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1.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Information —The accompanying unaudited, condensed consolidated financial statements have been prepared according to the rules and regulations of the United States (the “U.S.”) Securities and Exchange Commission (the “SEC”) and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the condensed consolidated balance sheets, condensed consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows of MACOM Technology Solutions Holdings, Inc. (“MACOM”, the “Company”, “us”, “we” or “our”) for the periods presented. We prepare our interim financial information using the same accounting principles we use for our annual audited consolidated financial statements. Certain information and note disclosures normally included in the annual audited consolidated financial statements have been condensed or omitted in accordance with prescribed SEC rules. We believe that the disclosures made in our condensed consolidated financial statements and the accompanying notes are adequate to make the information presented not misleading.

The condensed consolidated balance sheet as of September 27, 2019 is as reported in our audited consolidated financial statements as of that date. Our accounting policies are described in the notes to our September 27, 2019 consolidated financial statements, which were included in our Annual Report on Form 10-K for our fiscal year ended September 27, 2019 filed with the SEC on November 26, 2019 (the “2019 Annual Report on Form 10-K”). We recommend that the financial statements included in this Quarterly Report on Form 10-Q be read in conjunction with the consolidated financial statements and notes included in our 2019 Annual Report on Form 10-K.

Principles of Consolidation— The accompanying condensed consolidated financial statements include our accounts and the accounts of our majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

We have a 52- or 53-week fiscal year ending on the Friday closest to the last day of September. Fiscal year 2020 includes 53 weeks and fiscal year 2019 includes 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we include the extra week arising in such fiscal years in the first quarter. Our first fiscal quarter ended January 3, 2020 included 14 weeks.

Use of Estimates —The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities during the reporting periods, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, we base estimates and assumptions on historical experience, currently available information and various other factors that management believes to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.

Recent Accounting Pronouncements —Our Recent Accounting Pronouncements are described in the 2019 Annual Report on Form 10-K.

Pronouncements Adopted in Fiscal Year 2020

On the first day of our fiscal year 2020, we adopted Accounting Standards Update (“ASU”) 2016-02,  Leases  (“ASC 842”), which requires lease arrangements be presented on the lessee’s balance sheet by recording a right-of-use (“ROU”) asset and a lease liability equal to the present value of related future minimum lease payments. We adopted the new lease guidance using the modified retrospective approach and the transition method available in accordance with ASU 2018-11,  Leases (Topic 842): Targeted Improvements , which provides the option to use the effective date as the date of initial application of the guidance. As a result, the comparative information for prior periods has not been adjusted and continues to be reported in accordance with the accounting standards in effect for those periods under the previously applicable guidance. We elected the “practical expedients package of three” permitted under the transition guidance within ASC 842, which permitted us to carry forward our historical assessments of whether contracts contain leases, lease classification, and initial direct costs, for leases in existence prior to September 28, 2019. We evaluated our identified leases and applied the new lease guidance as discussed in Note 8 - Leases.

At the effective date, the adoption of ASC 842 resulted in an increase to our total assets of approximately  $ 37.1 million , an increase to total liabilities of approximately  $ 39.0 million and a decrease to retained earnings of approximately  $ 1.9 million primarily due to derecognition of financing obligations and associated assets established under ASC 840, Leases .

We have operating leases for certain facilities as well as manufacturing and office equipment. Based on the present value of lease payments for the remaining lease term of our existing leases, we recognized $ 37.7 million and $ 43.6 million of both operating ROU assets and operating lease liabilities, respectively, on our condensed consolidated balance sheet upon adoption of ASC 842

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on September 28, 2019. The difference between the ROU asset and liability represents deferred rent and lease incentives of approximately $ 5.9 million , recorded as a reduction to our gross ROU assets.

We have finance leases for our corporate headquarters, including our fabrication facility, and to a lesser extent, various manufacturing equipment. Upon the adoption of ASC 842 on September 28, 2019, we derecognized the previous financed assets, recorded financing obligations for our corporate headquarters, and recorded finance lease assets and financing obligations for various manufacturing equipment. On September 28, 2019 we recognized a finance lease ROU asset and finance lease liability of $ 35.7 million and $ 31.8 million , respectively, on our condensed consolidated balance sheet. The difference between the ROU asset and liability represents net prepaid rent for our corporate headquarters, which is recorded as part of the finance lease ROU asset and is being amortized on a straight-line basis over the remaining lease term.

The adoption of the new lease guidance did not have a material impact to the condensed consolidated statement of operations or cash flows, or earnings per share for the three and six months ended April 3, 2020 .

Pronouncements for Adoption in Subsequent Periods

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU introduces a new accounting model known as Credit Expected Credit Losses (“CECL”), which requires earlier recognition of credit losses. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for receivables at the time the financial asset is originated or acquired, replacing the current incurred loss methodology that delays recognition of credit losses until a probable loss has been incurred. There are other provisions within the standard affecting how impairments of other financial assets may be recorded and presented, as well as expanded disclosures. We plan to adopt this standard on the first day of our fiscal year 2021, October 3, 2020. We are currently evaluating the impact of this standard, although we do not believe the adoption will have a material impact on our consolidated financial statements.

