You should read the following discussion of our financial condition and results of operations together with the consolidated condensed financial statements and the notes to the consolidated condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report"). Forward Looking Statements
This Quarterly Report contains forward-looking statements. Forward-looking statements are statements other than historical information or statements of current condition and relate to matters such as our future financial performance, future operational performance and our plans, objectives and expectations. Some forward-looking statements may be identified by use of terms such as "expects," "anticipates," "intends," "estimates," "believes," "projects," "should," "will," "plans" and similar words. In light of the risks and uncertainties inherent in all such projected matters, forward-looking statements should not be regarded as a representation by us or any other person that our objectives or plans will be achieved or that any of our operating expectations or financial forecasts will be realized. Results could differ materially from those projected in forward-looking statements, due to factors including, but not limited to, those set forth in the "Risk Factors" and "Quantitative and Qualitative Disclosures About Market Risk" sections of this Quarterly Report and the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended January 29, 2012 filed with the Securities and Exchange Commission (the "SEC") on March 29, 2012. We undertake no duty to update any forward-looking statements, whether as a result of new information, future events or otherwise.
In addition to regarding forward-looking statements with caution, you should consider that the preparation of financial statements requires us to draw conclusions and make interpretations, judgments, assumptions and estimates with respect to factual, legal, and accounting matters. Different conclusions, interpretations, judgments, assumptions, or estimates could result in materially different results. See Note 1 to the consolidated condensed financial statements included in Part I, Item 1 of this Quarterly Report. Overview
We design, develop, manufacture and market high-performance analog and mixed signal semiconductor products. We operate and account for results in one reportable segment.
On March 20, 2012, we, through our wholly-owned subsidiary Semtech Canada Inc., completed the acquisition of all outstanding equity interests of Gennum Corporation ("Gennum") (TSX: GND), a leading supplier of high speed analog and mixed-signal semiconductors for the optical communications and video broadcast markets.
Upon consummation of the acquisition, which constituted a change in control of Gennum, Gennum's stock option awards and restricted shares became fully vested. We acquired 100% of the outstanding shares and vested stock options, restricted shares, and deferred share units of Gennum for CDN$13.55 per share for a total purchase price of $506.5 million. The acquisition was financed with a combination of cash from our international cash reserves and $347 million (net of original issue discount of $3 million) of five-year secured term loans with a combined interest rate of approximately 4% (see Note 10 to our consolidated condensed financial statements).
Our primary reasons for the acquisition were to broaden our existing portfolio of high-speed communications platforms through Gennum's data communications and video platforms by combining Gennum's 1 Gbps to 25 Gbps signal integrity solutions with our 40 Gbps to 100 Gbps SerDes solutions to create one of the industry's most complete and robust analog and mixed signal portfolios. In addition, Gennum's strong position in video broadcast and the emerging HD video surveillance market further diversifies our portfolio of high-performance analog semiconductors and provides cross-selling potential with the combined customer base.
On March 7, 2012, we completed the acquisition of Cycleo SAS ("Cycleo"), a privately held company based in France that develops IP for wireless long-range semiconductor products used in smart metering and other industrial and consumer markets. This transaction, which was accounted using the acquisition method of accounting, complements our current wireless offerings and will bring customers a set of high-end, digitally enhanced wireless solutions. Under the terms of the agreement, we paid the stockholders of Cycleo $5 million in cash at closing. Additionally, pursuant to the earn-out arrangement with Cycleo stockholders, we potentially may make payments totaling up to approximately $16 million based on the achievement of a combination of certain revenue and operating income milestones by Cycleo over the period of four years beginning on April 30, 2012. For certain of the Cycleo stockholders, payment of the earn-out liability is contingent upon employment on the payout date and is accounted for as post-acquisition compensation expense over the service period. The portion of the earn-out liability that is not dependent on continued employment is included in the purchase price allocation at March 7, 2012.

