 28-1 will have no impact on the Company’s financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

13. RESTATEMENT

During the three months ended September 30, 2009, the Company identified errors in stock-based compensation expense. The Company restated its consolidated financial statements for fiscal years 2008, 2007 and 2006 and filed Form 10-K/A with the SEC.

The errors were identified after the Company’s third-party software provider notified its clients, including the Company, that it made a change to how its software program calculates stock-based compensation expense. Specifically, the prior version of this software calculated stock-based compensation expense by incorrectly continuing to apply a weighted average forfeiture rate to the vested portion of stock option awards until the grant’s final vest date, resulting in an understatement of stock-based compensation expense in certain periods prior to the grant’s final vest date. Thus, this accounting error relates to the timing of estimated stock-based compensation expense recognition.

As a result, the Company has restated the accompanying comparative prior fiscal period condensed consolidated financial statements for the three months ended March 31, 2008 to reflect the restatement of stock-based compensation expense. The Company recorded a $0.7 million increase in pre-tax non-cash stock-based compensation expense for the three months ended March 31, 2008 from amounts previously reported for the three months ended March 31, 2008. The errors in stock-based compensation expense for the three months ended March 31, 2009 were insignificant. Therefore, the only impact to the Company’s condensed consolidated financial statements for the three months ended March 31, 2009 is to reflect the cumulative restatement adjustments made to the condensed consolidated balance sheet as of March 31, 2009.

The following tables present the effect of the restatement adjustments by financial statement line item for the Condensed Consolidated Balance Sheet as of March 31, 2009 and the Condensed Consolidated Statements of Operations and Statements of Cash Flows for the three months ended March 31, 2008.

Condensed Consolidated Balance Sheets (in thousands):


	March 31, 2009
	As previously reported			As restated
ASSETS:
Deferred income tax asset—long-term	$	260		$	261
Total assets	$	149,006		$	149,007
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Income tax payable	$	223		$	322
Total current liabilities	$	10,680		$	10,779
Total liabilities	$	14,664		$	14,763
Additional paid-in capital	$	175,000		$	177,083
Accumulated deficit	$	(31,946	)	$	(34,127	)
Total stockholders’ equity	$	134,342		$	134,244
Total liabilities and stockholders’ equity	$	149,006		$	149,007

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Condensed Consolidated Statements of Operations (in thousands, except per share amounts):


	Three months ended March 31, 2008
	As previously reported			As restated
Cost of Revenues	$	11,369		$	11,385
Gross Profit	$	13,732		$	13,716
Operating expenses:
Research and development	$	7,659		$	7,913
Sales, general and administrative	$	6,445		$	6,877
Total operating expenses	$	14,366		$	15,052
Loss from operations	$	(634	)	$	(1,336	)
Income (loss) before income taxes	$	510		$	(192	)
Provision for (benefit from) income taxes	$	64		$	(63	)
Net income (loss)	$	446		$	(129	)
Basic net income (loss) per share	$	0.01		$	0.00
Diluted net income (loss) per share	$	0.01		$	0.00
Weighted average shares used in net income (loss) per share calculation:
Basic		45,491			45,491
Diluted		47,060			45,491

Condensed Consolidated Statements of Cash Flows (in thousands):


	Three months ended March 31, 2008
	(as previously reported)			(as restated)
Net income (loss)	$	446		$	(129	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation		1,727			2,429
Excess tax benefit from stock options		(487	)		(479	)
Tax benefit from stock option exercises		46			38
Changes in operating assets and liabilities:
Deferred income taxes		145			(24	)
Income taxes payable		(250	)		(200	)
Net cash (used in) provided by operating activities		236			244

Excess tax benefit from stock options		487			479
Net cash (used in) provided by financing activities		955			947

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our most recently filed Form 10-K/A. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to, those set forth under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q/A.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q/A contains forward-looking statements. When used in this Quarterly Report on Form 10-Q/A the words “anticipate,” “objective,” “may,” “might,” “should,” “could,” “can,” “intend,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” “is designed to” or the negative of these and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•

our expectations regarding our expenses, sales and operations;

•

our anticipated cash needs and our estimates regarding our capital requirements and our need for additional financing;

•

our ability to anticipate the future needs of our customers;

•

our plans for future products and enhancements of existing products;

•

our growth strategy elements;

•

our intellectual property;

•

our anticipated trends and challenges in the markets in which we operate; and

•

our ability to attract customers.

These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. While we believe our plans, intentions and expectations reflected in those forward-looking statements are reasonable, we cannot assure you that these plans, intentions or expectations will be achieved. Our actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q/A, including those under the heading “Risk Factors.”

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Quarterly Report on Form 10-Q/A. Other than as required by applicable laws, we are under no obligation to, and do not intend to, update any forward-looking statement, whether as a result of new information, future events or otherwise.

Overview

The following discussion reflects the effects of the restatement discussed in Note 13 “Restatement” to the condensed consolidated financial statements.

We are a supplier of power management semiconductors for consumer, communications and computing electronic devices, such as wireless handsets, notebook and tablet computers, smartphones, camera phones, digital cameras, personal media players, personal navigation and GPS devices, Bluetooth headphones and accessories, personal and digital multimedia TVs, set top boxes and displays. We focus our design and marketing efforts on the application-specific power management needs in these rapidly-evolving devices. We currently offer a portfolio of over 650 power management products comprising Power Management application-specific standard products, or ASSPs, and selected general-purpose analog integrated circuits, or ICs, in single-chip, multi-chip and chip-scale packages. We sell directly to original equipment manufacturers, or OEMs, including LG Electronics, Inc., Samsung Electronics Co., Ltd., Sony Ericsson Mobile Communications AB, ZTE Corporation and Flextronics International Ltd. We sell through distributors and original design manufacturers, or ODMs, and to other system designers, including USI Corporation, Longcheer Holdings Ltd., Tianyu Communication Equipment Co., Ltd., Foxconn Electronics Inc. and Gemtek Technology Co. Ltd.

Our net revenue for the three months ended March 31, 2009 decreased 34% compared to the three months ended March 31, 2008 as a result of a decrease in demand for our products primarily in Taiwan, Korea and China. Gross margin for the three months ended March 31, 2009 decreased to 44.9% compared to 54.6% for the three months ended March 31, 2008 primarily due to an unfavorable change in product mix and lower average selling prices.

Cash, cash equivalents and short term investments as of March 31, 2009 decreased by $6 million to approximately $104 million compared to December 31, 2008, primarily due to $3 million used to repurchase shares of our common stock during the three months ended March 31, 2009 and $2 million used in operating activities. We continue to be debt free as of March 31, 2009.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our condensed consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenues, inventory valuation, stock-based compensation, income taxes, goodwill, investments and long-lived assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.

Management believes that there have been no significant changes during the three months ended March 31, 2009 to the items that we disclosed as our critical accounting policies and estimates in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K/A for the year ended December 31, 2008.

