UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 18, 2014

 

 

M/A-COM Technology Solutions Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-35451		27-0306875
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

100 Chelmsford Street Lowell, Massachusetts		01851
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (978) 656-2500

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On November 18, 2014, M/A-COM Technology Solutions Holdings, Inc. issued a press release reporting its results of operations for the fiscal quarter and year ended October 3, 2014. A copy of the press release is furnished as Exhibit 99.1 to this report.

 

Item 9.01.

Financial Statements and Exhibits.

 

Exhibit Number		Description
99.1		Press Release, dated November 18, 2014.

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SIGNATURES

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

 

				M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
Dated: November 18, 2014				By:		/s/ Robert J. McMullan
						Robert J. McMullan
						Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press Release, dated November 18, 2014.

Exhibit 99.1

 

 

 

MACOM Reports Strong Growth; Revenue of $114.3 million with EPS of $0.35 and Gross Margin

of 54.1 percent (non-GAAP)

Revenue Meets, EPS and Gross Margin Exceed Guidance

LOWELL, MA, November 18, 2014 - M/A-COM Technology Solutions Holdings, Inc. (NASDAQ: MTSI) (“MACOM”), a leading supplier of high performance analog semiconductor solutions, today reported its financial results for its fiscal fourth quarter and fiscal year ended October 3, 2014.

Fourth Quarter Fiscal Year 2014 GAAP Results

 

•

Revenue was $114.3 million, compared to $112.4 million in the prior fiscal quarter and $84.7 million in the previous year’s fiscal fourth quarter;

 

•

Gross margin was 49.2 percent, compared to 44.7 percent in the prior fiscal quarter and 43.2 percent in the previous year’s fiscal fourth quarter;

 

•

Operating income was $16.8 million, compared to $7.3 million in the prior fiscal quarter and operating income of $4.8 million in the previous year’s fiscal fourth quarter; and

 

•

Net income was $14.5 million, or $0.30 earnings per diluted share, compared to $1.2 million, or $0.02 earnings per diluted share, in the prior fiscal quarter and net income of $1.7 million, or $0.04 earnings per diluted share, in the previous year’s fiscal fourth quarter.

Fourth Quarter Fiscal Year 2014 Non-GAAP Results

 

•

Gross margin was 54.1 percent, compared to 51.7 percent in the prior fiscal quarter and 45.4 percent in the previous year’s fiscal fourth quarter;

 

•

Operating income was $26.7 million, or 23.3 percent of revenue, compared to $23.9 million, or 21.3 percent of revenue, in the prior fiscal quarter and $17.0 million, or 20.3 percent of revenue, in the previous year’s fiscal fourth quarter;

 

•

EBITDA was $30.0 million, compared to $27.2 million for the prior fiscal quarter and $19.5 million for the previous year’s fiscal fourth quarter; and

 

•

Net income was $17.2 million, or $0.35 earnings per diluted share, compared to net income of $15.8 million, or $0.33 earnings per diluted share, in the prior fiscal quarter and net income of $12.0 million, or $0.25 earnings per diluted share, in the previous year’s fiscal fourth quarter.

Fiscal Year Results

Fiscal year 2014 revenue was $418.7 million, compared to $323.1 million in fiscal year 2013. GAAP net income was a $15.3 million loss, or $0.33 per diluted share net loss, in fiscal year 2014, compared to net income of $18.2 million, or $0.39 per diluted share in fiscal year 2013. Non-GAAP net income was $60.4 million, or $1.25 per diluted share, in fiscal year 2014, compared to $44.9 million, or $0.93 per diluted share in fiscal year 2013.

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John Croteau, Chief Executive Officer of MACOM stated, “Gross margin and earnings per share for the quarter exceeded the top end of our guidance, with non-GAAP gross margin improving 240 basis points from the prior quarter and 870 basis points from the prior year quarter due to a more favorable mix of our high-margin products for the Networks market.”

The fourth quarter results reflected major customer wins and share gains for optical products in Networks, combined with continued gains in Multi-Market catalog business as well as an increase in Automotive, which was within the normal range of fluctuations from Ford. This broad-based growth was partially offset by Aerospace and Defense timing of certain radar programs.