Disaggregation of Revenue

We disaggregate revenue from contracts with customers by markets and geography, as we believe it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The following tables present our revenue disaggregated by markets and geography (in thousands):

	Three Months Ended								Six Months Ended
	April 3, 2020				March 29, 2019				April 3, 2020				March 29, 2019
Revenue by Market:
Telecommunications	$	51,648			$	47,337			$	97,249			$	97,496
Industrial & Defense	48,069				50,471				98,552				107,754
Data Center	26,707				30,657				49,720				73,904
Total	$	126,424			$	128,465			$	245,521			$	279,154

	Three Months Ended								Six Months Ended
	April 3, 2020				March 29, 2019				April 3, 2020				March 29, 2019
Revenue by Geographic Region:
United States	$	56,380			$	64,714			$	110,331			$	132,832
China	40,433				32,419				77,773				77,041
Asia Pacific, excluding China (1)	20,044				20,598				38,864				44,013
Other Countries (2)	9,567				10,734				18,553				25,268
Total	$	126,424			$	128,465			$	245,521			$	279,154

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(1)	Asia Pacific represents Taiwan, Japan, Singapore, India, Thailand, South Korea, Australia, Malaysia, New Zealand and the Philippines.

(2)	Outside the United States, no country or region represented greater than 10% of our total revenue as of the dates presented, other than China and the Asia Pacific region as presented above.

Contract Balances

We record contract assets or contract liabilities depending on the timing of revenue recognition, billings and cash collections on a contract-by-contract basis. Our contract liabilities primarily relate to deferred revenue, including advance consideration received from customers for contracts prior to the transfer of control to the customer, and therefore revenue is recognized upon delivery of products and services.

The following table presents the changes in contract liabilities during the six months ended April 3, 2020 (in thousands):

	April 3, 2020				September 27, 2019				$ Change				% Change
Contract liabilities	$	10,542			$	10,653			$	( 111	)		( 1	)%

As of April 3, 2020 and September 27, 2019 , approximately $ 3.5 million and $ 8.5 million of our contract liabilities, respectively, were recorded as other long-term liabilities on our balance sheet with the remainder recorded as deferred revenue. The decrease in contract liabilities during the six months ended April 3, 2020 , as shown in the table above, was primarily from the recognition of revenue deferred for funds received prior to when certain of our customers obtain control of the product or services.

During the three and six months ended April 3, 2020 , we recognized net sales of $ 0.1 million and $ 0.2 million , respectively, that were included in the contract liabilities balance at the beginning of the period.

Our short-term investments include corporate bonds and commercial paper and are classified as available-for-sale and are summarized in the tables below (in thousands):

	April 3, 2020
	Amortized Cost				Gross Unrealized Holding Gains				Gross Unrealized Holding Losses				Aggregate Fair Value
Corporate bonds	$	29,778			$	—			$	( 1,291	)		$	28,487
Commercial paper	72,364				28				( 32		)		72,360
Total short-term investments	$	102,142			$	28			$	( 1,323	)		$	100,847

	September 27, 2019
	Amortized Cost				Gross Unrealized Holding Gains				Gross Unrealized Holding Losses				Aggregate Fair Value
Corporate bonds	$	29,578			$	112			$	( 93	)		$	29,597
Commercial paper	71,646				1				( 18		)		71,629
Total short-term investments	$	101,224			$	113			$	( 111	)		$	101,226

The contractual maturities of available-for-sale investments were as follows (in thousands):

	April 3, 2020				September 27, 2019
Less than 1 year	$	77,862			$	75,233
Over 1 year	22,985				25,993
Total short-term investments	$	100,847			$	101,226

Available-for-sale investments are reported at fair value and as such, their associated unrealized gains and losses are reported as a separate component of stockholders’ equity within accumulated other comprehensive income.

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Other Investments — As of April 3, 2020 , we held an investment in a Series B preferred stock ownership of a privately held manufacturing corporation with preferred liquidation rights over other equity shares. As the equity securities do not have a readily determinable fair value and do not qualify for the practical expedient under ASC 820, Fair Value Measurement, we have elected to account for this investment at cost less any impairment. As of April 3, 2020 , the cost of this investment was $ 5.0 million . We evaluate this investment for impairment at each balance sheet date, and through April 3, 2020 , no impairment has been recorded for this investment.

Assets and liabilities measured at fair value on a recurring basis consist of the following (in thousands):

	April 3, 2020
	Fair Value				Active Markets for Identical Assets (Level 1)				Observable Inputs (Level 2)				Unobservable Inputs (Level 3)
Assets
Money market funds	$	491			$	491			$	—			$	—
Commercial paper	72,360				—				72,360				—
Corporate bonds	28,487				—				28,487				—
Total assets measured at fair value	$	101,338			$	491			$	100,847			$	—
Liabilities
Common stock warrant liability	$	7,804			$	—			$	—			$	7,804
Total liabilities measured at fair value	$	7,804			$	—			$	—			$	7,804

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	September 27, 2019
	Fair Value				Active Markets for Identical Assets (Level 1)				Observable Inputs (Level 2)				Unobservable Inputs (Level 3)
Assets
Money market funds	$	261			$	261			$	—			$	—
Commercial paper	71,629				—				71,629				—
Corporate bonds	29,597				—				29,597				—
Total assets measured at fair value	$	101,487			$	261			$	101,226			$	—
Liabilities
Common stock warrant liability	$	12,364			$	—			$	—			$	12,364
Total liabilities measured at fair value	$	12,364			$	—			$	—			$	12,364

