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): July 28, 2015

 

 

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 July 28, 2015, M/A-COM Technology Solutions Holdings, Inc. issued a press release reporting its results of operations for the fiscal quarter ended July 3, 2015. 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 July 28, 2015.

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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: July 28, 2015		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 July 28, 2015.

Exhibit 99.1

 

MACOM Reports Record Revenue $130.7 million and EPS $0.42 (non-GAAP)

for Fiscal Third Quarter

LOWELL, MA, July 28, 2015—M/A-COM Technology Solutions Holdings, Inc. (NASDAQ: MTSI) (“MACOM”), a leading supplier of high-performance analog RF, microwave, millimeterwave and photonic semiconductor products, today announced its financial results for its fiscal third quarter ended July 3, 2015.

Third Quarter Fiscal Year 2015 GAAP Results

 

•

Revenue was $130.7 million, compared to $124.9 million in the prior fiscal quarter and $112.4 million in the previous year’s fiscal third quarter;

 

•

Gross profit was 45.8 percent, compared to 43.2 percent in the prior fiscal quarter and 44.7 percent in the previous year’s fiscal third quarter;

 

•

Operating income was $10.2 million, compared to $3.3 million in the prior fiscal quarter and $7.3 million in the previous year’s fiscal third quarter; and

 

•

Net income was $8.0 million, or $0.15 income per diluted share, compared to net loss of $7.5 million, or $0.15 loss per diluted share, in the prior fiscal quarter and net income of $1.2 million, or $0.02 income per diluted share, in the previous year’s fiscal third quarter.

Third Quarter Fiscal Year 2015 Non-GAAP Results

 

•

Gross profit was 54.0 percent, compared to 53.1 percent in the prior fiscal quarter and 51.7 percent in the previous year’s fiscal third quarter;

 

•

Operating income was $32.3 million, or 24.7 percent of revenue, compared to $30.3 million, or 24.3 percent of revenue, in the prior fiscal quarter and $23.9 million, or 21.3 percent of revenue, in the previous year’s fiscal third quarter;

 

•

Adjusted EBITDA was $35.6 million, compared to $34.1 million for the prior fiscal quarter and $27.2 million for the previous year’s fiscal third quarter; and

 

•

Net income was $23.1 million, or $0.42 per diluted share, compared to net income of $21.3 million, or $0.41 per diluted share, in the prior fiscal quarter and net income of $15.8 million, or $0.33 per diluted share, in the previous year’s fiscal third quarter.

Management Commentary

John Croteau, MACOM’s President and Chief Executive Officer, stated, “I am pleased to announce another quarter of solid execution. During the fiscal third quarter Networks grew on the back of strong demand in 100G for long haul and metro and lasers in the access market. In addition, we saw weakness in multi-market, including industrial. That said, end market demand across the full breadth of our catalog portfolio including Networks and A&D more than offset this weakness and actually grew sequentially.

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During the quarter, we successfully achieved our goal of doubling laser production capacity at our Ithaca fab. We remain on track to double production capacity using our Lowell fab by the beginning of calendar 2016. These expansion efforts will enable us to address the next secular growth opportunity in datacenters.”

Mr. Croteau concluded, “In mid-July we announced a definitive agreement to divest our automotive business to Autoliv ASP Inc. This divestiture supports MACOM’s strategy to be a pure-play high performance analog company. We expect it will significantly accelerate our ability to meet our target operating model of 60% non-GAAP gross margin and 30% non-GAAP operating margin. We anticipate our optical and laser businesses will continue to outperform allowing us to meet our growth and profit objectives.”

Business Outlook

For the fiscal fourth quarter ending October 2, 2015, MACOM expects another quarter of growth with revenue expected to be in the range of $133 to $137 million. Non-GAAP gross margin is expected to be between 53 and 55 percent, and non-GAAP earnings per share between $0.43 and $0.46 on an anticipated 55.5 million shares outstanding, based on our increased share count following the public offering of common stock we completed in February.