Results of Operations

The following table sets forth our unaudited historical operating results, in dollar amounts and as a percentage of net revenue for the periods indicated:


	Three Months Ended March 31,
(in thousands, except percentages)	2009					2008
Net revenue	$	16,549		100.0	%	$	25,101		100.0	%
Cost of revenue		9,118		55.1			11,385		45.4

Gross profit		7,431		44.9			13,716		54.6
Operating expenses:
Research and development		6,583		39.8			7,913		31.5
Sales, general and administrative		5,429		32.8			6,877		27.4
Patent litigation		301		1.8			262		1.0

Total operating expenses		12,313		74.4			15,052		60.0

Loss from operations		(4,882	)	(29.5	)		(1,336	)	(5.3	)
Interest and other income:
Interest and investment income		371		2.2			1,129		4.5
Interest and other income (expense), net		(18	)	(0.1	)		15		0.1

Total interest and other income, net		353		2.1			1,144		4.6

Income (loss) before income taxes		(4,529	)	(27.4	)		(192	)	(0.8	)
Provision for income taxes		679		4.1			(63	)	(0.3	)

Net income (loss)	$	(5,208	)	(31.5	)%	$	(129	)	(0.5	)%

Comparison of Three Months ended March 31, 2009 and March 31, 2008

Revenues

The following table illustrates our net revenue by principal product families:


	Three Months Ended March 31,
	2009				2008
	Amount		Percent of net revenue		Amount		Percent of net revenue
	(in thousands, except percentages)
Display and Lighting Solutions	$	11,493	69	%	$	14,837	59	%
Voltage Regulation and DC/DC Conversion		1,791	11	%		5,900	24	%
Interface and Power Management		2,830	17	%		4,019	16	%
Battery Management		435	3	%		345	1	%

Total	$	16,549	100	%	$	25,101	100	%

Our net revenue for the three months ended March 31, 2009 decreased by $8.6 million or 34% compared to the three months ended March 31, 2008. This decrease reflected lower sales of all our product families except for Battery Management, as a result of decreased demand. Total unit shipments in the three months ended March 31, 2009 decreased 23% compared to the three months ended March 31, 2008 while the average selling prices decreased by approximately 6%.

Geographically, sales decreased in all regions during the three months ended March 31, 2009 compared to the three months ended March 31, 2008. Sales in Korea for the three months ended March 31, 2009 decreased 19% compared to the same period a year ago due to lower sales to a major customer. Sales in China for the three months ended March 31, 2009 decreased 38% compared to the same period a year ago due to lower shipments to our distributors as a result of lower demand.

Gross Profit


	Three Months Ended March 31,
(in thousands, except percentages)	2009			2008			Increase (Decrease)
Net revenue	$	16,549		$	25,101		$	(8,552	)	(34	)%
Cost of revenue		9,118			11,385			(2,267	)	(20	)%

Gross profit	$	7,431		$	13,716

Gross profit margin percentage		44.9	%		54.6	%		(9.7	)%

Our gross margin was 44.9% for the three months ended March 31, 2009, compared to 54.6% for the three months ended March 31, 2008. Approximately 8 percentage points of this decrease was due to the unfavorable impact of a change in product mix and decreased selling prices. Approximately 2 percentage points of this decrease was due to the unfavorable impact to gross margin as a result of higher excess inventory charges resulting from lower demand for our products than anticipated, as described below.

During the three months ended March 31, 2009, our gross inventory write-down was approximately $1.1 million, partially offset by the sale of $0.4 million of previously written down inventory. During the three months ended March 31, 2008, our gross inventory write-down was approximately $0.8 million, partially offset by the sale of $0.3 million of previously written down inventory.

Research and Development


	Three Months Ended March 31,
(in thousands, except percentages)	2009			2008			Increase (Decrease)
Research and development	$	6,583		$	7,913		$	(1,330	)	(17	)%
Percentage of net revenue		39.8	%		31.5	%		8.3	%

Research and development expenses for the three months ended March 31, 2009 decreased by $1.3 million as compared to the three months ended March 31, 2008 primarily due to a $0.8 million decrease in payroll and personnel related expenses. Payroll and personnel related expenses were lower during the three months ended March 31, 2009 as a result of lower headcount due to our December 2008 reduction in workforce and other cost reduction measures implemented.

Sales, General and Administrative


	Three Months Ended March 31,
(in thousands, except percentages)	2009			2008			Increase (Decrease)
Sales, general and administrative	$	5,429		$	6,877		$	(1,448	)	(21	)%
Percentage of net revenue		32.8	%		27.4	%		5.4	%

Sales, general and administrative expenses for the three months ended March 31, 2009 decreased by $1.4 million as compared to the three months ended March 31, 2008 primarily due to a $0.6 million decrease in payroll and personnel related expenses and a $0.3 million decrease in audit expenses incurred. Payroll and personnel related expenses were lower during the three months ended March 31, 2009 as a result of lower headcount due to our December 2008 reduction in workforce and other cost reduction measures implemented.

Patent Litigation


	Three Months Ended March 31,
(in thousands, except percentages)	2009			2008			Increase (Decrease)
Patent litigation	$	301		$	262		$	39		15	%
Percentage of net revenue		1.8	%		1.0	%		0.8	%

Patent litigation expense increased slightly during the three months ended March 31, 2009 compared to the three months ended March 31, 2008. We believe that we will continue to incur significant litigation expenses for the remainder of 2009 and future years. For a description of our litigation, please see Part II, Item 1—Legal Proceedings—for further details.

Interest and Investment Income

Interest and investment income was $0.4 million for the three months ended March 31, 2009, compared to $1.1 million for the three months ended March 31, 2008 primarily due to lower average interest rates.

Interest and Other Income (Expense), Net

Interest and other expense, net was insignificant for both the three months ended March 31, 2009 and March 31, 2008.

Provision for Income Taxes

In accordance with Accounting Principles Board Opinion No. 28, “Interim Financial Reporting” (APB No. 28), we adjust our effective tax rate each quarter to be consistent with the estimated annual effective tax rate. We also record the tax effect of unusual or infrequently occurring discrete items including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. Our effective tax rate reflects the impact of a significant amount of our earnings being taxed in foreign jurisdictions at rates below the United States statutory tax rate and a valuation allowance maintained on our deferred tax assets.

We recorded a tax provision of approximately $0.7 million and a tax benefit of $0.1 million for the three months ended March 31, 2009 and 2008, respectively. The increase in our tax provision compared to prior year is primarily due to a full valuation allowance against our United States deferred tax assets at March 31, 2009. Accordingly, no benefit is recognized for stock-based compensation as any increase in our related deferred tax asset will have a corresponding increase in our valuation allowance.

We established a full valuation allowance against our United States deferred tax assets on December 31, 2008. We have established valuation allowances for deferred tax assets based on a “more likely than not” threshold. Our ability to realize our deferred tax assets depends on our ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. We consider the following possible sources of taxable income when assessing the realization of our deferred tax assets:

•

Future reversals of existing taxable temporary differences;

•

Future taxable income exclusive of reversing temporary differences and carryforwards;

•

Taxable income in prior carryback years; and

•

Tax-planning strategies.

