MACOM Solutions Annual Report 2015

Plain-text annual report

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC. FORM 10-K (Annual Report) Filed 11/24/15 for the Period Ending 10/02/15 Address Telephone CIK 100 CHELMSFORD STREET LOWELL, MA 01851 (978) 656-2500 0001493594 Symbol MTSI SIC Code Industry Sector Fiscal Year 3674 - Semiconductors and Related Devices Semiconductors Technology 09/30 http://www.edgar-online.com © Copyright 2015, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended October 2, 2015OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 001-35451M/A-COM Technology Solutions Holdings, Inc.(Exact name of registrant as specified in its charter) Delaware 27-0306875(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 100 Chelmsford Street, Lowell, Massachusetts 01851(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: (978) 656-2500Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct. x Yes ¨ NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theAct. x Yes ¨ NoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. x Yes ¨ NoIndicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). x Yes ¨ NoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). ¨ Yes x NoThe aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of April 3, 2015, the last business day of the registrant’ssecond fiscal quarter, was approximately $869.7 million based on the closing price of the registrant’s common stock as of such date as reported on the NASDAQGlobal Select Market. For purposes of the foregoing calculations only, shares of common stock held by each executive officer and director of the registrant andtheir respective affiliates have been excluded, as such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusivedetermination for other purposes.The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of November 20, 2015 was 53,073,246.DOCUMENTS INCORPORATED BY REFERENCEPart III incorporates certain information by reference from the registrant’s definitive proxy statement for the 2016 Annual Meeting of Stockholders, which will befiled no later than 120 days after the close of the registrant’s fiscal year ended October 2, 2015.Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.ANNUAL REPORT ON FORM 10-KFOR THE FISCAL YEAR ENDED OCTOBER 2, 2015TABLE OF CONTENTS PAGE NO. PART I ITEM 1: BUSINESS. 4 ITEM 1A: RISK FACTORS. 15 ITEM 1B: UNRESOLVED STAFF COMMENTS. 37 ITEM 2: PROPERTIES. 37 ITEM 3: LEGAL PROCEEDINGS. 38 ITEM 4: MINE SAFETY DISCLOSURES. 38 PART II ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASESOF EQUITY SECURITIES. 39 ITEM 6: SELECTED FINANCIAL DATA. 41 ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 44 ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 56 ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 58 ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 100 ITEM 9A: CONTROLS AND PROCEDURES. 100 ITEM 9B: OTHER INFORMATION. 104 PART III ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 105 ITEM 11: EXECUTIVE COMPENSATION. 105 ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS. 105 ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 106 ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES. 106 PART IV ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 107 SIGNATURES 110 2Table of ContentsCAUTIONARY STATEMENTThis Annual Report on Form 10-K (Annual Report) contains forward-looking statements, including statements regarding our business outlook, strategy,plans, expectations, estimates and objectives for future operations, and our future results of operations and financial position. Forward-looking statements includeall statements that are not historical facts and generally may be identified by terms such as “anticipates,” “believes,” “could,” “continue,” “estimates,” “expects,”“intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” “would,” or similar expressions or variations or the negatives ofthose terms, but are not the exclusive means of identifying forward-looking statements in this Annual Report.Although forward-looking statements in this Annual Report reflect the good faith judgment of our management based on what we know at the time they aremade, such statements involve inherent risks and uncertainties and actual results and outcomes may differ materially and adversely from the results and outcomesexpressed or implied by our forward-looking statements. A number of important factors could cause actual results to differ materially and adversely from those inthe forward-looking statements. We urge you to consider the risks and uncertainties in “Item 1A - Risk Factors” and elsewhere in this Annual Report and the otherdocuments filed by us with the Securities and Exchange Commission (SEC). Except as required by law, we have no plans, and undertake no obligation, to revise orupdate our forward-looking statements to reflect any event or circumstance that may arise after the date of this Annual Report. We caution readers not to placeundue reliance upon any such forward-looking statements, which speak only as of the date made.In this document, the words “Company,” “we,” “our,” “us,” and similar terms refer only to M/A-COM Technology Solutions Holdings, Inc. and itsconsolidated subsidiaries, and not any other person or entity.“M/A-COM” and “MACOM” are trademarks of M/A-COM Technology Solutions Holdings, Inc. All other brands and names listed are trademarks of theirrespective owners. 3Table of ContentsPART lITEM 1. BUSINESSOverviewWe are a leading provider of high-performance analog semiconductor solutions that enable next-generation internet applications, the cloud connected appseconomy, and the modern, networked battlefield across the radio frequency (RF), microwave, millimeterwave and photonic spectrum. We design and manufacturedifferentiated, high-value products for customers who demand high performance, quality, and reliability. We offer a broad portfolio of over 3,500 standard andcustom devices, which include integrated circuits (IC), multi-chip modules, power pallets and transistors, diodes, amplifiers, switches and switch limiters, passiveand active components and complete subsystems, across approximately 40 product lines serving over 6,000 end customers in three primary markets. Oursemiconductor products are electronic components that our customers incorporate into their larger electronic systems, such as, point-to-point wireless backhaulradios, high density networks, active antenna arrays, radar, magnetic resonance imaging systems (MRI) and unmanned aerial vehicles (UAVs). Our primarymarkets are: Networks, which includes carrier and enterprise infrastructure, wired broadband and cellular backhaul, cellular infrastructure, photonic solutions andfiber optic applications; Aerospace and Defense (A&D), which includes military and commercial radar, RF jammers, electronic countermeasures, andcommunication data links; and Multi-market, which includes industrial, medical, test and measurement and scientific applications.We have built upon a 60-year heritage of delivering innovative solutions dating back to the founding of Microwave Associates, Inc. We utilize our system-level knowledge and our extensive capabilities in high-frequency modeling, IC design, integration, packaging and manufacturing of semiconductors to address ourcustomers’ needs. Our specialized engineers and technologists located across twelve global design centers collaborate with our customers during the early stage oftheir system development process to incorporate our standard products and identify custom products we can develop to enhance their overall system performance.We intend to continue to expand our revenue opportunities through our market-facing strategy of aligning our solutions with our customers’ needs andcollaborating with them during the product definition stage of their systems toward design-in of our products. We believe this approach will allow us to sell morecomplete semiconductor solutions that integrate more functions and incorporate more highly-valued content into our products. We believe the combination of ourmarket-facing strategy, targeted development projects, our engineering expertise and our fabrication capabilities enables us to identify profitable growthopportunities and rapidly develop and deliver new products and solutions.Many of our products have long life cycles ranging from five to ten years, and some of our products have been shipping for over 20 years. We continue todevelop or acquire new products to extend our market share, strengthen customer relationships and capture design wins, where a customer allows us to be asupplier of a particular component used in its system.We believe our “fab-lite” manufacturing model provides us with a competitive advantage and an attractive financial model through a largely variable coststructure. We operate semiconductor fabrication facilities at our Lowell, Massachusetts headquarters and in Ithaca, New York. We manufacture compoundsemiconductors including Gallium Arsenide (GaAs) and Indium Phosphide (InP), and we are currently in the process of adding Gallium Nitride (GaN) fabricationcapacity as well. In the A&D market, a domestic fabrication facility may be a requirement to be a strategic supplier, and we believe our status as a “TrustedFoundry” offers us further competitive differentiation.We also utilize external semiconductor foundries to supply us with additional capacity and lower costs, and to provide us access to additional processtechnologies. The ability to utilize a broad array of internal proprietary process technologies and commercially available foundry technologies allows us to selectthe most appropriate technology to solve our customers’ needs. We believe our fab-lite strategy provides us with dependable domestic supply, control over quality,reduced capital investment requirements, faster time to market, and additional 4Table of Contentsoutsourced capacity when needed. In addition, the experience base cultivated through the continued operation of our internal fabrication lines provides us with theexpertise to better manage our external foundry suppliers.We serve our broad and diverse customer base through a multi-channel sales strategy utilizing our direct sales force, a global network of independent salesrepresentatives, distributors, and an e-commerce channel. Our direct sales force and application engineers are focused on securing design wins by supportingindustry-leading original equipment manufacturer (OEM) customers. Our external sales representatives, distributors, and our e-commerce channel are focused onincreasing our design wins with smaller or emerging customers early in their new product development efforts.Our Markets & ProductsThe growth of advanced electronic systems using analog RF, microwave, millimeterwave and photonic semiconductor technologies has created demand forhigh-performance analog semiconductor components, modules and solutions. The terms RF, microwave and millimeterwave are used to refer to electromagneticwaves in a particular frequency range produced by applying an alternating current to an antenna or conductor. A wide variety of advanced electronic systems relyon electromagnetic waves for high-speed data transmission or reception. We offer high-performance analog semiconductor products for both wireless and wirelineapplications across the frequency spectrum from RF to millimeterwave and beyond through photonics. We develop high-value products to serve our customers inthree primary markets: Networks, A&D, and Multi-market which represented 65.1%, 19.8%, and 15.1%, respectively, of our revenue in fiscal year 2015.The market demand for high-performance analog RF, microwave, millimeterwave, and photonic semiconductors is driven by the growth of mobile Internetdevices, cloud computing and streaming video that strain existing network capacity, as well as the growth in advanced information-centric military applications. Inaddition, the increasing need for real-time information, sensing and imaging functions in industrial, medical, scientific, and test and measurement applications isdriving demand for our products.Networks . Growth in the Networks market is driven by the proliferation of wireless and wired devices from smartphones and tablets to data centers, as wellas the data rich applications and services they enable such as mobile Internet, cloud computing, video-on-demand, social media, global positioning functionality,and location based services. Growth in global next-generation Internet and Internet of Things (IoT) drives demand for communications infrastructure equipmentrequiring amplifiers, filters, receivers, switches, synthesizers, transformers, upconverters, and other components to expand and upgrade cellular backhaul, cellularinfrastructure, wired broadband, and fiber optic networks. Semiconductor products and solutions must continually deliver greater bandwidth and functionality asthe demands of our customers and end users increase.In December 2014 we completed the acquisition of BinOptics Corporation (BinOptics), a leading merchant provider of InP lasers for data centers, mobilebackhaul, silicon photonics and access networks. With this acquisition, we have broadened our position in the growing optical component market, which we believewill continue to be an important growth driver in future periods and support our growth opportunities in data center networks, including silicon photonicsapplications. This transaction expands our optical portfolio with differentiated edge-emitting and surface-emitting Fabry Perot and Distributed Feedback lasers,incorporating proprietary and patented Etched Facet Technology (EFT) for lasers that enables wafer-scale economics in both device manufacturing and testing.Our expertise in system-level architectures and advanced IC design capability allow us to offer Networks OEMs highly-integrated solutions optimized forperformance and cost. We are a leader in high-frequency semiconductors used in point-to-point radios for cellular backhaul, where we provide a highly-integratedchipset solution featuring innovative IC and low cost package design capabilities. Similarly, our portfolio of opto-electronics products for clock and data recovery,optical post amplifiers, laser and modulator drivers, transimpedance amplifiers, transmitter and receiver applications in 2.5/6/10/40/100/400 gigabits per second(Gbps) long haul, metro, data center links and fiber-to-the-X (FTTx) fiber optic networks enable 5Table of Contentstelecommunications carriers and data centers to cost-efficiently increase their network capacity by a factor of four to ten times over earlier generation solutions. Foroptical communications applications, we utilize a proprietary combination of GaAs, InP, and Silicon Germanium (SiGe) technologies to obtain advantages inperformance and size. For wired broadband applications, we offer OEMs the opportunity to streamline their supply chain through our broad catalog of activecomponents such as active splitters, amplifiers, multi-function ICs and switches, as well as passive components such as transformers, diplexers, filters, powerdividers, and combiners.Aerospace & Defense . In the A&D market, military applications require more advanced electronic systems, such as radar warning receivers,communications data links and tactical radios, UAVs, RF jammers, electronic countermeasures, and smart munitions. Military applications are becoming moresophisticated, favoring higher performance semiconductor ICs based on GaAs and GaN technologies due to their high power density, improved power efficiency,and broadband capability. Radar systems for mapping and targeting missions are undergoing a major transition from existing mechanically-scanned radar productsto a next-generation of active electronically-scanned array (AESA) based products. Consisting of hundreds or thousands of transmit/receive modules commonlybased on GaAs and GaN technologies, AESAs deliver greater speed, range, resolution, and reliability over mechanically-scanned radar products that utilize a singletransmitter and receiver with mechanical steering. Military communications employing wireless infrastructure and tactical radios in the field remain critical forallowing geographically dispersed operators to exchange information quickly and efficiently. UAVs and their underlying semiconductor content require innovativedesigns to meet rigorous specifications for high performance, small size, and low power consumption.We believe our in-depth knowledge of critical radar system requirements, integration expertise, and track record of reliability make us a valued resource forour A&D customers faced with demanding application parameters. Further, we have been accredited by the United States Department of Defense with “TrustedFoundry” status, a designation conferred on microelectronics vendors exhibiting the highest levels of process integrity and protection, which we believedifferentiates us as a trusted manufacturer of ICs for U.S. military and aerospace applications. For radar applications, we offer standard and custom power transistorpallets, discrete components, switch limiters, phase shifters, and integrated modules for transmit and receive functions in air traffic control, marine, weather, andmilitary radar applications. For military communications data link and tactical radio applications, we offer a family of active, passive and discrete products, such asintegrated IC modules, control components, voltage-controlled oscillators (VCOs), transformers, power transistors and pallets, and diodes. In some cases, wedesign parts specifically for these applications, while in others, our reputation for quality and our broad catalog allows these demanding customers to reduce thecost of their high-performance systems by designing in standard dual-use or commercial off-the-shelf parts that we have developed for other applications. Webelieve manufacturing many of these products in our Lowell, Massachusetts “Trusted Foundry” fabrication offers us a competitive advantage in the A&D marketbecause of certain A&D customers’ requirements for a domestic supply chain.Multi-market . Multi-market encompasses industrial, medical, test and measurement, and scientific applications, where analog RF, microwave, andmillimeterwave semiconductor solutions are gaining prevalence. In addition, evolving medical technology has increased the need for high-performancesemiconductor solutions in medical imaging and patient monitoring to provide enhanced analysis and functionality.In the medical industry, our custom designed non-magnetic diode product line is a critical component for certain MRI applications. For sensing and test andmeasurement applications, we believe our patented Heterolithic Microwave Integrated Circuit (HMIC) process is ideal for high-performance, integrated biasnetworks and switches. Our catalog of general purpose GaAs ICs includes low noise amplifiers, switches, and power amplifiers that address a wide range ofapplications such as industrial automation systems to test and measurement equipment.To address our target markets, we offer a broad range of standard and custom ICs, modules and complete subsystems across approximately 40 product lines.Our product catalog currently consists of more than 3,500 6Table of Contentsproducts including the following key product platforms: power pallets and transistors, ICs, diodes, switches and switch limiters, passive and active components,multi-chip modules, and complete subsystems. Many of our product platforms are leveraged across multiple markets and applications. For example, our applicationexpertise with regard to power transistor technology is leveraged across both scientific laboratory equipment applications and commercial and defense radar systemapplications. Our diode technology is used in switch filter banks of military tactical radios as well as medical imaging MRI systems. The table below presents themajor product families and major applications in our primary target markets. TARGET MARKET MAJOR PRODUCT FAMILIES MAJOR APPLICATIONS Networks Active Splitters 2G/3G/4G Wireless Base Stations Amplifiers 40/100G Fiber Optics Attenuators Broadcast Video Clock and Data Recovery CATV Infrastructure Crosspoint Switches Enterprise Routing and Switching Carrier Convergence Processors GPON/FTTX Enterprise Voice & Data Processors Hybrid PBX Filters/Diplexers IP PBX Laser Drivers Optical Transport Networks Modulator Driver Amplifiers Point-to-Point Wireless Backhaul Post Amplifiers Session Border Controller SDI Cable Drivers Set Top Boxes SDI Equalizers Unified Communication SDI Reclockers Wireless Trunk Gateway Signal Conditioners Wireline Access Gateway Switches Wireline Trunk Gateway Transformers/Baluns Transimpedance Amplifiers Upconverters/Downconverters VoIP Processors Voltage Controlled Oscillators Aerospace and Defense Amplifiers Air Traffic Control Radar Attenuators Weather Radar Components Public Safety Radios Diodes Tactical & Manpack Radios Power Transistors & Modules Satellite Communications Mixers Military Communications Phase Shifters Switch Limiters Voltage Control Oscillators Multi-Market Amplifiers Industrial Attenuators Medical Couplers Scientific Diodes Test & Measurement Logic Drivers Mixers Power Detectors Power Transistors Switches Transceivers In August 2015, we divested our Automotive business to Autoliv based on our belief that the business was no longer accretive to our operating model andwas no longer consistent with our long-term strategic vision from 7Table of Contentsa growth and profitability perspective. We believe divesting our Automotive business will help us to realize our potential as a high-performance analogsemiconductor company and focus our efforts on growing our retained core businesses.We believe the combination of our market-facing strategy and our engineering expertise enables us to identify profitable growth opportunities and rapidlydevelop and deliver new products and solutions complemented by strategic acquisitions. Many of our products have long lifecycles ranging from five to ten years,and some of our products have been shipping for over 20 years. Our goal is to strengthen customer relationships and capture design wins with customers that allowus to be a supplier of components used in their systems.Research and DevelopmentOur research and development efforts are directed toward the rapid development of new and innovative products and solutions, process technologies andpackaging techniques. The interaction of semiconductor process technology, circuit design technology and packaging technology defines the performanceparameters and the customers’ acceptance of our products. We believe our core competency is the ability to model, design, integrate, package, and manufacturedifferentiated solutions. We leverage this core competency to solve difficult and complex challenges that our customers face during their system design phases. Webelieve our integrated and customized solutions offer customers high performance, quality, reliability, and faster time to market.Circuit design and device modeling expertise . Our engineers are experts in the design of circuits capable of reliable, high-performance analog RF,microwave, millimeterwave and photonic signal conditioning. Our staff has decades of experience in solving complex design challenges in applications involvinghigh frequency, high power, and environmentally-rugged operating conditions. We also develop proprietary device and electro-magnetic modeling techniques thatour engineers use to generate predictive models prior to fabrication. Our predictive modeling expertise allows us to achieve faster design cycle times resulting inshorter time to market for our products.Semiconductor process technology . We leverage our domestic semiconductor wafer fabrication capabilities and our foundry suppliers to offer customers theright process technology to meet their particular requirements. Depending on the requirements for the application, our semiconductor products may be designedusing an internally developed or externally sourced process technology.Packaging expertise . Our extensive packaging expertise enables us to model the interaction between the semiconductor and its package. Our engineers makeadjustments in the design of both the semiconductor and the package, to take account of that interaction. We offer products in a variety of different package typesfor specific applications, including plastic over-molded, ceramic, and laminate-based packaging.We continue to invest in proprietary processes to enable us to develop and manufacture high-value solutions. For example, we have developed innovative,patented technologies such as HMIC, which provides high integration, high power and low loss switching capabilities for our primary markets. This technologyreplaces mechanical switches for very high power applications such as wireless base stations. We are also in the process of transferring innovative, high-performance GaN process technology manufacturing capability from an external foundry supplier to our Lowell, Massachusetts fabrication facility. Uponcompletion of the transfer and qualification process, we believe that being able to offer our customers this dual-sourced, internal and external GaN supplycapability will provide us with a competitive advantage.Our engineers’ system-level design expertise allows us to offer differentiated solutions that leverage multiple process technologies and are integrated into asingle, higher-level assembly, thereby delivering our customers enhanced functionality. 8Table of ContentsResearch and development expenses were $82.2 million, $71.4 million, and $42.5 million for fiscal years 2015, 2014, and 2013, respectively. We anticipatethat we will continue to make significant research and development expenditures in order to drive future new product and process introductions and maintain ourcompetitive position.Sales and MarketingWe employ a global multi-channel sales strategy and support model intended to facilitate our customers’ evaluations and selections of our products. We sellthrough our direct sales force, our application engineering staff, our global network of independent sales representatives, resellers, and distributors, as well as an e-commerce channel. We have strategically positioned our direct sales and applications engineering staff in 32 locations worldwide, augmented by independent salesrepresentatives and distributors with additional domestic and foreign locations to offer responsive local support resources to our customers and to build long-termrelationships. From our global design centers, our application engineers visit customers at their engineering and manufacturing facilities, aid them in understandingour capabilities, and collaborate with them to deliver products that can optimize their system performance. Our global independent sales representatives anddistributor network allows us to extend our sales capabilities to new customers in new geographies more cost effectively than using our direct sales force alone.Our products are principally sold in the U.S., Asia, and Europe, which is where we concentrate our direct sales force, engineering staff, independent salesrepresentatives, and distributors. Sales to our distributors accounted for 20.7%, 22.0%, and 24.5% of our revenue in fiscal years 2015, 2014, and 2013, respectively.Our agreements with sales representatives, resellers and distributors may provide for an initial term of one or more years with the opportunity for subsequentrenewals or for an indefinite term, and also typically provide that either party may terminate the agreement for convenience with a minimum period of prior noticeto the other party, usually between 30 and 90 days.Our sales efforts are focused on the needs of our customers in our three primary markets rather than on particular product lines, facilitating product cross-selling across end markets, and within key accounts. Through our website, customers can order online, request samples, and access our product selection guides,detailed product brochures and data sheets, application notes, suggested design block diagrams and test fixture information, technical articles, and informationregarding quality and reliability.CustomersOur diversified base of over 6,000 end customers includes OEMs, contract manufacturers, and distributors. For fiscal years 2015 and 2014, one directcustomer individually accounted for more than 10% of our revenue, Alltek at 12.1% and 9.7%, respectively. There were no sales to this customer in 2013. Inaddition, our principal distributor, Richardson Electronics, an Arrow Electronics Company (Richardson), accounted for 17.7%, 18.5%, and 20.8% of our revenue infiscal years 2015, 2014, and 2013, respectively. Our top 25 direct customers accounted for an aggregate of 54.6%, 51.2%, and 45.8% of our revenue in fiscal years2015, 2014, and 2013, respectively.CompetitionThe markets for our products are highly competitive and are characterized by continuously evolving customer requirements. We believe that the principalcompetitive factors in our markets include: • the ability to timely design and deliver products and solutions that meet customers’ performance, reliability and price requirements; • the breadth and diversity of product offerings; • the ability to provide a reliable supply of products in sufficient quantities and in a timely manner; 9Table of Contents • the ability of engineering talent to drive innovation and new product development; • the quality of customer service and technical support; and • the financial reliability, operational stability, and reputation of the supplier.We believe that we compete favorably with respect to these factors. We compete primarily with both internal design resources and other suppliers of high-performance analog semiconductor solutions for use in wireless and wireline RF, microwave, millimeterwave and photonic applications, some of whom havegreater financial resources and scale than us. We expect competition in our markets to intensify, as new competitors enter these markets, existing competitorsmerge or form alliances, and new technologies emerge. We believe that in the future there will be increased competition from companies utilizing alternativetechnologies, such as high-volume manufacturers using low-cost silicon process technology. Some of our competitors are also our customers, and in certain productcategories we compete with semiconductor manufacturers from which we also obtain foundry services, including Sumitomo Electric Device Innovations, Inc. andQorvo, Inc. (Qorvo).We compete with Analog Devices, Inc. (ADI) across our primary markets, Networks, A&D and Multi-market. In the Networks market, we also competewith Avago, Inc.