The quantitative information utilized in the fair value calculation of our Level 3 liabilities is as follows:

						Inputs
Liabilities		Valuation Technique		Unobservable Input		April 3, 2020		September 27, 2019
Warrant liability		Black-Scholes model		Volatility		62.1 %		61.4 %
				Discount rate		0.15 %		1.71 %
				Expected life		0.7 years		1.2 years
				Exercise price		$ 14.05		$ 14.05
				Stock price		$ 18.55		$ 21.68
				Dividend rate		— %		— %

The changes in liabilities with inputs classified within Level 3 of the fair value hierarchy consist of the following (in thousands):

	September 27, 2019				Net Realized/Unrealized Losses Included in Earnings				Purchases and Issuances				Sales and Settlements				April 3, 2020
Common stock warrant liability	$	12,364			$	( 4,560	)		$	—			$	—			$	7,804

	September 28, 2018				Net Realized/Unrealized Losses (Gains) Included in Earnings				Purchases and Issuances				Sales and Settlements				March 29, 2019
Contingent consideration	$	585			$	65			$	—			$	( 650	)		$	—
Common stock warrant liability	$	13,129			$	( 3,861	)		$	—			$	—			$	9,268

Inventories consist of the following (in thousands):

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

	April 3, 2020				September 27, 2019
Construction in process	$	14,067			$	24,848
Machinery and equipment	191,660				175,696
Leasehold improvements	19,241				12,962
Furniture and fixtures	3,736				3,716
Computer equipment and software	18,277				18,116
Capital lease and financed assets	—				46,496
Finance lease assets	36,112				—
Total property and equipment	$	283,093			$	281,834
Less accumulated depreciation and amortization	( 157,328		)		( 149,187		)
Property and equipment, net	$	125,765			$	132,647

Depreciation and amortization expense related to property and equipment for the three and six months ended April 3, 2020 was $ 7.3 million and $ 14.7 million , respectively. Depreciation and amortization expense related to property and equipment for the three and six months ended March 29, 2019 was $ 7.6 million and $ 15.2 million , respectively. Accumulated amortization on finance lease assets as of April 3, 2020 was $1.6 million . Accumulated depreciation on capital leases as of September 27, 2019 was $ 5.3 million .

As of April 3, 2020 , we are party to a credit agreement dated as of May 8, 2014 with a syndicate of lenders and Goldman Sachs Bank USA (“Goldman Sachs”), as administrative agent (as amended on February 13, 2015, August 31, 2016, March 10, 2017, May 19, 2017, May 2, 2018 and May 9, 2018, the “Credit Agreement”).

As of April 3, 2020 , the Credit Agreement consisted of term loans with an initial aggregate principal amount of $ 700.0 million (the “Term Loans”) and a revolving credit facility with an aggregate borrowing capacity of $ 160.0 million (the “Revolving Facility”). The Revolving Facility will mature in November 2021 and the Term Loans will mature in May 2024 and bear interest at: (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determined by the administrative agent, plus an applicable margin of 2.25 % ; and (ii) for base rate loans, a rate per annum equal to the greater of (a) the prime rate quoted in the print edition of the Wall Street Journal, Money Rates Section, (b) the federal funds rate plus one-half of 1.00% and (c) the LIBOR rate applicable to a one-month interest period plus 1.00 % (but, in each case, not less than 1.00 % ), plus an applicable margin of 1.25 % .

All principal amounts outstanding and interest rate information as of April 3, 2020 , for the Credit Agreement were as follows (in thousands, except rate data):

	Principal Outstanding	LIBOR Rate	Margin	Effective Interest Rate
Term loans	$ 669,529	0.99 %	2.25 %	3.24 %

As of April 3, 2020 , approximately $ 6.6 million of deferred financing costs remain unamortized, of which $ 6.1 million is related to the Term Loans and is recorded as a direct reduction of the recognized debt liabilities in our accompanying condensed consolidated balance sheet, and $ 0.5 million is related to the Revolving Facility and is recorded in other long-term assets in our accompanying condensed consolidated balance sheet.

The Term Loans and Revolving Facility are secured by a first priority lien on substantially all of our assets and provide that we must comply with certain financial and non-financial covenants.

The Term Loans are payable in quarterly principal installments of approximately $ 1.7 million on the last business day of each calendar quarter, with the remainder due on the maturity date. In the event that we divest a business, the net cash proceeds of the divestment are generally required, subject to certain exceptions, to be applied to repayment of outstanding Term Loans except to the extent we reinvest such proceeds in assets useful for our business within 18 months of receiving the proceeds. If we enter into a binding agreement to reinvest such proceeds within 18 months of receiving them, we have until the later of 18 months following our receipt of the proceeds and six months following the date of such agreement to complete the reinvestment.

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As of April 3, 2020 , we had $ 160.0 million of borrowing capacity under our Revolving Facility, however, we would be subject to certain financial covenants if we were to borrow more than $ 50 million of the Revolving Facility.

