The statements in this Management's Discussion and Analysis that are forward-looking, within the meaning of the Private Securities Litigation Reform Act of 1995, involve numerous risks and uncertainties and are based on current expectations. The reader should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including those risks discussed under "Risk Factors" and elsewhere in this document. Often, forward-looking statements can be identified by the use of forward-looking words, such as "may," "will," "could," "should," "expect," "believe," "anticipate," "estimate," "continue," "plan," "intend," "project" and other similar terminology, or the negative of such terms. We disclaim any responsibility to update or revise any forward-looking statement provided in this Management's Discussion and Analysis for any reason. Critical Accounting Policies and Estimates The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements. The SEC has defined critical accounting policies as those that are most important to the portrayal of our financial condition and results of operations and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our critical accounting policies include: valuation of marketable securities, which impacts losses on debt and equity securities when we record impairments; revenue recognition, which impacts the recording of revenues; and valuation of inventories, which impacts cost of revenues and gross margin. Our critical accounting policies also include: the assessment of impairment of long-lived assets including acquisition-related intangibles, which impacts their valuation; the assessment of the recoverability of goodwill, which impacts goodwill impairment; accounting for income taxes, which impacts the provision or benefit recognized for income taxes, as well as, the valuation of deferred tax assets recorded on our consolidated balance sheet; and valuation and recognition of stock-based compensation, which impacts gross margin, research and development (R&D) expenses, and selling, general and administrative (SG&A) expenses. For more discussion please refer to "Item 7. Management's Discussion and Analysis of Financial condition and Results of Operations" included in our Form 10-K for the year ended March 31, 2012 filed with the SEC. We also have other key accounting policies that are not as subjective, and therefore, their application would not require us to make estimates or judgments that are as difficult, but which nevertheless could significantly affect our financial reporting. Results of Operations: Third quarter and first nine months of fiscal 2013 compared to the third quarter and first nine months of fiscal 2012 The following table sets forth statement of income data as a percentage of net revenues for the periods indicated:

                                                        Three Months Ended                               Nine Months Ended
                                           December 29, 2012          December 31, 2011     December 29, 2012         December 31, 2011
Net revenues                                       100.0 %                     100.0 %              100.0 %                    100.0 %
Cost of revenues                                    33.4                        34.2                 34.0                       35.6
Gross margin                                        66.6                        65.8                 66.0                       64.4
Operating expenses:
Research and development                            25.4                        21.2                 22.3                       19.0
Selling, general and administrative                 17.0                        17.4                 16.8                       16.3
Amortization of acquisition-related
intangibles                                          0.5                         0.4                  0.4                        0.3
Restructuring charges                                  -                           -                    -                        0.2
Total operating expenses                            42.9                        39.0                 39.5                       35.8
Operating income                                    23.7                        26.8                 26.5                       28.6
Interest and other expense, net                      1.0                         1.4                  1.5                        1.4
Income before income taxes                          22.7                        25.4                 25.0                       27.2
Provision for income taxes                           2.4                         0.5                  3.2                        3.0
Net income                                          20.3 %                      24.9 %               21.8 %                     24.2 %

Net Revenues
We sell our products to global manufacturers of electronic products in end markets such as wired and wireless communications, aerospace and defense, industrial, scientific and medical and audio, video and broadcast. The vast majority of our net revenues

are generated by sales of our semiconductor products, but we also generate sales from support products. We classify our product offerings into four categories: New, Mainstream, Base and Support Products. The composition of each product category is as follows:
• New Products include our most recent product offerings and include the Virtex®-7, Kintex™-7, Artix™-7, Zynq™-7000, Virtex-6 and Spartan®-6 product families.

• Mainstream Products include the Virtex-5, Spartan-3 and CoolRunner™-II product families.

• Base Products consist of our older product families including the Virtex-4, Virtex-II, Virtex-E, Virtex, Spartan-II, Spartan, CoolRunner and XC9500 products.

• Support Products include configuration solutions, HardWire, software and support services.