We conclude that a valuation allowance is required when there is significant negative evidence which is objective and verifiable, such as cumulative losses in recent years. We utilize a rolling three years of actual results as our primary measure of its cumulative losses in recent years. As of March 31, 2009, we continue to have a three year cumulative loss and, therefore, conclude that a valuation allowance is still required.

During the three months ended March 31, 2009, we increased our total amount of unrecognized tax benefits as calculated under FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN No. 48”) by approximately $0.4 million, including an accrual of interest and penalties of less than $0.1 million. We recognize interest and penalties accrued related to unrecognized tax benefits in income tax expense.

Recent Accounting Pronouncements

We adopted the provisions of Statement of Financial Accounting Standards No. 141(R), “Business Combinations”, as of January 1, 2009. The adoption did not have a material impact on our condensed consolidated financial statements.

disclosures of the inputs and valuation technique(s) used to measure fair value. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009 and is to be applied prospectively. We do not expect the adoption of FSP FAS 157-4 to have a significant impact on our financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” FSP FAS 115-2 and FAS 124-2 amends the other-than-temporary impairment guidance to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009. We do not expect the adoption of FSP FAS 115-2 and FAS 124-2 to have a significant impact on our financial statements.

Liquidity and Capital Resources


	Three Months Ended March 31,
(in thousands, except percentages)	2009			2008		Increase (Decrease)
Net cash (used in) provided by operating activities	$	(2,373	)	$	244	$	(2,617	)	(1,073	)%
Net cash (used in) provided by investing activities		(729	)		20,876		(21,605	)	(103	)%
Net cash (used in) provided by financing activities		(3,262	)		947		(4,209	)	(444	)%
Effect of exchange rate changes on cash and cash equivalents		(16	)		33		(49	)	(148	)%

Net (decrease) increase in cash and cash equivalents	$	(6,380	)	$	22,100	$	(28,480	)

Net Cash (Used in) Provided by Operating Activities

Cash used in operating activities consisted primarily of the net loss of $5.2 million, less non-cash items including $1.6 million of stock-based compensation expense and $0.5 million of depreciation and amortization, and $2.6 million used for the increase in accounts receivable as a result of higher sales near the end of the period. The cash outflows were partially offset by the $2.8 million increase in accounts payable due to the timing of inventory purchases and payments.

Net cash provided by operating activities was $0.2 million for the three months ended March 31, 2008. Net loss of $(0.1) million was adjusted for non-cash charges consisting primarily of $0.7 million of depreciation and amortization expense and $2.4 million of stock-based compensation expense. Amortization expense included $0.3 million related to the AP Semi acquisition. Accounts payable increased by $2.7 million due to increased purchases of materials and services to meet expected demand. Accrued liabilities decreased by $4.3 million as we paid out 2007 bonuses during the first quarter of 2008. Inventory increased by $1.8 million in anticipation of sales during the remainder of 2008.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities was $0.7 million for the three months ended March 31, 2009, primarily as a result of $20.8 million used to purchase short-term investments and $0.1 million used to increase our long-term investment in a privately held company, partially offset by $20.2 million proceeds from sales and maturities of short-term investments.

Net cash provided by investing activities was $20.9 million in the three months ended March 31, 2008, primarily as a result of a net cash inflow of $22 million from sales, maturities and purchases of our short-term investments, as a result of our actions to move our funds to shorter term investments to maintain our liquidity level. The net cash inflow from investments was offset by $1.2 million used to purchase testing and other equipment and to invest in office leasehold improvements.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities was $3.3 million for the three months ended March 31, 2009, primarily due to our repurchases of our common stock during the period.

Net cash provided by financing activities was $0.9 million for the three months ended March 31, 2008, primarily from net proceeds of $0.5 million from exercises of common stock options and $0.5 million of excess tax benefit from employee stock options.

Liquidity

Our cash, cash equivalents and short term investments were $103.6 million as of March 31, 2009 and $109.5 million as of December 31, 2008. We believe our existing cash, cash equivalents and short-term investment balances, as well as any cash expected to be generated from operating activities, will be sufficient to meet our anticipated cash needs for at least the next 12 months.

Our long-term future capital requirements will depend on many factors, including our level of revenues, the timing and extent of spending to support our product development efforts, the expansion of sales and marketing activities, the timing of our introductions of new products, the costs to ensure access to adequate manufacturing capacity, our level of acquisition activity or other strategic transactions, the continuing market acceptance of our products and the amount and intensity of our litigation activity. We could be required, or could elect, to seek additional funding through public or private equity or debt financing and additional funds may not be available on terms acceptable to us or at all.

Off Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us.

Contractual Obligations

The following table describes our principal contractual cash obligations as of March 31, 2009:


	Total		Remaining 2009		2010		2011		2012		2013		2014 and beyond
	(in thousands)
Obligations under capital leases	$	1	$	1	$	—	$	—	$	—	$	—	$	—
Operating leases		5,174		1,197		1,113		553		568		516		1,227
Purchase commitments ⁽¹⁾		4,381		4,184		197		—		—		—		—
Total contractual obligations	$	9,556	$	5,382	$	1,310	$	553	$	568	$	516	$	1,227

⁽¹⁾	Purchase commitments consist primarily of our commitment to purchase wafers and technology licenses.

Common Stock Repurchases

On October 29, 2008, our board of directors authorized a program to repurchase shares of our outstanding common stock. Under the stock repurchase program, we are authorized to use up to $30 million to repurchase our outstanding common stock in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased depended upon market conditions and other factors, in accordance with Securities and Exchange Commissions requirements.

During the three months ended March 31, 2009, we repurchased a total of 1.1 million shares of our common stock for a total cost of $3.3 million. As of March 31, 2009, we had $21.4 million of remaining funds authorized to purchase shares under the stock repurchase plan. Shares repurchased are accounted for as treasury stock and the total cost of shares repurchased is recorded as a reduction to stockholders’ equity.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At March 31, 2009, we had cash and cash equivalents totaling $45.7 million, compared to $52.1 million at December 31, 2008. At March 31, 2009, we had $57.9 million in short-term investments as compared to $57.4 million at December 31, 2008. Cash equivalents have an original or remaining maturity when purchased of 90 days or less; short-term investments generally have an original or remaining maturity when purchased of greater than 90 days. Our investment policy places emphasis on instruments with more liquidity.

The taxable equivalent interest rates for the three months ended March 31, 2009 and 2008, on those cash equivalents and short-term investments average approximately 1.4% and 4.0%, respectively. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. While none of the securities in which we invested are secured by real estate, these securities may be subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, we may maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including commercial paper, money market funds, debt securities and treasury notes.

A hypothetical increase in market interest rates of 100 basis points from the market rates in effect at March 31, 2009 would cause the fair value of these investments to decrease by approximately $0.3 million, which would not significantly impact our financial position or results of operations. Declines in interest rates over time will result in lower interest income. Based upon our analysis the fair values did not change materially as our investments are of short duration.