(Avago), and Semtech Corporation, Inc. In the A&D market, we also compete with Cobham Defense Electronic Systems Corporation (Cobham),Microsemi Corporation (Microsemi), and Qorvo. In the Multi-market arena, we also compete with Cobham, Avago, Microsemi and Skyworks Solutions, Inc(Skyworks).Segment and Geographic InformationWe manage our operations in one reportable segment, semiconductors and modules. Financial information about our operations, including our revenue andlong-lived assets by geographic region, is included in our consolidated financial statements and accompanying notes in Item 8. “Financial Statements andSupplementary Data” appearing elsewhere below.Risks attendant to our foreign operations are discussed in this Annual Report under “Item 1A—Risk Factors.”Backlog and InventoryOur sales are made primarily on a purchase order basis, rather than pursuant to long-term contracts where the customer commits to buy any minimumamount of product over an extended period. On occasion, we ship finished goods inventory to certain customer or third-party “hub” locations, but do not recognizerevenue associated with such shipments until these customers consume the inventory from the hub. We also frequently ship products from inventory shortly afterreceipt of an order, which we refer to as “turns business”. Due to these arrangements and industry practice, which allows customers to cancel orders with limitedadvance notice prior to shipment, and with little or no penalty, we believe that backlog as of any particular date may not be a reliable indicator of our future revenuelevels.Intellectual PropertyOur success depends in part upon our ability to protect our intellectual property. To accomplish this, we rely on a combination of intellectual property rights,including patents, copyrights, trademarks, and trade secrets, as well as customary contractual protections with our customers, suppliers, employees, and consultants.As of October 2, 2015, we had 409 U.S. and 161 foreign patents and 61 U.S. and 41 foreign pending patent applications covering elements of circuit design,manufacturing and wafer fabrication. We do not know whether any of our pending patent applications will result in the issuance of patents or whether theexamination process will require us to narrow our claims. The expiration dates of our patents range from 2016 to 2035. We do not 10Table of Contentsregard any of the patents scheduled to expire in the next 12 months as material to our overall intellectual property portfolio. Notwithstanding our active pursuit ofpatent protection when available, we believe that our future success will be determined by the innovation, technical expertise and management abilities of ourengineers and management more than by patent ownership.The semiconductor industry is characterized by the existence of a large number of patents, copyrights, trademarks and trade secrets, and by the vigorouspursuit, protection and enforcement of intellectual property rights. Many of our customer agreements require us to indemnify our customers for third-partyintellectual property infringement claims, which may in the future require that we defend those claims and might require that we pay damages in the case of adverserulings. Claims of this sort could harm our relationships with our customers and might deter future customers from doing business with us. With respect to anyintellectual property rights claims against us or our customers or distributors, we may be required to cease manufacture of the infringing product, pay damages orsettlement amounts, expend resources to develop non-infringing technology, seek a license, which may not be available on commercially reasonable terms or at all,or relinquish patents or other intellectual property rights.Manufacturing, Sources of Supply and Raw MaterialsIn any particular situation, we may choose to leverage our internal proprietary process technologies or other technologies with external fabrication facilities.We believe this ability to leverage our existing internal capabilities and external outsourcing helps us to provide optimized solutions for our customers.Our internal wafer fabrication, and a majority of our internal assembly and test operations, are conducted at our Lowell, Massachusetts headquarters andinternal wafer fabrication and test operations in Ithaca, New York. We believe having a U.S.-based wafer fabrication lines is a competitive advantage for us overcompetitors that do not have this capability, because it provides us with greater control over quality, a secure source of supply, and a domestic source for U.S. A&Dcustomers. We also believe that our domestic fabrication lines allow us to better manage quality control and develop products faster with shorter production leadtimes than if we utilized external foundries. We also perform internal assembly and test functions at our Long Beach, California, Ithaca, New York, Nashua, NewHampshire, and Hsinchu, Taiwan locations.We complement our internal manufacturing with outsourced foundry partners and other supply chain suppliers. Our operations staff has extensive expertisein the management of outsourced manufacturing service providers and other supply chain participants. We believe our fab-lite model of outsourcing certain of ourmanufacturing activities rather than investing heavily in capital-intensive production facilities, provides us with the flexibility to respond to new marketopportunities, simplifies our operations, provides access to other process technologies and additional manufacturing capacity, and reduces our capital requirements.We also use third-party contract manufacturers for assembly, packaging and test functions, and in some cases for fully-outsourced turnkey manufacturing of ourproducts.The principal materials used in the production of our IC products are high purity source materials such as gallium, aluminum, arsenic, nitrite, carbon, andsilicon. We purchase from hundreds of suppliers worldwide, a wide variety of semiconductors, wafers, packages, metals, printed circuit boards, electromechanicalcomponents, and other materials for use in our operations. These supply relationships are generally conducted on a purchase order basis. The use of externalsuppliers involves a number of risks, including the possibility of material disruptions in the supply of key raw materials and components, the lack of control overdelivery schedules, capacity, quality, and costs.While we attempt to maintain alternative sources for our principal raw materials to reduce the risk of supply interruptions or price increases, some of the rawmaterials and components are not readily available from alternate suppliers due to their unique nature, design or the length of time necessary for re-design orqualification. We routinely utilize single sources of supply for various materials based on availability, 11Table of Contentsperformance, efficiency, or cost considerations. For example, wafers procured from merchant foundries for a particular process technology are generally sourcedthrough a single foundry on which we rely for all of our wafers in that process. Our reliance on external suppliers puts us at risk of supply chain disruption if asupplier does not have sufficient raw material inventory to meet our manufacturing needs, goes out of business, changes or discontinues the process in whichcomponents or wafers are manufactured, or declines to continue supplying us for competitive or other reasons, as discussed in more detail in Item 1A. “RiskFactors” herein. Where practical, we attempt to mitigate these risks by qualifying multiple sources of supply, redesigning products for alternative components, andpurchasing incremental inventory of raw materials and components in order to protect us against supply disruptions.Quality AssuranceThe goal of our quality assurance program is for our products to meet our customers’ requirements, be delivered on time, and function reliably throughouttheir useful lives. The International Organization for Standards (ISO) provides models for quality assurance for various operational disciplines, such as design,manufacturing, and testing, which comprise part of our overall quality management system. Our following locations have each received ISO 9001:2008certifications in one or more of their principal functional areas: Lowell, Massachusetts; Ithaca, New York; Long Beach, Santa Clara and Newport Beach,California; Morrisville, North Carolina; Nashua, New Hampshire; Belfast, Northern Ireland; Cork, Ireland; Sydney, Australia, and Hsinchu, Taiwan. In addition,our Lowell, Massachusetts facility has received an ISO 14001:2004 environmental management systems certification.Environmental RegulationOur operations involve the use of hazardous substances and are regulated under federal, state, and local laws governing health and safety and theenvironment in the U.S. and other countries. These regulations include limitations on discharge of pollutants into the air, water, and soil; remediation requirements;product chemical content limitations; manufacturing chemical use and handling restrictions; pollution control requirements; waste minimization considerations; andrequirements regarding the treatment, transport, storage, and disposal of hazardous wastes. We are also subject to regulation by the U.S. Occupational Safety andHealth Administration and similar health and safety laws in other jurisdictions. While we are committed to compliance with applicable regulations, the risk ofenvironmental liabilities can never be completely eliminated, and there can be no assurance that the application of environmental and health and safety laws to ourbusiness will not require us to incur material future expenditures.We are also regulated under a number of federal, state, and local laws regarding responsible sourcing, recycling, product packaging and product contentrequirements in the U.S. and other countries, including legislation enacted in the European Union and other foreign jurisdictions that have placed greaterrestrictions on the use of lead, among other chemicals, in electronic products, which affects materials composition and semiconductor packaging. These laws arebecoming more stringent and may in the future cause us to incur material expenditures or otherwise cause financial harm.Export RegulationsWe market and sell our products both inside and outside the U.S. Certain products are subject to the Export Administration Regulations, administered by theDepartment of Commerce, Bureau of Industry Security, which require that we obtain an export license before we can export certain controlled products ortechnology to specified countries. Additionally, some of our products are subject to the International Traffic in Arms Regulations, which restrict the export ofinformation and material that may be used for military or intelligence applications by a foreign person. Similar controls exist in other jurisdictions. Failure tocomply with these laws could result in sanctions by the government, including substantial monetary penalties, denial of export privileges, and debarment fromgovernment contracts. We maintain an export compliance program staffed by dedicated 12Table of Contentspersonnel under which we screen export transactions against current lists of restricted exports, destinations, and end users with the objective of managing export-related decisions, transactions, and shipping logistics to ensure compliance with these requirements.EmployeesAs of October 2, 2015, we employ approximately 1,100 individuals worldwide. None of our domestic employees are represented by a collective bargainingagreement; however, certain of our employees working in our European operations are covered by collective bargaining agreements. We consider our relations withemployees to be good, and we have not experienced a work stoppage due to labor issues.History and Recent DevelopmentsWe were incorporated under the laws of the State of Delaware in March 2009. Our operations are conducted through our various subsidiaries, which areorganized and operated according to the laws of their respective jurisdictions of incorporation.M/A-COM Technology Solutions Inc., our primary operating subsidiary, which provides high-performance analog semiconductor solutions for use inwireless and wireline applications across the RF, microwave, and millimeterwave spectrum, was incorporated under the laws of the state of Delaware on July 16,2008. M/ACOM Technology Solutions (Cork) Limited, our primary foreign operating subsidiary, was incorporated under the laws of Ireland on November 18,2008. In September 2008, Cobham acquired certain assets from a third party, including the RF and microwave component and subsystem design and businessoperations that would ultimately become the operations of M/A-COM Technology Solutions Inc. and M/ACOM Technology Solutions (Cork) Limited. Theheritage of some of these business operations dates back over 60 years to the founding of Microwave Associates, Inc. and the M/A-COM brand date back over 30years.On March 30, 2009, we acquired 100% of the outstanding stock of M/A-COM Technology Solutions Inc., M/ACOM Technology Solutions (Cork) Limitedand the related M/A-COM brand from Cobham for $22.1 million in cash net of purchase price adjustments, the issuance of $35.0 million in short- and long-termdebt payable to the seller, and contingent consideration of approximately $30.0 million based on our achievement of revenue targets in each of the 12-monthperiods ended September 30, 2010, 2011 and 2012.On December 18, 2013, we acquired Mindspeed Technologies, Inc. (Mindspeed), a supplier of semiconductor solutions for communications infrastructureapplications (Mindspeed Acquisition). We acquired Mindspeed to further its expansion into high- performance analog products. We funded the MindspeedAcquisition through the use of available cash and borrowings under our revolving credit facility.In February 2014, subsequent to closing the Mindspeed Acquisition, we divested the wireless business of Mindspeed. The operations of the wireless businessare included in discontinued operations.In May 2014, we divested the communications processor equipment (CPE) product line we acquired as part of the Mindspeed acquisition. The operations ofthe CPE product line are included in the results of continuing operations through the date of the sale.On February 13, 2014, we completed the acquisition of Nitronex, LLC (Nitronex) (the Nitronex Acquisition). Nitronex designs, develops, manufactures, andmarkets GaN semiconductors and holds an exclusive license to fundamental GaN patents in the RF field of use. We funded the Nitronex Acquisition through theuse of available cash and borrowings under our revolving credit facility.We acquired Nitronex from a party under common control. As a result, we have accounted for the Nitronex Acquisition as a pooling of interest from the dateof acquisition by the common control party in June 2012. The 13Table of Contentsoriginal acquisition of Nitronex by the common control party was accounted for as a purchase. Our financial statements have been retroactively combined toinclude the results of operations of Nitronex from June 2012.In December 2014, we completed the acquisition of BinOptics, a leading merchant provider of InP lasers for data centers, mobile backhaul, silicon photonicsand access networks. This acquisition has broadened our position in the optical components market, which we believe will continue to be an important growthdriver in future periods. We funded the BinOptics acquisition through the use of available cash and borrowings under our revolving credit facility.In August 2015, we divested our Automotive business to Autoliv based on our belief that the business was no longer accretive to our operating model andwas no longer consistent with our long-term strategic vision from a growth and profitability perspective. We believe divesting our Automotive business will help usto realize our potential as a high-performance analog semiconductor company and focus our efforts on growing our retained core businesses.We expect that our optical and laser businesses will continue to perform and contribute to our consolidated earnings and cashflows with our pre-divestmentexpectations.Additionally, our operating margins related to the Automotive business were no longer accretive to our operating model which was a driver in our decision todivest the Automotive business.We intend to continue to pursue acquisitions of technologies, design teams, products, and companies that complement our strengths and help us execute ourstrategies. Our acquisition strategy is designed to accelerate our revenue growth, expand our technology portfolio, grow our addressable market, and createshareholder value. We believe our management team has a proven track record in identifying, acquiring, and successfully integrating companies and technologiesin the high-performance analog semiconductor industry.Available InformationWe maintain a website at www.macom.com, including an investors section at which we routinely post important information, such as webcasts of quarterlyearnings calls and other investor events in which we participate or host, and any related materials. You may access our annual reports on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as other reports relating to us that are filed with or furnished to theSEC, free of charge in the investors section of our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.The public may also read and copy materials we file with the SEC at the SEC’s Public Reference Room, which is located at 100 F Street, NE, Room 1580,Washington, DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC alsomaintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC atwww.sec.gov. The contents of the websites mentioned above are not incorporated into and should not be considered a part of this report. 14Table of ContentsITEM1A. RISK FACTORSOur business involves a high degree of risk. You should carefully consider the following risks and other information in this Annual Report in evaluating theCompany and its common stock. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. The risksdescribed below are not the only ones facing us. Additional risks not presently known to us or that we currently consider immaterial also may adversely affect ourCompany.Risks Relating to Our BusinessOur revenue growth is substantially dependent on our successful development and release of new products.Maintaining or growing our revenue will depend on our ability to timely develop new products for existing and new markets that meet customers’performance, reliability and price expectations. The development of new products is a highly complex process, and we have in the past and may in the futureexperience delays and failures in completing the development and introduction of new products. Our successful product development depends on a number offactors, including the following: • the accurate prediction of market requirements, changes in technology and evolving standards; • the availability of qualified product designers and process technologies needed to solve difficult design challenges in a cost-effective, reliable manner; • our ability to design products that meet customers’ cost, size and performance requirements; • our ability to manufacture new products according to customer needs with acceptable manufacturing yields; • our ability to offer new products at competitive prices; • the acceptance by customers of our new product designs; • the identification of and entry into new markets for our products; • the acceptance of our customers’ products by the market and the lifecycle of such products; • our ability to deliver products in a timely manner within our customers’ product planning and deployment cycle; and • our ability to maintain and increase our level of product content in our customers’ systems.A new product design effort may last 12 to 18 months or longer, and requires significant investment in engineering hours and materials, as well as sales andmarketing expenses, which may not be recouped if the product launch is unsuccessful. We may not be able to design and introduce new products in a timely orcost-efficient manner, and our new products may fail to meet the requirements of the market or our customers, or may be adopted by customers more slowly thanwe expect. In that case, we may not reach our expected level of production orders and may lose market share, which could adversely affect our ability to sustain ourrevenue growth or maintain our current revenue levels.Various factors may reduce our gross margin, which could negatively affect our business, financial condition and results of operations.If we are unable to utilize our design, fabrication, assembly and test facilities at a high level, the significant fixed costs associated with these facilities maynot be fully absorbed, resulting in higher average unit costs and lower gross margin. Our various products have different gross margins. Increased sales of lower-margin products, such as certain of our products targeted at consumer markets, in a given period relative to sales of higher-margin products such as our opticalproducts, may cause us to report lower overall gross margin. We have 15Table of Contentsexperienced periods where our gross margin declined due to, among other things, reduced factory utilization resulting from reduced customer demand, reducedselling prices and a change in product mix towards lower-margin products. Future market conditions may adversely affect our revenue and utilization rates andconsequently our future gross margin, and this, in turn, could have an adverse impact on our business, financial condition and results of operations. In addition,increased raw material costs, changes in manufacturing yields, more complex engineering requirements and certain other factors may lead to lower margins for usin the future. As a result of these or other factors, we may be unable to maintain or increase our gross margin in future periods and our gross margin may fluctuatefrom period to period.Our operating results may fluctuate significantly from period to period. We may not meet investors’ quarterly or annual financial expectations and, as a result,our stock price may decline.Our quarterly and annual operating results and related expectations may vary significantly in the future based upon a number of factors, many of which arebeyond our control. Factors that could cause operating results and related expectations to fluctuate include: • the general economic growth or decline in the U.S. or foreign markets; • the reduction or cancellation of orders by customers, whether as a result of a loss of market share by us or our customers, changes in the design ofcustomers’ products or slowing demand for our products or customers’ products; • the amount of new customer orders we book and ship in any particular fiscal quarter, which accounts for a significant amount of our net revenue in anyparticular quarter, and which can often be weighted toward the latter part of each fiscal quarter, making the timing of recognition of the associatedrevenue difficult to forecast and susceptible to slippage between quarters; • the relative linearity of our shipments within any particular fiscal quarter, in that a less linear shipment pattern within a given fiscal quarter tends toresult in lower gross margin in that quarter, and a shipment pattern weighted toward the latter part of a fiscal quarter tends to reduce our cash flowsfrom operations in that quarter, as collections of related receivables do not occur until later fiscal periods; • the gain or loss of a key customer or significant changes in the financial condition of one or more key customers; • the fluctuations in manufacturing output, yields, capacity levels, quality control or other potential problems or delays we or our subcontractors mayexperience in the fabrication, assembly, testing or delivery of our products; • the fluctuations in demand relating to the A&D market due to changes in government programs, budgets or procurement; • the market acceptance of our products and particularly the timing and success of new product and technology introductions by us, customers orcompetitors; • the amount, timing, and relative success of our investments in research and development, which impacts our ability to develop, introduce and marketnew products and solutions on a timely basis; • the period-to-period changes in the mix of products we sell, which can result in lower gross margin; • the availability, quality and cost of semiconductor wafers and other raw materials, equipment, components and internal or outsourced manufacturing,packaging and test capacity, particularly where we have only one qualified source of supply; • the effects of seasonal and other changes in customer purchasing cycles and component inventory levels; • the effects of competitive pricing pressures, including decreases in average selling prices of our products; 16Table of Contents • the effects of impairment charges associated with intangible assets, including goodwill and acquisition-related intangible assets; • the loss of key personnel or the shortage of available skilled workers; • the effects of factors that could cause our reported domestic and foreign income taxes and income tax rate to increase in future periods, such as limitson our ability to utilize net operating losses or tax credits and the geographic distribution of our income, which may change from period to period; and • the effects of war, natural disasters, acts of terrorism, macroeconomic uncertainty or decline or geopolitical unrest.The foregoing factors are difficult to forecast, and these, as well as other factors, could materially and adversely affect our quarterly and annual operatingresults and related expectations for future periods. If our operating results in any period do not meet our publicly stated guidance or the expectations of investors orsecurities analysts, our stock price may decline. Similarly, any publicly stated guidance we provide in the future may fail to meet the expectations of investors orsecurities analysts and our stock price may decline as a result.If our primary markets decline or fail to grow, our revenue and profitability may suffer.Our future growth depends to a significant extent on the continued growth in usage of advanced electronic systems in our primary markets: Networks, A&Dand Multi-market. The rate and extent to which these markets grow, if at all, is uncertain. These markets may fail to grow or decline for many reasons, includinginsufficient consumer demand, lack of access to capital, sequestration or other changes in the U.S. defense budget and procurement processes, changes in exportcontrols or other regulatory environments, macro-economic factors and changes in network specifications. If demand for electronic systems that incorporates ourproducts declines, fails to grow, or grows more slowly than we anticipate, purchases of our products may be reduced, which may adversely affect our business,financial condition and results of operations. In particular, we believe that the rollout of fiber-to-the-home network technology and other new network technologydevelopments in China, Japan and certain other geographies will be an important factor in our future growth. If any such expected rollout fails to occur, occursmore slowly than we expect or does not result in the amount or type of new business we anticipate, purchases of our products intended to address the affectedmarkets may be reduced or not occur, which may materially and adversely affect our