As of April 3, 2020 , the following remained outstanding on the Term Loans (in thousands):

	April 3, 2020
Principal balance	$	669,529
Unamortized discount	( 2,809		)
Unamortized deferred financing costs	( 6,113		)
Total term loans	660,607
Current portion	6,885
Long-term, less current portion	$	653,722

As of April 3, 2020 , the minimum principal payments under the Term Loans in future fiscal years were as follows (in thousands):

	Amount
2020 (remainder of fiscal year)	$	3,442
2021	6,885
2022	6,885
2023	6,885
2024	645,432
Total	$	669,529

The fair value of the Term Loans was estimated to be approximately $ 595.9 million as of April 3, 2020 , and was determined using Level 2 inputs, including a quoted rate from a financial institution.

We have operating leases for certain facilities, as well as manufacturing and office equipment. We have financing leases for our corporate headquarters, including our fabrication facility, and to a lesser extent, various manufacturing equipment. These leases expire at various dates through 2038 , and certain of these leases have renewal options with the longest ranging up to two ten-year periods.

We determine that a contract contains a lease at lease inception if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In evaluating whether the right to control an identified asset exists, we assess whether we have the right to direct the use of the identified asset and obtain substantially all of the economic benefit from the use of the identified asset. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and lease liabilities. For leases with a term of one year or less (“short-term leases”), we elected not to recognize the lease liability for these arrangements and the lease payments are recognized in the condensed consolidated statement of operations on a straight-line basis over the lease term. ROU assets and lease liabilities are recognized at the present value of future minimum lease payments over the lease term on the commencement date. ROU assets are initially measured as the amount of the initial lease liability, adjusted for initial direct costs, lease payments made at or before the commencement date, and reduced by lease incentives received. We include options to renew or terminate when determining the lease term when it is reasonably certain that the option will be exercised. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.

Our leases may contain lease and non-lease components. We elected to account for lease and non-lease components in a contract as part of a single lease component. Fixed payments are considered part of the single lease component and included in the ROU assets and lease liabilities. Additionally, lease contracts typically include variable payments and other costs that do not transfer a separate good or service, such as reimbursement for real estate taxes and insurance, which are expensed as incurred.

Our leases generally do not provide an implicit interest rate. As a result, we utilize our incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

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Included in our condensed consolidated balance sheets were the following amounts related to operating and finance lease assets and liabilities (in thousands):

		April 3, 2020				September 27, 2019			Consolidated Balance Sheet Classification
Assets:
Operating lease ROU assets		$	33,807			$	—		Other long-term assets
Finance lease assets		34,667				—			Property and equipment, net
Capital lease and financed assets		—				40,442			Property and equipment, net
Total lease assets		$	68,474			$	40,442
Liabilities:
Current:
Operating lease liabilities		$	7,613			$	—		Accrued liabilities
Finance lease liabilities		1,596				—			Current portion of finance lease obligations and other
Capital lease and financing obligations		—				1,084			Current portion of finance lease obligations and other
Long-term:
Operating lease liabilities		32,052				—			Other long-term liabilities
Finance lease liabilities		29,697				—			Finance lease obligations and other, less current portion
Capital lease and financing obligations		—				29,506			Finance lease obligations and other, less current portion
Total lease liabilities		$	70,958			$	30,590

The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases as of  April 3, 2020  were as follows:

	April 3, 2020
Weighted-average remaining lease term (in years):
Operating leases	6.69
Finance leases	17.17
Weighted-average discount rate:
Operating leases	6.36	%
Finance leases	6.72	%

The components of lease expense were as follows (in thousands):

	Three Months Ended				Six Months Ended
	April 3, 2020
Finance lease cost:
Amortization of lease assets	$	796			$	1,573
Interest on lease liabilities	532				1,116
Total finance lease cost	$	1,328			$	2,689
Operating lease cost	$	2,448			$	4,931
Variable lease cost	811				1,188
Short-term lease cost	185				270
Sublease income	( 83		)		( 325		)

Cash paid for amounts included in the measurement of lease liabilities were as follows (in thousands):

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	Six Months Ended
	April 3, 2020
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	4,486
Operating cash flows from finance leases	1,116
Financing cash flows from finance leases	871
Non-cash activities:
Operating lease right-of-use assets obtained in exchange for new lease liabilities	$	157
Financing lease assets obtained in exchange for new lease liabilities	586

As of April 3, 2020 , maturities of lease liabilities by fiscal year were as follows (in thousands):

Fiscal year ending:	Operating Leases				Finance Leases
2020 (remainder of fiscal year)	$	5,028			$	1,923
2021	9,183				3,394
2022	7,427				2,836
2023	5,989				2,820
2024	5,571				2,856
2025	3,636				2,783
Thereafter	12,276				37,150
Total lease payments	49,110				53,762
Less: interest	9,445				22,469
Present value of lease liabilities	$	39,665			$	31,293

As of September 27, 2019, future minimum lease payments under our operating and capital leases were as follows as determined in accordance with the previous guidance under ASC 840 and as previously disclosed in our 2019 Annual Report on Form 10-K (in thousands):