As of March 31, 2009, our investment portfolio included $3.2 million of interest bearing auction rate securities (“ARS”) with a fair value of $2.5 million, of which $1.9 million was classified as available-for-sale and $0.6 million was classified as trading securities. In addition, our investment portfolio included $0.5 million of ARS exchange rights (“ARS Put Option”) that provide us with the right, but not the obligation, to sell one of our ARS to UBS for par value during the period of June 30, 2010 to July 2, 2012. Upon initial recognition of the ARS Put Option, we made an election to account for this financial instrument at fair value pursuant to SFAS No. 159.

We used a discounted cash flow model to determine the estimated fair value of our ARS and the ARS Put Option as of March 31, 2009. The assumptions used in preparing the discounted cash flow model included estimates for interest rates, estimates for discount rates using yields of comparable traded instruments adjusted for illiquidity and other risk factors, and estimates for the amount of cash flows and expected holding periods of the ARS and the ARS Put Option. These inputs reflect our own assumptions about the assumptions market participants would use in pricing the ARS and the ARS Put Option, including assumptions about risk, developed based on the best information available in the circumstances.

ITEM 4.

CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q/A.

In connection with the restatement described in Note 13 to our unaudited condensed consolidated financial statements, our Chief Executive Officer and Chief Financial Officer determined that there was a material weakness in our internal control over financial reporting as of March 31, 2009 relating to the design of the controls over the calculation of stock-based compensation expense related to the application of the forfeiture rate. Based on this evaluation and because of the material weakness, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2009.

(b) Changes in Internal Controls Over Financial Reporting

There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2009 covered by this Quarterly Report on Form 10-Q/A that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

(c) Remedial Efforts to Address the Material Weakness

Subsequent to the identification of the material weakness in our internal control over financial reporting during the three months ended September 30, 2009, we have initiated remediation measures to address the material weakness over the calculation of stock-based compensation expense related to the application of the forfeiture rate which includes adding a control procedure to test the calculation of the third-party stock-based compensation system reports on a quarterly basis and upon our upgrades to new versions of the software.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

In May 2003, we received a letter from Linear Technology Corporation (“Linear Technology”) alleging that certain of our charge pump products infringed United States Patent No. 6,411,531 (‘531 Patent) owned by Linear Technology. In August 2004, we received a letter from Linear Technology alleging that certain of our switching regulator products infringed United States Patent Nos. 5,481,178, 6,304,066 and 6,580,258 (‘258 Patent). In response to these letters, we contacted Linear Technology to convey our good faith belief that we do not infringe the patents in question. Subsequently, we became aware of a marketing campaign conducted by Linear Technology in which it sought to disrupt our business relationships and sales by suggesting to our customers that our products infringe the same United States patents mentioned in its two letters to us. As a result, in February 2006, we initiated a lawsuit against Linear Technology for unfair business practices, interference with existing and prospective customers and trade libel, as well as a declaration of patent invalidity and non-infringement. This case is currently stayed pending the outcome of the United States International Trade Commission (“USITC”) investigation described in the following paragraphs.

In March 2006, the USITC responded to a complaint filed by Linear Technology by initiating an investigation under Section 337 of the Tariff Act to determine if certain of our products infringe certain patents owned by Linear Technology. The accused products include charge pumps and switching regulators and are similar to the products involved in our lawsuit with Linear Technology.

In a Final Determination issued September 24, 2007, the USITC left unchanged its earlier initial determination that our charge pumps do not violate Section 337 of the Tariff Act because they do not infringe any valid claim of ‘531 Patent owned by Linear Technology.

The Final Determination also found that a majority of our switching regulator designs do not infringe Linear Technology’s ‘258 Patent. The USITC also found that one family of switching regulator products infringes certain claims of the ‘258 Patent. Following normal USITC procedure, the USITC issued a limited exclusion order under Section 337 of the Tariff Act prohibiting the direct importation by us of this particular product family. This exclusion order does not, however, prevent our customers from importing their products into the United States. To date, our sales of this product family in the United States have been minimal. Linear Technology’s request that downstream products be barred from importation was denied.

Linear Technology has appealed portions of the Final Determination to the United States Court of Appeals for the Federal Circuit. This appeal is bifurcated into separate charge pump and switching regulator portions. On August 28, 2008, the Court of Appeals issued a ruling on the charge pump portion and upheld the invalidity of the ‘531 Patent. We believe that this ends the unsuccessful attempt by Linear Technology to assert its ‘531 Patent against us at the International Trade Commission. The separate appeal for the switching regulator portion remains pending at the United States Court of Appeals for the Federal Circuit.

On October 1, 2008, the USITC served notice that it will begin a formal enforcement proceeding for the limited exclusion order originally issued on September 24, 2007. The enforcement proceeding has been undertaken at the request of Linear Technology which has alleged that we have violated the limited exclusion order by importing certain switching regulator products. We believe that these allegations are not based in fact and that none of our products infringe the Linear Technology patents in question. Our domestic sales of these products have been minimal to date and we expect domestic sales of these products to be minimal in future periods. However, whether or not we prevail in this proceeding, we expect to incur significant legal expenses which will be expensed when incurred.

In March 2009, we initiated a lawsuit against a small, privately held semiconductor manufacturing company alleging patent infringement of certain of our patented product designs. This case is pending in the United States District Court for the Northern District of California. We do not believe that this lawsuit will have a material impact on our business or financial condition.

ITEM 1A.

RISK FACTORS

If we fail to forecast demand for our products accurately, we may incur product shortages, delays in product shipments or excess or insufficient product inventory.

We generally do not obtain firm, long-term purchase commitments from our customers. Because production lead times often exceed the amount of time required to fulfill orders, we often must build in advance of orders, relying on an imperfect demand forecast to project volumes and product mix. Our demand forecast accuracy can be adversely affected by a number of factors, including inaccurate forecasting by our customers, changes in market conditions, new part introductions by our competitors that lead to our loss of previous design wins, adverse changes in our product order mix and demand for our customers’ products or models. Even after an order is received, our customers may cancel these orders or request a decrease in production quantities. Any such cancellation or decrease subjects us to a number of risks, most notably that our projected sales will not materialize on schedule or at all, leading to unanticipated revenue shortfalls and excess or obsolete inventory which we may be unable to sell to other customers. Alternatively, if we are unable to project customer requirements accurately, we may not build enough products, which could lead to delays in product shipments and lost sales opportunities in the near term, as well as force our customers to identify alternative sources, which could affect our ongoing relationships with these customers. We have in the past had customers dramatically increase their requested production quantities with little or no advance notice and after they had submitted their original order.

We have on occasion been unable to fulfill these revised orders within the time period requested. Either overestimating or underestimating demand would lead to excess, obsolete or insufficient inventory, which could harm our operating results, cash flow and financial condition, as well as our relationships with our customers.

We receive a substantial portion of our revenues from a small number of OEM customers and distributors, and the loss of, or a significant reduction in, orders from those customers or our other largest customers would adversely affect our operations and financial condition.

We received an aggregate of approximately 88% and 87% of our net revenues from our ten largest customers for the three months ended March 31, 2009 and March 31, 2008, respectively. Any action by one of our largest customers that affects our orders, product pricing or vendor status could significantly reduce our revenues and harm our financial results.