business, financial condition, results of operations and prospects.We typically depend on orders from a limited number of customers for a significant percentage of our revenue.In the fiscal year ended October 2, 2015, sales to two of our customers accounted for 10% or more of our revenue and sales to our top 10 direct anddistribution customers accounted for an aggregate of 57% of our revenue. While the composition of our top 10 customers varies from year to year, we expect thatsales to a limited number of customers will continue to account for a significant percentage of our revenue for the foreseeable future. The purchasing arrangementswith our customers are typically conducted on a purchase order basis that does not require our customers to purchase any minimum amount of our products over aperiod of time. As a result, it is possible that any of our major customers could terminate their purchasing arrangements with us or significantly reduce or delay theamount of our products that they order, purchase products from our competitors or develop their own products internally. The loss of, or a reduction in, orders fromany major customer may cause a decline in revenue and adversely affect our results of operations.Our investment in research and development may not be successful, which may impact our profitability.The semiconductor industry requires substantial investment in research and development in order to develop and bring to market new and enhancedtechnologies and products. Research and development expenses were $82.2 million for the fiscal year ended October 2, 2015. In each of the last three fiscal years,we invested in research and development as part of our strategy toward the development of innovative products and solutions to 17Table of Contentsfuel our growth and profitability. We cannot assure you if, or when, the products and solutions where we have focused our research and development expenditureswill become commercially successful. In addition, we may not have sufficient resources to maintain the level of investment in research and development requiredto remain competitive or succeed in our strategy. Our efforts to develop new and improved process technologies for use in our products require substantialexpenditures that may not generate any return on investment, may take longer than we anticipate to generate a return or may generate a return on investment that isinadequate. In July 2013, we announced that we had licensed 0.5, 0.25 and 0.15 micron GaN process technology from Global Communications Semiconductors,LLC (GCS) and would be installing such process technology to our Lowell, Massachusetts manufacturing facility. This installation effort is expected to be a multi-year process and to involve tens of millions of dollars of investment in capital equipment, license fees and other related costs and expenses. We have in the past andmay in the future experience unexpected difficulties, expenses, or delays in installing and qualifying our GaN technology, and ultimately, may not be successful inour efforts, may not realize the competitive advantage we anticipate from the license and porting effort, and may not realize customer demand for the GaNtechnology that meets our expectations following the installation effort, any of which could lead to reduced revenues and gross margin or otherwise harm ourbusiness. Similarly, following the Nitronex Acquisition, we announced a number of strategic plans and positive expectations concerning the future cost structure,manufacturability, opportunity for strategic partnerships and licensing programs, market applicability and potential positive impact on our market share of anothertype of GaN technology called GaN-on-Silicon, which is a focus of the Nitronex business. We also have undertaken significant research and development effortsaimed at targeting emerging market segments where we see potential for growth including the wireless base station, data center and radar tile markets. We have inthe past and may in the future experience unexpected difficulties, expenses or delays in driving the performance, qualification, licensing arrangements, scalemanufacturing, decreased manufacturing cost structure, productization or customer adoption of any of the new products or process technology types that we aretargeting. We may not be successful in our efforts or may not realize the competitive advantage or revenues or profits we anticipate from this technology, any ofwhich may lead to higher research and development expense, lower than expected revenues, gross margin and reduce profitability or may otherwise harm ourbusiness or reduce the price of our common stock.We may incur significant risk and expense in attempting to win new business, and such efforts may never generate revenue.To obtain new business, we often need to win a competitive selection process to develop semiconductors for use in our customers’ systems, known in theindustry as a “design win.” These competitive selection processes can be lengthy and can require us to incur significant and unreimbursed design and developmentexpenditures and dedicate scarce engineering resources in pursuit of a single customer opportunity. We may not win the competitive selection process or may nevergenerate any revenue despite incurring significant design and development expenditures and selling, general and administrative expenses. Failure to obtain a designwin may prevent us from supplying components for an entire generation of a customer’s system. This can result in lost or foregone revenue and could weaken ourposition in future competitive selection processes.Even when we achieve a design win, success is not assured. Customer qualification and design cycles can be lengthy, and it may take a year or morefollowing a successful design win and product qualification for one of our products to be purchased in volume by the customer. We may experience difficultiesmanufacturing the part in volume, such as low yields, supply chain delays or shortages, or quality issues. Further, while the customer has successfully qualified ourpart for use in its system, it may not have qualified all of the other components being sourced for its system, or qualified its system as a whole with its endcustomers. Any difficulties our customer may experience in completing those qualifications may delay or prevent us from translating the design win into revenue.These risks can be particularly acute in our A&D market, where we may spend material amounts and commit substantial design engineer resources to productdevelopment work in support of an OEM customer’s attempt to win business tied to a government contract award, but realize no related revenue or less thanexpected revenue from our investment due to failure of the OEM to win the business, government program cancellation, federal budget limitations, or otherwise.Any of these events, or any cancellation of a customer’s program or 18Table of Contentsfailure of our customer to successfully market its own product after our design win could materially and adversely affect our business, financial condition andresults of operations, as we may have incurred significant expense and generated no revenue.We are subject to order and shipment uncertainties. Our profitability will decline if we fail to accurately forecast customer demand when managing inventory.We generally sell our products on the basis of purchase orders rather than long-term purchase commitments from our customers. Our customers can typicallycancel purchase orders or defer product shipments for some period without incurring liability to us. We typically plan production and inventory levels based oninternal forecasts of customer demand, which can be highly unpredictable and can fluctuate substantially, leading to excess inventory write-downs, and resultingnegative impacts on gross margin and net income. We have limited visibility into our customers’ inventories, future customer demand, and the product mix that ourcustomers will require, which could adversely affect our production forecasts and operating margins. The difficulty in predicting demand may be compoundedwhen we sell to OEMs indirectly through distributors or contract manufacturers, or both, as our forecasts of demand are then based on estimates provided bymultiple parties. In a number of markets we serve, large dollar value customer orders scheduled for delivery in the current fiscal quarter may be canceled orrescheduled by the customer for delivery in a future fiscal quarter on short notice, which may cause our reported revenue to vary materially from our priorexpectations. In addition, the rapid pace of innovation in our industry could render significant portions of our inventory obsolete. If we overestimate our customers’requirements, we may have excess inventory, which could lead to obsolete inventory and unexpected costs. Further, if we build inventory specific to non-recurringengineering (NRE) arrangements that we may enter into with our customers from time to time, and then fail to achieve one or more required milestones inconnection with such NRE arrangements, we may have excess, non-qualified or non-conforming customer specific inventory, which could lead to unsellableinventory and unexpected costs. Conversely, if we underestimate our customers’ requirements, we may have inadequate inventory, which could lead to foregonerevenue opportunities, loss of potential market share and damage to customer relationships caused by product deliveries not made on a timely basis and disruptingour customers’ production schedules. Some of our larger customers also require us to build and maintain minimum inventories and keep them available forpurchase at specified locations based on non-binding demand estimates that are subject to change, which exposes us to increased inventory risk and makes it moredifficult to manage our working capital. If demand from such customers decreases, we may be left with excess or obsolete inventory that we are unable to sell. Inresponse to anticipated long lead times to obtain inventory and materials from outside suppliers and foundries, we periodically order materials and build a stock offinished goods inventory in advance of customer demand. This advance ordering of raw material and building of finished goods inventory has in the past and mayin the future result in excess inventory levels or unanticipated inventory write-downs if expected orders fail to materialize, or other factors make our products lesssaleable. In addition, any significant future cancellation or deferral of product orders could adversely affect our revenue and margins, increase inventory write-downs due to obsolete inventory, or adversely affect our operating results and stock price.The average selling prices of our products may decrease over time, which could have a material adverse effect on our revenue and gross margin.It is common in our industry for the average selling price of a given product to decrease over time as production volumes increase, competing products aredeveloped, technology, industry standards and customer platforms evolve, or new technologies featuring higher performance or lower cost emerge. To combat thenegative effects that erosion of average selling prices have had in the past, and may have in the future, on our revenue and gross margin, we attempt to activelymanage the prices of our existing products and introduce new process technologies and products in the market that exhibit higher performance, new features thatare in demand, or lower manufacturing costs. Despite this strategy, we may experience price erosion in select product platforms or generally in future periods.Failure to maintain our current prices or to successfully execute on our new product development strategy will cause our revenue and gross margin to decline,which could decrease the value of your investment in our common stock. 19Table of ContentsWe face intense competition in our industry, and our inability to compete successfully could negatively affect our operating results.The semiconductor industry is highly competitive. While we compete with a wide variety of companies, we compete with ADI across most of our primarymarkets. Our other significant competitors include, among others, Avago Technologies Limited, Cobham, Microsemi, Qorvo and Skyworks.We believe future competition could also come from companies developing new alternative technologies, component suppliers based in countries with lowerproduction costs and IC manufacturers achieving higher levels of integration that exceed the functionality offered by our products. Our customers and supplierscould also develop products that compete with or replace our products. A decision by any of our large customers to design and manufacture ICs internally couldhave an adverse effect on our operating results. Increased competition could mean lower prices for our products, reduced demand for our products, and acorresponding reduction in our ability to recover development, engineering and manufacturing costs.Many of our existing and potential competitors have entrenched market positions, historical affiliations with original equipment manufacturers, considerableinternal manufacturing capacity, established intellectual property rights, and substantial technological capabilities. Many of them may also have greater financial,technical, manufacturing or marketing resources than we do. Prospective customers may decide not to buy from us due to concerns about our relative size, financialstability or other factors. Our failure to successfully compete could result in lower revenue, decreased profitability and a lower stock price.We operate in the semiconductor industry, which is cyclical and subject to significant downturns.The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, price erosion, product obsolescence, evolvingstandards, short product lifecycles and significant fluctuations in supply and demand. The industry has historically experienced significant fluctuations in demandand product obsolescence, resulting in product overcapacity, high inventory levels and accelerated erosion of average selling prices. Downturns in many sectors ofthe electronic systems industry have in the past contributed to extended periods of weak demand for semiconductor products. We have experienced adverse effectson our profitability and cash flows during such downturns in the past, and our business may be similarly harmed by future downturns, particularly if we are unableto effectively respond to reduced demand in a particular market.We expect to make future acquisitions, dispositions and investments, which involve numerous risks.We have an active corporate development program and routinely evaluate potential acquisitions, investments and strategic alliances involvingcomplementary technologies, design teams, products, and companies. We also periodically evaluate the merits of a potential divestment of one or more of ourexisting business lines. We expect to pursue such transactions if appropriate opportunities arise. However, we may not be able to identify suitable transactions inthe future, or if we do identify such transactions, we may not be able to complete them on commercially acceptable terms, or at all. We also face intensecompetition for acquisitions from other acquirers in our industry. These competing acquirers may have significantly greater financial and other resources than us,which may prevent us from successfully pursuing a transaction. In the event we pursue acquisitions, we will face numerous risks including: • difficulties in integrating the personnel, culture, operations, technology or products and service offerings of the acquired company; • diversion of management’s attention from normal daily operations of our business; • difficulties in entering markets where competitors have stronger market positions; • difficulties in improving and integrating the financial reporting capabilities and operating systems of any acquired operations, particularly foreign andformerly private operations, as needed to maintain effective internal control over financial reporting and disclosure controls, and procedures; 20Table of Contents • loss of any key personnel of the acquired company as well as their know-how, relationships and expertise, which is common following an acquisition; • maintaining customer, supplier or other favorable business relationships of acquired operations; • generating insufficient revenue from completed acquisitions to offset increased expenses associated with any abandoned or completed acquisitions; • acquiring material or unknown leasehold, environmental, regulatory, infringement, contractual or other liabilities associated with any acquiredoperations; • litigation frequently associated with merger and acquisition transactions; and • increasing expense associated with amortization or depreciation of intangible and tangible assets we acquire.Our past acquisitions required or continue to require significant management time and attention relating to the transaction and integration activities. If we failto properly integrate these acquired companies with ours, we may not receive the expected benefits of the acquisitions. Even if a proposed acquisition issuccessfully realized and integrated, we may not receive the expected benefits of the transaction.Past transactions, whether completed or abandoned by us, have resulted, and in the future may result, in significant costs, expenses, liabilities and charges toearnings. The accounting treatment for any acquisition may result in significant amortizable intangible assets which, when amortized, will negatively affect ourconsolidated results of operations. The accounting treatment for any acquisition may result in significant goodwill, which, if impaired, will negatively affect ourconsolidated results of operations. Furthermore, we may incur debt or issue equity securities to pay for acquisitions. The incurrence of debt could limit ouroperating flexibility and be detrimental to our profitability, and the issuance of equity securities would be dilutive to our existing stockholders. Any or all of theabove factors may differ from the investment community’s expectations in a given quarter, which could negatively affect our stock price. In addition, as a result ofthe foregoing, we may not be able to successfully execute acquisitions in the future to the same extent as we have the in the past, if at all.In the event we make future investments, the investments may decline in value or fail to deliver any strategic benefits we anticipate from them, and we maylose all or part of our investment. For example, in May 2015 we received notice that a private company in which we held a minority equity investment was sold to athird party, and that the proceeds we would receive at closing would be less than the carrying value previously reported in our consolidated financial statements.We wrote down the investment to the estimated net proceeds we would receive from the sale, and recorded a charge of $3.5 million to other income (expense)resulting in an increase of our previously reported net loss per diluted share for the three and six months ended April 3, 2015, respectively. In the event weundertake divestments, such as the recent divestment of our Automotive business in August 2015, we may suffer from associated management distraction, damagedcustomer relationships, failure to realize the perceived strategic, or financial merits of the divestment, or we may incur material indemnity liabilities to thepurchaser. Further, the investments may incur unanticipated or larger than anticipated liabilities for patent and trademark infringement claims, violations of laws,commercial disputes, taxes and other known and unknown types of liabilities. There may be liabilities that we underestimate or do not discover in the course ofperforming our due diligence investigation of the investment. We may not have recourse under the transaction documents to recover any damages relating topotential liabilities.We may incur liabilities for claims of intellectual property infringement relating to our products.The semiconductor industry is generally subject to frequent litigation regarding patents and other intellectual property rights. Other companies in the industryhave numerous patents that protect their intellectual property rights in these areas and technology is frequently licensed. In the past, we have been, and may in the 21Table of Contentsfuture be, subject to claims that we have breached infringed or misappropriated patent, license or other intellectual property rights. Our customers may assert claimsagainst us for indemnification if they receive claims alleging that their or our products infringe others’ intellectual property rights, and have in the past and may inthe future choose not to purchase our products based on their concerns over such a pending claim. In the event of an adverse result of any intellectual propertyrights litigation, we could be required to incur significant costs to defend or settle such litigation, pay substantial damages for infringement, expend significantresources to develop non-infringing technology, incur material liability for royalty payments or fees to obtain licenses to the technology covered by the litigation orbe subjected to an injunction, which could prevent us from selling our products, and materially and adversely affect our revenue and results of operations.Negotiated settlements resolving such claims may require us to pay substantial sums, as was the case in September 2013 when we paid $7.25 million in settlementof a suit alleging intellectual property misappropriation. We cannot be sure that we will be successful in any such non-infringing development or that any suchlicense would be available on commercially reasonable terms, if at all. Any claims relating to the infringement of third-party proprietary rights, even if notmeritorious, could result in costly litigation, lost sales or damaged customer relationships and diversion of management’s attention and resources.Many of our products currently incorporate technology licensed or acquired from third parties and we expect our products in the future to also requiretechnology from third parties. If the licenses to such technology that we currently hold become unavailable or the terms on which they are available becomecommercially unreasonable, or if we are unable to acquire or license necessary technology for our products in the future, our business could be adverselyaffected.We sell products in markets that are characterized by rapid technological changes, evolving industry standards, frequent new product introductions andincreasing levels of integration. Our ability to keep pace with this market at times depends on our ability to obtain technology from third parties on commerciallyreasonable terms to allow our products to remain competitive. If licenses to such technology are not available on commercially reasonable terms and conditions orat all, and we cannot otherwise acquire or integrate such technology, our products or our customers’ products could become unmarketable or obsolete, and wecould lose market share. In addition, disputes with third party licensors over required payments, scope of licensed rights and compliance with contractual terms arecommon in our industry, and we have in the past and may in the future be subjected to disputes over the terms of such licenses. Such disputes may require us toincur significant costs defending our license rights, divert management’s attention or result in our inability to sell or develop certain products. In such instances, wecould also incur substantial unanticipated costs or scheduling delays to develop substitute technology to deliver competitive products, damaged customer andvendor relationships, indemnification liabilities, and declining revenues and profitability. Such events could have a material adverse effect on our financialcondition and results of operations and the value of an investment in our common stock.We depend on third parties for products and services required for our business, which may limit our ability to meet customer demand, assure product qualityand control costs.We purchase numerous raw materials, such as ceramic packages, precious metals, semiconductor wafers and ICs, from a limited number of externalsuppliers. We also currently use several external manufacturing suppliers for assembly and testing of our products, and in some cases for fully-outsourced turnkeymanufacturing of our products. We currently expect to increase our use of outsourced manufacturing in the future as a strategy. The ability and willingness of ourexternal suppliers to perform is largely outside of our control. The use of external suppliers involves a number of risks, including the possibility of materialdisruptions in the supply of key components, the lack of control over delivery schedules, capacity constraints, manufacturing yields, quality and fabrication costsand misappropriation of our intellectual property. If these vendors’ processes vary in reliability or quality, they could negatively affect our products and, therefore,our customer relations and results of operations. We generally purchase raw materials on a purchase order basis and we do not have significant long-term supplycommitments from our vendors. Where we do have long-term supply commitments, they may result in our being obligated to purchase more material than we need,materially and negatively impacting our 22Table of Contentsoperating results. In terms of relative bargaining power, many of our suppliers are larger than we are, with greater resources, and many of their other customers arelarger and have greater resources than we do. If these vendors experience shortages or fail to accurately predict customer demand, they may have insufficientcapacity to meet our demand, creating a capacity constraint on our business. They may also choose to supply others in preference to us in times of capacityconstraint or otherwise, particularly where the other customers purchase in higher volume. Third-party supplier capacity constraints have in the past and may in thefuture prevent us from supplying customer demand that we otherwise could have fulfilled at attractive prices. If we have a firm commitment to supply our customerbut are unable to do so based on inability or unwillingness of one of our suppliers to provide related materials or services, we may be liable for resulting damagesand expense incurred by our customer.Based on superior performance features, cost parameters or other factors, we utilize sole source suppliers for certain semiconductor packages and othermaterials, and it is common for one of our outside semiconductor foundries to be our sole supplier for the particular semiconductor fabrication process technologiesmanufactured at that supplier’s facility. Such supplier concentrations involve the risk of a potential future business interruption if the supplier becomes unable orunwilling to supply us at any point. While in some cases alternate suppliers may exist, because there are limited numbers of third-party wafer suppliers that use theprocess technologies we select for our products and that have sufficient capacity to meet our needs, it may not be possible or may be expensive to find analternative source of supply. Even if we are able to find an alternative source, moving production to an alternative supplier requires an extensive qualification or re-qualification process that could prevent or delay product shipments, or disrupt customer’s production schedules, which could harm our business. In addition, someof our external foundry suppliers compete against us in the market in addition to being our supplier. The loss of a supplier can also significantly harm our businessand operating results. A supplier may discontinue supplying us if its business is not sufficiently profitable, for competitive reasons or otherwise. We have in thepast and may in the future have our supply relationship discontinued by an external foundry, causing us to experience supply chain disruption, customerdissatisfaction, loss of business and increased cost.If we lose key personnel or fail to attract and retain key personnel, we may be unable to pursue business opportunities or develop our products.We believe our continued ability to recruit, hire, retain and motivate highly-skilled engineering, operations, sales, administrative and managerial personnel iskey to our future success. Competition for these employees is intense, particularly with respect to qualified engineers. Our failure to retain our present employeesand hire additional qualified personnel in a timely manner and on reasonable terms could harm our competitiveness and results of operations. In addition, from timeto time, we may recruit and hire employees from our competitors, customers, suppliers and distributors, which could result in liability to us, and has in the past andcould in the future, damage our business relationship with these parties. For example, in June 2015 NXP B.V. filed a lawsuit against us alleging, among otherthings, that by hiring away certain of its employees we breached a non-disclosure agreement we had signed as part of our participation in a private equity-backedconsortium in the early stages of bidding on a proposed divestiture of NXP’s RF power amplifier business. The lawsuit seeks, among other things, an injunctionbarring us from hiring additional NXP employees and limiting the scope of our employment of persons we have already hired. None of our senior managementteam is contractually bound to remain with us for a specified period, and we generally do not maintain key person life insurance covering our senior management.The loss of any member of our senior management team could strengthen a competitor or harm our ability to implement our business strategy.Sources for certain components and materials are limited, which could result in interruptions, delays or reductions in product shipments.Our industry may be affected from time to time by limited supplies of certain key components and materials. We have in the past and may in the future,experience delays or reductions in supply shipments, which could reduce our revenue and profitability. If key components or materials are unavailable, our costscould increase and our revenue could decline. 