Mr. Croteau further commented, “After the close of trading today we announced a definitive agreement to acquire BinOptics Corporation, based in Ithaca, New York. With this move, we anchor our new photonic portfolio with Indium Phosphide lasers. This plays to MACOM’s long-term strength in manufacturing compound semiconductors in large volume, with high quality and at low cost. As part of MACOM, we plan to scale laser production capacity and drive market share gains in what has been a supply constrained part of our customers’ supply chain.”

“Looking forward to fiscal 2015, we believe MACOM is poised to once again deliver double digit revenue growth, gross margin expansion and higher earnings per share.”

Business Outlook

For the fiscal first quarter ending January 2, 2015, MACOM expects another quarter of solid performance with revenue expected to be in the range of $112 to $115 million. Non-GAAP gross margin is expected to be between 51% and 53%, and non-GAAP earnings per diluted share between $0.33 and $0.36 on an anticipated 50 million shares outstanding.

Conference Call

MACOM will host a conference call on Tuesday, November 18, 2014 at 5:00 p.m. Eastern Time to discuss its fiscal fourth quarter and fiscal year financial results and business outlook. Investors and analysts may join the conference call by dialing 1-877-837-3908 and providing the confirmation code 17839406. International callers may join the teleconference by dialing +1-973-872-3000 and entering the same confirmation code at the prompt. A telephone replay of the call will be made available beginning two hours after the call and will remain available for 5 business days. The replay number is 1-855-859-2056 with a pass code of 17839406. International callers should dial +1-404-537-3406 and enter the same pass code at the prompt.

Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties via the Investors section of MACOM’s website at ir.macom.com/. To listen to the live call, please go to the Investors section of MACOM’s website and click on the conference call link at least fifteen minutes prior to the start of the conference call. For those unable to participate during the live broadcast, a replay will be available shortly after the call and will remain available for approximately 30 days.

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About MACOM

MACOM (www.macom.com) is a leading supplier of high performance analog RF, microwave, and millimeter wave products that enable next-generation Internet and modern battlefield applications. Recognized for its broad catalog portfolio of technologies and products, MACOM serves diverse markets, including high speed optical, satellite, radar, wired & wireless networks, CATV, automotive, industrial, medical, and mobile devices. A pillar of the semiconductor industry, we thrive on more than 60 years of solving our customers’ most complex problems, serving as a true partner for applications ranging from RF to Light.

Headquartered in Lowell, Massachusetts, MACOM is certified to the ISO9001 international quality standard and ISO14001 environmental management standard. MACOM has design centers and sales offices throughout North America, Europe, Asia and Australia.

MACOM, M/A-COM, M/A-COM Technology Solutions, M/A-COM Tech, Partners in RF & Microwave, Partners from RF to Light, The First Name in Microwave and related logos are trademarks of MACOM. All other trademarks are the property of their respective owners.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements based on MACOM management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among others, information concerning our stated business outlook and future results of operations, our statements regarding our proposed acquisition of BinOptics and our plans and expectations regarding the acquisition and its impact on MACOM, statements regarding our long-term strength in manufacturing compound semiconductors, and any statements regarding future trends, business strategies, competitive position, industry conditions, acquisitions and market opportunities. Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements contained in this press release reflect MACOM’s current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause those events or our actual activities or results to differ materially from those expressed in any forward-looking statement. Although MACOM believes that the expectations reflected in the forward-looking statements are reasonable, it cannot and does not guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including costs associated with the acquisition, matters arising in connection with the parties’ efforts to comply with and satisfy applicable regulatory approvals and closing conditions relating to the acquisition, failure to achieve expected synergies or successfully integrate BinOptics’ business, accretion and other anticipated benefits of the transaction, adverse reactions to the acquisition by employees, customers, suppliers or competitors of either MACOM or BinOptics, greater than expected dilutive effect on earnings from or failure to comply with applicable covenants related to MACOM’s outstanding indebtedness as increased to fund the acquisition, related interest expense and other costs, lower than expected demand in any or all of our primary end markets or from any of our large OEM customers based on macro-economic weakness or otherwise, MACOM’s failure to realize the expected economies of scale, lowered production cost and other anticipated benefits of our previously announced GaN intellectual property licensing program, the potential for defense spending cuts, program delays, cancellations or sequestration, failures or delays by any customer in winning business or to make purchases from us in support of such business, lack of adoption or delayed adoption by customers and industries we serve of GaN, Indium Phosphide lasers, or other solutions offered by us, failures or delays in porting and qualifying GaN or Indium Phosphide laser process technology to our Lowell, MA fabrication facility or third party facilities, lower than expected utilization and absorption in our manufacturing facilities, lack of success or slower