These product categories, except for Support Products, are modified on a periodic basis to better reflect the maturity of the products and advances in technology. The most recent modification was made on April 1, 2012, which was the beginning of our fiscal 2013. The amounts for the prior periods presented have been reclassified to conform to the new categorization. New Products include our most recent product offerings and are typically designed into our customers' latest generation of electronic systems. Mainstream Products are generally several years old and designed into customer programs that are currently shipping in full production. Base Products are older than Mainstream Products with demand generated generally by the customers' oldest systems still in production. Support Products are generally products or services sold in conjunction with our semiconductor devices to aid customers in the design process.
Net revenues of $509.8 million in the third quarter of fiscal 2013 represented a slight decrease from the comparable prior year period of $511.1 million. Net revenues from New Products increased significantly in the third quarter of fiscal 2013 versus the comparable prior year period, but were negatively offset by declines from our Mainstream and Base Products. No end customer accounted for 10% of our net revenues for any of the periods presented.
For the first nine months of fiscal 2013, approximately 57% of our net revenues were from products sold to distributors for subsequent resale to original equipment manufacturers (OEMs) or their subcontract manufacturers. As of December 29, 2012, we had $69.3 million of deferred revenue and $19.3 million of deferred cost of revenues recognized as a net $50.0 million of deferred income on shipments to distributors. As of March 31, 2012, we had $90.0 million of deferred revenue and $23.0 million of deferred cost of revenues recognized as a net $67.0 million of deferred income on shipments to distributors. The deferred income on shipments to distributors that will ultimately be recognized in our consolidated statement of income will be different than the amount shown on the consolidated balance sheet due to actual price adjustments issued to the distributors when the product is sold to their end customers. Net Revenues by Product
Net revenues by product categories for the third quarter and the first nine months of fiscal 2013 and 2012 were as follows:

                                                Three Months Ended                                           Nine Months Ended
(In millions)                  December 29, 2012     % Change      December 31, 2011       December 29, 2012     % Change      December 31, 2011
New Products                 $             125.5         79      $              70.1     $             332.3         79      $             185.2
Mainstream Products                        211.9         (4 )                  220.8                   724.8         (9 )                  795.9
Base Products                              151.5        (24 )                  199.8                   515.4        (18 )                  628.6
Support Products                            20.9          2                     20.4                    64.0        (11 )                   72.1
Total net revenues           $             509.8          -      $             511.1     $           1,636.5         (3 )    $           1,681.8

Net revenues from New Products increased significantly both in the third quarter and for the first nine months of fiscal 2013 from the comparable prior year periods. The increase was due to sales growth of our 40-nanometer (nm) Virtex-6, 45-nm Spartan-6 product families as well as 28-nm 7 Series and Zynq product lines. We expect sales of New Products to continue to grow as more customer programs enter into volume production with our 40/45-nm products and as our 28-nm products continue their sales ramp.
Net revenues from Mainstream Products decreased both in the third quarter and the first nine months of fiscal 2013 from the comparable prior year periods. The decrease was largely due to the decline in sales of our Virtex-5 and Spartan-3 product families.

Net revenues from Base Products decreased in the third quarter and the first nine months of fiscal 2013 from the comparable prior year periods. The decrease was mainly attributable to the decline in sales of our older products, in particular our Virtex-II and Virtex 4 product families.
Net revenues from Support Products increased slightly in the third quarter and decreased in the first nine months of fiscal 2013 compared to the prior year periods. The increase in the third quarter of fiscal 2013 was due primarily to a slight increase in sales from our PROM products while the decrease in the first nine months of fiscal 2013 was driven by a decline in PROM products.

Net Revenues by End Markets

Our end market revenue data is derived from our understanding of our end customers' primary markets. On April 1, 2012, we modified our end market categories in two ways. First, Data Center customers were moved from the Data Processing category into the Communications category. Additionally, all end market categories were renamed to better reflect actual sales composition. Amounts for the prior periods presented have been reclassified to conform to the new categorization. Net revenues by end markets were reclassified into the following four categories: Communications and Data Center; Industrial, Aerospace and Defense; Broadcast, Consumer and Automotive; and Other. The percentage change calculation in the table below represents the year-to-year dollar change in each end market.
Net revenues by end markets for the third quarter and the first nine months of fiscal 2013 and 2012 were as follows:

                                             Three Months Ended                                              Nine Months Ended
(% of total net                                    % Change in                                                    % Change in
revenues)                December 29, 2012           Dollars       December 31, 2011     December 29, 2012          Dollars       December 31, 2011
Communications and Data
Center                             47 %                 2                    46 %                  47 %               (1 )                  46 %
Industrial, Aerospace
and Defense                        36                   5                    34                    34                 (3 )                  34
Broadcast, Consumer and
Automotive                         15                  (2 )                  15                    16                  2                    15
Other                               2                 (52 )                   5                     3                (28 )                   5
Total net revenues                100 %                 -                   100 %                 100 %               (3 )                 100 %