23Table of ContentsIn particular, our manufacturing headquarters, design facilities, assembly and test facilities, and supply chain, and those of our contract manufacturers, aresubject to risk of catastrophic loss due to fire, flood, or other natural or man-made disasters. The majority of our semiconductor products are fabricated in ourLowell, Massachusetts headquarters and our facility in Ithaca, New York. The majority of the internal and outsourced assembly and test facilities we utilize arelocated in the Pacific Rim, and some of our internal design, assembly and test facilities are located in California regions with above average seismic and severeweather activity. In addition, our research and development personnel are concentrated in a few locations, with the expertise of the personnel at each such locationgenerally focused on one or two specific areas. Any catastrophic loss or significant damage to any of these facilities would likely disrupt our operations, delayproduction, shipments and revenue, and result in significant expenses to repair or replace the facility, and in some instances, could significantly curtail our researchand development efforts in a particular product area or primary market, which could have a material adverse effect on our operations. In particular, any catastrophicloss at our headquarters or our Ithaca, New York facilities could materially and adversely affect our business and financial results, revenue and profitability.Our failure to continue to keep pace with new or improved semiconductor process technologies could impair our competitive position.Semiconductor manufacturers constantly seek to develop new and improved semiconductor process technologies. Our future success depends in part uponour ability to continue to gain access to these semiconductor process technologies, internally or externally, in order to adapt to emerging customer requirements andcompetitive market conditions. We may be unable to internally develop such technologies successfully, and may be unable to gain access to them from merchantfoundries or other sources on commercially reasonable terms, or at all. If we fail to remain abreast of new and improved semiconductor process technologies asthey emerge, we may lose market share and our revenue and gross margin may decline, which could adversely affect our operating results.Minor deviations in the manufacturing process can cause substantial manufacturing yield loss or even cause halts in production, which could have a materialadverse effect on our revenue and gross margin.Our products involve complexities in both their design and the semiconductor process technology employed in their fabrication. In many cases, the productsare also assembled in customized packages or feature high levels of integration. Our products must meet exacting customer specifications for quality, performanceand reliability.Our manufacturing yield, or the percentage of units of a given product in a given period that is usable relative to all such units produced, is a combination ofyields including wafer fabrication, assembly, and test yields. Due to the complexity of our products, we periodically experience difficulties in achieving acceptableyields as even minor deviations in the manufacturing process can cause substantial manufacturing yield loss halt production. Our customers may also test ourcomponents once they have been assembled into their products. The number of usable products that result from our production process can fluctuate as a result ofmany factors, including the following: • design errors; • defects in photomasks, used to print circuits on wafers; • minute impurities in materials used; • contamination of the manufacturing environment; • equipment failure or variations in the manufacturing processes; • losses from broken wafers or other human error; • defects in packaging; and • issues and errors in testing. 24Table of ContentsTypically, for a given level of sales, when our yields improve, our gross margin improves. When our yields decrease, our unit costs are typically higher, ourgross margin is lower and our profitability is adversely affected, any or all of which can harm our results of operations and lower our stock price.We depend on third-party sales representatives and distributors for a material portion of our revenues.We sell many of our products to customers through independent sales representatives and distributors, as well as through our direct sales force. We areunable to predict the extent to which our independent sales representatives and distributors will be successful in marketing and selling our products. Moreover,many of our independent sales representatives and distributors also market and sell competing products. Our relationships with our representatives and distributorstypically may be terminated by either party at any time, and do not require them to buy any of our products. Sales to distributors accounted for approximately20.7% of our revenue for the fiscal year ended October 2, 2015, and sales to our largest distributor, Richardson, represented 17.7% of our revenue in the sameperiod. If our distributors cease doing business with us or fail to successfully market and sell our products, our ability to sustain and grow our revenue could bematerially adversely affected.Our internal and external manufacturing, assembly and test model subjects us to various manufacturing and supply risks.We own and operate a semiconductor wafer processing and manufacturing facility at our headquarters in Lowell, Massachusetts, and operate asemiconductor wafer processing and manufacturing facility at our Ithaca, New York site. These facilities are also important internal design, assembly and testfacilities. We maintain other internal assembly and test operation facilities as well, including leased sites in Long Beach, California, Nashua, New Hampshire andHsinchu, Taiwan. We also use multiple external foundries for outsourced semiconductor wafer supply, as well as multiple domestic and Asian assembly and testsuppliers to assemble and test our products. A number of factors will affect the future success of these internal manufacturing facilities and outsourced supply andservice arrangements, including the following: • the level of demand for our products; • our ability to expand and contract our facilities and purchase commitments in a timely and cost-effective manner in response to changes in demand forour products; • our ability to generate revenue in amounts that cover the significant fixed costs of operating our facilities; • our ability to qualify our facilities for new products in a timely manner; • the availability of raw materials, including GaAs, SiGe and InP substrates and high purity source materials such as gallium, aluminum, arsenic, carbon,nitrite, indium and silicon; • our manufacturing cycle times and yields; • the political and economic risks associated with our reliance on outsourced Asian assembly and test suppliers; • the location of our facilities and those of our outsourced suppliers; • natural disasters impacting our facilities and those of our outsourced suppliers; • our ability to hire, train, manage and retain qualified production personnel; • our compliance with applicable environmental and other laws and regulations; and • our ability to avoid prolonged periods of downtime or high levels of scrap in our and our suppliers’ facilities for any reason.If we experience issues in any of the above areas, the effectiveness of our supply chain could be adversely affected, and could harm our results of operations. 25Table of ContentsWe may experience difficulties in managing any future growth.To successfully conduct business in a rapidly evolving market, we must effectively plan and manage any current and future growth. Our ability to do so willbe dependent on a number of factors, including the following: • maintaining access to sufficient manufacturing capacity to meet customer demands; • arranging for sufficient supply of key raw materials and services to avoid shortages or supply bottlenecks; • building out our administrative infrastructure at the proper pace to support any current and future sales growth while maintaining operatingefficiencies; • adhering to our high quality and process execution standards, particularly as we hire and train new employees and during periods of high volume; • managing the various components of our working capital effectively; • upgrading our operational and financial systems, procedures and controls, including improvement of our accounting and internal managementsystems; and • maintaining high levels of customer satisfaction.If we do not effectively manage any future growth, we may not be able to take advantage of attractive opportunities in the markets, our operations may beimpacted, and we may experience delays in delivering products to our customers or damaged customer relationships, and achieve lower than anticipated revenueand decreased profitability.We may incur higher than expected expense from, or not realize the expected benefits, of consolidation, outsourcing and restructuring initiatives designed toreduce costs and increase revenue across our operations.We have pursued in the past and may pursue in the future various restructuring initiatives designed to reduce costs and increase revenue across operations,including reductions in our number of manufacturing facilities, workforce reductions, establishing certain operations closer in location to our global customers andevaluating functions that may be more efficiently performed through outsourcing arrangements. These initiatives can be substantial in scope and disruptive to ouroperations, and they can involve large expenditures. In fiscal years 2015, 2014 and 2013, we incurred restructuring charges of $1.3 million, $14.8 million and $1.1million, respectively, consisting primarily of employee severance and related costs resulting from reductions in our workforce. Exiting a leased site may involvecontractual or negotiated exit payments with the landlord, temporary holding over at an increased lease rate, costs to perform restoration work required by the lease,or associated environmental liability, any of which may be material in amount. Consolidation of operations and outsourcing may involve substantial capitalexpenses and the transfer of manufacturing processes and personnel from one site to another, with resultant startup issues at the receiving site and the need for re-qualification of the transitioned operations with major customers and for ISO or other certifications. We may experience shortages of affected products, delays andhigher than expected expenses. Affected employees may be distracted by the transition or may seek other employment, which could cause our overall operationalefficiency to suffer. Any of these issues or our failure to realize the expected benefits of these initiatives could harm our results of operations and reduce the priceof our common stock.Our business may be harmed if systems manufacturers choose not to use components made of the compound semiconductor materials we utilize.Silicon semiconductor technologies are the dominant process technologies for the manufacture of ICs in high-volume, commercial markets, and theperformance of silicon ICs continues to improve. While we use silicon for some applications, we also often use compound semiconductor technologies such asGaAs, InP, SiGe or GaN to deliver reliable operation at higher power, higher frequency, or smaller form factor than a silicon 26Table of Contentssolution has historically allowed. While these compound semiconductor materials offer high-performance features, it is generally more difficult to design andmanufacture products with reliability and in volume using them. GaN and InP, in particular, are newer process technologies that do not have as extensive a trackrecord of reliable performance in the field as many of the competing process technologies. Compound semiconductor technology tends to be more expensive thansilicon technology due to its above-described challenges, and the generally lower volumes at which parts in those processes tend to be manufactured relative tosilicon parts for high-volume consumer applications.System designers in some markets may be reluctant to adopt our non-silicon products or may be likely to adopt silicon products in lieu of our products ifsilicon products meeting their demanding performance requirements are available, because of: • their unfamiliarity with designing systems using our products; • their concerns related to manufacturing costs and yields; • their unfamiliarity with our design and manufacturing processes; or • uncertainties about the relative cost effectiveness of our products compared to high-performance silicon components.We cannot be certain that additional systems manufacturers will design our compound semiconductor products into their systems or that the companies thathave utilized our products will continue to do so in the future. Improvements in the performance of available silicon process technologies and solutions could resultin a loss of market share on our part. If our products fail to achieve or maintain market acceptance for any of the above reasons, our results of operations will suffer.We are subject to risks from our international sales and operations.We have operations in Europe, Asia and Australia, and customers around the world. In addition, in November 2015, we entered into a definitive agreementto acquire FiBest, a Japan-based merchant market component supplier of optical sub assemblies. If completed, the FiBest acquisition is expected to significantlyincrease our overall scope of operations and employee base in Japan. As a result, we are subject to regulatory, geopolitical and other risks associated with doingbusiness outside the U.S. Global operations involve inherent risks, including currency controls, currency exchange rate fluctuations, tariffs, required import andexport licenses, associated delays and other related international trade restrictions and regulations. Further, there is a risk that language barriers, cultural differencesand other factors associated with our international operations may make them more difficult to manage effectively.The legal system in many of the regions where we conduct business can lack transparency in certain respects relative to that of the U.S. and can accord localgovernment authorities a higher degree of control and discretion over business than is customary in the U.S. This makes the process of obtaining necessaryregulatory approvals and maintaining compliance inherently more difficult and unpredictable. In addition, the protection accorded to proprietary technology andknow-how under these legal systems may not be as strong as in the U.S., and, as a result, we may lose valuable trade secrets and competitive advantages. The costof doing business in European jurisdictions can also be higher than in the U.S. due to exchange rates, local collective bargaining regimes, and local legalrequirements and norms regarding employee benefits and employer-employee relations, in particular. We are also subject to U.S. legal requirements related to ourforeign operations, including the Foreign Corrupt Practices Act.Sales to customers located outside the U.S. accounted for 63.6% of our revenue for the fiscal year ended October 2, 2015. We expect that revenue frominternational sales will continue to be a significant part of our total revenue. Because the majority of our foreign sales are denominated in U.S. dollars, our productsbecome less price-competitive in countries with currencies that are low or are declining in value against the U.S. dollar. Also, we cannot be sure that ourinternational customers will continue to accept orders denominated in U.S. dollars. If they do not, our reported revenue and earnings will become more directlysubject to foreign exchange 27Table of Contentsfluctuations. Some of our customer purchase orders and agreements are governed by foreign laws, which may differ significantly from U.S. laws. We may belimited in our ability to enforce our rights under such agreements and to collect amounts owed to us.The majority of our assembly, packaging and test vendors are located in Asia. We generally do business with our foreign assemblers in U.S. dollars. Ourmanufacturing costs could increase in countries with currencies that are increasing in value against the U.S. dollar. Also, our international manufacturing suppliersmay not continue to accept orders denominated in U.S. dollars. If they do not, our costs will become more directly subject to foreign exchange fluctuations. Fromtime to time we may attempt to hedge our exposure to foreign currency risk by buying currency contracts or otherwise, and any such efforts involve expense andassociated risk that the currencies involved may not behave as we expect, and we may lose money on such hedging strategies or not properly hedge our risk.In addition, if terrorist activity, armed conflict, civil, economic or military unrest, embargoes or other economic sanctions or political instability occurs in theU.S. or other locations, such events may disrupt our manufacturing, assembly, logistics, security and communications, and could also result in reduced demand forour products. We have in the past and, may again in the future, experience difficulties relating to employees traveling in and out of countries facing civil unrest orpolitical instability, and with obtaining travel visas for our employees. Major health pandemics could also adversely affect our business and our customer orderpatterns. We could also be affected if labor issues disrupt our transportation arrangements or those of our customers or suppliers. There can be no assurance that wecan mitigate all identified risks with reasonable effort. The occurrence of any of these events could have a material adverse effect on our operating results.If we fail to comply with export control regulations we could be subject to substantial fines or other sanctions, including loss of export privileges.Certain of our products are subject to the Export Administration Regulations, administered by the Department of Commerce, Bureau of Industry Security,which require that we obtain an export license before we can export products or technology to specified countries. Other products are subject to the InternationalTraffic in Arms Regulations, which restrict the export of information and material that may be used for military or intelligence applications by a foreign person.U.S. regulators have announced “export control reform” that has changed and is expected to change many of the rules applicable to us in this area in the future inways we do not yet fully understand, and we have experienced and will continue to experience challenges in complying with the new rules as they becomeeffective, resulting in difficulties or an inability to ship products to certain countries and customers.We are also subject to U.S. import regulations and the import and export regimes of other countries in which we operate. Failure to comply with these lawscould result in sanctions by the government, including substantial monetary penalties, denial of export privileges and debarment from government contracts. Exportand import regulations may create delays in the introduction of our products in international markets, or prevent the export or import of our products to certaincountries or customers altogether. Any change in export or import regulations or related legislation, shift in approach by regulators to the enforcement or scope ofexisting regulations, changes in the interpretation of existing regulations by regulators or change in the countries, persons or technologies targeted by suchregulations, could harm our business by resulting in decreased use of our products by, or our decreased ability to export or sell our products to, existing or potentialcustomers with international operations. In addition, our sale of our products to or through third-party distributors, resellers and sales representatives creates the riskthat any violation of these laws they may engage in may cause disruption in our markets or otherwise bring liability on us.Our business may be adversely affected if we experience product returns, product liability and defects claims.Our products are complex and frequently operate in high-performance, challenging environments. We may not be able to anticipate all of the possibleperformance or reliability problems that could arise with our products after they are released to the market. If such problems occur or become significant, we mayexperience reduced revenue and increased costs related to product recalls, inventory write-offs, warranty or damage claims, delays in, cancellations of, or returns ofproduct orders and other expenses. The many materials and vendors used in the 28Table of Contentsmanufacture of our products increase the risk that some defects may escape detection in our manufacturing process and subsequently affect our customers, even inthe case of long-standing product designs. Our use of newly-developed or less mature semiconductor process technologies, such as GaN and InP, which have a lessextensive track record of reliability in the field than other more mature process technologies, also increases the risk of performance and reliability problems. Thesematters have arisen in our operations from time to time in the past, have resulted in significant expense to us per occurrence, and will likely occur again in thefuture. The occurrence of defects could result in product returns and liability claims, reduced product shipments, the loss of customers, the loss of or delay inmarket acceptance of our products, harm to our reputation, diversion of management’s time and resources, lower revenue, higher expenses and reducedprofitability. Any warranty or other rights we may have against our suppliers for quality issues caused by them may be more limited than those our customers haveagainst us, based on our relative size, bargaining power, or otherwise. In addition, even if we ultimately prevail, such claims could result in costly litigation, divertmanagement’s time and resources and damage our customer relationships.We also face exposure to potential liability resulting from the fact that some of our customers integrate our products into consumer products such asautomobiles or mobile communication devices, which are then sold to consumers in the marketplace. We may be named in product liability claims even if there isno evidence that our products caused a loss. Product liability claims could result in significant expenses in connection with the defense of such claims and possibledamages. In addition, we may be required to participate in a recall if our products prove to be defective. Any product recall or product liability claim broughtagainst us, particularly in high-volume consumer markets, could have a material negative impact on our reputation, business, financial condition or results ofoperations.The outcome of litigation in which we are involved in is unpredictable and an adverse decision in any such matter could subject us to damage awards andlower the market price of our stock.From time to time we are a party to litigation matters such as those described in “Item 3—Legal Proceedings” below. These and any other future disputes,litigations, investigations, administrative proceedings or enforcement actions we may be involved in may divert financial and management resources that wouldotherwise be used to benefit our operations, result in negative publicity and harm our customer or supplier relationships. Although we intend to contest such mattersvigorously, we cannot assure you that their outcome will be favorable to us. An adverse resolution of any such matter in the future, including the results of anyamicable settlement, could subject us to material damage awards or settlement payments or otherwise materially harm our business.Our financial results may be adversely affected by increased tax rates and exposure to additional tax liabilities.Our effective tax rate is highly dependent upon the geographic composition of our worldwide earnings and tax regulations governing each region, each ofwhich can change from period to period. We are subject to income taxes in both the U.S. and various foreign jurisdictions, and significant judgment is required todetermine our worldwide tax liabilities. Our effective tax rate as well as the actual tax ultimately payable could be adversely affected by changes in the amount ofour earnings attributable to countries with differing statutory tax rates, changes in the valuation of our deferred tax assets, changes in tax laws or tax rates(particularly in the U.S. or Ireland), increases in non-deductible expenses, the availability of tax credits, material audit assessments, or repatriation of non-U.S.earnings, each of which could materially affect our profitability. Any significant increase in our effective tax rates could materially reduce our net income in futureperiods and decrease the value of your investment in our common stock.Changes in tax laws are introduced from time to time to reform U.S. taxation of international business activities. Depending on the final form of legislationenacted, if any, these consequences may be significant for us due to the large scale of our international business activities. If any of these proposals are enacted intolegislation, they could have material adverse consequences on the amount of tax we pay and, thereby, on our financial position and results of operations. 