The unaudited consolidated condensed financial statements for the third quarter of fiscal year 2013 include the results of operations of Gennum and Cycleo commencing as of the acquisition dates.
Our product lines include:
Protection Products. We design, develop and market high performance protection devices, which are often referred to as transient voltage suppressors ("TVS"). TVS devices provide protection for electronic systems where voltage spikes (called transients), such as electrostatic discharge or secondary lightning surge energy that can permanently damage voltage sensitive complementary metal-oxide-semiconductor ("CMOS") ICs. Our portfolio includes filter and termination devices that are integrated in with the transient voltage suppressor ("TVS") devices. Our protection products feature low capacitance, providing robust protection while preserving signal integrity in high-speed networking and video interfaces. These products also operate at very low voltage needed for today's low voltage ICs. Our protection products can be found in a broad range of applications including portable, TV, video, computer, data-communications, telecommunications and industrial applications.
Advanced Communications Products. We design, develop and market a portfolio of proprietary advanced wired communication, ultra-high speed Serializer/Deserializer ("SerDes") and modulator driver products for transport communication. These integrated circuits (ICs) perform specialized timing, synchronization, and amplification functions used in high-speed networks, and 40Gbps and 100Gbps chips and transceivers for short reach, metro and long haul applications and high performance transceivers for datacenter applications. Our advanced communications products also feature a leading integrated timing solution for packet based communications networks. Our advanced communications products are used in a variety of communications and industrial applications. Power Management and High-Reliability Products. Power management products control, alter, regulate and condition the power supplies within electronic systems. The highest volume product types within the power management product line are switching voltage regulators, combination switching and linear regulators, smart regulators and charge pumps. Our power management products feature highly integrated devices for the telecom industry and low-power, small form factor and high-efficiency products for mobile phones, notebook computers, computer peripherals and other portable devices. The primary application for these products is power regulation for computer, communications, high-end consumer and industrial systems. Our high-reliability discrete semiconductor products comprised of rectifiers, assemblies (packaged discrete rectifiers) and other products are typically used to convert alternating currents ("AC") into direct currents ("DC") and to protect circuits against very high voltage spikes or high current surges. Our high-reliability products can be found in a broad range of applications including industrial, military, medical, aerospace and defense systems, including satellite communications.
Wireless and Sensing Products. We design, develop and market a portfolio of specialized radio frequency ("RF") functions used in a wide variety of industrial, medical and networking applications, and specialized sensing functions used in industrial and consumer applications. Our wireless and sensing products feature industry leading and longest range industrial, scientific and medical ("ISM") radio, enabling low cost of ownership and increased reliability in all environments. Our unique sensing interface platforms can interface to any sensor and output digital data in any form. Our wireless and sensing products can be found in a broad range of applications in the industrial, medical and consumer markets.
Gennum Products. We design, develop and market a portfolio of 10G optical communications, broadcast video, active cable transceiver and backplane products used in a wide variety of enterprise computing, industrial, communications and high-end consumer applications. Our broadcast video products offer advanced solutions for next generation video formats, ever increasing data rates and evolving I/O and distance requirements. Our security and surveillance products for HDcctv enable upgrade of analog cctv installations to full digital HD, leveraging the installed base of cabling, and our fully integrated transmit and receive products enable the highest performance, longest reach HDcctv standards-compliant designs. Our comprehensive portfolio of IC's for optical transceivers, backplane applications and consumer high-speed interfaces ranges from 100Mbps to 100Gbps and supports key industry standards such as Fibre Channel, Infiniband, Ethernet, PON, SONET and PCI Express.
Most of our sales to customers are made on the basis of individual customer purchase orders. Many customers include cancellation provisions in their purchase orders. Trends within the industry toward shorter lead-times and "just-in-time" deliveries have resulted in our reduced ability to predict future shipments. As a result, we rely on orders received and shipped within the same quarter for a significant portion of our sales. Orders received and shipped in the third quarter of fiscal years 2013 and 2012 represented 46% and 45% of net sales, respectively. Sales made directly to customers during the third quarter of fiscal years 2013 and 2012 were 64% and 55% of net sales, respectively. The remaining sales were made through independent distributors.