We receive a substantial portion of our revenues from two of our OEM customers, Samsung of South Korea and LG Electronics Inc. of South Korea, as well as from a few of our distributors, such as ChiefTech Electronics Ltd. of China. LG Electronics, our largest direct customer in 2008 and 2007, represented 25% and 29% of net revenues for the three months ended March 31, 2009 and March 31, 2008, respectively. Sales to Samsung accounted for 32% of our net revenue for the three months ended March 31, 2009 and 12% of net revenues for the three months ended March 31, 2008. Additionally, we sell to a number of contract manufacturers of Samsung. Total sales to Samsung and its contract manufacturers represented 44% and 25% of our net revenue for three months ended March 31, 2009 and March 31, 2008, respectively. One distributor, ChiefTech Electronics Limited, accounted for 7% and 10% of our net revenue for the three months ended March 31, 2009 and March 31, 2008, respectively.

We anticipate that we will continue to be dependent on these customers for a significant portion of our revenue in the immediate future; however, we do not have long-term contractual purchase commitments from them, and we cannot assure you that they will continue to be our customers. Because our largest customers account for such a significant part of our business, the loss of, or a decline in sales to, any of our major customers would negatively impact our business.

Our operating results have fluctuated in the past and we expect our operating results to continue to fluctuate.

Our revenues are difficult to predict and have varied significantly in the past from period to period. We expect our revenues and expense levels to continue to vary in the future, making it difficult to predict our future operating results. In particular, we experience seasonality and variability in demand for our products as our customers manage their inventories. Our customers tend to increase inventory of our products in anticipation of the peak fourth quarter buying season for the mobile consumer electronic devices in which our products are used, which often leads to sequentially lower sales of our products in the first calendar quarter and, potentially, late in the fourth calendar quarter.

Additional factors that could cause our results to fluctuate include:

•

the forecasting, scheduling, rescheduling or cancellation of orders by our customers, particularly in China and other emerging markets;

•

costs associated with litigation, especially related to intellectual property;

•

liquidity and cash flow of our distributors, suppliers and end-market customers;

•

changes in manufacturing costs, including wafer, test and assembly costs, and manufacturing yields, product quality and reliability;

•

the timing and availability of adequate manufacturing capacity from our manufacturing suppliers;

•

our ability to successfully define, design and release new products in a timely manner that meet our customers’ needs;

•

the timing, performance and pricing of new product introductions by us and by our competitors;

•

general economic conditions in the countries where we operate or our products are used;

•

changes in exchange rates, interest rates, tax rates and tax withholding;

•

geopolitical stability, especially affecting China, Taiwan and Asia in general; and

•

changes in domestic and international tax laws.

Unfavorable changes in any of the above factors, most of which are beyond our control, could significantly harm our business and results of operations.

We may be required to record additional significant charges to earnings if our goodwill becomes impaired.

Under accounting principles generally accepted in the United States, we review our goodwill for impairment each year as of September 30 ^th and when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of our goodwill may not be recoverable due to factors indicating a decrease in the value of the Company, such as a decline in stock price and market capitalization, reduced estimates of future cash flows and slower growth rates in our industry. Estimates of future cash flows are based on an updated long-term financial outlook of our operations. However, actual performance in the near-term or long-term could be materially different from these forecasts, which could impact future estimates. For example, a significant decline in our stock price and/or market capitalization may result in goodwill impairment. We may be required to record a charge to earnings in our financial statements during a period in which an impairment of our goodwill is determined to exist, which may negatively impact our results of operations.

We may be required to record impairment charges in future quarters as a result of the decline in value of our investments in auction rate securities.

As of March 31, 2009, our investment portfolio included $2.5 million of interest bearing auction rate securities (ARS). Our ARS represent investments in debt obligations collateralized by Federal Family Education Program student loans. At the time of acquisition, these ARS investments were intended to provide liquidity via an auction process that resets the applicable interest rate at predetermined calendar intervals, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. The monthly auctions historically provided a liquid market for these securities. However, beginning in 2008, uncertainties in the credit markets have affected all of our holdings in ARS and auctions for our investments in these securities have failed to settle on their respective settlement dates. Auctions for our investments in these securities continued to fail through March 31, 2009.

If the current market conditions deteriorate further, the anticipated recovery in market values does not occur, or if we determine that we do not have the ability and intent to hold the ARS until a recovery of the auction process or until maturity, we may be required to record impairment charges in future quarters which may negatively impact our results of operations.

We may be unsuccessful in developing and selling new products or in penetrating new markets.

We operate in a dynamic environment characterized by rapidly changing technologies and industry standards and technological obsolescence. Our competitiveness and future success depends on our ability to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective basis. A fundamental shift in technologies in any of our product markets could harm our competitive position within these markets. Our failure to anticipate these shifts, to develop new technologies or to react to changes in existing technologies could materially delay our development of new products, which could result in product obsolescence, decreased revenues and a loss of design wins to our competitors. For example, we introduced approximately 70 new products in 2008, however many of them have not yet been adopted by our customers. The success of a new product depends on accurate forecasts of long-term market demand and future technological developments, as well as on a variety of specific implementation factors, including:

•

effective marketing, sales and service;

•

timely and efficient completion of process design and device structure improvements and implementation of manufacturing, assembly and test processes; and

•

the quality, performance and reliability of the product.

If we fail to introduce new products or penetrate new markets, our revenues will likely decrease over time and our financial condition could suffer.

We may not have the expertise we need to successfully define or develop products for new market opportunities, and we may lack the sales connections and applications expertise to secure orders for such products. Identifying and hiring such resources be difficult and we may not be successful in identifying and hiring necessary personnel. Attempts to balance product development and sales efforts between new and existing applications may delay our entrance into new markets and make it more difficult to penetrate new customers and application opportunities in the future.

Due to defects and failures that may occur, our products may not meet specifications, which may cause customers to return or stop buying our products and may expose us to product liability claims.

Our customers generally establish demanding specifications for quality, performance and reliability that our products must meet. Integrated circuits as complex as ours often encounter development delays and may contain undetected defects or failures when first introduced or after commencement of commercial shipments, which might require product replacement or recall. In addition, our customers may not use our products in a way that is consistent with our published specifications. If defects and failures occur in our products during the design phase or after, or our customers use our products in ways that are not consistent with their intended use, we could experience lost revenues, increased costs, including warranty expense and costs associated with customer support, delays in or cancellations or rescheduling of orders or shipments, or product returns or discounts, any of which would harm our operating results. We cannot assure you that we will have sufficient resources, including any available insurance, to satisfy any asserted claims.

The nature of the design process requires us to incur expenses prior to earning revenues associated with those expenses, and we will have difficulty selling our products if system designers do not design our products into their electronic systems.

We devote significant time and resources in working with our customers’ system designers to understand their future needs and to provide products that we believe will meet those needs. If a customer’s system designer initially chooses a competitor’s product for a particular electronic system, it becomes significantly more difficult for us to sell our products for use in that electronic system because changing suppliers can involve significant cost, time, effort and risk for our customers.