Fiscal year ending:		Operating Leases				Capital Leases
2020		$	9,987			$	3,299
2021		9,233				3,343
2022		7,447				2,884
2023		6,061				2,816
2024		5,564				2,853
Thereafter		16,437				39,927
Total future minimum lease payments		$	54,729			55,122
Less amount representing interest						( 26,241		)
Present value of net minimum capital lease payments						$	28,881

Amortization expense related to intangible assets is as follows (in thousands):

	Three Months Ended								Six Months Ended
	April 3, 2020				March 29, 2019				April 3, 2020				March 29, 2019
Cost of revenue	$	4,347			$	7,883			$	8,767			$	15,935
Selling, general and administrative	8,072				11,873				16,726				24,392
Total	$	12,419			$	19,756			$	25,493			$	40,327

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Intangible assets consist of the following (in thousands):

	April 3, 2020				September 27, 2019
Acquired technology	$	179,434			$	179,682
Customer relationships	245,870				245,870
Trade name (indefinite-lived)	3,400				3,400
Total	$	428,704			$	428,952
Less accumulated amortization	( 272,969		)		( 247,724		)
Intangible assets — net	$	155,735			$	181,228

A summary of the activity in gross intangible assets and goodwill is as follows (in thousands):

	Intangible Assets
	Total Intangible Assets				Acquired Technology				Customer Relationships				Trade Name				Goodwill
Balance at September 27, 2019	$	428,952			$	179,682			$	245,870			$	3,400			$	314,727
Disposal of a fully amortized intangible asset	( 248		)		( 248		)		—				—				—
Currency translation adjustment	—				—				—				—				93
Balance at April 3, 2020	$	428,704			$	179,434			$	245,870			$	3,400			$	314,820

As of April 3, 2020 , our estimated amortization of our intangible assets in future fiscal years was as follows (in thousands):

	2020 Remaining			2021		2022		2023		2024		Thereafter		Total
Amortization expense	$	24,837		46,213		33,433		26,048		15,410		6,394		$	152,335

Accumulated amortization for acquired technology and customer relationships were $ 143.4 million and $ 129.6 million , respectively, as of April 3, 2020 , and $ 134.8 million and $ 112.9 million , respectively, as of September 27, 2019 .

We have authorized 10 million shares of $ 0.001 par value preferred stock and 300 million shares of $ 0.001 par value common stock as of April 3, 2020 .

Common Stock Warrants —In March 2012, we issued warrants to purchase 1,281,358 shares of common stock for $ 14.05 per share. The warrants expire on December 21, 2020 , or earlier as per the terms of the agreement, including immediately following consummation of a sale of all or substantially all assets or capital stock or other equity securities, including by merger, consolidation, recapitalization or similar transactions. We do not currently have sufficient registered and available shares to immediately satisfy a request for registration, if such a request were made. As of April 3, 2020 , no exercise of the warrants had occurred, and no request had been made to register the warrants or any underlying securities for resale by the holders.

We record the estimated fair values of the warrants as a long-term liability in the accompanying condensed consolidated financial statements with changes in the estimated fair value being recorded in the accompanying statements of operations. See Note 4 - Fair Value for additional information related to the fair value of our warrant liability. See Note 11 - Earnings (Loss) Per Share for impact of the common stock warrants on loss per share.

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The following table sets forth the computation for basic and diluted net loss per share of common stock (in thousands, except per share data):

	Three Months Ended								Six Months Ended
	April 3, 2020				March 29, 2019				April 3, 2020				March 29, 2019
Numerator:
Net loss	$	( 10,226	)		$	( 46,204	)		$	( 38,588	)		$	( 69,600	)
Warrant liability gain	( 8,647		)		—				( 4,560		)		( 3,862		)
Net loss attributable to common stockholders	$	( 18,873	)		$	( 46,204	)		$	( 43,148	)		$	( 73,462	)
Denominator:
Weighted average common shares outstanding-basic	66,522				65,531				66,375				65,404
Dilutive effect of warrants	563				—				546				206
Weighted average common shares outstanding-diluted	67,085				$	65,531			$	66,921			$	65,610
Loss per share-basic:
Net loss to common stockholders per share-basic:	$	( 0.15	)		$	( 0.71	)		$	( 0.58	)		$	( 1.06	)
Loss per share-diluted:
Net loss to common stockholders per share-diluted:	$	( 0.28	)		$	( 0.71	)		$	( 0.64	)		$	( 1.12	)

As of April 3, 2020 , we had warrants outstanding which were reported as a liability on the condensed consolidated balance sheet. During the three and six months ended April 3, 2020 , and the six months ended March 29, 2019 , we recorded warrant liability gains of $ 8.6 million , $ 4.6 million and $ 3.9 million , respectively, associated with adjusting the fair value of the warrants in the condensed consolidated statements of operations primarily as a result of changes in our stock price. When calculating earnings per share, we are required to adjust for the dilutive effect of outstanding common stock equivalents, including adjustment to the numerator for the dilutive effect of contracts that must be settled in stock. During the three and six months ended April 3, 2020 , and the six months ended March 29, 2019 , we adjusted the numerator by the warrant gains of $ 8.6 million , $ 4.6 million and $ 3.9 million , respectively, and the denominator by the incremental shares of 562,567 , 545,578 and 206,104 , respectively, under the treasury stock method. The table above excludes the effects of 1,009,830 and 886,671 shares for the three and six months ended April 3, 2020 , respectively, and 425,202 and 154,377 shares for the three and six months ended March 29, 2019 , respectively, of potential shares of common stock issuable upon exercise of stock options, warrants, restricted stock and restricted stock units, as applicable, as the inclusion would be antidilutive.