Conference Call

MACOM will host a conference call on Tuesday, July 28, 2015 at 5:00 p.m. Eastern Time to discuss its fiscal third quarter financial results and business outlook. Investors and analysts may join the conference call by dialing 1-877-837-3908 and providing the confirmation code 69910703. 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 69910703. 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 in the Investors section of MACOM’s website at http://www.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.

About MACOM

M/A-COM Technology Solutions Holdings, Inc. (www.macom.com) is a leading supplier of high-performance analog RF, microwave, millimeterwave and photonic semiconductor 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 and wireless networks, 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.

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MACOM, M/A-COM, M/A-COM Technology Solutions, M/A-COM Tech, Partners in RF & Microwave, 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 expectations of previously-announced divestment of our Automotive business, statements about expected expansion in capacity and any other 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 greater than expected dilutive effect on earnings of our equity issuances, outstanding indebtedness and related interest expense and other costs, the potential that the expected rollout of fiber-to-the-home network technology or other new network technology deployments in China and other geographies fails to occur, occurs more slowly than we expect or does not result in the amount or type of new business we anticipate, lower than expected demand in any or all of our primary end markets or from any of our large OEM customers based on seasonal effects, macro-economic weakness or otherwise, delays in completing, failure to complete or failure to realize the projected benefits of our anticipated Automotive business divestment, our failure to realize the expected economies of scale, lowered production cost and other anticipated benefits of our previously announced GaN intellectual property licensing program or InP laser production capacity expansion 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, InP lasers or other solutions offered by us, failures or delays in porting and qualifying GaN or InP 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 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, joint venture, financing or restructuring activity, the impact of supply shortages or other disruptions in our internal or outsourced supply chain, the impact of changes in export, environmental or other laws applicable to us, 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, the potential loss of access to any in-licensed

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intellectual property or inability to license technology we may require on reasonable terms, 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 fiscal quarter ended April 3, 2015 as filed with the SEC on May 13, 2015. 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, Adjusted 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 merger 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 assets and 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 Adjusted 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												Nine Months Ended
		July 3, 2015				April 3, 2015				July 4, 2014				July 3, 2015				July 4, 2014
Revenue		$	130,663			$	124,885			$	112,364			$	370,412			$	304,345
Cost of revenue			70,879				70,878				62,150				202,420				191,546
Gross profit			59,784				54,007				50,214				167,992				112,799
Operating expenses:
Research and development			21,611				21,061				20,810				62,146				53,587
Selling, general and administrative			27,428				29,227				22,065				82,254				65,952
Restructuring charges			558				413				—				971				15,725
Total operating expenses			49,597				50,701				42,875				145,371				135,264
Income (loss) from operations			10,187				3,306				7,339				22,621				(22,465	)
Other income (expense):
Warrant liability (expense) gain			546				(5,609	)			(2,782	)			(15,671	)			(5,566	)
Interest expense			(4,505	)			(4,723	)			(5,625	)			(13,952	)			(7,833	)
Other income (expense)			3,775				(1,376	)			1,354				2,774				2,441
Total other expense			(184	)			(11,708	)			(7,053	)			(26,849	)			(10,958	)
Income (loss) before income taxes			10,003				(8,402	)			286				(4,228	)			(33,423	)
Income tax provision (benefit)			1,976				(865	)			(897	)			1,589				(8,168	)
Income (loss) from continuing operations			8,027				(7,537	)			1,183				(5,817	)			(25,255	)
Income (loss) from discontinued operations			—				—				—				—				(4,605	)
Net income (loss)		$	8,027			$	(7,537	)		$	1,183			$	(5,817	)		$	(29,860	)
Net income (loss) per share:
Basic:
Income (loss) from continuing operations		$	0.15			$	(0.15	)		$	0.03			$	(0.12	)		$	(0.54	)
Income (loss) from discontinued operations			—				—				—				—				(0.10	)
Income (loss) per share—basic		$	0.15			$	(0.15	)		$	0.03			$	(0.12	)		$	(0.64	)
Diluted:
Income (loss) from continuing operations		$	0.15			$	(0.15	)		$	0.02			$	(0.12	)		$	(0.54	)
Income (loss) from discontinued operations			—				—				—				—				(0.10	)
Income (loss) per share—diluted		$	0.15			$	(0.15	)		$	0.02			$	(0.12	)		$	(0.64	)
Shares:
Basic			53,098				50,593				47,280				50,433				46,856
Diluted			55,175				50,593				48,524				50,433				46,856