29Table of ContentsWe face risks associated with government contracting.Some of our revenue is derived from contracts with agencies of the U.S. government or subcontracts with its prime contractors. Under some of ourgovernment subcontracts, we are required to maintain secure facilities and to obtain security clearances for personnel involved in performance of the contract, incompliance with applicable federal standards. If we were unable to comply with these requirements, or if personnel critical to our performance of these contractswere to lose their security clearances, we might be unable to perform these contracts or compete for other projects of this nature, which could adversely affect ourrevenue.Our limited ability to protect our proprietary information and technology may adversely affect our ability to compete.Our future success and ability to compete is dependent in part upon our protection of our proprietary information and technology through patent filings andotherwise. We cannot be certain that any patents we apply for will be issued or that any claims allowed from pending applications will be of sufficient scope orstrength to provide meaningful protection or commercial advantage. Our competitors may also be able to design around our patents. The laws of some countries inwhich our products are or may be developed, manufactured, or sold, may not protect our products or intellectual property rights to the same extent as U.S. laws,increasing the possibility of piracy of our technology and products. Although we intend to vigorously defend our intellectual property rights, we may not be able toprevent misappropriation of our technology or may need to expend significant financial and other resources in defending our rights.In addition, we rely on trade secrets, technical know-how and other unpatented proprietary information relating to our product development andmanufacturing activities. We try to protect this information by entering into confidentiality agreements with employees and other parties. We cannot be sure thatthese agreements will be adequate and will not be breached, that we would have adequate remedies for any breach or that our trade secrets and proprietary know-how will not otherwise become known or independently discovered by others.Additionally, our competitors may independently develop technologies that are substantially equivalent or superior to our technology. Despite our efforts toprotect our proprietary rights, unauthorized parties may attempt to copy, or otherwise obtain or use our products or technology. Patent litigation is expensive, andour ability to enforce our patents and other intellectual property, is limited by our financial resources and is subject to general litigation risks. If we seek to enforceour rights, we may be subject to claims that the intellectual property rights are invalid, are otherwise not enforceable, or are licensed to the party against whom weassert a claim. In addition, our assertion of intellectual property rights could result in the other party seeking to assert alleged intellectual property rights of its ownagainst us, which is a frequent occurrence in such litigations.We may need to modify our activities or incur substantial costs to comply with environmental laws, and if we fail to comply with environmental laws we couldbe subject to substantial fines or be required to change our operations.We are subject to a variety of international, federal, state and local governmental regulations directed at preventing or mitigating climate change and otherenvironmental harms, as well as to the storage, discharge, handling, generation, disposal and labeling of toxic or other hazardous substances used to manufactureour products. If we fail to comply with these regulations, substantial fines could be imposed on us, and we could be required to suspend production, altermanufacturing processes, cease operations or remediate polluted land, air or groundwater, any of which could have a negative effect on our revenue, results ofoperations and business. Failure to comply with environmental regulations could subject us to civil or criminal sanctions and property damage or personal injuryclaims. Compliance with current or future environmental laws and regulations could restrict our ability to expand our facilities or build new facilities, or require usto acquire additional expensive equipment, modify our manufacturing processes, or incur other substantial expenses which could harm our business, financialcondition and results of operations. In addition, under some of these laws and regulations, we 30Table of Contentscould be held financially responsible for remedial measures if our properties or, those nearby are contaminated, even if we did not cause the contamination. Wehave incurred in the past and may in the future incur environmental liability based on the actions of prior owners, lessees or neighbors of sites we have leased ormay lease in the future, or sites we become associated with due to acquisitions. We cannot predict: • changes in environmental or health and safety laws or regulations; • the manner in which environmental or health and safety laws or regulations will be enforced, administered or interpreted; • our ability to enforce and collect under any indemnity agreements and insurance policies relating to environmental liabilities; or • the cost of compliance with future environmental or health and safety laws or regulations or the costs associated with any future environmental claims,including the cost of clean-up of currently unknown environmental conditions.In addition to the costs of complying with environmental, health and safety requirements, we may in the future incur costs defending against environmentallitigation brought by government agencies, lessors at sites we currently lease or have been associated with in the past and other private parties. We may bedefendants in lawsuits brought by parties in the future alleging environmental damage, personal injury or property damage. A significant judgment or fine leviedagainst us, or agreed settlement payment, could materially harm our business, financial condition and results of operations.Environmental regulations such as the WEEE and RoHS directives limit our flexibility and may require us to incur material expense.Various countries require companies selling a broad range of electrical equipment to conform to regulations such as the Waste Electrical and ElectronicEquipment (WEEE) and the European Directive 2002/95/Ec on Restriction of Hazardous Substances (RoHS). New environmental standards such as these couldrequire us to redesign our products in order to comply with the standards, require the development of compliance administration systems or otherwise limit ourflexibility in running our business or require us to incur substantial compliance costs. For example, RoHS requires that certain substances be removed from mostelectronic components. The WEEE directive makes producers of electrical and electronic equipment financially responsible for specified collection, recycling,treatment and disposal of past and future covered products. We have already invested significant resources into complying with these regimes, and furtherinvestments may be required. Alternative designs implemented in response to regulation may be more costly to produce, resulting in an adverse effect on our grossprofit margin. If we cannot develop compliant products in a timely fashion or properly administer our compliance programs, our revenue may also decline due tolower sales, which would adversely affect our operating results. Further, if we were found to be non-compliant with any rule or regulation, we could be subject tofines, penalties and/or restrictions imposed by government agencies that could adversely affect our operating results.Our term loan and revolving credit facility could result in outstanding debt with a claim to our assets that is senior to that of our stockholders, and may haveother adverse effects on our results of operations.As of October 2, 2015, we have a term loan outstanding of $345.6 million and a revolving credit facility with $130.0 million of available borrowing capacity.The facility is secured by a first priority lien on our assets and those of our domestic subsidiaries. The amount of our indebtedness could have importantconsequences, including the following: • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes maybe limited; • our ability to make distributions to our stockholders in a sale or liquidation until any balance on the line is repaid in full; 31Table of Contents • we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing businessand economic conditions; • our cash flow from operations will be allocated to the payment of the principal of, and interest on, any outstanding indebtedness; and • we cannot assure you that our business will generate sufficient cash flow from operations or other sources to enable us to meet our paymentobligations under the facility and to fund other liquidity needs.Our credit facility also contains certain restrictive covenants that may limit or eliminate our ability to, among other things, incur additional debt, sell, lease ortransfer our assets, pay dividends, make investments and loans, make acquisitions, guarantee debt or obligations, create liens, enter into transactions with ouraffiliates, enter into new lines of business and enter into certain merger, consolidation or other reorganizations transactions. These restrictions could limit our abilityto withstand downturns in our business or the economy in general or to take advantage of business opportunities that may arise, any of which could place us at acompetitive disadvantage relative to our competitors that are not subject to such restrictions. If we breach a loan covenant, the lenders could either refuse to lendfunds to us or accelerate the repayment of any outstanding borrowings under the credit facility. We might not have sufficient assets to repay such indebtednessupon a default. If we are unable to repay the indebtedness, the lenders could initiate a bankruptcy proceeding against us or collection proceedings with respect toour subsidiaries securing the facility, which could materially decrease the value of our common stock.Customer demands and regulations related to “conflict” minerals may force us to incur additional expenses and liabilities.In August 2012, the SEC adopted its final rule to implement Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act regardingdisclosure and reporting requirements for companies who use “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in theirproducts. In the semiconductor industry, these minerals are most commonly found in metals used in the manufacture of semiconductor devices and relatedassemblies. These requirements may adversely affect our ability to source related minerals and metals and increase our related cost. We face difficulties andincreased expense associated with complying with the related disclosure requirements, such as costs related to determining the source of any conflict minerals usedin our products. Continued timely reporting is dependent upon the improvement and implementation of new systems and processes and information supplied by oursuppliers of products that contain, or potentially contain, conflict minerals. Our supply chain is complex, and some suppliers may be unwilling to share relatedconfidential information regarding the source of their products, or may provide us information that is inaccurate or inadequate. If those risks arise, or if ourprocesses in obtaining that information do not fulfill the SEC’s requirements, we may face both reputational challenges and SEC enforcement risks based on ourinability to sufficiently verify the origins of the subject minerals and metals or otherwise. More recently, executive orders issued by the President of the U.S. haveincreased sanctions in this area as well, which may impact us in the scenarios described above. Moreover, we may encounter challenges to satisfy any relatedrequirements of our customers, which may be different from or more onerous than the requirements of the related SEC rules and executive orders. If we cannotsatisfy these customers, they may choose a competitor’s products or may choose to disqualify us as a supplier, and we may experience lower than expectedrevenues or have to write off inventory in the event that it becomes unsalable as a result of these regulations.We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet ourobligations.As a holding company, we derive substantially all of our cash flow from our subsidiaries. Because we conduct our operations through our subsidiaries, wedepend on those entities for dividends and other payments or distributions to meet our operating needs. Legal and contractual restrictions in any existing and future 32Table of Contentsoutstanding indebtedness we or our subsidiaries incur may limit our ability to obtain cash from our subsidiaries. The deterioration of the earnings from, or otheravailable assets of, our subsidiaries for any reason could limit or impair their ability to pay dividends or other distributions to us.Variability in self-insurance liability estimates could adversely impact our results of operations.We self-insure for employee health insurance and workers’ compensation insurance coverage up to a predetermined level, beyond which we maintain stop-loss insurance from a third-party insurer. Our aggregate exposure varies from year to year based upon the number of participants in our insurance plans. Weestimate our self-insurance liabilities using an analysis provided by our claims administrator and our historical claims experience. Our accruals for insurancereserves reflect these estimates and other management judgments, which are subject to a high degree of variability. If the number or severity of claims for which weself-insure increases, it could cause a material and adverse change to our reserves for self-insurance liabilities, as well as to our earnings.We may be subject to liabilities based on alleged links between the semiconductor manufacturing process and certain illnesses and birth defects.In recent years, there has been increased media scrutiny and associated reports regarding a potential link between working in semiconductor manufacturingclean room environments and birth defects and certain illnesses, primarily cancer. Regulatory agencies and industry associations have begun to study the issue todetermine if any actual correlation exists. Because we utilize clean rooms, we may become subject to liability claims alleging personal injury. In addition, thesereports may also affect our ability to recruit and retain employees. A significant judgment against us or material defense costs could harm our reputation, business,financial condition and results of operations.We rely on third parties to provide corporate infrastructure services necessary for the operation of our business. Any failure of one or more of our vendors toprovide these services could have a material adverse effect on our business.We rely on third-party vendors to provide critical corporate infrastructure services, including, among other things, certain services related to informationtechnology and network development and monitoring. We depend on these vendors to ensure that our corporate infrastructure will consistently meet our businessrequirements. The ability of these third-party vendors to successfully provide reliable, high quality services is subject to technical and operational uncertainties thatare beyond our control. While we may be entitled to damages if our vendors fail to perform under their agreements with us, our agreements with these vendors limitthe amount of damages we may receive. In addition, we do not know whether we will be able to collect on any award of damages or that any such damages wouldbe sufficient to cover the actual costs we would incur as a result of any vendor’s failure to perform under its agreement with us. Any failure of our corporateinfrastructure could have a material adverse effect on our business, financial condition and results of operations. Upon expiration or termination of any of ouragreements with third-party vendors, we may not be able to replace the services provided to us in a timely manner or on terms and conditions, including servicelevels and cost, that are favorable to us, and a transition from one vendor to another vendor could subject us to operational delays and inefficiencies until thetransition is complete.Our business and operations could suffer in the event of a security breach or other cybersecurity incident.Cyber attacks and attempts by others to gain unauthorized access to our information technology systems are becoming more sophisticated and may besuccessful. These attempts, which might be related to industrial or other espionage, include covertly introducing malware to our computers and networks andimpersonating authorized users, among others. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases, we mightbe unaware of an incident or its magnitude and effects. The theft, 33Table of Contentsunauthorized use or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the value of ourinvestment in research and development and other strategic initiatives or otherwise adversely affect our business and reputation. To the extent that any securitybreach impacts the operation of our products in the field, or results in inappropriate disclosure of our customers’ confidential information, we may incur liability,reputational damage or impaired business relationships as a result, which could harm our business. While we expect to continually invest in additional resourcesand services to bolster the security of our information technology systems, no amount of investment will eliminate these risks entirely.Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.Although we currently do not have reason to believe that any of our net operating loss carryforwards will expire unutilized, under Section 382 of the InternalRevenue Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be significantly limited. An ownership change is generally defined as a greater than 50% change inequity ownership by value over a three year period. We may experience such an ownership change in the future as a result of shifts in our stock ownership,including upon the issuance of our common stock, the exercise of stock options or warrants or as a result of any conversion of our convertible notes into shares ofour common stock, among other things. If we were to trigger an ownership change in the future, our ability to use any net operating loss carryforwards existing atthat time could be limited, resulting in higher than anticipated taxes payable and lower than expected net income and earnings per share.Risks Relating to Ownership of our Common StockWe may engage in future capital-raising transactions that dilute the ownership of our existing stockholders or cause us to incur debt.We may issue additional equity, debt or convertible securities to raise capital in the future. If we do, existing stockholders may experience significant furtherdilution. In addition, new investors may demand rights, preferences or privileges that differ from, or are senior to, those of our existing stockholders. Ourincurrence of indebtedness could limit our operating flexibility and be detrimental to our results of operations.The market price of our common stock may be volatile, which could result in substantial losses for investors.We cannot predict the prices at which our common stock will trade. The market price of our common stock may fluctuate significantly, depending uponmany factors, some of which may be beyond our control. In addition to the risks described in this Annual Report, other factors that may cause the market price ofour common stock to fluctuate include: • changes in general economic, industry and market conditions; • domestic and international economic factors unrelated to our performance; • actual or anticipated fluctuations in our quarterly operating results; • changes in or failure to meet publicly disclosed expectations as to our future financial performance, as was the case in August 2012 when the tradingprice of our common stock declined approximately 21% on the day following our public announcement of lower than expected revenue, gross marginand business outlook figures; • changes in securities analysts’ estimates of our financial performance or lack of research and reports by industry analysts; • changes in market valuations or earnings of similar companies; • addition or loss of significant customers; 34Table of Contents • announcements by us or our competitors, customers or suppliers of significant products, contracts, acquisitions, strategic partnerships or other events; • developments or disputes concerning patents or proprietary rights, including any injunction issued or material sums paid for damage awards,settlement payments, license fees, attorney’s fees or other litigation expenses associated with intellectual property lawsuits we may initiate, or in whichwe may be named as defendants; • failure to complete significant sales or to win a competitive selection process; • developments concerning current or future strategic alliances or acquisitions; • any future sales of our common stock or other securities; and • additions or departures of directors, executives or key personnel.Furthermore, the stock markets recently have experienced price and volume fluctuations that have affected and continue to affect the market prices of equitysecurities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broadmarket and industry fluctuations, as well as general economic, political, and market conditions such as recessions, interest rate changes or international currencyfluctuations, may negatively impact the market price of our common stock. In the past, companies that have experienced volatility in the market price of their stockhave been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result insubstantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our stock price andtrading volume could decline.The trading market for our common stock may depend on the research and reports that securities or industry analysts publish about us or our business. We donot have any control over these analysts. If one or more of the analysts who cover us downgrade our common stock or change their opinion of our common stock,our stock price would likely decline. If one or more of these analysts cease their coverage of us or fail to regularly publish reports on us, we could lose visibility inthe financial markets, which could cause our stock price or trading volume to decline.Our common stock price may decline if a substantial number of shares are sold in the market by our stockholders.Future sales of substantial amounts of shares of our common stock by our existing stockholders in the public market, or the perception that these sales couldoccur, may cause the market price of our common stock to decline. Increased sales of our common stock in the market for any reason could exert significantdownward pressure on our stock price. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and pricewe deem appropriate.We are no longer a “controlled company” within the meaning of the rules of the NASDAQ Global Select Market (NASDAQ), and we are now subject toadditional governance requirements under the NASDAQ rules.Following our public common stock offering on February 5, 2015 (the Offering), John and Susan Ocampo and their affiliates no longer control more than50% of our common stock and, consequently, we are no longer a “controlled company” within the meaning of the NASDAQ listing requirements. As a result, weare now subject to additional governance requirements under NASDAQ rules, including the requirements to have: • a majority of the board of directors consist of independent directors; and • certain compensation committee and nominating and governance committee requirements. 35Table of ContentsThe NASDAQ rules provide for phase-in periods for these requirements, but we must be fully compliant with the new requirements within one yearfollowing the consummation of the Offering. Currently, we do not have a majority of independent directors. During the current transition period following ourceasing to be a “controlled company,” our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of theNASDAQ corporate governance requirements, such as a majority of independent directors. If within the one-year phase-in period we are not able to recruitadditional directors that qualify as independent, or otherwise comply with NASDAQ listing requirements, we may be subject to enforcement actions by NASDAQ.In addition, these changes in the board of directors and committee membership may result in a change in corporate strategy and operating philosophies, and mayresult in deviations from our current growth strategy.Our management has identified a material weakness in our internal control over financial reporting. If we fail to maintain effective internal control overfinancial reporting, we may not be able to accurately report our financial results, which could have a material adverse effect on our operations, investorconfidence in our business and the trading prices of our securities.As disclosed in “Item 9A—Controls and Procedures” below, our management identified a material weakness in our internal control over financial reportingrelated to our information technology general controls in the areas of user access and program change management for certain information technology systems thatcomprise part of our system of internal control over financial reporting and are relevant to the preparation of our consolidated financial statements. A materialweakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that amaterial misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of this material weakness, ourChief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective as of the last day of the periodcovered by this Annual Report.We are actively engaged in developing a remediation plan designed to address this material weakness. If our remediation efforts are insufficient to addressthe identified material weakness or if additional material weaknesses in our internal controls are discovered in the future, they may adversely affect our ability torecord, process, summarize and report financial information timely and accurately and, as a result, our financial statements may contain material misstatements oromissions, which could result in regulatory scrutiny, cause investors to lose confidence in our reported financial condition and otherwise have a material adverseeffect on our business, financial condition, cash flow results of operations or the trading price of our stock.Some of our stockholders can exert control over us, and they may not make decisions that reflect our interests or those of other stockholders.Our largest stockholders control a significant amount of our outstanding common stock. As of October 2, 2015, John and Susan Ocampo beneficially owned43.1% of our common stock and certain investment funds affiliated with Summit Partners, L.P. owned 14.3% of our common stock on an as-converted basis. As aresult, these stockholders will be able to exert a significant degree of influence over our management and affairs and control over matters requiring stockholderapproval, including the election of our directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay orprevent a change in control of us and might affect the market price of our securities. In addition, the interests of these stockholders may not always coincide withyour interests or the interests of other stockholders.Anti-takeover provisions in our charter documents and Delaware law could prevent or delay a change in control of our company that stockholders mayconsider beneficial and may adversely affect the price of our stock.Provisions of our fourth amended and restated certificate of incorporation and second amended and restated bylaws may discourage, delay or prevent amerger, acquisition or change of control that a stockholder may consider favorable. These provisions could also discourage proxy contests and make it moredifficult for stockholders to elect directors and take other corporate actions. The existence of these provisions could limit the price that investors might be willing topay in the future for shares of our common stock. These provisions include authorizing the issuance of “blank check” preferred stock, staggered elections ofdirectors, and 36Table of Contentsestablishing advance notice requirements for nominations for election to the board of directors and for proposing matters to be submitted to a stockholder vote.Provisions of Delaware law may also discourage, delay or prevent someone from acquiring or merging with our company or obtaining control of our company.Specifically, Section 203 of the Delaware General Corporate Law may prohibit business combinations with stockholders owning 15% or more of our outstandingvoting stock. Our Board of Directors could rely on Delaware law to prevent or delay an acquisition of us and this reliance could reduce our value.We do not intend to pay dividends for the foreseeable future.We do not intend to pay any cash dividends on our common stock in the foreseeable future. The payment of cash dividends is restricted under the terms ofthe agreements governing our indebtedness. In addition, because we are a holding company, our ability to pay cash dividends may be limited by restrictions on ourability to obtain sufficient funds through dividends from subsidiaries. We anticipate that we will retain all of our future earnings for use in the development of ourbusiness and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly,investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on theirinvestments.ITEM 1B. UNRESOLVED STAFF COMMENTS.None.ITEM 2. PROPERTIES.For additional information regarding property, plant and equipment by geographic region for each of the last two fiscal years, see Notes to ConsolidatedFinancial Statements in Item 8 below.Our principal executive offices are located in Lowell, Massachusetts. In June 2015, we purchased our corporate headquarters and fabrication facilitiesincluding the associated land, improvements, leases and leasehold property, for approximately $8.3 million. Prior to the purchase, we leased the 157,600 squarefoot facility from Cobham Properties, Inc., and concurrently with the closing of the purchase, the lease was terminated. Also, we maintain leased facilities for ourdesign centers located in Massachusetts, California, North Carolina, New York, Rhode Island, Ireland, the United Kingdom, France, and Australia as well as forour administrative, assembly and test operations located in New Hampshire and Taiwan, and our local sales offices in Oregon, Canada, Germany, Malaysia, China,Japan, India, and South Korea. We believe that our leased facilities are adequate for our present operations. The following is a list of our main leased facilities andtheir primary functions. Site Major Activity Square Footage Lease ExpirationLowell, Massachusetts Administration, Research andDevelopment, Application Engineering 60,700 December 2022Newport Beach, California Administration, Research and Development, Sales andMarketing 88,160 December 2019Long Beach, California Administration, Assembly and Test, Research andDevelopment, Sales and Marketing 25,317 January 2018Ithaca, New York Administration, Production and Fabrication, Test andAssembly 20,600 December 2025Cork, Ireland Administration, Research and Development, Sales andMarketing, Application Engineering, Reliability Testing 21,634 April 2017 37Table of ContentsITEM 3. LEGAL PROCEEDINGS.From time to time we may be subject to commercial and employment disputes, claims by other companies in the industry that we have infringed theirintellectual property rights and other similar claims and litigations. Any such claims may lead to future litigation and material damages and defense costs. Otherthan as set forth below, we were not involved in any pending legal proceedings as of the filing date of this Annual Report that we believe could have a materialadverse effect on our business, operating results, financial condition or cash flows.Patent Suit Against Laird . On February 11, 2014, we brought a patent infringement suit against Laird Technologies, Inc. (Laird) in the Federal District Courtfor the District of Delaware, seeking monetary damages and a permanent injunction. The suit alleged that Laird infringed on our United States Patent No. 6,272,349(‘349 Patent), titled “Integrated Global Positioning System Receiver,” by making, using, selling, offering to sell or selling products incorporating an integratedglobal positioning receiver that include structure(s) recited in the ‘349 Patent, including global positioning system modules for Automotive industry customers. Thecourt entered a preliminary injunction against Laird on June 13, 2014. On April 15, 2015, the parties reached a confidential settlement agreement, filed a stipulatedpermanent injunction with the court that is similar in scope to the preliminary injunction, and filed a stipulated dismissal of all claims. The permanent injunctionand dismissal were entered on April 21, 2015 by the court.Class Action Suit Against Mindspeed Technologies, Inc . On March 10, 2015, Philip Alvarez, a former employee of Mindspeed filed a putative class actionlawsuit against Mindspeed in the Superior Court of California for the County of Orange. On April 24, 2015, Alvarez filed a First Amended Complaint adding oursubsidiary M/A-COM Technology Solutions Inc. as a defendant. The lawsuit alleged, among other things, that Alvarez and certain other employees who designedand manufactured hardware systems for Mindspeed or M/A-COM Technology Solutions Inc. between March 10, 2011 and the present were misclassified asexempt employees under California law. The lawsuit seeks recovery of alleged unpaid overtime wages, meal and rest period premiums, penalties and attorneys’fees. We dispute the allegations of the lawsuit. On June 15, 2015, Mindspeed removed the action to the United States District Court for the Central District ofCalifornia. On July 15, 2015, Plaintiff filed a Motion to Remand, which Motion was denied in an Order dated September 9, 2015. The parties have reached anagreement for the dismissal of all class action allegations and claims in the action, as well as certain other claims against Mindspeed and M/A-COM TechnologySolutions Inc. The parties have stipulated to the filing of a Second Amended Complaint that effectuates this agreement, and are awaiting order by the Court on thatstipulation. After the Second Amended Complaint is filed, the matter will proceed as an individual action by Alvarez seeking only his personal claims, as well asclaims under the Private Attorneys’ General Act.With respect to the above and other legal proceedings, we have not been able to reasonably estimate the amount or range of any possible loss, andaccordingly has not accrued or disclosed any related amounts of possible loss in the accompanying consolidated financial statements.ITEM 4. MINE SAFETY DISCLOSURES.Not applicable. 