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than expected success in our new product development efforts, loss of business due to competitive factors, product or technology obsolescence, customer program shifts or otherwise, lower than anticipated or slower than expected customer acceptance of our new product introductions, the potential for a shift in the mix of products sold in any period toward lower-margin products or a shift in the geographical mix of our revenues, the potential for increased pricing pressure based on competitive factors, technology shifts or otherwise, the impact of any executed or abandoned acquisition, divestiture or restructuring activity, the impact of supply shortages or other disruptions in our internal or outsourced supply chain, the relative success of our cost-savings initiatives, the potential for inventory obsolescence and related write-offs, the expense, business disruption or other impact of any current or future investigations, administrative actions, litigation or enforcement proceedings we may be involved in, and the impact of any claims of intellectual property infringement or misappropriation, which could require us to pay substantial damages for infringement, expend significant resources in prosecuting or defending such matters or developing non-infringing technology, incur material liability for royalty or license payments, or prevent us from selling certain of our products, as well as those factors described in “Risk Factors” in MACOM’s filings with the Securities and Exchange Commission (SEC), including its Quarterly Report on Form 10-Q for the quarter ended July 4, 2014 as filed with the SEC on August 1, 2014. MACOM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

In addition to GAAP reporting, MACOM provides investors with non-GAAP financial information, including revenue, gross margin, operating margin, operating income, net income, earnings per share, EBITDA and other data calculated on a non-GAAP basis. This non-GAAP information excludes the operations of Nitronex prior to the date of acquisition, discontinued operations, the impact of fair value accounting in mergers and acquisitions (M&A) of businesses, M&A costs, including acquisition and related integration costs, certain cost savings from synergies expected from M&A activities, income and expenses from transition services related to M&A activities, expected amortization of acquisition-related intangibles, share-based and other non-cash compensation expense, certain cash compensation, restructuring charges, litigation settlement and costs, changes in the carrying values of liabilities measured at fair value, contingent consideration, amortization of debt discounts and issuance costs, other non-cash expenses, earn-out costs, exited leased facility costs and certain income tax items. Management does not believe that the excluded items are reflective of MACOM’s underlying performance. The exclusion of these and other similar items from MACOM’s non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. These and other similar items are also excluded from EBITDA, which is non-GAAP earnings before interest, income taxes, depreciation and amortization. MACOM believes this non-GAAP financial information provides additional insight into MACOM’s on-going performance and has, therefore, chosen to provide this information to investors for a consistent basis of comparison and to help them evaluate the results of MACOM’s on-going operations and enable more meaningful period to period comparisons. These non-GAAP measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial data is included in the supplemental financial data attached to this press release.

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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)

 

 

 

		Three Months Ended												Fiscal Years Ended
		October 3, 2014				July 4, 2014				September 27, 2013				October 3, 2014				September 27, 2013
Revenue		$	114,317			$	112,364			$	84,675			$	418,662			$	323,071
Cost of revenue			58,128				62,150				48,085				249,674				186,658
Gross profit			56,189				50,214				36,590				168,988				136,413
Operating expenses:
Research and development			20,098				20,810				10,650				73,685				44,588
Selling, general and administrative			20,227				22,065				13,898				86,179				52,004
Litigation settlement			—				—				7,250				—				7,250
Contingent consideration			—				—				—				—				(577	)
Restructuring charges			(902	)			—				—				14,823				1,060
Total operating expenses			39,423				42,875				31,798				174,687				104,325
Income (loss) from operations			16,766				7,339				4,792				(5,699	)			32,088
Other income (expense):
Warrant liability gain (expense)			1,638				(2,782	)			(2,277	)			(3,928	)			(4,312	)
Interest expense			(4,529	)			(5,625	)			(201	)			(12,362	)			(817	)
Other income			776				1,354				79				3,217				372
Total other income (expense)			(2,115	)			(7,053	)			(2,399	)			(13,073	)			(4,757	)
Income (loss) before income taxes			14,651				286				2,393				(18,772	)			27,331
Income tax provision (benefit)			114				(897	)			653				(8,054	)			9,135
Income (loss) from continuing operations			14,537				1,183				1,740				(10,718	)			18,196
Loss from discontinued operations			—				—				—				(4,605	)			—
Net income (loss)		$	14,537			$	1,183			$	1,740			$	(15,323	)		$	18,196
Net income (loss) per share:
Basic:
Income (loss) from continuing operations		$	0.31			$	0.03			$	0.04			$	(0.23	)		$	0.40
Loss from discontinued operations			—				—				—				(0.10	)			—
Income (loss) per share - basic		$	0.31			$	0.03			$	0.04			$	(0.33	)		$	0.40
Diluted:
Income (loss) from continuing operations		$	0.30			$	0.02			$	0.04			$	(0.23	)		$	0.39
Loss from discontinued operations			—				—				—				(0.10	)			—
Income (loss) per share - diluted		$	0.30			$	0.02			$	0.04			$	(0.33	)		$	0.39
Shares used to compute net income (loss) per share:
Basic			47,480				47,280				46,301				47,009				45,916
Diluted			48,873				48,524				47,585				47,009				47,137