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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
		July 3, 2015								April 3, 2015								July 4, 2014
		Amount								Amount								Amount
Revenue—GAAP		$	130,663							$	124,885							$	112,364
		Amount				% Revenue				Amount				% Revenue				Amount				% Revenue
Gross Profit—GAAP		$	59,784				45.8	%		$	54,007				43.2	%		$	50,214				44.7	%
Amortization expense			6,932				5.3				7,347				5.9				6,270				5.6
Non-cash compensation expense			503				0.4				599				0.5				646				0.6
Equity-based compensation			27				—				179				0.1				23				—
Acquisition FMV step-up			2,464				1.9				3,538				2.8				168				0.1
Third-party engineering costs			396				0.3				305				0.2				400				0.4
Integration costs and synergy savings			487				0.4				356				0.3				345				0.3
Gross Profit—non-GAAP		$	70,593				54.0	%		$	66,331				53.1	%		$	58,066				51.7	%
Research and Development—GAAP		$	21,611				16.5	%		$	21,061				16.9	%		$	20,810				18.5	%
Non-cash compensation expense			(1,506	)			(1.2	)			(1,620	)			(1.3	)			(893	)			(0.8	)
Equity-based compensation			(305	)			(0.2	)			(669	)			(0.5	)			(228	)			(0.2	)
Acquisition FMV step-up			(204	)			(0.2	)			(204	)			(0.2	)			(204	)			(0.2	)
Integration costs and synergy savings			(74	)			(0.1	)			(137	)			(0.1	)			(1,108	)			(1.0	)
Third-party engineering costs			396				0.3				305				0.2				400				0.4
Research and Development—non-GAAP		$	19,918				15.2	%		$	18,736				15.0	%		$	18,777				16.7	%
Selling, General and Administrative—GAAP		$	27,428				21.0	%		$	29,227				23.4	%		$	22,065				19.6	%
Amortization expense			(3,201	)			(2.4	)			(3,096	)			(2.5	)			(505	)			(0.4	)
Non-cash compensation expense			(4,763	)			(3.6	)			(7,578	)			(6.1	)			(1,851	)			(1.6	)
Equity-based compensation			(246	)			(0.2	)			(501	)			(0.4	)			(147	)			(0.1	)
Acquisition FMV step-up			(28	)			—				(28	)			—				(28	)			—
Litigation costs			(559	)			(0.4	)			(971	)			(0.8	)			(1,836	)			(1.6	)
Transaction expenses			(125	)			(0.1	)			530				0.4				—				—
Integration costs and synergy savings			(136	)			(0.1	)			(282	)			(0.2	)			(2,321	)			(2.1	)
Selling, General and Administrative—non-GAAP		$	18,370				14.1	%		$	17,301				13.9	%		$	15,377				13.7	%
Total operating expenses—GAAP		$	49,597				38.0	%		$	50,701				40.6	%		$	42,875				38.2	%
Amortization expense			(3,201	)			(2.4	)			(3,096	)			(2.5	)			(505	)			(0.4	)
Non-cash compensation expense			(6,269	)			(4.8	)			(9,198	)			(7.4	)			(2,744	)			(2.4	)