We often incur significant expenditures in the development of a new product without any assurance that our customers’ system designers will select our product for use in their electronic systems. We often are required to anticipate which product designs will generate demand in advance of our customers expressly indicating a need for that particular design. In some cases, there is minimal or no demand for our products in our anticipated target applications. Even if our products are selected by our customers’ system designers, a substantial period of time will elapse before we generate revenues related to the significant expenses we have incurred. The reasons for this delay generally include the following elements of our product sales and development cycle timeline and related influences:

•

our customers usually require a comprehensive technical evaluation of our products before they incorporate them into their electronic systems;

•

it can take up to 12 months from the time our products are selected to complete the design process;

•

it can take an additional nine to 12 months or longer to complete commercial introduction of the electronic systems that use our products, if they are introduced at all;

•

original equipment manufacturers typically limit the initial release of their electronic systems to evaluate performance and consumer demand; and

•

the development and commercial introduction of products incorporating new technology are frequently delayed.

We estimate that the overall sales and development cycle timeline of an average product is approximately 16 months.

Additionally, even if system designers use our products in their electronic systems, we cannot assure you that these systems will be commercially successful. As a result, we are unable to accurately forecast the volume and timing of our orders and revenues associated with any new product introductions.

Any increase in the manufacturing cost of our products could reduce our gross margins and operating profit.

The semiconductor business exhibits ongoing competitive pricing pressure from customers and competitors. Accordingly, any increase in the cost of our products, whether by adverse purchase price variances or adverse manufacturing cost variances, will reduce our gross margins and operating profit. We do not have many long-term supply agreements with our manufacturing suppliers and, consequently, we may not be able to obtain price reductions or anticipate or prevent future price increases from our suppliers.

The average selling price of our products may decline, or a change in the mix of product orders may occur, either of which could reduce our gross margins.

During a power management product’s life, its selling price tends to decrease for a particular application. As a result, to maintain gross margins on our products, we must continue to identify new applications for our products, reduce manufacturing costs for our existing products and introduce new products. If we are unable to identify new, high gross margin applications for our existing products, reduce our production costs or sell new, high gross margin products, our gross margins will suffer. A sustained reduction in our gross margins could harm our future operating results, cash flow and financial condition, which could lead to a significant drop in the price of our common stock.

Because we receive a substantial portion of our revenues through distributors, their financial viability and ability to access the capital markets could impact our ability to continue to do business with them and could result in lower revenues, which could adversely affect our operating results and our customer relationships.

We obtain a portion of our revenues through sales to distributors located in Asia who act as our fulfillment representatives. Sales to distributors accounted for 22% and 37% of our revenues for the three months ended March 31, 2009 and March 31, 2008, respectively. In the normal course of their operation as fulfillment representatives, these distributors typically perform functions such as order scheduling, shipment coordination, inventory stocking, payment and collections and, when applicable, currency exchange between purchasers of our products and these distributors. Our distributors’ compensation for these functions is reflected in the price of the products we sell to these distributors. Many of our current distributors also serve as our sales representatives procuring orders for us to fill directly. If these distributors are unable to pay us in a timely manner or if we anticipate that they will not pay us, we may elect to withhold future shipments, which could adversely affect our operating results. If one of our distributors experiences severe financial difficulties, becomes insolvent or declares bankruptcy, we could lose product inventory held by that distributor and we could be required to write off the value of any receivables owed to us by that distributor. We could also be required to record bad debt expense in excess of our reserves. We may not be successful in recognizing these indications or in finding replacement distributors in a timely manner, or at all, any of which could harm our operating results, cash flow and financial condition.

Our distributor arrangements often require us to accept product returns and to provide price protection and if we fail to properly estimate our product returns and price protection reserves, this may adversely impact our reported financial information.

A substantial portion of our sales are made through third-party distribution arrangements, which include stock rotation rights that generally permit the return of up to 5% of the previous six months’ purchases. We generally accept these returns in the second and fourth quarter of each annual period. Our arrangements with our distributors typically also include price protection provisions if we reduce our list prices. We record estimated returns at the time of shipment, and we record reserves for price protection at the time we decide to reduce our list prices. In the future, we could receive returns or claims that are in excess of our estimates and reserves, which could harm our operating results.

If our relationship with any of our distributors deteriorates or terminates, it could lead to a temporary or permanent loss of revenues until a replacement sales channel can be established to service the affected end-user customers, as well as inventory write-offs or accounts receivable write-offs. In addition, we also may be obligated to repurchase unsold products from a distributor if we decide to terminate our relationship with that distributor.

Our current backlog may not be indicative of future sales.

Due to the nature of our business, in which order lead times may vary, and the fact that customers are generally allowed to reschedule or cancel orders on short notice, we believe that our backlog is not necessarily a good indicator of our future sales. Our quarterly revenues also depend on orders booked and shipped in that quarter. Because our lead times for the manufacturing of our products generally take six to ten weeks, we often must build in advance of orders. This exposes us to certain risks, most notably the possibility that expected sales will not occur, which may lead to excess inventory, and we may not be able to sell this inventory to other customers. In addition, we supply LG Electronics, one of our largest customers, through its central hub and we do not record backlog with respect to the products we ship to the hub. Therefore, our backlog may not be a reliable indicator of future sales.

If consumer demand for mobile consumer electronic devices declines, our revenues will decrease.

Our products are used primarily in the mobile consumer electronic devices market. For the foreseeable future, we expect to see the significant majority of our revenues continue to come from this market, especially in wireless handsets. If consumer demand for these products declines and fewer mobile customer electronic devices are sold, our revenues will decrease significantly. For example, in the second half of 2008, and particularly later in the fourth quarter, we experienced a significant decrease in worldwide billings to our customers, suggesting that our customers have been reacting to decreased consumer demand for their end products. In an adverse economic climate such as the current worldwide financial crisis, consumers are less likely to prioritize purchasing new mobile consumer electronic devices or upgrading existing devices. In addition, if we are unsuccessful in identifying alternative markets for our products in a timely manner, our operating results will suffer dramatically.

Substantially all of our manufacturing suppliers, customers and operations are located in Asia, which subjects us to additional risks, including regional economic influences, logistical complexity, political instability and natural disasters including earthquakes.

We conduct, and expect to continue to conduct, almost all of our business with companies that are located outside the United States. Based on ship-to locations, more than 95% of our revenues for both the three months ended March 31, 2009 and March 31, 2008 came from customers in Asia, particularly South Korea, Taiwan, China and Japan. A vast majority of our contract manufacturing operations are located in South Korea, Taiwan, Malaysia and China. In addition, we have a design center in Shanghai, China. As a result of our international focus, we face several challenges, including:

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increased complexity and costs of managing international operations;

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longer and more difficult collection of receivables;

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political and economic instability;

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limited protection of our intellectual property;

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unanticipated changes in local regulations, including tax regulations;

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timing and availability of import and export licenses; and

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foreign currency exchange fluctuations relating to our international operating activities.