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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(unaudited and in thousands, except per share data)

 

 

 

		Three Months Ended
		October 3, 2014								July 4, 2014								September 27, 2013
		Amount								Amount								Amount
Revenue - GAAP		$	114,317							$	112,364							$	84,675
Nitronex prior to acquisition			—								—								(1,020	)
Revenue – Non-GAAP		$	114,317							$	112,364							$	83,655
		Amount				% Revenue				Amount				% Revenue				Amount				% Revenue
Gross profit - GAAP		$	56,189				49.2	%		$	50,214				44.7	%		$	36,590				43.2	%
Nitronex prior to acquisition			—				—				—				—				690				1.3
Amortization expense			4,495				3.9				6,270				5.6				479				0.6
Non-cash compensation expense			416				0.4				646				0.6				216				0.3
Equity-based compensation			13				—				23				—				—				—
Acquisition FMV step-up			168				0.1				168				0.1				—				—
Third-party engineering costs			493				0.4				400				0.4				—				—
Integration costs and synergy savings			100				0.1				345				0.3				—				—
Gross profit - non-GAAP		$	61,874				54.1	%		$	58,066				51.7	%		$	37,975				45.4	%
Research and Development - GAAP		$	20,098				17.6	%		$	20,810				18.5	%		$	10,650				12.6	%
Nitronex prior to acquisition			—				—				—				—				(1,112	)			(1.1	)
Earn-out costs			—				—				—				—				1,021				1.2
Non-cash compensation expense			(713	)			(0.6	)			(893	)			(0.8	)			(462	)			(0.6	)
Equity-based compensation			(112	)			(0.1	)			(228	)			(0.2	)			—				—
Acquisition FMV step-up			(204	)			(0.2	)			(204	)			(0.2	)			—				—
Integration costs and synergy savings			(898	)			(0.8	)			(1,108	)			(1.0	)			—				—
Third-party engineering costs			493				0.4				400				0.4				—				—
Research and Development - non-GAAP		$	18,664				16.3	%		$	18,777				16.7	%		$	10,097				12.1	%
Selling, General and Administrative - GAAP		$	20,227				17.7	%		$	22,065				19.6	%		$	13,898				16.4	%
Nitronex prior to acquisition			—				—				—				—				(468	)			(0.3	)
Earn-out costs			—				—				—				—				569				0.7
Amortization expense			(432	)			(0.4	)			(505	)			(0.4	)			(315	)			(0.4	)
Non-cash compensation expense			(1,623	)			(1.4	)			(1,851	)			(1.6	)			(1,052	)			(1.3	)
Equity-based compensation			(106	)			(0.1	)			(147	)			(0.1	)			—				—
Acquisition FMV step-up			(28	)			—				(28	)			—				—				—
Litigation costs			(1,035	)			(0.9	)			(1,836	)			(1.6	)			(1,735	)			(2.1	)
Integration costs and synergy savings			(485	)			(0.4	)			(2,321	)			(2.1	)			—				—
Selling, General and Administrative - non-GAAP		$	16,518				14.4	%		$	15,377				13.7	%		$	10,897				13.0	%