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Equity-based compensation			(551	)			(0.4	)			(1,170	)			(0.9	)			(375	)			(0.3	)
Acquisition FMV step-up			(232	)			(0.2	)			(232	)			(0.2	)			(232	)			(0.2	)
Restructuring charges			(558	)			(0.4	)			(413	)			(0.3	)			—				—
Integration costs and synergy savings			(210	)			(0.2	)			(419	)			(0.3	)			(3,429	)			(3.1	)
Litigation costs			(559	)			(0.4	)			(971	)			(0.8	)			(1,836	)			(1.6	)
Transaction expenses			(125	)			(0.1	)			530				0.4				—				—
Third-party engineering			396				0.3				305				0.2				400				0.4
Total operating expenses—non-GAAP		$	38,288				29.3	%		$	36,037				28.9	%		$	34,154				30.4	%
Income from operations—GAAP		$	10,187				7.8	%		$	3,306				2.6	%		$	7,339				6.5	%
Amortization expense			10,133				7.8				10,446				8.4				6,775				6.0
Non-cash compensation expense			6,772				5.2				9,797				7.8				3,390				3.0
Equity-based compensation			578				0.4				1,349				1.1				398				0.4
Restructuring charges			558				0.4				413				0.3				—				—
Acquisition FMV step-up			2,696				2.1				3,770				3.0				400				0.4
Litigation costs			559				0.4				971				0.8				1,836				1.6
Transaction expenses			125				0.1				(530	)			(0.4	)			—				—
Integration costs and synergy savings			697				0.5				772				0.6				3,774				3.4
Income from operations—non-GAAP		$	32,305				24.7	%		$	30,294				24.3	%		$	23,912				21.3	%
Net income (loss)—GAAP		$	8,027				6.1	%		$	(7,537	)			(6.0	)%		$	1,183				1.1	%
Amortization expense			8,306				6.4				8,566				6.9				5,183				4.6
Non-cash compensation expense			5,529				4.2				8,309				6.7				2,593				2.3
Equity-based compensation			472				0.4				1,107				0.9				304				0.3
Impairment of minority investment			—				—				2,230				1.8				—				—
Contingent consideration			—				—				(1,640	)			(1.3	)			—				—
Restructuring charges			457				0.3				339				0.3				—				—
Warrant liability expense			(546	)			(0.4	)			5,609				4.5				2,782				2.5
Non-cash interest expense			333				0.3				330				0.3				1,838				1.6
Acquisition FMV step-up			2,210				1.7				3,092				2.5				306				0.3
Litigation costs			(2,822	)			(2.2	)			797				0.6				1,405				1.3
Integration costs and synergy savings			760				0.6				633				0.5				1,270				1.1
Transaction expenses			404				0.3				(435	)			(0.3	)			—				—
Transition services for divested business			—				—				(102	)			(0.1	)			(1,036	)			(0.9	)
Net income—non-GAAP		$	23,130				17.7	%		$	21,298				17.1	%		$	15,828				14.1	%
Income from operations—non-GAAP		$	32,305							$	30,294							$	23,912
Depreciation expense			3,298								3,759								3,296
Adjusted EBITDA		$	35,603							$	34,053							$	27,208
Interest expense- GAAP		$	4,505							$	4,723							$	5,625
Non-cash interest expense			(405	)							(403	)							(2,402	)
Interest expense- non-GAAP		$	4,100							$	4,320							$	3,223

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		Three Months Ended
		July 3, 2015								April 3, 2015								July 4, 2014
		Amount				Income (loss) per diluted share				Amount				Income (loss) per diluted share				Amount				Income per diluted share
Net income (loss)—GAAP		$	8,027			$	0.15			$	(7,537	)		$	(0.15	)		$	1,183			$	0.02
Net income—non-GAAP		$	23,130			$	0.42			$	21,298			$	0.41			$	15,828			$	0.33
Diluted shares—GAAP			55,175								50,593								48,524
Incremental stock options, warrants, restricted stock and units			—								1,908								—
Diluted shares—non-GAAP			55,175								52,501								48,524

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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)

 