Our corporate headquarters in Santa Clara, California, our operations office in Chupei, Taiwan, and the production facilities of one of our wafer fabrication suppliers and several of our assembly and test suppliers in Hsinchu and across Taiwan are located near seismically active regions and are subject to periodic earthquakes. We do not maintain earthquake insurance and our business could be damaged in the event of a major earthquake or other natural disaster.

In addition to risks in our operations from natural disasters, our customers are also subject to these risks. Any disaster impacting our customers could result in loss of orders, delay of business and temporary regional economic recessions.

We are also more susceptible to the regional economic impact of health crises. Because we anticipate that we will continue to rely heavily on foreign companies or United States companies operating in Asia for our future growth, the above risks and issues that we do not currently anticipate could adversely affect our ability to conduct business and our results of operations.

We outsource our wafer fabrication, testing, packaging, warehousing and shipping operations to third parties, and rely on these parties to produce and deliver our products according to requested demands in specification, quantity, cost and time.

We rely on third parties for substantially all of our manufacturing operations, including wafer fabrication, wafer probe, wafer thinning, assembly, final test, warehousing and shipping. We depend on these parties to supply us with material of a requested quantity in a timely manner that meets our standards for yield, cost and manufacturing quality. Any problems with our manufacturing supply chain could adversely impact our ability to ship our products to our customers on time and in the quantity required, which in turn could cause an unanticipated decline in our sales and possibly damage our customer relationships. An economic slowdown such as the current economic recession could adversely affect the financial strength of our vendors and adversely impact their ability to manufacture product, resulting in a shortage or delay in product shipments to our customers.

Our products are manufactured at a limited number of locations. If we experience manufacturing problems at a particular location or with a particular supplier, we would be required to transfer manufacturing to a backup supplier. Converting or transferring manufacturing from a primary supplier to a backup fabrication facility could be expensive and could take as long as six to 12 months. During such a transition, we would be required to meet customer demand from our then-existing inventory, as well as any partially

finished goods that can be modified to the required product specifications. We do not seek to maintain sufficient inventory to address a lengthy transition period because we believe it is uneconomical to keep more than minimal inventory on hand. As a result, we may not be able to meet customer needs during such a transition, which could delay shipments, cause a production delay or stoppage for our customers, result in a decline in our sales and damage our customer relationships. Should we be required to manufacture safety stock and finished goods to insure against any supply interruptions to our customers, there is no guarantee that our customers would necessarily purchase the extra material and excess inventory may result. There is no guarantee we would be able to sell that excess inventory to other customers and we may have to write-off this material as an expense adversely affecting our financial performance.

In addition, a significant portion of our sales are to customers that practice just-in-time order management from their suppliers, which gives us a very limited amount of time in which to process and complete these orders. As a result, delays in our production or shipping by the parties to whom we outsource these functions could reduce our sales, damage our customer relationships and damage our reputation in the marketplace, any of which could harm our business, results of operations and financial condition.

The loss of any of our key personnel could seriously harm our business, and our failure to attract or retain specialized technical and management talent could impair our ability to grow our business.

The loss of services of one or more of our key personnel could seriously harm our business. In particular, our ability to define and design new products, gain new customers and grow our business depends on the continued contributions of Richard K. Williams, our President, Chief Executive Officer and Chief Technical Officer, as well as our senior level sales, finance, operations, technology and engineering personnel. Our future growth will also depend significantly on our ability to recruit and retain qualified and talented managers and engineers, along with key manufacturing, quality, sales and marketing staff members. There remains intense competition for these individuals in our industry, especially those with power and analog semiconductor design and applications expertise. We cannot assure you we will be successful in finding, hiring and retaining these individuals. If we are unable to recruit and retain such talent, our product and technology development, manufacturing, marketing and sales efforts could be impaired.

In economic downturns where consumer demand for our customer’s products is reduced or delayed, we expect lower revenue and reduced profitability. In response to these downturns, we may implement certain cost reduction actions including spending controls, forced holidays and company shutdowns, employee layoffs, shortened work-weeks, and involuntary salary reductions. It is uncertain what affect such measures may have on our ability to retain key talent and staff members, or our ability to rehire employees should business improve. For example, in December 2008, we reduced our headcount by 12% globally and announced employee salary reductions. It is unclear what long term affect these actions may have on our ability to recruit and retain engineering, sales and managerial talent.

Changes in effective tax rates or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.

Our future effective tax rates could be adversely affected by lower than anticipated earnings in countries where we have lower statutory rates and higher than anticipated earnings in countries where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations, accounting principles or interpretations thereof. Further, as a result of certain ongoing employment and capital investment commitments made by us, our income in certain countries is subject to reduced tax rates, and in some cases is wholly exempt from tax. Our failure to meet such commitments could adversely impact our effective tax rate. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. If we are unable to comply with domestic and international tax laws, our tax rate and our financial condition may be adversely impacted. Further, the domestic and international tax laws governing our structure are subject to change, which could adversely affect our operations and financial results. We are currently undergoing an audit by the Internal Revenue Service for our 2005, 2006 and 2007 tax years. In connection with this audit, the IRS could challenge certain tax positions regarding our international structure. If such a challenge is successful, our financial results and financial condition could be materially and adversely affected.

We compete against companies with substantially greater financial and other resources, and our market share or gross margins may be reduced if we are unable to respond to competitive challenges effectively.

The analog, mixed-signal, or analog with digital, and power management semiconductor industry in which we operate is highly competitive and dynamic, and we expect it to remain so. Our ability to compete effectively depends on defining, designing and regularly introducing new products that meet or anticipate the power management needs of our customers’ next-generation products and applications. We compete with numerous domestic and international semiconductor companies, many of which have greater financial and other resources with which to pursue marketing, technology development, product design, manufacturing, quality, sales and distribution of their products.

We consider our primary competitors to be Maxim Integrated Products, Inc., Linear Technology Corporation, Intersil Corporation, Texas Instruments Incorporated, Semtech Corporation and National Semiconductor Corporation. We expect continued competition from existing competitors as well as from new entrants into the power management semiconductor market. Our ability to compete depends on a number of factors, including:

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our success in identifying new and emerging markets, applications and technologies, and developing power management solutions for these markets;

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our products’ performance and cost effectiveness relative to that of our competitors’ products;

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our ability to deliver products in large volume on a timely basis at a competitive price;

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our success in utilizing new and proprietary technologies to offer products and features previously not available in the marketplace;

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our ability to recruit application engineers and designers; and

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our ability to protect our intellectual property.

We cannot assure you that our products will compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by our existing competitors or new companies entering this market.

Intellectual property litigation could result in significant costs, reduce sales of our products and cause our operating results to suffer.

The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights and positions, which has resulted in protracted and expensive litigation for many companies. We have in the past received, and expect that in the future we may receive, communications from various industry participants alleging our infringement of their patents, trade secrets or other intellectual property rights. Any lawsuits resulting from such allegations could subject us to significant liability for damages and invalidate our proprietary rights. Any potential intellectual property litigation also could force us to do one or more of the following:

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stop selling products or using technology that contain the allegedly infringing intellectual property;

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incur significant legal expenses;

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pay damages to the party claiming infringement;

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redesign those products that contain the allegedly infringing intellectual property; and

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attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all.

