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

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the audited Consolidated Financial Statements, Notes and MD&A included in our Annual Report filed on Form 10-K for the fiscal year ended June 27, 2009. Our discussion and analysis is an integral part of understanding our financial results. Also refer to "Basis of Presentation and Use of Estimates" in the Notes to the Consolidated Financial Statements.

Our Critical Accounting Policies and Estimates

The preparation of our Consolidated Financial Statements in conformity with U.S. Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the Consolidated Financial Statements and accompanying notes. These estimates and assumptions are based on management's judgment and available information and, consequently, actual results could differ from these estimates.

The accounting policies that we believe are the most critical to understanding and evaluating our reported financial results include: revenue recognition; reserves on accounts receivable; allowance for excess and obsolete inventory; uncertain tax positions; valuation of deferred tax assets; valuation of long-lived assets; share-based compensation expense; estimation of warranty liabilities and the separation of convertible notes between debt and equity.

Fiscal Year

Our fiscal years end on the Saturday closest to June 30, resulting in an extra week of results every five or six years and reporting periods ended on October 3, 2009, September 27, 2008 and June 27, 2009. Fiscal 2010 is a fifty-three week year and, as a result, the first quarter of fiscal 2010 was a 14-week period compared with a 13-week period for the first quarter of fiscal 2009.

Business Realignment Initiatives

In the first quarter of fiscal 2010, as a result of a further effort to streamline expenses internationally, we recorded severance of approximately $0.1 million, which was expensed to Selling, general and administrative ("SG&A"). This resulted from headcount reductions of four employees or approximately 1.0% of the workforce as compared to June 27, 2009.

Our Business Risks

Our results of operations and financial position are affected by a variety of factors. We believe the most significant recurring factors are the economic strength of the technology markets into which we sell our products, our ability to identify market demands and develop competitive products to meet those demands, the announcements and actions of our competitors and our ability to enter into new markets and broaden our presence in existing markets. Our sales are largely dependent on the health and growth of technology companies whose operations tend to be cyclical. Consequently, demand for our products tends to coincide with the increase or decrease in capital spending in the Computer/Semiconductor/Consumer Electronics, Data Storage, Automotive/Industrial, and Military/Aerospace industries.

Recent Accounting Pronouncements

See Note 17 "New Accounting Pronouncements" for additional information on recent pronouncements adopted and not yet adopted. Currently we have not adopted the new accounting guidance on revenue recognition effective for fiscal years beginning on or after June 15, 2010, with early adoption permitted.

---

Table of Contents

In May 2008, the FASB issued a staff position on new accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement). The staff position requires cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component will be the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the cash proceeds and this estimated fair value will be recorded as a debt discount, with an offset to equity, and will be amortized to interest expense, using the effective interest method, over the life of the convertible notes. The guidance was effective for financial statements issued for fiscal years beginning after December 15, 2008 and for interim periods within those years and required retrospective application. We adopted the staff position in fiscal 2010 and have retrospectively applied it to prior periods. See Note 12 - "Debt and Capital Leases" for additional information.