Net revenues from the Communications and Data Center end market increased in the third quarter, but decreased in the first nine months of fiscal 2013 in terms of absolute dollars, compared to the prior year periods. The increase in the third quarter of fiscal 2013 was due to stronger sales from wireless communication applications, and the decrease in the first nine months of fiscal 2013 was driven by weaker sales in wired communications.
Net revenues from the Industrial, Aerospace & Defense end market increased in the third quarter and decreased in the first nine months of fiscal 2013 versus the comparable prior year periods. The increase in the third quarter of fiscal 2013 was primarily due to an increase in sales from defense and test and measurement applications. The decrease in the first nine months of fiscal 2013 was driven by weaker sales in defense applications.
Net revenues from the Broadcast, Consumer and Automotive end market decreased in the third quarter, but increased in the first nine months of fiscal 2013 from the comparable prior year periods. The decrease in net revenues in the third quarter of fiscal 2013 was due to a decline in sales from audio, video and broadcast, consumer, and automotive applications. The increase in net revenues in the first nine months of fiscal 2013 was driven by increases in sales from audio, video and broadcast, and automotive applications.
Net revenues from the Other end market decreased in both the third quarter and the first nine months of fiscal 2013 from the comparable prior year periods. The decreases were due primarily to weaker sales from computing and storage applications.
Net Revenues by Geography
Geographic revenue information reflects the geographic location of the distributors, OEMs or contract manufacturers who purchased our products. This may differ from the geographic location of the end customers. Net revenues by geography for the third quarter and the first nine months of fiscal 2013 and 2012 were as follows:

                                               Three Months Ended                                           Nine Months Ended
(In millions)                December 29, 2012      % Change      December 31, 2011       December 29, 2012      % Change      December 31, 2011
North America              $             162.7          -       $             162.8     $             488.4         (3 )     $             505.5
Asia Pacific                             174.7         (3 )                   180.2                   573.6          1                     568.8
Europe                                   119.4          1                     117.7                   412.2         (6 )                   439.8
Japan                                     52.8          5                      50.4                   162.3         (3 )                   167.7
Total net revenues         $             509.6          -       $             511.1     $           1,636.5         (3 )     $           1,681.8

Net revenues in North America were flat in the third quarter and decreased in the first nine months of fiscal 2013 from the comparable prior year periods. The decreases were primarily due to weaker sales across most end markets, including Communications & Data Center and Industrial and Aerospace & Defense. Net revenues in Asia Pacific declined in the third quarter and increased slightly in the first nine months of fiscal 2013 from the comparable prior year periods. The decline in the third quarter of fiscal 2013 was primarily due to a decrease in sales from the Communications and Data Center end market, particularly wireless communications applications. The increase in sales in the first nine months of fiscal 2013 was driven by the Communications & Data Center end market.
Net revenues in Europe increased in the third quarter and decreased in the first nine months of fiscal 2013 compared with the prior year periods. The increase in the third quarter of fiscal 2013 was primarily due to increased sales from the Communications and Data Center and Automotive end markets. The decline in the first nine months of fiscal 2013 was due to decreased sales from the Communications and Data Center and Other end markets.
Net revenues in Japan increased in the third quarter and decreased in the first nine months of fiscal 2013 compared with the prior year periods. The increase in the third quarter of fiscal 2013 was primarily due to increased sales in industrial, scientific, and medical applications. The decline in the first nine months of fiscal 2013 was driven by a decline in sales in the Industrial and Aerospace & Defense end market.

Gross Margin

                                             Three Months Ended                                        Nine Months Ended
(In millions)               December 29, 2012      Change      December 31, 2011     December 29, 2012      Change       December 31, 2011

Gross margin was 0.8 and 1.6 percentage points higher, respectively, in the third quarter and in the first nine months of fiscal 2013 from the comparable prior year periods. The gross margin increases in both periods were driven primarily by continued cost improvement and mix of customers, and was negatively offset, in part, by mix of products. New Products generally have lower gross margins than Mainstream and Base Products as they are in the early stage of their product life cycle and have higher unit costs associated with relatively lower volumes and early manufacturing maturity.
Gross margin may be affected in the future due to shifts in the mix of customers and products, competitive-pricing pressure, manufacturing-yield issues and wafer pricing. We expect to mitigate any adverse impacts from these factors by continuing to improve yields on our New Products, improve manufacturing efficiencies, and improve average selling price management.
In order to compete effectively, we pass manufacturing cost reductions to our customers in the form of reduced prices to the extent that we can maintain acceptable margins. Price erosion is common in the semiconductor industry, as advances in both product architecture and manufacturing process technology permit continual reductions in unit cost. We have historically been able to offset much of this revenue decline in our mature products with increased revenues from newer products.
Research and Development

                                      Three Months Ended                                       Nine Months Ended
(In millions)         December 29, 2012     Change      December 31, 2011     December 29, 2012     Change      December 31, 2011
Research and
development          $           129.1         19 %    $           108.2     $           364.4         14 %    $           320.0
Percentage of net
revenues                            25 %                              21 %                  22 %                              19 %