		Nine Months Ended
		July 3, 2015								July 4, 2014
		Amount								Amount
Revenue—GAAP		$	370,412							$	304,345
Nitronex prior to acquisition			—								(1,048	)
Revenue—non-GAAP		$	370,412							$	303,297
		Amount				% Revenue				Amount				% Revenue
Gross Profit—GAAP		$	167,992				45.4	%		$	112,799				37.1	%
Nitronex prior to acquisition			—				—				959				0.5
Amortization expense			19,638				5.3				13,779				4.5
Non-cash compensation expense			1,456				0.4				1,355				0.4
Equity-based compensation			264				0.1				53				—
Acquisition FMV step-up			6,837				1.8				18,707				6.2
Integration costs and synergy savings			839				0.2				1,306				0.4
Third-party engineering costs			1,625				0.4				970				0.3
Gross Profit—non-GAAP		$	198,651				53.6	%		$	149,928				49.4	%
Research and Development—GAAP		$	62,146				16.8	%		$	53,587				17.6	%
Nitronex prior to acquisition			—				—				(1,423	)			(0.3	)
Non-cash compensation expense			(4,164	)			(1.1	)			(2,105	)			(0.7	)
Equity-based compensation			(1,493	)			(0.4	)			(365	)			(0.1	)
Acquisition FMV step-up			(612	)			(0.2	)			(459	)			(0.2	)
Integration costs and synergy savings			(382	)			(0.1	)			(3,558	)			(1.2	)
Third-party engineering costs			1,625				0.4				970				0.3
Research and Development—non-GAAP		$	57,120				15.4	%		$	46,647				15.4	%
Selling, General and Administrative—GAAP		$	82,254				22.2	%		$	65,952				21.7	%
Nitronex prior to acquisition			—				—				(685	)			(0.2	)
Amortization expense			(7,350	)			(2.0	)			(1,347	)			(0.4	)
Non-cash compensation expense			(14,746	)			(4.0	)			(5,065	)			(1.7	)
Equity-based compensation			(1,064	)			(0.3	)			(361	)			(0.1	)
Acquisition FMV step-up			(84	)			—				(60	)			—
Integration costs and synergy savings			(714	)			(0.2	)			(8,914	)			(2.9	)
Litigation costs			(2,247	)			(0.6	)			(3,240	)			(1.1	)
Transaction expenses			(4,231	)			(1.1	)			(4,472	)			(1.5	)
Selling, General and Administrative—non-GAAP		$	51,818				14.0	%		$	41,808				13.8	%
Total operating expenses—GAAP		$	145,371				39.2	%		$	135,264				44.4	%

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Nitronex prior to acquisition			—				—				(2,108	)			(0.4	)
Amortization expense			(7,350	)			(2.0	)			(1,347	)			(0.4	)
Non-cash compensation expense			(18,910	)			(5.1	)			(7,170	)			(2.4	)
Equity-based compensation			(2,557	)			(0.7	)			(726	)			(0.2	)
Acquisition FMV step-up			(696	)			(0.2	)			(519	)			(0.2	)
Restructuring charges			(971	)			(0.3	)			(15,725	)			(5.2	)
Integration costs and synergy savings			(1,096	)			(0.3	)			(12,472	)			(4.1	)
Litigation costs			(2,247	)			(0.6	)			(3,240	)			(1.1	)
Transaction expenses			(4,231	)			(1.1	)			(4,472	)			(1.5	)
Third-party engineering			1,625				0.4				970				0.3
Total operating expenses—non-GAAP		$	108,938				29.4	%		$	88,455				29.2	%
Income (loss) from operations—GAAP		$	22,621				6.1	%		$	(22,465	)			(7.4	)%
Nitronex prior to Acquisition			—				—				3,067				1.0
Amortization expense			26,988				7.3				15,126				5.0
Non-cash compensation expense			20,366				5.5				8,525				2.8
Equity-based compensation			2,820				0.8				779				0.3
Restructuring charges			971				0.3				15,725				5.2
Acquisition FMV step-up			7,533				2.0				19,226				6.3
Integration costs and synergy savings			1,935				0.5				13,778				4.5
Litigation costs			2,247				0.6				3,240				1.1
Transaction expenses			4,231				1.1				4,472				1.5
Income from operations—non-GAAP		$	89,712				24.2	%		$	61,473				20.3	%
Net loss—GAAP		$	(5,817	)			(1.6	)%		$	(29,860	)			(9.8	)%
Nitronex prior to acquisition			—				—				3,067				0.9
Amortization expense			22,130				6.0				11,572				3.8
Non-cash compensation expense			16,951				4.6				6,521				2.2
Equity-based compensation			2,312				0.6				595				0.2
Impairment of minority investment			2,230				0.6				—				—
Contingent consideration			(1,640	)			(0.4	)			—				—
Restructuring charges			796				0.2				12,030				4.0
Warrant liability expense			15,671				4.2				5,566				1.8
Non-cash interest expense			1,023				0.3				2,020				0.7
Acquisition FMV step-up			6,177				1.7				13,841				4.6
Integration costs and synergy savings			1,773				0.5				8,922				2.9
Litigation costs			(1,437	)			(0.4	)			2,479				0.8
Transaction expenses			3,388				0.9				3,537				1.2
Transition services for divested business			(409	)			(0.1	)			(1,777	)			(0.6	)
Discontinued operations			—				—				4,605				1.5
Net income—non-GAAP		$	63,148				17.0	%		$	43,118				14.2	%
		Amount				Income (loss) per diluted share				Amount				Income (loss) per diluted share
Net loss—GAAP		$	(5,817	)		$	(0.12	)		$	(29,860	)		$	(0.64	)