Our business relies on foreign-based entities. Most of our outside subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in foreign countries, including China, Taiwan, Germany, Poland, United Kingdom and Israel. For the third quarter of fiscal year 2013, approximately 46% of our silicon, in terms of cost of wafers purchased, was manufactured in China. Foreign sales during the three and nine month periods ended October 28, 2012 constituted approximately 80% and 82% of our net sales, respectively. Approximately 68% and 67% of foreign sales during the three and nine month periods ended October 28, 2012, respectively, were to customers located in the Asia-Pacific region. The remaining foreign sales were primarily to customers in Europe, Canada, and Mexico. Critical Accounting Policies and Estimates In addition to the discussion below, you should refer to the disclosures regarding our critical accounting policies in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 29, 2012 filed with the SEC on March 29, 2012.
Revenue and Cost of Sales
We recognize product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Product design and engineering recoveries is recognized during the period in which services are performed. We include revenue related to granted technology licenses as part of "Net sales." Historically, revenue from these arrangements has not been significant though it is part of our recurring ordinary business. In the third quarter of fiscal year 2013, we entered into a single licensing arrangement that resulted in the recognition of $7.5 million of revenue.
We record a provision for estimated sales returns in the same period as the related revenues are recorded. We base these estimates on historical sales returns and other known factors. Actual returns could be different from our estimates and current provisions for sales returns and allowances, resulting in future charges to earnings.
We defer revenue recognition on shipment of products to certain customers, principally distributors, under agreements which provide for limited pricing credits or product return privileges, until these products are sold through to end-users or the return privileges lapse. For sales subject to certain pricing credits or return privileges, the amount of future pricing credits or inventory returns cannot be reasonably estimated given the relatively long period in which a particular product may be held by the customer. Therefore, we have concluded that sales to customers under these agreements are not fixed and determinable at the date of the sale and revenue recognition has been deferred. We estimate the deferred gross margin on these sales by applying an average gross profit margin to the actual gross sales. The average gross profit margin is calculated for each category of material using current standard costs. The deferred gross margin does not include any adjustments for sales returns. The estimated deferred gross margin on these sales, where there are no outstanding receivables, is recorded on the balance sheet under the heading of "Deferred revenue." There were no significant impairments of deferred cost of sales in fiscal year 2012 or the first nine months of fiscal year 2013. The following table summarizes the deferred net revenue balance:

                                                    October 28,      January 29,
(in thousands)                                          2012             2012
Deferred revenue                                   $       5,878    $       4,964
Deferred cost of revenue                                   1,449            1,243
Deferred revenue, net                                      4,429            3,721
Deferred product design and engineering recoveries           137              132
Total deferred revenue                             $       4,566    $       3,853

Gross Profit
Gross profit is equal to our net sales less our cost of sales. Our cost of sales includes materials, depreciation on fixed assets used in the manufacturing process, shipping costs, direct labor and overhead. We determine the cost of inventory by the first-in, first-out method. Operating Costs
Our operating costs and expenses generally consist of selling, general and administrative, product development and engineering costs, costs associated with acquisitions, and other operating related charges.

Results of Operations
The following table sets forth, for the periods indicated, our statements of
income data expressed as a percentage of revenues.
                                                   Three Months Ended                         Nine Months Ended
                                         October 28, 2012      October 30, 2011     October 28, 2012     October 30, 2011
Net sales                                     100.0  %               100.0  %             100.0  %               100.0 %
Cost of sales                                  39.8  %                40.8  %              47.1  %                40.0 %
Gross Profit                                   60.2  %                59.2  %              52.9  %                60.0 %
Operating costs and expenses:
Selling, general and administrative            22.2  %                20.3  %              26.1  %                19.7 %
Product development and engineering            20.7  %                16.5  %              21.0  %                16.3 %
Intangible amortization and impairments         5.1  %                 3.7  %               5.1  %                 2.3 %
Total operating costs and expenses             48.0  %                40.5  %              52.2  %                38.3 %
Operating income                               12.2  %                18.7  %               0.7  %                21.7 %
Interest expense                               (2.6 )%                   -                 (2.4 )%                   -
Interest income and other (expense)
income, net                                    (0.7 )%                 0.6  %              (0.2 )%                   - %
Income (loss) before taxes                      8.9  %                19.3  %              (1.9 )%                21.7 %
(Benefit) provision for taxes                  (1.4 )%                (2.4 )%              (8.5 )%                 1.4 %
Net income                                     10.3  %                21.7  %               6.6  %                20.3 %
Percentages may not add precisely due
to rounding.