From time to time, we may be subject to commercial disputes, employment issues, claims by other companies in the industry that we have infringed their intellectual property rights and other similar claims and litigations. Any such claims may lead to future litigation and material damages and defense costs. We were not involved in any material pending legal proceedings during the fiscal quarter ended April 3, 2020 .

We have periodically implemented restructuring actions in connection with broader plans to reduce staffing, reduce our internal manufacturing footprint and generally reduce operating costs. The restructuring expenses are primarily comprised of direct and incremental costs related to headcount reductions including severance and outplacement fees for the terminated employees, as well as facility closure costs.

The following is a summary of the restructuring charges incurred under the plans noted below (in thousands):

	Three Months Ended								Six Months Ended
	April 3, 2020				March 29, 2019				April 3, 2020				March 29, 2019
Employee related expenses	$	390			$	465			$	1,549			$	1,618
Facility related expenses	425				2,717				500				6,542
Total restructuring charges	$	815			$	3,182			$	2,049			$	8,160

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The following is a rollforward of the accrued restructuring liabilities for the six months ended April 3, 2020 (in thousands):

	Employee-Related Expense (1)			Facility-Related Expense (2)			Total
Balance at September 27, 2019	$	1,549		$	978		$	2,527
Charges and adjustments	1,549			500			2,049
Charges paid/settled/other	( 799		)	( 1,337		)	( 2,136		)
Balance at April 3, 2020	$	2,299		$	141		$	2,440

(1) Primarily includes severance charges associated with the reduction of our workforce in certain facilities.

(2) Primarily includes activities associated with the closure of certain facilities, including any associated asset impairments and contract termination costs.

Ithaca Plan

During the fiscal quarter ended December 28, 2018, we commenced a plan to exit certain production and product lines, primarily related to certain production facilities located in Ithaca, New York (the “Ithaca Plan”). We incurred restructuring charges for the Ithaca Plan of $ 0.4 million in the three months ended March 29, 2019 including $ 0.2 million of employee-related costs and $ 0.2 million of facility-related costs, and $ 5.4 million in the six months ended March 29, 2019 , including $ 1.4 million of employee-related costs and $ 4.0 million of facility-related costs. This action was completed in fiscal year 2019 and no further costs will be incurred. The remaining charges were paid during the three months ended January 3, 2020.

Details of the Ithaca Plan activities during the six months ended April 3, 2020 are as follows (in thousands):

	Employee-Related Expense			Facility-Related Expense			Total
Balance at September 27, 2019	$	13		$	70		$	83
Charges and adjustments	—			( 40		)	( 40		)
Charges paid/settled	( 13		)	( 30		)	( 43		)
Balance at April 3, 2020	$	—		$	—		$	—

Design Facilities Plan

During the fiscal quarter ended March 29, 2019, we committed to a plan to exit certain design facilities and activities (the “Design Facilities Plan”). We incurred restructuring charges of $ 2.8 million in the three months ended March 29, 2019 , including $ 0.3 million of employee-related costs and $ 2.5 million of facility-related costs. This action was completed in fiscal year 2019 and no further costs will be incurred. The remaining charges are expected to be paid during fiscal year 2020 .

Details of the Design Facilities Plan activities during the six months ended April 3, 2020 are as follows (in thousands):

	Facility-Related Expense
Balance at September 27, 2019	$	451
Charges and adjustments	( 18		)
Charges paid/settled	( 315		)
Balance at April 3, 2020	$	118

2019 Plan

During the fiscal quarter ended June 28, 2019, we committed to a plan to strategically realign, streamline and improve certain of our business and operations, including reducing our workforce by approximately 250 employees and exiting six development facilities in France, Japan, the Netherlands, Florida, Massachusetts, and Rhode Island; additionally, we made the decision to no longer invest in the design and development of optical modules and subsystems for Data Center applications (the “2019 Plan”). We incurred restructuring charges of $ 0.8 million in the three months ended April 3, 2020 under the 2019 Plan, including $ 0.4 million of employee-related costs and $ 0.4 million of other costs, and $ 2.1 million in the six months ended April 3, 2020 , including $ 1.5 million of employee-related costs and $ 0.6 million of other costs. We expect to incur restructuring costs of approximately $ 0.1 million to $ 0.2 million through fiscal year 2020 as we complete this restructuring action.

Details of the 2019 Plan activities during the six months ended April 3, 2020 are as follows (in thousands):

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	Employee-Related Expense			Facility-Related Expense			Total
Balance at September 27, 2019	$	1,536		$	457		$	1,993
Charges and adjustments	1,549			558			2,107
Charges paid/settled/other	( 786		)	( 992		)	( 1,778		)
Balance at April 3, 2020	$	2,299		$	23		$	2,322

Stock Plans

As of April 3, 2020 , we had 16.9 million  shares available for issuance under our 2012 Omnibus Incentive Plan (as Amended and Restated) (the “2012 Plan”) and 3.8 million shares available for issuance under our Employee Stock Purchase Plan. Under the 2012 Plan, we have the ability to issue incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), performance based non-statutory stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), performance shares and other equity-based awards to employees, directors and outside consultants. The ISOs and NSOs must be granted at a price per share not less than the fair value of our common stock on the date of grant. Options granted to date primarily vest based on certain market-based and performance-based criteria. Options granted generally have a term of four years to seven years . Certain of the share-based awards granted and outstanding as of April 3, 2020 are subject to accelerated vesting upon a change in control of the Company.