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Total operating expenses - GAAP		$	39,423				34.5	%		$	42,875				38.2	%		$	31,798				37.6	%
Nitronex prior to acquisition			—				—				—				—				(1,580	)			(1.4	)
Amortization expense			(432	)			(0.4	)			(505	)			(0.4	)			(315	)			(0.4	)
Non-cash compensation expense			(2,336	)			(2.0	)			(2,744	)			(2.4	)			(1,514	)			(1.8	)
Equity-based compensation			(218	)			(0.2	)			(375	)			(0.3	)			—				—
Acquisition FMV step-up			(232	)			(0.2	)			(232	)			(0.2	)			—				—
Contingent consideration and earn-out costs			—				—				—				—				1,590				1.9
Restructuring charges			902				0.8				—				—				—				—
Integration costs and synergy savings			(1,383	)			(1.2	)			(3,429	)			(3.1	)			—				—
Litigation costs			(1,035	)			(0.9	)			(1,836	)			(1.6	)			(8,985	)			(10.7	)
Third-party engineering			493				0.4				400				0.4				—				—
Total operating expenses - non-GAAP		$	35,182				30.8	%		$	34,154				30.4	%		$	20,994				25.1	%
Income from operations - GAAP		$	16,766				14.7	%		$	7,339				6.5	%		$	4,792				5.7	%
Nitronex prior to acquisition			—				—				—				—				2,010				2.4
Amortization expense			4,927				4.3				6,775				6.0				794				0.9
Non-cash compensation expense			2,752				2.4				3,390				3.0				1,730				2.1
Equity-based compensation			231				0.2				398				0.4				—				—
Contingent consideration and earn-out costs			—				—				—				—				(1,590	)			(1.9	)
Restructuring charges			(902	)			(0.8	)			—				—				—				—
Acquisition FMV step-up			400				0.3				400				0.4				—				—
Litigation costs			1,035				0.9				1,836				1.6				9,245				11.1
Integration costs and synergy savings			1,483				1.3				3,774				3.4				—				—
Income from operations - non-GAAP		$	26,692				23.3	%		$	23,912				21.3	%		$	16,981				20.3	%
Net income - GAAP		$	14,537				12.7	%		$	1,183				1.1	%		$	1,740				2.1	%
Nitronex prior to acquisition			—				—				—				—				2,010				2.5
Amortization expense			3,769				3.3				5,183				4.6				495				0.6
Non-cash compensation expense			2,105				1.8				2,593				2.3				652				0.8
Equity-based compensation			177				0.2				304				0.3				—				—
Contingent consideration and earn-out costs			—				—				—				—				(992	)			(1.2	)
Restructuring charges			(690	)			(0.6	)			—				—				—				—
Warrant liability (gain) expense			(1,638	)			(1.4	)			2,782				2.5				2,277				2.7
Non-cash interest expense			291				0.3				1,838				1.6				46				0.1
Acquisition FMV step-up			306				0.3				306				0.3				—				—
Litigation costs			792				0.7				1,405				1.3				5,794				6.9
Integration costs and synergy savings			1,134				1.0				1,270				1.1				—				—
Tax effect of non-GAAP adjustments			(2,944	)			(2.6	)			—				—				—				—
Transition services for divested business			(593	)			(0.5	)			(1,036	)			(0.9	)			—				—
Discontinued operations			—				—				—				—				—				—
Net income - non-GAAP		$	17,246				15.1	%		$	15,828				14.1	%		$	12,022				14.4	%
Income from operations – non-GAAP		$	26,692							$	23,912							$	16,981
Depreciation expense			3,273								3,296								2,467
Other income, net			—								—								79
EBITDA		$	29,965							$	27,208							$	19,527
Interest expense GAAP		$	4.529							$	5.625							$	201
Non cash interest expense			(361	)							(2,402	)							(74	)
Interest expense non-GAAP		$	4,168							$	3,223							$	127

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		Three Months Ended
		October 3, 2014								July 4, 2014								September 27, 2013
		Amount				Income per diluted share				Amount				Income per diluted share				Amount				Income per diluted share
Net income - GAAP		$	14,537			$	0.30			$	1,183			$	0.02			$	1,740			$	0.04
Net income – non-GAAP		$	17,246			$	0.35			$	15,828			$	0.33			$	12,022			$	0.25
Diluted shares - GAAP			47,480								48,524								47,585
Incremental stock options, warrants, restricted stock and units			1,393								—								946
Diluted shares - non-GAAP			48,873								48,524								48,531

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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(unaudited and in thousands, except per share data)

 

 

 