38Table of ContentsPART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES.Our common stock has been listed on the NASDAQ Global Select Market under the symbol “MTSI” since March 15, 2012. The following table sets forthfor the periods indicated the high and low sale prices of our common stock on the NASDAQ Global Select Market. The number of stockholders of record of ourcommon stock as of November 16, 2015 was approximately 14.The high and low sales prices of our common stock by quarter in fiscal year 2015 and fiscal year 2014 follows: High Low Fiscal Year 2015: First quarter $32.80 $18.23 Second quarter 39.52 27.64 Third quarter 42.81 29.85 Fourth quarter 36.51 25.82 High Low Fiscal Year 2014: First quarter $18.25 $13.20 Second quarter 21.70 15.43 Third quarter 23.44 15.76 Fourth quarter 25.70 19.04 We have not paid cash dividends on our common stock and we do not anticipate paying cash dividends in the foreseeable future. Our credit facility alsocontains restrictions on our ability to pay cash dividends, subject to certain exceptions. 39Table of ContentsStock Price Performance GraphThe following graph shows a comparison from March 15, 2012 (the date our common stock commenced trading on NASDAQ) through October 2, 2015 ofthe total cumulative return of our common stock with the total cumulative return of the NASDAQ Composite Index and the PHLX Semiconductor Index. Theamounts represented below assume an investment of $100 in our common stock at the closing price of $20.55 on March 15, 2012 and in the NASDAQ CompositeIndex and the PHLX Semiconductor Index on the closest month end date of February 29, 2012, and assume reinvestment of dividends. The comparisons in thegraph are historical and are not intended to forecast or be indicative of possible future performance of our common stock. March 15,2012 September 28,2012 September 27,2013 October 3,2014 October 2,2015 M/A-COM Technology Solutions Holdings, Inc. $100.00 $61.80 $83.75 $106.28 $140.00 NASDAQ Composite Index $100.00 $102.61 $126.30 $151.94 $161.04 PHLX Semiconductor Index $100.00 $88.74 $116.04 $153.64 $149.08 Issuer Purchases of Equity Securities Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs July 4, 2015 — July 31, 2015 512 $32.39 — — August 1, 2015 — August 28, 2015 1,577 32.60 — — August 29, 2015 — October 2, 2015 219 30.06 — — Total 2,308 $32.31 — — (1)In 2011, our Board of Directors approved “withhold to cover” as a tax payment method for vesting of restricted stock awards for our employees. Pursuant toan election for “withhold to cover” made by our employees in connection with the vesting of such awards, all of which were outside of a publicly-announcedrepurchase plan, we withheld from such employees the shares noted in the table above to cover tax withholding related to the vesting of their awards. Theaverage 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 ofshares to be withheld. 40Table of ContentsITEM 6. SELECTED FINANCIAL DATA.You should read the following selected financial data in conjunction with our consolidated financial statements and related notes, as well as “Item 1—RiskFactors” and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report.In August 2015, we divested our Automotive business to Autoliv based on our belief that the business was not consistent with our long-term strategicvision from either a growth or profitability perspective. We believe divesting our Automotive business will enable us to realize our potential as a high-performanceanalog company and will allow us to focus on growing our retained core businesses. Certain amounts contained within our Consolidated Financial Statements havebeen reclassified to reflect adjustments related to the discontinued operations of our Automotive business. Refer to Note 19, to the Consolidated FinancialStatements for additional information.On December 15, 2014, we completed the acquisition of BinOptics, a supplier of high-performance photonic semiconductor products. The operations ofBinOptics are included in our consolidated financial statements from the date of acquisition.On December 18, 2013, we completed the acquisition of Mindspeed, a supplier of high performance analog products previously headquartered in SouthernCalifornia. The operations of Mindspeed have been included in our consolidated financial statements since the date of acquisition.Subsequent to closing the Mindspeed Acquisition, in February 2014, we divested the wireless business of Mindspeed. The operations of the wireless businessare included in discontinued operations.On May 9, 2014, we completed the sale of the CPE communication processor product line of Mindspeed for $12.0 million and an additional $2.0 millionbased upon the achievement of certain revenue-related milestones through December 31, 2014. During the quarter ended April 3, 2015, these milestones wereachieved and we recorded income related to this contingent consideration of $2.0 million.We acquired Nitronex on February 13, 2014. Because we and Nitronex were under common control since June 25, 2012, we present combined financialstatements in a manner similar to a pooling-of-interests for all periods since June 25, 2012, the earliest date of common control. Accordingly, our historicalfinancial statements have been retroactively combined as if Nitronex was acquired on June 25, 2012. All periods from June 25, 2012, have been combined usinghistorical amounts of each entity.We derived (i) the statements of operations data for the fiscal years 2015, 2014, and 2013, and (ii) the balance sheet data as of October 2, 2015 andOctober 3, 2014, from our audited consolidated financial statements, which appear elsewhere in this Annual Report. We derived the statements of operations datafor the fiscal years 2012 and 2011 and balance sheet data as of September 28, 2012, and September 30, 2011 from our audited consolidated financial statements,adjusted for discontinued operations, which do not appear elsewhere in this Annual Report. We adopted a 52-or 53-week fiscal year ending on the Friday closest toSeptember 30. 41Table of ContentsThe historical results presented below are not necessarily indicative of financial results to be achieved in future periods. Fiscal Years 2015 2014 2013 2012 2011 (in thousands, except per share data) Statements of Operations Data (1) : Revenue $420,609 $339,189 $242,703 $255,544 $274,208 Cost of revenue 217,019 198,249 133,505 134,826 151,609 Gross profit 203,590 140,940 109,198 120,718 122,599 Operating expenses: Research and development 82,188 71,351 42,505 34,903 34,974 Selling, general and administrative 110,030 82,593 57,930 41,235 47,556 Restructuring charges 1,280 14,823 1,060 1,862 1,499 Total operating expenses 193,498 168,767 101,495 78,000 84,029 Income (loss) from operations 10,092 (27,827) 7,703 42,718 38,570 Other income (expense): Warrant liability (expense) gain (2) (6,020) (3,928) (4,312) 3,175 (5,080) Class B conversion liability expense (2) — — — (44,119) (39,737) Interest (expense) income (18,376) (12,362) (817) (695) (1,561) Other (expense) income, net (1,096) 3,217 372 185 — Other (expense) income, net (25,492) (13,073) (4,757) (41,454) (46,378) (Loss) income before income taxes (15,400) (40,900) 2,946 1,264 (7,808) Income tax (benefit) provision (9,858) (16,086) 283 11,830 (1,433) (Loss) income from continuing operations (5,542) (24,814) 2,663 (10,566) (6,375) Income from discontinued operations 54,131 9,491 15,533 6,902 5,359 Net income (loss) 48,589 (15,323) 18,196 (3,664) (1,016) Less: net income attributable to noncontrolling interest in a subsidiary — — — — 195 Net income (loss) attributable to controlling interest 48,589 (15,323) 18,196 (3,664) (1,211) Accretion value of redeemable preferred stock (3) — — — (2,616) (80,452) Net income (loss) attributable to common stockholders $48,589 $(15,323) $18,196 $(6,280) $(81,663) Basic income (loss) per common share: (Loss) income from continuing operations $(0.11) $(0.53) $0.06 $(0.53) $(57.69) Income from discontinued operations 1.06 0.20 0.34 0.28 3.56 Net income (loss) — basic $0.95 $(0.33) $0.40 $(0.25) $(54.13) Diluted income (loss) per common share: (Loss) income from continuing operations $(0.11) $(0.53) $0.06 $(0.53) $(57.69) Income from discontinued operations 1.06 0.20 0.33 $0.28 $3.56 Net income (loss) — diluted $0.95 $(0.33) $0.39 $(0.25) $(54.13) Shares used to compute net income (loss) per common share: Basic 51,146 47,009 45,916 24,758 1,505 Diluted 51,146 47,009 47,137 24,758 1,505 42Table of Contents As of October 2, 2015 October 3, 2014 September 27, 2013 September 28, 2012 September 30, 2011 Consolidated Balance Sheet Data (in thousands): Cash and cash equivalents $122,312 $173,895 $110,488 $84,600 $45,668 Working capital 312,743 287,703 194,289 157,451 89,426 Total assets 866,251 682,234 316,635 268,217 211,268 Long-term debt, less current portion 340,504 343,178 — — — Class B conversion liability — — — — 81,378 Convertible and redeemable preferred stock — — — — 182,018 Stockholders’ equity (deficit) $424,533 $228,567 $247,141 $199,458 $(144,837) Dividends of $0.63 per share, $0.81 per share and $2.44 per share were paid to the record holders as of January 4, 2011 of our Series A-1 convertiblepreferred stock, Series A-2 convertible preferred stock and common stock, respectively, aggregating $80 million. (1)See Results of Operations in Item 7 and Consolidated Statements of Operations and our Notes to Consolidated Financial Statements for additional information for fiscal years 2015, 2014 and 2013. (2)Represents changes in the fair value of certain features of our warrant and Class B convertible preferred stock that were recorded as liabilities and adjusted each reporting period to fair value. The convertiblepreferred stock liability was settled in connection with our initial public offering (IPO) in March 2012. (3)In fiscal year 2011, includes $76.2 million of dividends declared and paid in January 2011 to holders of our Series A-1 and A-2 convertible preferred stock. 43Table of ContentsITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statementsand related notes that appear elsewhere in this Annual Report. In addition to historical information, the following discussion contains forward-looking statementsthat are subject to risks and uncertainties. Actual results may differ substantially and adversely from those referred to herein due to a number of factors, includingbut not limited to those described below and in Item 1A “Risk Factors” and elsewhere in this Annual Report.OVERVIEWSee Item 1, Business for additional information.We are a leading provider of high-performance analog semiconductor solutions that enable next-generation internet applications, the cloud connected appseconomy, and the modern, networked battlefield across the radio frequency (RF), microwave, millimeterwave and photonic spectrum. We design and manufacturedifferentiated, high-value products for customers who demand high performance, quality, and reliability. We offer a broad portfolio of over 3,500 standard andcustom devices, which include integrated circuits (IC), multi-chip modules, power pallets and transistors, diodes, amplifiers, switches and switch limiters, passiveand active components and complete subsystems, across approximately 40 product lines serving over 6,000 end customers in three primary markets. Oursemiconductor products are electronic components that our customers incorporate into their larger electronic systems, such as, point-to-point wireless backhaulradios, high density networks, active antenna arrays, radar, magnetic resonance imaging systems (MRI) and unmanned aerial vehicles (UAVs). Our primarymarkets are: Networks, which includes carrier and enterprise infrastructure, wired broadband and cellular backhaul, cellular infrastructure, photonic solutions andfiber optic applications; Aerospace and Defense (A&D), which includes military and commercial radar, RF jammers, electronic countermeasures, andcommunication data links; Multi-market, which includes industrial, medical, test and measurement and scientific applications.Basis of PresentationWe have one reportable operating segment, semiconductors and modules. All intercompany balances have been eliminated in consolidation. Certain priorperiod financial statement amounts, including the Automotive business discontinued operations have been adjusted to conform to currently reported presentations.We have a 52 or 53-week fiscal year ending on the Friday closest to the last day of September. The fiscal year 2015 includes 52 weeks, fiscal year 2014included 53 weeks and fiscal year 2013 included 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we include the extra weekarising in our fiscal years in the first quarter.Description of Our RevenueRevenue . Substantially all of our revenue is derived from sales of high-performance analog semiconductor solutions for use in wireless and wirelineapplications across the RF, microwave, millimeterwave and photonic spectrum and in high speed communications. We design, integrate, manufacture, and packagedifferentiated product solutions that we sell to customers through our direct sales organization, our network of independent sales representatives, and ourdistributors.We believe the primary drivers of our future revenue growth will include: • engaging early with our lead customers to develop products and solutions that can be driven across multiple growth markets; • leveraging our core strength and leadership position in standard, catalog products that service all of our end applications; 44Table of Contents • increasing content of our semiconductor solutions in our customers’ systems through cross-selling of our more than 40 product lines; • introducing new products through internal development and acquisitions with market reception that command higher prices based on the application ofadvanced technologies such as GaN, added features, higher levels of integration and improved performance; and • growth in the market for high-performance analog semiconductors generally, and in our three primary markets in particular.Our core strategy is to develop innovative, high-performance products that address our customers’ most difficult technical challenges in our primary markets:Networks, A&D and Multi-market. While sales in any or all of our primary markets may slow or decline from period to period, over the long-term we generallyexpect to benefit from strength in these markets.We expect our revenue in the Networks market to be primarily driven by continued upgrades and expansion of communications equipment to supportexpansion in the Internet of Things (IoT), the proliferation of mobile computing devices such as smartphones and tablets, increasing adoption of bandwidth richservices such as video on demand and cloud computing, the rapid adoption of cloud-based services, and the migration to an application centric architecture, whichwe expect will drive faster adoption of higher speed, low latency optical and wireless links.We expect our revenue in the A&D market to be driven by the upgrading of radar systems and modern battlefield communications equipment and networksdesigned to improve situational awareness. Growth in this market is subject to changes in governmental programs and budget funding, which is difficult to predict.We expect revenue in multi-market to be driven by diverse demand for our multi-purpose catalog products.CRITICAL ACCOUNTING POLICIES AND ESTIMATESOur discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements. The preparation offinancial statements, in conformity with generally accepted accounting principles in the U.S. (GAAP), requires management to make estimates and judgments thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amountsof revenue and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and could bematerial if our actual or expected experience were to change unexpectedly. On an ongoing basis, we re-evaluate our estimates and judgments.We base our estimates and judgments on our historical experience and on other assumptions that we believe are reasonable under the circumstances, theresults of which form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actualresults could differ from those estimates, and material effects on our operating results and financial position may result. The accounting policies which ourmanagement believes involve the most significant application of judgment, or involve complex estimation, are inventories and associated reserves; goodwill andintangibles asset valuations and associated impairment assessments; revenue reserves; contingent consideration valuations; share-based compensation valuationsand income taxes and deferred income tax accounting. For additional information related to these and other accounting policies refer to Note 2—Summary ofSignificant Accounting Policies to our Consolidated Financial Statements included in this Annual Report which is incorporated by reference herein.During the first quarter of 2015 we re-evaluated certain revenue recognition estimates and judgments associated with certain sales to distributors. Wegenerally do not provide customers other than distributors the right to return product, with the exception of warranty related matters. Accordingly, we do nottypically maintain 45Table of Contentsa reserve for customers. Shipping and handling fees billed to customers are recorded as revenue while the related costs are classified as a component cost ofrevenue. We provide warranties for certain products and accrue the costs of warranty claims in the period the related revenue is recorded.Prior to fiscal 2015, we had concluded that we had insufficient information as well as limited experience in estimating the effect of the right of distributors toreturn product and price protection and, accordingly, used the sell through approach of revenue recognition. Under this approach, we would recognize revenue fromsales after the distributor resold the product to its end customer (the sell through basis). After concluding an extensive three year study of distributor relatedtransactions, we completed an evaluation of our revenue recognition policy and concluded that it was more appropriate to recognize revenue to distributors at thetime of shipment to the distributor (sell-in basis). We believe we now have sufficient data to predict future price adjustments from distributors and has a basis ofbeing able to reasonably estimate these future price adjustments.On a consolidated basis, revenue from distribution customers impacted by the change in estimate accounts for approximately 20-25% of total consolidatedrevenue. Certain agreements with distribution customers provide for rights of return and compensation credits until such time as our products are sold by thedistributors to their end customers. We have agreements with some distribution customers for various programs, including compensation, volume-based pricing,obsolete inventory, new products and stock rotation. Sales to these distribution customers, as well as the existence of compensation programs, are in accordancewith terms set forth in written agreements with these distribution customers. In general, credits allowed under these programs are capped based upon individualdistributor agreements. We record charges associated with these programs as a reduction of revenue at the time of sale with a corresponding adjustment to accountsreceivable based upon historical activity. Our policy is to use a 12 month rolling historical experience rate and an estimated general reserve percentage in order toestimate the necessary allowance to be recorded.During the first fiscal quarter of 2015, we recorded corresponding adjustments related to this change in estimate to recognize previously deferred revenues.The net effect was an increase of $15.1 million, of which $12.4 million was from previously deferred revenue and $2.7 million was related to the change indistributor inventories. Additionally, we recognized the related deferred inventory costs of $4.7 million which resulted in a reduction to net loss of $8.5 million, ora reduction of $0.18 net loss per share when the change in estimate was recorded. The full year impact of this change in estimate resulted in additional revenue of$17.4 million and a net income of $7.7 million, or $0.15 earnings per share.We also established a new reserve of $5.6 million during the first quarter of fiscal year 2015 which was increased to $6.0 million for the fiscal year endedOctober 2, 2015 related to future rebates and returns under various programs associated with our distributor agreements. The amount of this reserve is largelydriven by the individual distribution agreements and our business strategy whereby we will invoice the distributor at “list price”. We expect to issue compensationcredits consistent with the distributor agreements. The difference between the list price and distributor selling price will vary by product grouping consistent withhistorical trends and marketing strategies. Historically, 90 percent of the credits issued to distributors are based on “list price” credits and 10 percent of the creditswere for product returns and stock rotation rights, based upon the 12 month rolling historical experience rate. 46Table of ContentsThe table below shows the changes in gross and net distributor revenue and reserve balances associated with the change in estimate for the fiscal year endedOctober 2, 2015 (in thousands): Three Months Ended Fiscal Year 2015 January 2,2015 April 3, 2015 July 3, 2015 October 2,2015 Gross revenue effect of one-time change in estimate (1) $17,028 $— $— $— $17,028 Gross revenue effect associated with change in estimate (2) 3,636 4,687 (1,687) (351) 6,285 Total gross revenue resulting from change in estimate 20,664 4,687 (1,687) (351) 23,313 Net revenue effect of one-time change in estimate (3) 12,457 — — 12,457 Net revenue effect associated with change in estimate (4) 2,643 3,686 (1,296) (134) 4,899 Total net revenue resulting from change in estimate 15,100 3,686 (1,296) (134) 17,356 Reserve for future returns and credits (5) $5,564 $1,001 $(391) $(217) $5,957 (1)This amount was recorded as deferred revenue as of October 3, 2014. (2)This amount represents the impact of the change in estimate associated with increases in distributor inventories as compared to the prior reporting period. (3)This amount represents the net revenue impact of the one-time change in estimate after applying the associated reserve for future credits and returns. (4)This amount represents the impact of the change in estimate associated with increases in distributor inventories as compared to the prior reporting period after applying the associated reserve for future creditsand returns. (5)This amount reflects the change in the revenue reserve for future returns and credits.RESULTS OF OPERATIONSAs discussed in Note 19—Discontinued Operations, to our Consolidated Financial Statements included in this Annual Report, we have adjusted certainamounts associated with these businesses in our results of operations, cash flows, and assets and liabilities as discontinued operations for all periods presented. 47Table of ContentsThe following table sets forth, for the periods indicated, our statement of operations data (in thousands): Fiscal Years 2015 2014 2013 Revenue $420,609 339,189 242,703 Cost of revenue (1) (4) (5) 217,019 198,249 133,505 Gross profit 203,590 140,940 109,198 Operating expenses: Research and development (1) (5) 82,188 71,351 42,505 Selling, general and administrative (1) (3) (5) 110,030 82,593 57,930 Restructuring charges 1,280 14,823 1,060 Total operating expenses 193,498 168,767 101,495 Income (loss) from operations 10,092 (27,827) 7,703 Other (expense) income: Warrant liability expense (2) (6,020) (3,928) (4,312) Interest expense (1) (18,376) (12,362) (817) Other (expense) income, net (1,096) 3,217 372 Other (expense) income, net (25,492) (13,073) (4,757) (Loss) income before income taxes (15,400) (40,900) 2,946 Income tax (benefit) provision (9,858) (16,086) 283 (Loss) income from continuing operations (5,542) (24,814) 2,663 Income from discontinued operations (6) 54,131 9,491 15,533 Net income (loss) $48,589 $(15,323) $18,196 (1)Includes (a) Amortization expense related to intangible assets arising from acquisitions, (b) Non-Cash compensation expense, and (c) deferred financing cost amortization included in our consolidatedstatements of operations is set forth below (in thousands): Fiscal Years 2015 2014 2013 (a) Intangible amortization expense: Cost of revenue $27,285 $18,274 $2,986 Selling, general and administrative 11,695 1,779 1,335 (b) Non-cash compensation expense: (i) Cost of revenue 1,949 1,771 1,039 Research and development 5,447 2,818 1,688 Selling, general and administrative 12,039 6,688 3,369 (c) Deferred financing cost amortization — interest expense 1,652 3,021 321 (i)Includes share-based compensation expense and incentive and retention compensation amounts payable to certain of our employees in connection with the sale of acquired business to us. (2)Represents changes in the fair value of common stock warrants recorded as liabilities and adjusted each reporting period to fair value. (3)Includes litigation costs of $0.9 million, $1.6 million and $2.6 million incurred in fiscal years 2015, 2014 and 2013, respectively. (4)In fiscal year 2015 and 2014, includes approximately $5.5 and $18.1 million of costs for step-up in valuation of acquired business inventories to fair value. (5)In fiscal year 2014, cost of revenue, research and development, and selling, general, and administrative includes approximately $1.4 million, $4.5 million, and $13.9 million, respectively, of costs related tothe acquisition and integration of Mindspeed. (6)See Note 19—Discontinued Operations to the Consolidated Financial Statements for additional information. 