Share-Based Compensation

The following table shows a summary of share-based compensation expense included in the condensed consolidated statements of operations (in thousands):

	Three Months Ended								Six Months Ended
	April 3, 2020				March 29, 2019				April 3, 2020				March 29, 2019
Cost of revenue	$	995			$	841			$	1,957			$	1,514
Research and development	4,111				1,200				7,018				4,022
Selling, general and administrative	5,170				6,035				9,451				11,813
Total share-based compensation expense	$	10,276			$	8,076			$	18,426			$	17,349

As of April 3, 2020 , the total unrecognized compensation costs related to ISOs, RSAs and RSUs, including awards with time-based and performance-based vesting was $ 61.1 million , which we expect to recognize over a weighted-average period of 2.4 years . As of April 3, 2020 , total unrecognized compensation cost related to our Employee Stock Purchase Plan was $ 0.2 million .

Stock Options

A summary of stock option activity for the six months ended April 3, 2020 is as follows (in thousands, except per share amounts and contractual term):

	Number of Shares			Weighted-Average Exercise Price per Share				Weighted-Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
Options outstanding - September 27, 2019	376			$	13.58
Exercised	( 18	)		6.73
Forfeited, canceled or expired	—			19.45
Options outstanding - April 3, 2020	358			$	13.93			6.84		$	1,653
Options vested and expected to vest - April 3, 2020	358			13.93				6.84		1,653
Options exercisable - April 3, 2020	73			$	10.55			2.40		$	580

Aggregate intrinsic value represents the difference between our closing stock price on April 3, 2020 and the exercise price of outstanding, in-the-money options. The total intrinsic value of options exercised was $ 0.3 million for the three and six months ended April 3, 2020 and $ 0.2 million for the three and six months ended March 29, 2019 .

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Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units

A summary of RSAs, RSUs and PRSUs activity for the six months ended April 3, 2020 is as follows:

	Number of RSAs, RSUs and PRSUs (in thousands)			Weighted- Average Grate Date Fair Value				Aggregate Intrinsic Value (in thousands)
Balance at September 27, 2019	2,613			$	21.81			$	56,649
Granted	1,177			21.80
Vested and released	( 564	)		26.98
Forfeited, canceled or expired	( 238	)		23.18
Balance at April 3, 2020	2,988			$	20.72			$	55,333

RSAs, RSUs and PRSUs that vested during the six months ended April 3, 2020 and March 29, 2019 had combined fair values of $ 16.7 million and $ 9.6 million , respectively, as of the vesting date.

We are subject to income tax in the U.S. as well as other tax jurisdictions in which we conduct business. Earnings from non-U.S. activities are subject to local country income tax and may also be subject to current U.S. income tax. For interim periods, we record a tax provision or benefit based upon the estimated effective tax rate expected for the full fiscal year, adjusted for material discrete taxation matters arising during the interim periods. Our quarterly tax provision or benefit, and its quarterly estimate of the annual effective tax rate, are subject to significant variation due to several factors. These factors include variability in accurately predicting pre-tax income/loss, the mix of jurisdictions in which we operate, intercompany transactions, changes in how we do business, tax law developments, and relative changes in permanent tax benefits or expenses.

Our effective tax rates for the six months ended April 3, 2020 and March 29, 2019 were ( 8.3 )% and ( 2.5 )% , respectively. Income tax expense for the six months ended April 3, 2020 and March 29, 2019 was $ 3.0 million and $ 1.7 million , respectively. Our effective tax rates for the three months ended April 3, 2020 and March 29, 2019 were ( 18.3 )% and ( 1.2 )% , respectively. Income tax expense for the three months ended April 3, 2020 and March 29, 2019 was $ 1.6 million and $ 0.5 million , respectively. The difference between the U.S. federal statutory income tax rate of 21 % and our effective tax rates for the three and six months ended April 3, 2020 and March 29, 2019 was primarily driven by the continuation of a full valuation allowance against any benefit associated with U.S. losses and income taxed in foreign jurisdictions at generally lower tax rates and where we are not in a valuation allowance since it is expected that we will be in a taxable income position.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making this determination, we consider available evidence, both positive and negative. We look at factors that may impact the valuation of our deferred tax asset including results of recent operations, future reversals of existing taxable temporary differences, projected future taxable income, and tax-planning strategies. We have significant negative objective evidence in the form of adjusted cumulative losses in the U.S. over the three-year period ended April 3, 2020 that resulted in our continued determination that there was not sufficient objectively verifiable positive evidence to offset this negative objective evidence and we concluded that a full valuation allowance was still appropriate for our U.S. deferred tax assets.