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Net income—non-GAAP		$	63,148			$	1.20			$	43,118			$	0.89
Diluted shares—GAAP			50,433								46,856
Incremental stock options, warrants, restricted stock and units			2,126								1,349
Diluted shares—non-GAAP			52,559								48,205

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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

		July 3, 2015				October 3, 2014
ASSETS
Current assets:
Cash and cash equivalents		$	80,687			$	173,895
Accounts receivable, net			89,714				75,156
Inventories			84,373				73,572
Deferred income taxes and other			54,380				50,726
Total current assets			309,154				373,349
Property and equipment, net			80,167				50,357
Goodwill and intangible assets, net			351,295				153,417
Deferred income taxes and other			66,098				105,111
TOTAL ASSETS		$	806,714			$	682,234
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of lease		$	554			$	—
Current portion of long-term debt			3,500				3,478
Accounts payable, accrued liabilities and other			61,264				64,910
Deferred revenue			336				17,258
Total current liabilities			65,654				85,646
Lease payable, less current portion			608				—
Long-term debt, less current portion			340,813				343,178
Common stock warrant liability			31,472				15,801
Deferred income taxes and other			7,365				9,042
Total liabilities			445,912				453,667
Commitments and contingencies
Stockholders’ equity			360,802				228,567
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	806,714			$	682,234

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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

		Nine Months Ended
		July 3, 2015				July 4, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(5,817	)		$	(29,860	)
Non-cash adjustments			86,208				47,690
Change in operating assets and liabilities			(52,196	)			(8,170	)
Net cash from operating activities			28,195				9,660
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net			(208,352	)			(258,108	)
Sale of a business			—				8,627
Sale of a product line			—				12,000
Strategic investments			1,250				(5,250	)
Purchases of property and equipment			(32,488	)			(10,279	)
Acquisition of intellectual property			(2,483	)			(5,088	)
Net cash used in investing activities			(242,073	)			(258,098	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable			—				350,000
Payment of assumed debt			—				(34,952	)
Capital contributions			—				3,200
Proceeds from stock offering, net of issuance costs			127,697				—
Proceeds from revolving facility			100,000				—
Proceeds from stock awards and units			5,329				3,777
Financing and offering costs			(39	)			(8,790	)
Payments on revolving facility			(100,000	)			—
Other financing activities			(11,916	)			(1,847	)
Net cash from financing activities			121,071				311,388
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS			(401	)			70
NET CHANGE IN CASH AND CASH EQUIVALENTS			(93,208	)			63,020
CASH AND CASH EQUIVALENTS — Beginning of period			173,895				110,488
CASH AND CASH EQUIVALENTS — End of period		$	80,687			$	173,508

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* * *

Company Contact:

M/A-COM Technology Solutions Holdings, Inc.

Robert J. McMullan

Senior Vice President and Chief Financial Officer

P: 978-656-2753

E: bob.mcmullan@macom.com

Investor Relations Contact:

Shelton Group

Leanne K. Sievers

EVP, Investor Relations

P: 949-224-3874

E: lsievers@sheltongroup.com