R&D spending increased $20.9 million, or 19%, for the third quarter of fiscal 2013 compared to the same period last year. For the first nine months of fiscal 2013, R&D spending increased by $44.4 million, or 14%. The increases in both periods were primarily attributable to higher employee-related expenses (including stock-based compensation expense), mask and wafer expenses related to our 28-nm development activities during the current period.
We plan to continue to selectively invest in R&D efforts in areas such as new products and more advanced process development, IP cores and the development of new design and layout software. We may also consider acquisitions to complement our strategy for technology leadership and engineering resources in critical areas.
Selling, General and Administrative

                                              Three Months Ended                                        Nine Months Ended
(In millions)               December 29, 2012       Change      December 31, 2011      December 29, 2012      Change      December 31, 2011
Selling, general and
administrative             $            86.8          (2 )%    $           88.9       $           275.0          - %     $           274.0
Percentage of net revenues                17 %                               17 %                    17 %                               16 %

SG&A expenses decreased by $2.1 million during the third quarter of fiscal 2013 compared to the same period last year. The decrease during the third quarter of fiscal 2013 was primarily due to lower litigation expenses. For the first nine months of fiscal 2013, SG&A expenses were relatively flat compared to the same period last year as higher employee-related expenses (including stock-based compensation expense) were offset by lower sales commission due to lower revenues.

Amortization of Acquisition-Related Intangibles

                                                Three Months Ended                                             Nine Months Ended
(In millions)               December 29, 2012          Change       December 31, 2011       December 29, 2012         Change       December 31, 2011
Amortization of
acquisition-related
intangibles                $           2.6                29 %    $            2.0        $           7.0                26 %    $            5.6
Percentage of net revenues               1 %                                     - %                    - %                                     - %

Amortization expense for the three and nine months ended December 29, 2012 increased compared to the same periods last year. The increases were primarily due to the impact of amortization of intangible assets obtained from the recent acquisitions in the second quarter of fiscal 2013.

Stock-Based Compensation

                                            Three Months Ended                                        Nine Months Ended
                             December 29,
(In millions)                    2012          Change       December 31, 2011       December 29, 2012      Change       December 31, 2011
Stock-based compensation
included in:
Cost of revenues           $          1.5         12 %    $               1.3     $          4.7              20 %    $               3.9
Research and development              9.7         12 %                    8.7               27.7              19 %                   23.3
Selling, general and
administrative                        8.6         10 %                    7.8               24.2              14 %                   21.3
                           $         19.8         11 %    $              17.8     $         56.6              17 %    $              48.5

The increases in stock-based compensation expense for the third quarter and the first nine months of fiscal 2013 compared to the prior year periods were primarily related to higher expenses associated with restricted stock units, as we granted more restricted stock units at a higher fair value in the recent years. The higher expense from restricted stock units was partially offset by lower expenses related to stock option grants as we granted lower number of stock options in the current fiscal year.

The impact of forfeiture true up in the first nine months of fiscal 2013 and 2012 reduced stock-based compensation expense by $2.0 million and $3.4 million, respectively.

Interest and Other Expense, Net
                                                   Three Months Ended                                          Nine Months Ended
(In millions)                     December 29, 2012      Change       December 31, 2011      December 29, 2012       Change      December 31, 2011
Interest and other expense, net $           5.1            (28 )%   $            7.2        $          24.8             5 %     $           23.6
Percentage of net revenues                    1 %                                  1 %                    2 %                                  1 %

Our net interest and other expense decreased by $2.1 million for the third quarter of fiscal 2013 compared to the same period last year. The decrease was due to a royalty payment received during the quarter. For the first nine months of fiscal 2013, our net interest and other expense increased by $1.2 million as compared to the same period last year. The increase was primarily due to higher losses related to foreign exchange hedging for the current period, partially offset by the royalty payment received during the third quarter of fiscal 2013.

Provision for Income Taxes
                                             Three Months Ended                                         Nine Months Ended
(In millions)               December 29, 2012      Change      December 31, 2011      December 29, 2012       Change      December 31, 2011
Provision for income taxes $          12.0           312 %   $            2.9        $          51.8             6 %     $           49.0
Percentage of net revenues               2 %                                1 %                    3 %                                  3 %
Effective tax rate                      10 %                                2 %                   13 %                                 11 %

The difference between the U.S. federal statutory tax rate of 35% and the Company's effective tax rate in all periods is primarily due to income earned in lower tax rate jurisdictions, for which no U.S. income tax has been provided, as . . .