Our deferred income tax asset balance as of April 3, 2020 and September 27, 2019 is primarily attributable to an initial $ 39.8 million deferred asset generated from an intra-entity transfer of a license for intellectual property during the fiscal quarter ended September 27, 2019. We expect this deferred tax asset to amortize over the life of the intellectual property.

All earnings of foreign subsidiaries, other than M/A-COM Technology Solutions International Limited (“Cayman Islands subsidiary”), and M/A-COM Technology Solutions (UK) Limited (“UK subsidiary”), are considered indefinitely reinvested for the periods presented. During the fiscal quarter ended March 29, 2019, we changed our position for our Cayman Islands subsidiary to no longer have its earnings permanently reinvested which had no tax impact.

The balance of the unrecognized tax benefits remained at $ 0.3 million as of April 3, 2020 when compared to the balance as of September 27, 2019 . It is our policy to recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the fiscal quarter ended April 3, 2020 , we did not make any accrual or payment of interest and penalties due to our net operating loss carryforward position within the U.S., which would offset any adjustment.

On December 22, 2017, the U.S. Congress enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act enacted a wide range of changes to the U.S. corporate income tax system, many of which differ significantly from the provisions of the previous U.S. tax law. The Tax Act also transitions international taxation from a worldwide system with deferral to a modified territorial system and includes base erosion prevention measures on non-U.S.

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earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low-taxed income. These changes became effective in our fiscal year beginning September 29, 2018.

As of April 3, 2020 and March 29, 2019 , we had $ 0.6 million and $ 2.7 million , respectively, in unpaid amounts related to purchases of property and equipment included in accounts payable and accrued liabilities during each period. These amounts have been excluded from the payments for purchases of property and equipment in the accompanying condensed consolidated statements of cash flows until paid.

During the six months ended March 29, 2019 , we capitalized $ 1.5 million of net construction costs, of which $ 0.3 million was accounted for as a non-cash transaction as the costs were paid by the developer.

The following is supplemental cash flow information regarding non-cash investing and financing activities (in thousands):

	Six Months Ended
	April 3, 2020				March 29, 2019
Cash paid for interest	$	14,830			$	17,041
Cash paid (refunded) for income taxes	$	920			$	( 1,606	)

We have one reportable operating segment that designs, develops, manufactures and markets semiconductors and modules. The determination of the number of reportable operating segments is based on the chief operating decision maker’s use of financial information for the purposes of assessing performance and making operating decisions. In evaluating financial performance and making operating decisions, the chief operating decision maker primarily uses consolidated revenue, gross profit and operating loss. We evaluate this assessment on an ongoing basis as facts and circumstances change and as of April 3, 2020 there were no changes to our conclusion.

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For information about our revenue in different geographic regions, based upon customer locations, see Note 2 - Revenue . Information about net property and equipment in different geographic regions is presented below (in thousands):

		April 3, 2020				September 27, 2019
United States		$	107,892			$	116,037
Asia Pacific (1)		7,946				8,917
Other Countries (2)		9,927				7,693
Total		$	125,765			$	132,647

(1)	Asia Pacific represents Taiwan, Japan, Singapore, India, Thailand, South Korea, Malaysia, the Philippines, Vietnam and China.

(2)	Outside the United States, no country or region represented greater than 10% of the total net property and equipment as of the dates presented .

The following is a summary of customer concentrations as a percentage of revenue and accounts receivable as of and for the periods presented:

	Three Months Ended						Six Months Ended
Revenue	April 3, 2020			March 29, 2019			April 3, 2020		March 29, 2019
Customer A	15	%		14	%		15 %		15 %
Customer B	11	%		5	%		10 %		6 %

Accounts Receivable	April 3, 2020			September 27, 2019
Customer A	23	%		24	%
Customer C	13	%		10	%

No other customer represented more than 10% of revenue or accounts receivable in the periods presented in the accompanying condensed consolidated financial statements. For the three and six months ended April 3, 2020 our top ten customers represented 58 % and 59 % , respectively, of total revenue, and for the three and six months ended March 29, 2019 , our top ten customers represented 55 % and 56 % , respectively, of total revenue.

19 . RELATED-PARTY TRANSACTIONS

During the six months ended April 3, 2020 , we sold $ 0.2 million of commercial products to Mission Microwave Technologies, LLC, a MACOM customer and an affiliate of directors John and Susan Ocampo. Together, Mr. and Mrs. Ocampo are MACOM's largest stockholders.

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

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•	engaging early with our lead customers to develop custom and standard products;

•	leveraging our core strength and leadership position in standard, catalog products that service all of our end applications;

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•	increasing content of our semiconductor solutions in customers’ systems through cross-selling our product lines;

•	introducing new products using advanced technologies, added features, higher levels of integration and improved performance; and

•	continued growth in the demand for high-performance analog, digital and optical semiconductors in our three primary markets in particular.

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(1)	Includes (a) Amortization expense related to intangible assets arising from acquisitions and (b) Share-based compensation expense included in our condensed consolidated statements of operations as set forth below (in thousands):

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(1)

We employ “withhold to cover” as a tax payment method for vesting of restricted stock awards for our employees, pursuant to which, we withheld from employees the shares noted in the table above to cover tax withholding related to the vesting of their awards. The average prices listed in the above table are averages of the fair market prices at which we valued shares withheld for purposes of calculating the number of shares to be withheld.

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