48Table of ContentsThe following table sets forth, for the periods indicated, our statement of operations data expressed as a percentage of our revenue: Fiscal Years 2015 2014 2013 Revenue 100.0% 100.0% 100.0% Cost of revenue 51.6 58.4 55.0 Gross profit 48.4 41.6 45.0 Operating expenses: Research and development 19.5 21.0 17.5 Selling, general and administrative 26.2 24.4 23.9 Restructuring charges 0.3 4.4 0.4 Total operating expenses 46.0 49.8 41.8 Income (loss) from operations 2.4 (8.2) 3.2 Other (expense) income: Warrant liability expense (1.4) (1.2) (1.8) Interest expense (4.4) (3.6) (0.3) Other (expense) income, net (0.3) 0.9 0.2 Other (expense) income, net (6.1) (3.9) (2.0) (Loss) income (loss) before income taxes (3.7) (12.1) 1.2 Income tax (benefit) provision (2.3) (4.7) 0.1 (Loss) income from continuing operations (1.3) (7.3) 1.1 Income from discontinued operations 12.9 2.8 6.4 Net income (loss) 11.6% (4.5)% 7.5% Comparison of Fiscal Year Ended October 2, 2015 to Fiscal Year Ended October 3, 2014Revenue . In fiscal year 2015, our revenue increased $81.4 million, or 24.0%, to $420.6 million from $339.2 million for fiscal year 2014.Revenue from our primary markets, the percentage of change between the years, and revenue by primary markets expressed as a percentage of total revenuewere (in thousands, except percentages): Fiscal Years 2015 2014 % Change Networks $273,931 $183,347 49.4% A&D 83,296 87,563 (4.9)% Multi-market 63,382 68,279 (7.2)% Total $420,609 $339,189 24.0% Networks 65.1% 54.1% A&D 19.8% 25.8% Multi-market 15.1% 20.1% Total 100.0% 100.0% 49Table of ContentsIn fiscal year 2015, our Networks market revenue increased by $90.6 million, or 49.4%, compared to fiscal year 2014. The increase in revenue was primarilyfrom sales of products from the BinOptics Acquisition in December 2014 and the full year impact of the Mindspeed Acquisition in December 2013. Each of theseacquisitions expanded our product offerings significantly.In fiscal year 2015, our A&D market revenue decreased by $4.3 million, or 4.9%, compared to fiscal year 2014. We attribute this decrease to lower demandand shipments of certain legacy radar programs as well as cyclical demand for radar applications.In fiscal year 2015, our Multi-market revenues decreased $4.9 million, or 7.2%, compared to fiscal year 2014. The decrease in revenue in the 2015 periodwas primarily due to lower general market demand for catalog products, partially offset by distributor revenue adjustments associated with a change in estimateduring the first quarter of fiscal year 2015.Gross profit . In fiscal year 2015, our gross profit increased by $62.7 million or 44.5%, compared to fiscal 2014. Gross margin of 48.4%, increased 6.8%,compared to fiscal year 2014. The higher gross profit was largely the result of a favorable product mix with higher revenue from recent acquisitions and legacyproducts, partially offset by acquisition related increases in amortization expense.Research and development . In fiscal year 2015, R&D expense increased $10.8 million, or 15.2%, to $82.2 million, or 19.5% of our revenue, compared with$71.4 million, or 21.0% of our revenue in fiscal year 2014. Research and development expenses increased primarily related to additional research and developmentactivities as well as increased headcount and employee compensation related to recently acquired businesses.Selling, general and administrative . In fiscal year 2015, SG&A expense increased $27.4 million, or 33.2%, to $110.0 million, or 26.2% of our revenue,compared with $82.6 million, or 24.4% of our revenue for fiscal year 2014. The increase was primarily due to increased headcount and employee compensationexpense related to acquired businesses, acquisition integration costs and higher litigation costs.Restructuring charges . In fiscal year 2015, restructuring charges were $1.3 million, or 0.3% of our revenue compared with $14.8 million, or 4.4% of ourrevenue for fiscal year 2014. Restructuring charges were higher in 2014 primarily due to a reduction in headcount and changes related to payments associated withMindspeed employment agreements, as well as, reductions associated with the integration of the Mindspeed business which included severance and relatedbenefits.Income (loss) from operations . In fiscal year 2015, we reported income from operations of $10.1 million, or 2.4%, compared to a loss from operations of$27.8 million, or 8.2%. This change of $37.9 million, or 136.3%, was primarily the result of higher revenue and gross profit associated with recently acquiredbusinesses, partly offset by higher operating expenses in fiscal year 2015 compared the prior fiscal year 2014.Warrant liability . In fiscal year 2015, we recorded an expense of $6.0 million compared to an expense of $3.9 million for fiscal year 2014. The expenserelates to the change in the estimated fair value of common stock warrants we issued in December 2010, which we carry as a liability at fair value. Our commonstock price is a key input in determining the fair value of the warrant liability and has increased over the past year which has resulted in a higher expense.Interest expense . In fiscal year 2015, interest expense was $18.4 million, or 4.4% of our revenue, compared with $12.4 million, or 3.6% of our revenue forfiscal year 2014, due to increased borrowings outstanding under our Credit Agreement at higher interest rates. The borrowings were primarily utilized to fund ouracquisitions.Other income . In fiscal year 2015, other income, net, was $1.1 million expense and primarily related to contingent consideration income of $2.0 millionassociated with a 2014 product line divestiture and income for 50Table of Contentsservices and fees earned under a transition services agreement related to a business sold during the fiscal year, offset by $3.5 million related to a minority equityinvestment impairment.Discontinued Operations . See Note 19 to the Consolidated Financial Statements for additional information.Provision for income taxes. In fiscal year 2015, the provision for income taxes was a benefit of $9.9 million compared to a benefit of $16.1 million for fiscalyear 2014. The benefit decreased primarily due to a decrease in the current period taxable loss in the U.S. partially offset by income taxed in foreign jurisdictions.The difference between the U.S. federal statutory income tax rate of 35% and the Company’s effective income tax rates for fiscal year 2015 and 2014, wasprimarily impacted by changes in fair values of the stock warrant liability which are not deductible nor taxable for tax purposes, as well as income taxed in foreignjurisdictions at generally lower tax rates, research and development credits, non-deductible compensation and for fiscal year 2015 provision to return adjustments.The aggregate net deferred income tax liabilities acquired in the BinOptics Acquisition were $33.3 million. At the date of the acquisition, BinOptics hadfederal net operating loss (NOL) carryforwards of approximately $44.9 million, which will expire at various dates through 2034, and federal research anddevelopment tax credit carryforwards of $1.5 million. Both the NOL and the tax credits are subject to change-in-control limitations within the Internal RevenueCode and, accordingly, the NOL carryforwards were reduced to $43.3 million and the research and development credits were reduced to $1.1 million, to reflect theestimated realizable amount after consideration of the limitations. The NOL carryforwards and tax credits are included in the computation of net deferred incometax assets arising from the acquisition.During fiscal year 2015, the Company’s unrecognized tax benefits did not change and remained at $1.7 million. The unrecognized tax benefits primarilyrelate to positions taken by the Company in its 2014 U.S. tax filings. During fiscal year 2014, the Company settled the federal audit for fiscal years 2011 and 2012with no material impact upon the financial statements.Comparison of Fiscal Year Ended October 3, 2014 to Fiscal Year Ended September 27, 2013Revenue . In fiscal year 2014, our revenue increased $96.5 million, or 39.8%, to $339.2 million from $242.7 million for fiscal year 2013. The increase inrevenue was primarily due to the acquisition of Mindspeed, which expanded our product offerings significantly.Revenue from our primary markets, the percentage of change between the years, and revenue by primary markets expressed as a percentage of total revenuewere (in thousands, except percentages): Fiscal Years 2014 2013 % Change Networks 183,347 83,785 118.8% A&D 87,563 91,390 (4.2)% Multi-Market 68,279 67,528 1.1% Total 339,189 242,703 39.8% Networks 54.1% 34.5% A&D 25.8% 37.7% Multi-Market 20.1% 27.8% Total 100.0% 100.0% In fiscal year 2014, our Networks market revenue increased by $99.6 million, or 118.8%, compared to fiscal year 2013. The increase is revenue wasprimarily from sales of our newly acquired products from our Mindspeed 51Table of ContentsAcquisition addressing carrier infrastructure, fiber-to-the-home access networks, physical media devices and broadcast video, as well as increased sales of ourproducts targeting wireless backhaul and optical applications, partly offset by continued weakness in our products targeting set top box products.In fiscal year 2014, our A&D market revenue decreased by $3.8 million, or 4.1%, compared to fiscal year 2013. We attribute this decrease to ramp down ofcertain legacy radar programs as well as cyclical demand for radar applications.In fiscal year 2014, our Multi-market revenues decreased by $0.8 million, or 1.1%, compared to fiscal year 2013. The modest increase in revenue in the 2014period was primarily from sales of our newly acquired CPE product line, as partly offset by softness in demand for catalog products. We divested the CPE productline in May 2014.Gross profit . In fiscal year 2014, our gross profit increased $31.7 million, or 29.1%, compared to fiscal year 2013. Gross margin of 41.6%, decreased 3.4%compared to fiscal year 2013. The higher gross profit was largely the result of leveraging greater revenue against fixed costs compared to fiscal year 2013. Thedecline in gross margin percentage included the effect of the step-up in valuation of Mindspeed’s inventory to fair value and other acquisition and integration costsincreasing costs by $19.5 million, which offset the positive impact of selling higher margin products.Research and development . In fiscal year 2014, R&D expense increased $28.8 million, or 67.9%, to $71.4 million, or 21.0% of our revenue, compared with$42.5 million, or 17.5% of our revenue, in fiscal year 2013. R&D expenses increased primarily as a result of increased headcount and employee compensationrelated to acquired businesses, of which approximately $4.5 million related to Mindspeed acquisition and integration costs.Selling, general and administrative . In fiscal year 2014, SG&A expense increased $24.7 million, or 42.6%, to $82.6 million, or 24.4% of our revenue,compared with $57.9 million, or 23.9% of our revenue, for fiscal year 2013. The increase was primarily due to increased headcount and employee compensationexpense related to acquired businesses, acquisition integration expense, and increased litigation costs, of which approximately $13.9 million related to MindspeedAcquisition.Restructuring charges . In fiscal year 2014, restructuring charges were $14.8 million, or 4.4% of our revenue, compared with $1.1 million, or 0.4% of ourrevenue for fiscal year 2013. Restructuring charges were due to a reduction in headcount as part of the integration of the Mindspeed business and includedseverance, related benefits, and an immaterial amount of non-employee related charges.Income (loss) from operations . In fiscal year 2014, loss from operations decreased $35.5 million, or 461.2%, to a loss of $27.8 million, or 8.2%, of ourrevenue, compared with income from operations of $7.7 million, or 3.2%, of our revenue for fiscal year 2013. The fiscal year 2014 loss was primarily driven by theincremental costs incurred related to our acquisition and integration of Mindspeed.Warrant liability . In fiscal year 2014, we recorded an expense of $3.9 million compared to an expense of $4.3 million for fiscal year 2013. The expenserelates to the change in the estimated fair value of common stock warrants we issued in December 2010, which we carry as a liability at fair value.Interest expense . In fiscal year 2014, interest expense was $12.4 million, or 3.6% of our revenue, compared with $0.8 million, or 0.3% of our revenue forfiscal year 2013, primarily due to increased borrowings outstanding under our Credit Agreement at higher interest rates. The borrowings were primarily utilized tofund our Mindspeed and Nitronex Acquisitions.Other income . In fiscal year 2014, other income was $3.2 million for services and fees earned under a transition services agreement related to a businesssold during the fiscal year. 52Table of ContentsDiscontinued Operations . See Note 19 to the Consolidated Financial Statements for additional information.Provision for income taxes . In fiscal year 2014, the provision for income taxes was a benefit of $16.1 million compared to an expense of $0.3 million forfiscal year 2013. The provision for income taxes decreased primarily due to a current period taxable loss in the U.S. for which we have recorded a benefit, partiallyoffset by income taxed in foreign jurisdictions.The difference between the U.S. federal statutory income tax rate of 35% and the Company’s effective income tax rates for fiscal year 2014 and 2013, wasprimarily impacted by changes in fair values of the stock warrant liability which are not deductible nor taxable for tax purposes, as well as income taxed in foreignjurisdictions at generally lower tax rates, partly offset by U.S. state income taxes, and, for fiscal year 2014, by nondeductible expenses for tax purposes resultingfrom the Mindspeed Acquisition and pre-acquisition Nitronex losses.The aggregate net deferred income tax assets acquired in the Mindspeed Acquisition were $92.9 million, net of a $9.2 million valuation allowance. Avaluation allowance is required to the extent we believe that it is more likely than not our deferred tax assets will not be recovered.At the date of acquisition, Mindspeed had federal NOL carryforwards of approximately $668.8 million, which will expire at various dates through 2033, andfederal research and development tax credit carryforwards of $19.9 million. Both the NOL and the tax credits are subject to change-in-control limitations within theInternal Revenue Code and, accordingly, these carryforwards were reduced to $307.0 million, the estimated realizable amount after consideration of the limitations.The NOL carryforwards and tax credits are included in the computation of net deferred income tax assets arising from the acquisition.During fiscal year 2014, the Company increased its unrecognized tax benefits by $1.7 million primarily relating to positions to be taken by the Company inits US tax filings. During fiscal year 2014, the Company settled the federal audit for fiscal years 2011 and 2012 with no material impact upon the financialstatements.LIQUIDITY AND CAPITAL RESOURCESThe following table summarizes our cash flow activities for the fiscal years ended October 2, 2015 and October 3, 2014, respectively (in thousands): Twelve Months Ended October 2, 2015 October 3, 2014 Cash and cash equivalents, beginning of period $173,895 $110,488 Net cash provided by operating activities 33,678 25,472 Net cash used in investing activities (207,425) (264,243) Net cash provided by financing activities 122,407 302,360 Effect of exchange rates on cash balances (243) (182) Cash and cash equivalents, end of period $122,312 $173,895 Cash Flow from Operating Activities:As of October 2, 2015, we held $122.3 million of cash and cash equivalents, all deposited with financial institutions. Our cash flow from operating activitiesconsists of net income for the period, adjusted for certain non-cash items and changes in operating assets and liabilities. Cash provided by operations was $33.7million in fiscal 2015 of which the principal components were net income of $48.6 million, plus noncash items of $45.8 million including depreciation andamortization expense of $54.7 million, stock-based and other noncash 53Table of Contentsincentive compensation expense of $19.4 million partially offset by gains on the disposal of discontinued businesses of $63.3 million. In addition cash used byoperating assets and liabilities were $60.7 million for fiscal 2015.Cash used by operating assets and liabilities for fiscal 2015 was driven by a use of cash of $17.0 million related to the reduction of deferred revenueprimarily related to a change in estimate associated with revenue recognition during the first quarter of fiscal 2015. Increases in accounts receivable balances were ause of cash of $13.1 million, primarily related to increases in revenue from acquisitions, and income taxes were a use of $12.5 million during the year primarilyrelated to tax payments associated with the sale of the automotive business. In addition we had a use of cash related to prepaid compensation associated with theBinOptics Acquisition that used cash of $14.6 million. With the exception of the cash used for prepaid compensation related to the BinOptics Acquisition, thesechanges in working capital generally reflect normal fluctuations relative to the timing and nature of the transactions.Cash provided by operating activities for fiscal 2014 was $25.5 million which was largely driven by a net loss of $15.3 million, plus noncash expenses of$57.8 million, and cash decreases from operating assets and liabilities of $17.0 million. The change in operating assets and liabilities included cash used ininventory of $9.6 million, accounts payable of $7.1 million, accrued expenses of $6.7 million and income taxes of $2.7 million, primarily driven by the MindspeedAcquisition and other normal fluctuations in working capital requirements. These amounts were partially offset by an increase deferred revenue of $7.6 million.Cash Flow from Investing Activities:Our cash flow used by investing activities consists primarily of cash paid for acquisitions, capital expenditures and the acquisition of intellectual property, aswell as other strategic investments. Cash used in investing activities was $207.4 million for fiscal 2015, which consisted of net business acquisition expenditures of$208.4 million for the BinOptics Acquisition. We also used $38.3 million for the purchase of property and equipment, including $8.3 million related to purchase ofour headquarters and fabrication facility in Lowell, Massachusetts, the renovation of leased facilities as well as purchases of production and manufacturingequipment, tooling, engineering equipment and software tools. We used $3.3 million for the purchase of intellectual property. These expenditures were partiallyoffset by proceeds from the sale of businesses of $81.2 million including the divestiture of the Automotive business, the wireless business of Mindspeed and thesale of our CPE communications product line.Cash Flow from Financing Activities:Cash from financing activities was $122.4 million in fiscal year 2015, driven primarily by net proceeds from our February 2015 common stock offeringtotaling $127.8 million. Proceeds from stock option exercises and employee stock plans totaled $5.5 million. We also received proceeds of $100.0 million from ourRevolving Facility during the first fiscal quarter, which was subsequently repaid during the following fiscal quarter. We made $3.5 million in payments of debt aswell as $1.5 million in capital lease payments. Repurchases of common stock related to minimum tax withholding payments for employee share-based awardstotaled $8.6 million during the period.On February 5, 2015, we completed a public offering of 7,800,000 shares of common stock at a price of $30.00 per share, of which 4,500,000 shares werenewly-issued shares sold and 3,300,000 shares were previously outstanding shares held by affiliates of John Ocampo, our Chairman of the Board and majoritystockholder prior to the offering, and held by certain funds affiliated with Summit Partners, L.P. After deducting underwriting discounts and commissions andoffering expenses, the net proceeds from shares sold in this offering were approximately $127.7 million. We used $100.0 million of the net proceeds we received inthis offering to repay outstanding borrowings under our revolving credit facility, and we expect to use the remainder of the net 54Table of Contentsproceeds for general corporate purposes. We did not receive any proceeds from the sale of shares of common stock by the selling stockholders.On May 8, 2014, we refinanced our outstanding indebtedness under our prior revolving credit facility (Prior Facility) and discharged our obligationsthereunder by entering into a credit agreement (Credit Agreement) with a syndicate of lenders. Concurrent with the execution of the Credit Agreement, weterminated the Prior Facility and repaid the outstanding $245.0 million principal and interest due through draws on the Credit Agreement. The Credit Agreementprovides for term loans in an aggregate principal amount of $350.0 million, which mature in May 2021 (Term Loans) and a revolving credit facility of initially$100.0 million, which matures in May 2019 (Revolving Facility). In February 2015, we executed an amendment to the Credit Agreement that increased ouravailable borrowing capacity under the Revolving Facility to $130.0 million. The Term Loans were issued with an original issue discount (OID) of 0.75%, which isbeing amortized over the term of the Term Loans using the straight line method, which approximates the effective interest rate method. Borrowings under both theTerm Loans and the Revolving Facility bear interest at variable rates payable quarterly. The Term Loans are payable in quarterly principal installments of 0.25% ofthe Term Loans on the last business day of each calendar quarter, with the remainder due on the maturity date.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 certainfinancial and non-financial covenants. As of October 2, 2015, we were in compliance with all financial and non-financial covenants under the Credit Agreementand we had $345.6 million of outstanding Term Loan borrowings under the Credit Agreement and $130.0 million of borrowing capacity under our RevolvingFacility.In July 2013, we announced that we had licensed GaN process technology from Global Communications Semiconductors, LLC and would be installing suchprocess technology at our Lowell, Massachusetts manufacturing facility. This installation effort continues to be a multi-year process and to involve tens of millionsof dollars of investment in capital equipment, license fees, and other related costs and expenses. We have a long-term technology licensing and transfercommitment that calls for remaining potential payments by us, as of October 2, 2015, of up to $5.0 million through July 2016.The undistributed earnings of our foreign subsidiaries are indefinitely reinvested and we do not intend to repatriate such earnings. We believe the decision toreinvest these earnings will not have a significant impact on our liquidity. As of October 2, 2015, cash held by our foreign subsidiaries was $32.2 million, which,along with cash generated from foreign operations, is expected to be used in the support of international growth and working capital requirements.We plan to use our available cash and cash equivalents, short term investments, and potential remaining borrowing capacity under our Revolving Facility forgeneral corporate purposes, including working capital, or for the acquisition of or investment in complementary technologies, design teams, products andbusinesses. We may also use a portion of our cash and cash equivalents and any amounts remaining under our Revolving Facility, which we may draw on fromtime to time, for the acquisition of, or investment in, complementary technologies, design teams, products and companies. We believe that our cash and cashequivalents, short term investments, cash generated from operations, and borrowing availability under the Revolving Facility will be sufficient to meet our workingcapital requirements for at least the next 12 months. We may need to raise additional capital from time to time through the issuance and sale of equity or debtsecurities, and there is no assurance that we will be able do so on favorable terms or at all.OFF-BALANCE SHEET ARRANGEMENTSWe do not have significant contractual obligations not fully recorded on our consolidated balance sheet or fully disclosed in the notes to our consolidatedfinancial statements. As of October 2, 2015, we do not have material off-balance sheet arrangements as defined in SEC Regulation S-K Item 303(a)(4)(ii). 55Table of ContentsCONTRACTUAL OBLIGATIONSThe following is a summary of our contractual payment obligations for consolidated debt, purchase agreements, operating leases, other commitments andlong-term liabilities as of October 2, 2015, (in thousands): Payments Due By Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Contractual Cash Obligations Long-term Debt Principal Payments $345,625 $3,500 $7,000 $7,000 $328,125 Estimated Interest Payments on Long-term Debt 89,843 16,159 31,928 30,588 11,168 Capital Lease Payments 982 558 425 — — Estimated Interest Payments on Capital Leases 29 24 5 — — Operating Lease Obligations (1) 30,228 7,343 11,731 6,875 4,279 Purchase Commitments (2) 1,183 1,183 — — — Total Contractual Cash Obligations $467,890 $28,766 $51,089 $44,464 $343,571 Other Commercial Commitments Letters of Credit $400 $400 $— $— $— Commercial Contract Commitments (3) 54,825 54,674 151 — — Total Commercial Commitments $55,225 $55,074 $151 $— $— (1)We have non-cancelable operating lease agreements for office, research, development, and manufacturing space in the U.S. and certain foreign locations. Wealso have operating leases for certain equipment, automobiles and services. These lease agreements expire at various dates through 2022 and certainagreements contain provisions for extension at substantially the same terms as currently in effect.(2)In the normal course of business, we enter into supply arrangements with certain of our suppliers to purchase minimum quantities of inventories.(3)The most significant of our commercial contract commitments relate to approximately $54.8 million of commitments related to open purchase orders.As of October 2, 2015, we had an estimated $1.3 million in asset retirement obligations for the restoration of leased facilities upon the termination of therelated leases. Although it is reasonably possible that our estimates could materially change in the next 12 months, we are presently unable to reliably estimatewhen any cash settlement of these obligations may occur.We have a long term technology licensing and transfer commitment that calls for potential payments of up to $9.0 million to one specific party in connectionwith the technology through July 2016. We have made payments of approximately $4.0 million as of October 2, 2015 and $9.4 million in aggregate on this longterm technology licensing and transfer commitment and related costs will be amortized upon completion of the transfer, which is expected to be completed duringfiscal year 2017.OTHER MATTERSInflation did not have a material impact upon our results of operations during the three-year period ended October 2, 2015.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.We are exposed to market risk in the ordinary course of business, which consists primarily of interest rate risk associated with our cash and cash equivalentsshort-term investments, and our variable rate debt, as well as foreign exchange rate risk. In addition, the value of our warrant liability is based on the underlyingprice of our common stock and changes in its value could significantly impact our warrant liability expense. 