		Fiscal Years Ended
		October 3, 2014								September 27, 2013
		Amount								Amount
Revenue - GAAP		$	418,662							$	323,071
Nitronex prior to acquisition			(1,048	)							(4,353	)
Revenue – non-GAAP		$	417,614							$	318,718
		Amount				% Revenue				Amount				% Revenue
Gross profit - GAAP		$	168,988				40.4	%		$	136,413				42.2	%
Nitronex prior to acquisition			959				0.2				3,286				1.7
Amortization expense			18,274				4.4				1,900				0.6
Non-cash compensation expense			1,771				0.4				1,039				0.3
Equity-based compensation			66				—				—				—
Acquisition FMV step-up			18,875				4.5				—				—
Integration costs and synergy savings			1,406				0.3				—				—
Third-party engineering costs			1,463				0.4				—				—
Gross profit - non-GAAP		$	211,802				50.7	%		$	142,638				44.8	%
Research and Development - GAAP		$	73,685				17.6	%		$	44,588				13.8	%
Nitronex prior to acquisition			(1,423	)			(0.3	)			(3,957	)			(1.1	)
Non-cash compensation expense			(2,818	)			(0.7	)			(1,688	)			(0.5	)
Equity-based compensation			(477	)			(0.1	)			—				—
Acquisition FMV step-up			(663	)			(0.2	)			—				—
Integration costs and synergy savings			(4,456	)			(1.1	)			—				—
Third-party engineering costs			1,463				0.4				—				—
Research and Development - non-GAAP		$	65,311				15.6	%		$	38,943				12.2	%
Selling, General and Administrative - GAAP		$	86,179				20.6	%		$	52,004				16.1	%
Nitronex prior to acquisition			(685	)			(0.1	)			(1,762	)			(0.3	)
Amortization expense			(1,779	)			(0.4	)			(1,260	)			(0.4	)
Non-cash compensation expense			(6,688	)			(1.6	)			(3,369	)			(1.1	)
Equity-based compensation			(467	)			(0.1	)			—				—
Acquisition FMV step-up			(88	)			—				—				—
Integration costs and synergy savings			(9,399	)			(2.3	)			(1,267	)			(0.4	)
Litigation costs			(4,275	)			(1.0	)			(2,596	)			(0.8	)
Transaction expenses			(4,472	)			(1.1	)			—				—
Selling, General and Administrative - non-GAAP		$	58,326				14.0	%		$	41,750				13.1	%

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Total operating expenses - GAAP		$	174,687				41.7	%		$	104,325				32.3	%
Nitronex prior to acquisition			(2,108	)			(0.5	)			(5,719	)			(1.4	)
Amortization expense			(1,779	)			(0.4	)			(1,260	)			(0.4	)
Non-cash compensation expense			(9,506	)			(2.3	)			(5,057	)			(1.6	)
Equity-based compensation			(944	)			(0.2	)			—				—
Acquisition FMV step-up			(751	)			(0.2	)			—				—
Contingent consideration and earn-out costs			—				—				577				0.2
Restructuring charges			(14,823	)			(3.5	)			(1,060	)			(0.3	)
Integration costs and synergy savings			(13,855	)			(3.3	)			(1,267	)			(0.4	)
Litigation costs			(4,275	)			(1.0	)			(9,846	)			(3.1	)
Transaction expenses			(4,472	)			(1.1	)			—				—
Third-party engineering			1,463				0.4				—				—
Total operating expenses - non-GAAP		$	123,637				29.6	%		$	80,693				25.3	%
Income (loss) from operations - GAAP		$	(5,699	)			(1.4	)%		$	32,088				9.9	%
Nitronex prior to acquisition			3,067				0.8				9,715				3.2
Amortization expense			20,053				4.8				3,160				1.0
Non-cash compensation expense			11,277				2.7				6,096				1.9
Equity-based compensation			1,010				0.2				—				—
Contingent consideration and earn-out costs			—				—				(577	)			(0.2	)
Restructuring charges			14,823				3.5				950				0.3
Acquisition FMV step-up			19,626				4.7				—				—
Integration costs and synergy savings			15,261				3.7				1,267				0.4
Litigation costs			4,275				1.0				9,246				2.9
Transaction expenses			4,472				1.1				—				—
Income from operations - non-GAAP		$	88,165				21.1	%		$	61,945				19.4	%
Net income (loss) - GAAP		$	(15,323	)			(3.7	)%		$	18,196				5.6	%
Nitronex prior to acquisition			3,067				0.8				9,117				3.0
Amortization expense			15,341				3.7				1,976				0.6
Non-cash compensation expense			8,626				2.1				3,806				1.2
Equity-based compensation			772				0.2				—				—
Contingent consideration			—				—				(358	)			(0.1	)
Restructuring charges			11,340				2.7				666				0.2
Warrant liability expense			3,928				0.9				4,312				1.4
Non-cash interest expense			2,311				0.6				200				0.1
Acquisition FMV step-up			14,147				3.4				—				—
Integration costs and synergy savings			10,056				2.4				793				0.2
Litigation costs			3,271				0.8				6,171				1.9
Transaction expenses			3,537				0.8				—				—
Transition services for divested business			(2,370	)			(0.6	)			—				—
Tax effect of non-GAAP adjustments			(2,944	)			(0.7	)			—				—
Discontinued operations			4,605				1.1				—				—
Net income - non-GAAP		$	60,364				14.5	%		$	44,879				14.1	%