Our regional mix of income (loss) from continuing operations before income taxes is as follows:

                                           Three Months Ended                          Nine Months Ended
(in thousands)                    October 28, 2012     October 30, 2011     October 28, 2012      October 30, 2011
Domestic                         $         (9,185 )   $        (7,895 )    $        (26,910 )   $            3,080
Foreign                                    23,523              31,859                19,160                 78,757
Total                            $         14,338     $        23,964      $         (7,750 )   $           81,837

Domestic (loss) income from continuing operations includes amortization of acquired intangible assets, litigation expenses and higher levels of stock-based compensation compared to foreign operations.
Comparison of the Three Months Ended October 28, 2012 and October 30, 2011 We report results on the basis of 52 and 53 week periods and end our fiscal year on the last Sunday in January. The other quarters generally end on the last Sunday of April, July and October. All quarters consist of 13 weeks, except for one 14-week quarter in 53-week years. The third quarter of fiscal years 2013 and 2012 each consisted of 13 weeks.
Our sales by major end-market are detailed below:

(dollars in thousands; % of net sales)              Three Months Ended
                                         October 28, 2012        October 30, 2011
Enterprise Computing                   $     32,156     20 %   $     10,560      9 %
Communications                               46,241     29 %         46,212     37 %
High-end Consumer (1)                        44,773     28 %         45,859     37 %
Industrial and Other                         37,708     23 %         21,313     17 %
Total                                  $    160,878    100 %   $    123,944    100 %

(1) Approximately $12.4 million and $4.9 million of our total sales to Samsung Electronics (and affiliates), one of our significant customers, in the third quarter of fiscal years 2013 and 2012, respectively, were for products that target the handheld market (which includes mobile phones). This activity is included in the high-end consumer end-market category.

Net Sales Net sales for the third quarter of fiscal year 2013 were $160.9 million, an increase of 30% compared to $123.9 million for the third quarter of fiscal year 2012.
The higher revenue in the current quarter resulted primarily from higher demand from the enterprise computing and industrial end markets, driven by the impact of approximately $45.3 million of Gennum sales in the quarter, partially offset by decreased demand from the high-end consumer end market. Gennum sales for the quarter include $8.1 million of licensing revenue and the occurrence of similar transactions in future periods is not predictable.
Gross Profit During the third quarter of fiscal year 2013, gross profit increased to $96.8 million from $73.4 million in the third quarter of fiscal year 2012. Gross profit margins increased to 60.2% in the third quarter of fiscal year 2013 from 59.2% in the third quarter of fiscal year 2012. The increase in gross profit margin was due primarily to the impact of higher margin for $45.3 million Gennum licensing revenue and sales during the third quarter of fiscal year 2013, partially offset by amortization of $4.4 million of the fair value adjustment related to acquired inventory recorded to cost of sales from the Gennum acquisition.
Most of the remaining fair value adjustment of approximately $6.8 million related to the acquired inventory from the Gennum acquisition is expected to be recognized in the fourth quarter of the fiscal year 2013.