We initiated a lawsuit against Linear Technology Corporation in February 2006 for unfair business practices, interference with existing and prospective customers and trade libel, as well as a declaration of patent invalidity and non-infringement.

Uncertainty over the outcome of our litigation with Linear Technology may cause our customers or potential customers to elect not to include our products that are the subject of this litigation into the design of their systems. Once a customer’s system designer initially chooses a competitor’s product for a particular electronic system, it becomes significantly more difficult for us to sell our products for use in that electronic system, because changing suppliers can involve significant cost, time, effort and risk for our customers. As a result, our litigation with Linear Technology or any similar future litigation may result in significantly increased expenses on a quarterly basis. If we are unsuccessful in any such litigation, our business and our ability to compete in foreign markets could be harmed, and we could be enjoined from selling the accused products, either directly or indirectly, which could have a material adverse impact on our revenues, financial condition, results of operations and cash flows.

Our failure to protect our intellectual property rights adequately could impair our ability to compete effectively or to defend ourselves from litigation, which could harm our business, financial condition and results of operations.

We rely primarily on patent, copyright, trademark and trade secret laws, as well as confidentiality and non-disclosure agreements to protect our proprietary technologies and know-how. While we have more than 110 patents issued or allowed in the United States or foreign countries and a larger number of pending applications, the rights granted to us may not be meaningful or provide us with any commercial advantage. For example, these patents could be challenged or circumvented by our competitors or be declared invalid or unenforceable in judicial or administrative proceedings. The failure of our patents to adequately protect our technology might make it easier for our competitors to offer similar products or technologies. Our foreign patent protection is generally not as comprehensive as our United States patent protection and may not protect our intellectual property in some countries where our products are sold or may be sold in the future. Even if foreign patents are granted, effective enforcement in foreign countries may not be available. Many United States-based companies have encountered substantial intellectual property infringement in foreign countries, including countries where we sell products.

Monitoring unauthorized use of our intellectual property is difficult and costly. It is possible that unauthorized use of our intellectual property may occur without our knowledge. We cannot assure you that the steps we have taken will prevent unauthorized use of our intellectual property. Our failure to effectively protect our intellectual property could reduce the value of our technology in licensing arrangements or in cross-licensing negotiations, and could harm our business, results of operations and financial condition. We may in the future need to initiate infringement claims or litigation. Litigation, whether we are a plaintiff or a defendant, can be expensive, time-consuming and may divert the efforts of our technical staff and managerial personnel, which could harm our business, whether or not such litigation results in a determination favorable to us.

Any acquisitions we make could disrupt our business, result in integration difficulties or fail to realize anticipated benefits, which could adversely affect our financial condition and operating results.

We may choose to acquire companies, technologies, assets and personnel that are complementary to our business, including for the purpose of expanding our new product design capacity, introducing new design, market or application skills or enhancing and expanding our existing product lines. In October 2006, we acquired Analog Power Semiconductor Corporation and related assets and personnel, primarily located in Shanghai, China. In June 2008, we acquired Elite Micro Devices, located in Shanghai, China. Acquisitions involve numerous risks, including the following:

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difficulties in integrating the operations, systems, technologies, products and personnel of the acquired companies;

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diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions;

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difficulties in entering markets in which we may have no or limited direct prior experience and where competitors may have stronger market positions;

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the potential loss of key employees, customers, distributors, suppliers and other business partners of the companies we acquire following and continuing after announcement of acquisition plans;

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improving and expanding our management information systems to accommodate expanded operations;

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insufficient revenue to offset increased expenses associated with acquisitions; and

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addressing unforeseen liabilities of acquired businesses.

Acquisitions may also cause us to:

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issue capital stock that would dilute our current stockholders’ percentage ownership;

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use a substantial portion of our cash resources or incur debt;

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assume liabilities;

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record goodwill or incur amortization expenses related to certain intangible assets; and

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incur large and immediate write-offs and other related expenses.

Any of these factors could prevent us from realizing the anticipated benefits of an acquisition, and our failure to realize these benefits could adversely affect our business. In addition, we may not be successful in identifying future acquisition opportunities or in consummating any acquisitions that we may pursue on favorable terms, if at all. Any transactions that we complete may impair stockholder value or otherwise adversely affect our business and the market price of our stock. Failure to manage and successfully integrate acquisitions could materially harm our financial condition and operating results.

Our operating results, financial condition and cash flows may be adversely impacted by worldwide political and economic uncertainties and specific conditions in the markets we address, including the cyclical nature of and volatility in the semiconductor industry.

The semiconductor industry has historically exhibited cyclical behavior which at various times has included significant downturns in customer demand. These conditions have caused significant variations in product orders and production capacity utilization, as well as price erosion. Because a significant portion of our expenses is fixed in the near term or is incurred in advance of anticipated sales, we may not be able to decrease our expenses rapidly enough to offset any unanticipated shortfall in revenues. If this situation were to occur, it could adversely affect our operating results, cash flow and financial condition.

Additionally, general worldwide economic conditions have recently experienced a downturn due to slower economic activity, concerns about inflation and deflation, fears of recession, increased energy costs, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns in the wired and wireless communications markets, recent international conflicts and terrorist and military activity and the impact of natural disasters and public health emergencies. Our operations and performance depend significantly on worldwide economic conditions and their impact on consumer spending, which has recently deteriorated significantly in many countries and regions, including the United States and Asia, and may remain depressed for the foreseeable future. For example, some of the factors that could influence consumer spending include conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence and other factors affecting consumer spending behavior. These and other economic factors could have a material adverse effect on demand for our products and on our financial condition and operating results. In addition, these conditions make it extremely difficult for our customers, our vendors and us to accurately forecast and plan future business activities, and they could cause United States and foreign businesses to slow spending on our products and services, which would delay and lengthen sales cycles. We cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, worldwide, or in the semiconductor industry. If the economy or markets in which we operate do not continue at their present levels, our business, financial condition and results of operations will likely be materially and adversely affected.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

We repurchase shares of our common stock under our stock repurchase program announced on October 29, 2008. Under the stock repurchase program, we are authorized to use up to $30 million to repurchase our outstanding common stock. We may repurchase shares in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased depends upon market conditions and other factors, in accordance with SEC requirements.

We have entered into agreements pursuant to SEC Rule 10b5-1 pursuant to which we authorized a third-party broker to purchase shares on our behalf during our normal blackout periods in accordance with predetermined trading instructions. In addition, we may repurchase shares of our common stock under the guidelines of SEC Rule 10b-18.

During the three months ended March 31, 2009, we repurchased shares of our common stock as follows:


(In thousands, except per share amounts)	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Remaining funds authorized to purchase shares under the plan
1/1/2009-1/31/2009	1,089	$	3.03	1,089	$	21,438

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5.

OTHER INFORMATION

Not applicable.

ITEM 6.

EXHIBITS


31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		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.

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

ADVANCED ANALOGIC TECHNOLOGIES INCORPORATED

SIGNATURE

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

EXHIBIT INDEX


31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		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.