---

		Amount								Amount
Income from operations – non-GAAP		$	88,165							$	61,945
Depreciation expense			12,857								10,193
Other income, net			118								382
EBITDA		$	101,140							$	72,520
		Amount				Income (loss) per diluted share				Amount				Income per diluted share
Net income (loss) - GAAP		$	(15,323	)		$	(0.33	)		$	18,196			$	0.39
Net income - non-GAAP		$	60,364			$	1.25			$	44,879			$	0.93
Diluted shares - GAAP			47,009								47,137
Incremental stock options, warrants, restricted stock and units			1,408								980
Diluted shares - non-GAAP			48,417								48,117

---

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

 

 

		October 3, 2014				September 27, 2013
ASSETS
Current assets:
Cash and cash equivalents		$	173,895			$	110,488
Accounts receivable, net			75,156				63,526
Inventories			73,572				54,908
Deferred income taxes			35,957				10,404
Other current assets			14,769				7,121
Total current assets			373,349				246,447
Property and equipment, net			50,357				32,735
Goodwill and intangible assets, net			153,417				31,548
Deferred income taxes			84,629				404
Other assets			20,482				5,501
TOTAL ASSETS		$	682,234			$	316,635
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	3,478			$	—
Accounts payable, accrued liabilities and other			64,910				42,927
Deferred revenue			17,258				9,231
Total current liabilities			85,646				52,158
Long-term debt, less current portion			343,178				—
Warrant liability			15,801				11,873
Deferred income taxes and other long-term liabilities			9,042				5,463
Total liabilities			453,667				69,494
Commitments and contingencies
Stockholders’ equity			228,567				247,141
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	682,234			$	316,635

---

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

 

 

		Fiscal Years Ended
		October 3,				September 27,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	(15,323	)		$	18,196
Non-cash adjustments			57,585				20,371
Payment of contingent consideration			—				(5,328	)
Change in operating assets and liabilities			(17,263	)			(4,336	)
Net cash from operating activities			24,999				28,903
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net			(261,599	)			—
Sale of business			12,345				—
Sale of product line			12,000				—
Strategic investments			(5,250	)			—
Purchases of property and equipment			(16,973	)			(12,336	)
Acquisition of intellectual property			(5,490	)			(897	)
Net cash used in investing activities			(264,967	)			(13,233	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of contingent consideration			—				(675	)
Proceeds from issuance of long-term debt			347,375				—
Payment of assumed debt			(40,193	)			—
Capital contributions			3,200				8,435
Financing activities			(6,132	)			2,458
Payment of long-term debt			(875	)
Net cash from financing activities			303,375				10,218
NET CHANGE IN CASH AND CASH EQUIVALENTS			63,407				25,888
CASH AND CASH EQUIVALENTS — Beginning of period			110,488				84,600
CASH AND CASH EQUIVALENTS — End of period		$	173,895			$	110,488

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*  *  *

Company Contact:

M/A-COM Technology Solutions Holdings, Inc.

Bob McMullan

Senior Vice President and Chief Financial Officer

P: 978-656-2753

E: bobmcmullan@macom.com

Investor Relations Contact:

Shelton Group

Leanne K. Sievers

EVP, Investor Relations

P: 949-224-3874

E: lsievers@sheltongroup.com