Operating Costs and Expenses
(dollars in thousands)                                Three Months Ended
                                       October 28, 2012                October 30, 2011            Change
Selling, general and
administrative                   $    35,646              46 %   $    25,110              50 %         42 %
Product development and
engineering                           33,354              43 %        20,489              41 %         63 %
Intangible amortization and
impairments                            8,212              11 %         4,573               9 %         80 %
Total operating costs and
expenses                         $    77,212             100 %   $    50,172             100 %         54 %

Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses increased by $10.5 million in the third quarter of fiscal year 2013, compared to the same quarter of fiscal year 2012 driven primarily by the inclusion of Gennum results for the full quarter and $1.5 million of transaction and integration expenses due to the acquisition of Gennum and Cycleo in March 2012. Product Development and Engineering Expenses Product development and engineering expenses increased by $12.9 million in the third quarter of fiscal year 2013, compared to the same quarter of fiscal year 2012 driven primarily by the inclusion of Gennum results for the full quarter. The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period over period volatility, by the number of new product tape-outs and by the timing of recoveries from non-recurring engineering services which are typically recorded as a reduction to product development and engineering expense. Intangible Amortization and Impairments
Intangible amortization and impairments was $8.2 million and $4.6 million in the third quarter of fiscal years 2013 and 2012, respectively. The increase reflects the impact of $5.7 million intangible amortization due to the inclusion of Gennum results for the full quarter. As of October 28, 2012, we had a total of $180.3 million of finite-lived intangible assets, which included $129.9 million related to the acquisition of Gennum.
Amortization expense related to acquired finite-lived intangible assets is expected to be $8.2 million in the fourth quarter of fiscal year 2013 (see Note 9 for further details).
The preliminary purchase price allocation for the Gennum acquisition included $29.1 million of acquired in-process research and development ("IPR&D") projects. Each project was analyzed to determine the unique technological innovations, the existence and reliance on core technology, the existence of any alternative future use or current technological feasibility, and the complexity, cost and time to complete the remaining development.

The fair value of the IPR&D projects was determined using an income approach or replacement cost approach as applicable. The replacement cost approach was used for IPR&D projects that were considered long-term core investments and were not anticipated to be profitable for a period of time. IPR&D projects which were valued using an income approach, measured the returns attributable to each specific IPR&D project, discounted to present value using a risk-adjusted rate of return, including as appropriate, any tax benefits derived from amortizing the intangible asset for tax purposes. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and return on assets, as well as the risks inherent in the development process, including the likelihood of achieving technological success and market acceptance. For IPR&D projects valued using a replacement cost approach, value was estimated by developing the cost to either replace or reproduce (replicate) the IPR&D to its current state.
The top three IPR&D projects that comprise $21.0 million of the total $29.1 million IPR&D balance are for enterprise computing, communications and high-end consumer products. The following table summarizes the significant assumptions underlying the valuation for such three IPR&D projects at the acquisition date:

                                           Estimated   Estimated
                                            Time to     Cost to      Risk
                               Estimated   Complete    Complete    Adjusted
                                Percent       (in         (in      Discount    Valuation        IPR&D
Development Projects           Complete     years)     millions)     Rate      Approach     (In millions)
                                            1.7 to
Video Platform                  10%-14%       2.9      3.4-10.4      12%        Income           4.0
                                            0.2 to                            Replacement
Backplane                       36%-40%       0.4      18.4-20.2      NA         Cost           12.0
                                                                              Replacement
Consumer                        44%-48%       0.2       5.2-6.0       NA         Cost            5.0

Costs, timing, and successful completion are subject to additional risk factors such as (i) increase in the projected technological risk of completion, (ii) decrease in the projected market size for the developed product, and (iii) subsequent decisions to postpone or delay the development of the IPR&D project. Interest Expense
Interest expense was $4.2 million in the third quarter of fiscal year 2013. There was no interest expense in the third quarter of fiscal year 2012. The increase was due to interest expense and the amortization of the original issue discount and debt issuance costs related to the credit facilities to finance the acquisition of Gennum (see Note 2 to our consolidated condensed financial statements). The original issue discount and debt issuance costs will be amortized and recognized in subsequent quarters over the terms of the loans (see Note 10 to our consolidated condensed financial statements for further details). Interest expense is expected to be approximately $4.1 million in the fourth . . .