56Table of ContentsInterest rate risk . The primary objectives of our investment activity are to preserve principal, provide liquidity, and earn a money market rate of return. Tominimize market risk, we maintain our portfolio in cash and diversified short-term investments, which may consist of bank deposit and money market funds. Theinterest rates are variable and fluctuate with current market conditions. The risk associated with fluctuating interest rates is limited to this investment portfolio. Webelieve that a 10% change in interest rates would not have a material impact on our financial position or results of operations.Our exposure to interest rate risk also relates to the increase or decrease in the amount of interest expense we must pay on the outstanding debt under theCredit Agreement. The interest rates on our term loans and revolving credit facility are variable interest rates based on our lender’s prime rate or a LIBOR rate, ineach case plus an applicable margin, which exposes us to market interest rate risk when we have outstanding borrowings under the Credit Agreement. As ofOctober 2, 2015, we had $345.6 million of outstanding borrowings under the Credit Agreement. Assuming our outstanding debt remains constant under the CreditAgreement for an entire year and the applicable annual interest rate increases or decreases by 1%, our annual interest expense would increase or decrease by $3.5million.Foreign currency risk . To date, our international customer agreements have been denominated primarily in U.S. dollars. Accordingly, we have limitedexposure to foreign currency exchange rates. The functional currency of a majority of our foreign operations is U.S. dollars with the remaining operations beinglocal currency. Increases in the value of the United States dollar relative to other currencies could make our products more expensive, which could negativelyimpact demand in certain regions. Conversely, decreases in the value of the United States dollar relative to other currencies could result in our products being moreexpensive to certain customers and could reduce or delay orders, or otherwise negatively affect how they do business with us. The effects of exchange ratefluctuations on the net assets of the majority of our operations are accounted for as transaction gains or losses. We believe that a change of 10% in such foreigncurrency exchange rates would not have a material impact on our financial position or results of operations. In the future, we may enter into foreign currencyexchange hedging contracts to reduce our exposure to changes in exchange rates. 57Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.INDEX TO FINANCIAL STATEMENTS Page M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC. Report of Independent Registered Public Accounting Firm 59 Consolidated Financial Statements: Consolidated Balance Sheets 60 Consolidated Statements of Operations 61 Consolidated Statements of Comprehensive Income (Loss) 62 Consolidated Statements of Stockholders’ Equity 63 Consolidated Statements of Cash Flows 65 Notes to Consolidated Financial Statements 66 58Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofM/A-COM Technology Solutions Holdings, Inc.Lowell, MassachusettsWe have audited the accompanying consolidated balance sheets of M/A-COM Technology Solutions Holdings, Inc. and subsidiaries (the “Company”) as ofOctober 2, 2015 and October 3, 2014 and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows foreach of the three fiscal years in the period ended October 2, 2015. These consolidated financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these consolidated financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, ona test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basisfor our opinion.In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of October 2, 2015 andOctober 3, 2014, and the results of its operations and its cash flows for each of the three fiscal years in the period ended October 2, 2015 in conformity withaccounting principles generally accepted in the United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control overfinancial reporting as of October 2, 2015 based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission and our report dated November 24, 2015 expressed an adverse opinion on the Company’s internal controlover financial reporting because of a material weakness./s/ Deloitte & Touche LLPBoston, MassachusettsNovember 24, 2015 59Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except per share data) October 2, 2015 October 3, 2014 ASSETS Current assets: Cash and cash equivalents $122,312 $173,895 Short term investments 39,557 — Accounts receivable, net 83,950 62,258 Inventories 79,943 71,481 Deferred income taxes 31,431 35,957 Prepaids and other current assets 27,026 14,769 Current assets, discontinued operations — 14,989 Total current assets 384,219 373,349 Property and equipment, net 83,759 50,052 Goodwill 93,346 10,784 Intangible assets, net 243,666 142,633 Deferred income taxes 48,239 84,629 Other long-term assets 13,022 20,232 Other assets, discontinued operations — 555 Total assets $866,251 $682,234 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion long-term debt 4,058 3,478 Accounts payable 29,311 22,528 Accrued liabilities 37,599 33,596 Income taxes payable 508 865 Deferred revenue — 17,258 Other current liabilities, discontinued operations — 7,921 Total current liabilities 71,476 85,646 Long-term debt, less current portion 340,504 343,178 Warrant liability 21,822 15,801 Other long-term liabilities 7,916 9,042 Total liabilities 441,718 453,667 Commitments and contingencies (Notes 11) Stockholders’ equity: Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued — — Common stock, $0.001 par value, 300,000 shares authorized; 52,958 and 47,548 shares issued and 52,933 and 47,525 sharesoutstanding as of October 2, 2015 and October 3, 2014, respectively, of which 11 and 59 shares, respectively, are subjectto forfeiture 53 48 Accumulated other comprehensive loss (2,279) (1,354) Additional paid-in capital 526,011 377,714 Treasury stock, at cost, 23 shares as of October 2, 2015 and October 3, 2014 (330) (330) Accumulated deficit (98,922) (147,511) Total stockholders’ equity 424,533 228,567 Total liabilities and stockholders’ equity $866,251 $682,234 See notes to consolidated financial statements. 60Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data) Fiscal Years 2015 2014 2013 Revenue $420,609 $339,189 $242,703 Cost of revenue 217,019 198,249 133,505 Gross profit 203,590 140,940 109,198 Operating expenses: Research and development 82,188 71,351 42,505 Selling, general and administrative 110,030 82,593 57,930 Restructuring charges 1,280 14,823 1,060 Total operating expenses 193,498 168,767 101,495 Income (loss) from operations 10,092 (27,827) 7,703 Other (expense) income: Warrant liability expense (6,020) (3,928) (4,312) Interest expense (18,376) (12,362) (817) Other (expense) income, net (1,096) 3,217 372 Other (expense) income, net (25,492) (13,073) (4,757) (Loss) income before income taxes (15,400) (40,900) 2,946 Income tax (benefit) provision (9,858) (16,086) 283 (Loss) income from continuing operations (5,542) (24,814) 2,663 Income from discontinued operations, net of tax 54,131 9,491 15,533 Net income (loss) $48,589 $(15,323) $18,196 Net income (loss) per share: Basic income (loss) per common share: Income (loss) from continuing operations $(0.11) $(0.53) $0.06 Income (loss) from discontinued operations 1.06 0.20 0.34 Net income (loss) — basic $0.95 $(0.33) $0.40 Diluted income (loss) per common share: Income (loss) from continuing operations $(0.11) $(0.53) $0.06 Income (loss) from discontinued operations 1.06 0.20 0.33 Net income (loss) — diluted $0.95 $(0.33) $0.39 Shares used to compute net income (loss) per common share: Basic 51,146 47,009 45,916 Diluted 51,146 47,009 47,137 See notes to consolidated financial statements. 61Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(In thousands) Fiscal Years 2015 2014 2013 Net income (loss) 48,589 $(15,323) $18,196 Unrealized gain (loss) on short term investments, net of tax (97) — Foreign currency translation gain (loss), net of tax (918) (1,097) (30) Other adjustments, net of tax 90 (90) — Other comprehensive income (925) (1,187) (30) Total comprehensive income (loss) $47,664 $(16,510) $18,166 See notes to consolidated financial statements. 62Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(In thousands, except per share data) Accumulated Other ComprehensiveLoss Additional Paid-In Capital AccumulatedDeficit Total Stockholders’Equity Common Stock Treasury Stock Shares Amount Shares Amount Balance — September 28, 2012 45,452 $45 43 $(685) $(137) $361,616 $(150,384) $210,455 Capital contributions — — — — — 8,435 — 8,435 Stock option exercises 614 1 — — — 604 — 605 Vesting of restricted common stock and units 248 — — — — — — — Issuance of common stock pursuant to employeestock purchase plan 131 — — — — 1,281 — 1,281 Shares repurchased for tax withholdings on stockawards — — 6 (77) — — — (77) Retirement of treasury stock (26) — (26) 432 — (432) — Share-based and other incentive compensation — — — — — 6,096 — 6,096 Excess tax benefits — — — — — 2,180 — 2,180 Other comprehensive income — — — — (30) — — (30) Net income — — — — — — 18,196 18,196 Balance — September 27, 2013 46,419 $46 23 $(330) $(167) $379,780 $(132,188) $247,141 Capital contributions — — — — — 3,200 — 3,200 Common control business combination — — — — — (26,080) — (26,080) Common control tax benefits — — — — — 6,069 — 6,069 Stock option exercises 515 1 — — — 2,218 — 2,219 Issuance of common stock pursuant to employeestock purchase plan 150 — — — — 1,810 — 1,810 Vesting of restricted common stock and units 536 1 — — — — — 1 Shares repurchased for tax withholdings on stockawards (72) — — — — (1,282) — (1,282) Share-based and other incentive compensation — — — — — 11,277 — 11,277 Fair value of vested awards assumed in acquisition — — — — — 785 — 785 Excess tax benefits — — — — — (63) — (63) Other comprehensive income — — — — (1,187) — — (1,187) Net loss — — — — — — (15,323) (15,323) Balance — October 3, 2014 47,548 $48 23 $(330) $(1,354) $377,714 $(147,511) $228,567 (Continued) 63Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(In thousands, except per share data) Accumulated Other ComprehensiveLoss Additional Paid-In Capital AccumulatedDeficit Total Stockholders’Equity Common Stock Treasury Stock Shares Amount Shares Amount Balance — October 3, 2014 47,548 $48 23 $(330) $(1,354) $377,714 $(147,511) $228,567 Common stock issued, net of issuance costs 4,500 5 — — — 127,756 — 127,761 Vesting of restricted common stock and units 704 1 — — — — — 1 Stock option exercises 288 — — — — 2,613 — 2,613 Issuance of common stock pursuant to employeestock purchase plan 176 — — — — 2,838 — 2,838 Shares repurchased for tax withholdings on stockawards (258) (1) — — (8,555) — (8,556) Share-based and other incentive compensation — — — — — 20,655 — 20,655 Excess tax benefits — — — — — 2,990 — 2,990 Other comprehensive income — — — — (925) — — (925) Net income — — — — — — 48,589 48,589 Balance — October 2, 2015 52,958 $53 23 $(330) $(2,279) $526,011 $(98,922) $424,533 See notes to consolidated financial statements. 64Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Fiscal Years 2015 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $48,589 $(15,323) $18,196 Adjustments to reconcile net income (loss) to net cash from operating activities (net of acquisition): Depreciation and intangible amortization 54,708 34,618 14,822 Stock-based and other noncash incentive compensation 19,435 11,277 6,096 Warrant liability expense 6,020 3,928 4,312 Acquired inventory step-up amortization 5,533 18,053 — Deferred financing costs amortization and write-offs 1,651 3,021 321 Gain on disposition of business (63,256) — — Impairment of minority equity investment 3,500 — — Acquisition prepaid compensation amortization 9,623 — — Deferred income taxes 7,835 (13,328) (4,650) Other adjustments 740 186 (530) Change in operating assets and liabilities (net of acquisition): Accounts receivable (13,089) 2,223 (8,495) Inventories 92 (9,586) 3,368 Prepaid expenses and other assets 3,932 (646) (4,753) Prepaid compensation (14,586) — — Accounts payable (1,858) (7,140) (3,642) Accrued and other liabilities (5,640) (6,726) 4,337 Income taxes (12,512) (2,656) 3,714 Deferred revenue (17,039) 7,571 1,135 Payment of contingent consideration — — (5,328) Net cash from operating activities 33,678 25,472 28,903 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (38,252) (16,973) (12,336) Strategic investments 1,500 (5,250) — Purchase of short-term investments (40,183) — — Acquisition of intellectual property (3,346) (5,490) (897) Acquisition of businesses, net (208,352) (260,875) — Sale of product line — 12,000 — Sale of businesses 81,208 12,345 — Net cash used in investing activities (207,425) (264,243) (13,233) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock offering, net of issuance costs of $827 127,761 — — Borrowings from revolving credit facility 100,000 245,000 — Payments on revolving credit facility (100,000) (245,000) — Borrowings from notes payable — 350,000 — Payments on notes payable (3,500) (3,500) — Payments of assumed debt (1,504) (40,917) — Repurchase of common stock (8,626) (1,282) (77) Proceeds from stock option exercises and employee stock purchases 5,450 4,028 1,886 Capital contributions — 3,200 8,435 Other adjustments 2,826 (9,169) (26) Net cash from financing activities 122,407 302,360 10,218 Effect of exchange rate changes on cash and cash equivalents (243) (182) — NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (51,583) 63,407 25,888 CASH AND CASH EQUIVALENTS — Beginning of year $173,895 $110,488 84,600 CASH AND CASH EQUIVALENTS — End of year $122,312 $173,895 $110,488 See notes to consolidated financial statements. 65Table of ContentsM/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF BUSINESSM/A-COM Technology Solutions Holdings, Inc. (the Company) was incorporated in Delaware on March 25, 2009. We are a leading provider of high-performance analog semiconductor solutions that enable the next-generation internet applications, the cloud connected apps economy, and the modern, networkedbattlefield across the radio frequency (RF), microwave, and millimeterwave spectrum. We design and manufacture differentiated, high-value products forcustomers who demand high performance, quality, and reliability.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of Consolidation, Basis of Presentation and Reclassification —We have one reportable segment, semiconductors and modules. Theaccompanying consolidated financial statements include our accounts and the accounts of our majority-owned subsidiaries. All intercompany balances andtransactions have been eliminated in consolidation. Certain prior period financial statement amounts, including Automotive business discontinued operations havebeen adjusted to conform to current reported presentations.We have a 52 or 53-week fiscal year ending on the Friday closest to the last day of September. The fiscal year 2015 includes 52 weeks, fiscal year 2014included 53 weeks and fiscal year 2013 included 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we include the extra weekarising in our fiscal years in the first quarter.Use of Estimates —The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities during the reporting periods, the reported amounts ofrevenue and expenses during the reporting periods, and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoingbasis, we base estimates and assumptions on historical experience, currently available information, and various other factors that management believes to bereasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.Discontinued Operations —In the fourth quarter of fiscal year 2015, we divested our Automotive business. In the second quarter of fiscal year 2014, wesold assets of the non-core wireless business of Mindspeed. The operating results of these businesses are reflected in discontinued operations.Foreign Currency Translation and Remeasurement —Our consolidated financial statements are presented in U.S. dollars. While the majority of ourforeign operations use the U.S. dollar as the functional currency, the financial statements of our foreign operations for which the functional currency is not the U.S.dollar are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates (for assets and liabilities) and at average exchange rates (for revenueand expenses). The unrealized translation gains and losses on the net investment in these foreign operations are accumulated as a component of othercomprehensive income (loss).The financial statements of our foreign operations where the functional currency is the U.S. dollar, but where the underlying transactions are transacted in adifferent currency, are remeasured at the exchange rate in effect at the balance sheet date with respect to monetary assets and liabilities. Nonmonetary assets andliabilities, such as inventories and property and equipment, and related statements of operations accounts, such as cost of revenue and depreciation, are remeasuredat historical exchange rates. Revenue and expenses, other than cost of revenue, amortization and depreciation, are translated at the average exchange rate for theperiod in which the transaction occurred. The net gains and losses on foreign currency remeasurement are reflected in selling, general 66Table of Contentsand administrative expense in the accompanying consolidated statements of operations. Net foreign exchange gains and losses for all periods presented wereimmaterial.Cash and Cash Equivalents —Cash equivalents are primarily composed of short-term, highly-liquid instruments with an original maturity of three monthsor less.Investments —We classify our investments as available-for-sale. Our investments classified as available-for-sale are recorded at fair value based uponquoted market prices at period end. Unrealized gains and losses that are deemed temporary in nature are recorded in accumulated other comprehensive income andloss as a separate component of stockholders’ equity.A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishmentof a new cost basis for the security. Premiums and discounts are amortized (accreted) over the life of the related security as an adjustment to its yield. Dividend andinterest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method fordetermining the cost of investments sold.Inventories —Inventories are stated at the lower of cost or market. We use a combination of standard cost and moving weighted-average cost methodologiesto determine the cost basis for our inventories, approximating a first-in, first-out basis. The standard cost of finished goods and work-in-process inventory iscomposed of material, labor and manufacturing overhead, which approximates actual cost. In addition to stating inventory at the lower of cost or market, we alsoevaluate inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historical experience, assessmentof economic conditions and expected demand. Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory.Property and Equipment —Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance andrepairs are charged to expense as incurred, whereas major improvements that significantly extend the useful life of the assets are capitalized as additions to propertyand equipment.Property and equipment are depreciated or amortized using the straight-line method over the following estimated useful lives: Asset Classification Estimated Useful Life In YearsBuildings and improvements 40Machinery and equipment 2 – 7Computer equipment and software 2 – 5Furniture and fixtures 7 – 10Leasehold improvements Shorter of useful life or term of leaseGoodwill and Indefinite-lived Intangible Assets —We have goodwill and certain intangible assets with indefinite-lives which are not subject toamortization; these are reviewed for impairment annually during our fiscal fourth quarter and more frequently if events or changes in circumstances indicate thatthe assets may be impaired. For our assessment of goodwill impairment we compare the carrying value of the reporting unit to the fair value of the Company. Ifimpairment exists, a loss would be recorded to write down the value of the indefinite-lived assets to their implied fair values. There have been no impairments ofgoodwill or indefinite-lived intangible assets in any period presented through October 2, 2015.Other Intangible Assets —Our other intangible assets, including acquired technology and customer relationships, are definite-lived assets and are subject toamortization. We amortize definite-lived assets over 67Table of Contentstheir estimated useful lives, which range from five to ten years, generally based on the pattern over which we expect to receive the economic benefit from theseassets.Impairment of Long-Lived Assets —Long-lived assets include property and equipment and definite-lived intangible assets subject to amortization. Weevaluate long-lived assets for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Circumstanceswhich could trigger a review include, but are not limited to, significant decreases in the market price of the asset or asset group, significant adverse changes in thebusiness climate or legal factors, the accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset,current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset and a currentexpectation that the asset will more likely than not, be sold or disposed of significantly before the end of its previously estimated useful life.In evaluating a long-lived asset for recoverability, we estimate the undiscounted cash flows expected to result from our use and eventual disposition of theasset. If the sum of the expected undiscounted cash flows is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carryingamount over the fair value of the asset, is recognized. There were no impairments of long-lived assets in any period presented. Intangible assets related to in-process research and development acquired are not amortized until the underlying asset begins revenue generating activity, at which time it is amortized over itsestimated useful life. Intangibles related to abandoned in-process research and development projects are expensed in the period the project is abandoned.Revenue Recognition —We recognize revenue when: (i) persuasive evidence of an arrangement exists; (ii) delivery or services have been rendered; (iii) theprice is fixed or determinable; and (iv) collectability is reasonably assured. We recognize revenue with the transfer of title and risk of loss and provide for reservesfor returns and other allowances.We generally do not provide customers other than distributors the right to return product, with the exception of warranty related matters. Accordingly, we donot typically maintain a reserve for customers. Shipping and handling fees billed to customers are recorded as revenue while the related costs are classified as acomponent cost of revenue. We provide warranties for certain products and accrue the costs of warranty claims in the period the related revenue is recorded.Prior to fiscal 2015, we had concluded that we had insufficient information as well as limited experience in estimating the effect of the right of distributors toreturn product and price protection and, accordingly, used the sell through approach of revenue recognition. Under this approach, we would recognize revenue fromsales after the distributor resold the product to its end customer (the sell through basis). After concluding an extensive three year study of distributor relatedtransactions, we completed an evaluation of our revenue recognition policy and concluded that it was more appropriate to recognize revenue to distributors at thetime of shipment to the distributor (sell-in basis). We believe we now have sufficient data to predict future price adjustments from distributors and has a basis ofbeing able to reasonably estimate these future price adjustments.On a consolidated basis, revenue from distribution customers impacted by the change in estimate accounts for approximately 20-25% of total consolidatedrevenue. Certain agreements with distribution customers provide for rights of return and compensation credits until such time as our products are sold by thedistributors to their end customers. We have agreements with some distribution customers for various programs, including compensation, volume-based pricing,obsolete inventory, new products and stock rotation. Sales to these distribution customers, as well as the existence of compensation programs, are in accordancewith terms set forth in written agreements with these distribution customers. In general, credits allowed under these programs are capped based upon individualdistributor agreements. We record charges associated with these programs as a reduction of revenue at the time of sale with a corresponding adjustment to accountsreceivable based upon 68Table of Contentshistorical activity. Our policy is to use a 12 month rolling historical experience rate and an estimated general reserve percentage in order to estimate the necessaryallowance to be recorded.During the first fiscal quarter of 2015, we recorded corresponding adjustments related to this change in estimate to recognize previously deferred revenues.The net effect was an increase of $15.1 million, of which $12.4 million was from previously deferred revenue and $2.7 million was related to the change indistributor inventories. Additionally, we recognized the related deferred inventory costs of $4.7 million which resulted in a reduction to net loss of $8.5 million, ora reduction of $0.18 net loss per share when the change in estimate was recorded. The full year impact of this change in estimate resulted in additional revenue of$17.4 million and a net income of $7.7 million, or $0.15 earnings per share.We also established a new reserve of $5.6 million during the first quarter of fiscal year 2015 which was increased to $6.0 million for the fiscal year endedOctober 2, 2015 related to future rebates and returns under various programs associated with our distributor agreements. The amount of this reserve is largelydriven by the individual distribution agreements and our business strategy whereby we will invoice the distributor at “list price”. We expect to issue compensationcredits consistent with the distributor agreements. The difference between the list price and distributor selling price will vary by product grouping consistent withhistorical trends and marketing strategies. Historically, 90 percent of the credits issued to distributors are based on “list price” credits and 10 percent of the creditswere for product returns and stock rotation rights, based upon the 12 month rolling historical experience rate.The table below shows the changes in gross and net distributor revenue and reserve balances associated with the change in estimate for the fiscal year endedOctober 2, 2015 (in thousands): Three Months Ended Fiscal Year January 2,2015 April 3, 2015 July 3, 2015 October 2,2015 2015 Gross revenue effect of one-time change in estimate (1) $17,028 $— $— $— $17,028 Gross revenue effect associated with change in estimate (2) 3,636 4,687 (1,687) (351) 6,285 Total gross revenue resulting from change in estimate 20,664 4,687 (1,687) (351) 23,313 Net revenue effect of one-time change in estimate (3) 12,457 — — 12,457 Net revenue effect associated with change in estimate (4) 2,643 3,686 (1,296) (134) 4,899 Total net revenue resulting from change in estimate 15,100 3,686 (1,296) (134) 17,356 Reserve for future returns and credits (5) $5,564 $1,001 $(391) $(217) $5,957 (1)This amount was recorded as deferred revenue as of October 3, 2014. (2)This amount represents the impact of the change in estimate associated with increases in distributor inventories as compared to the prior reporting period. (3)This amount represents the net revenue impact of the one-time change in estimate after applying the associated reserve for future credits and returns. (4)This amount represents the impact of the change in estimate associated with increases in distributor inventories as compared to the prior reporting periodafter applying the associated reserve for future credits and returns. (5)This amount reflects the change in the revenue reserve for future returns and credits. 69Table of ContentsAccounts Receivable Allowances —The activity in our accounts receivable allowances which includes compensation credits, customer returns, doubtfulaccounts and other items are as follows (in thousands): Fiscal year 2015 2014 2013 Beginning balance $725 $514 $834 Provisions (recoveries), net 5,056 250 (259) Charge-offs (36) (39) (61) Ending balance $5,745 $725 $514 Includes compensation credits and customer returns allowance of $5.5 million, $0.4 million and $0.3 million for fiscal years 2015, 2014 and 2013,respectively. Includes allowance for doubtful accounts of $0.2 million for fiscal 2015, 2014 and 2013.Research and Development Costs —Costs incurred in the research and development of products are expensed as incurred.Income Taxes —Deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases ofassets and liabilities, using rates anticipated to be in effect when such temporary differences reverse. A valuation allowance against net deferred tax assets isrequired if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.We provide reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. Reserves are based on adetermination of whether and how much of a tax benefit is taken by us in our tax filings or positions and that are more likely than not to be realized following anexamination by taxing authorities. We recognize the financial statement benefit of an uncertain tax position only after considering the probability that a taxauthority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financialstatements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit isrecognized. Potential interest and penalties associated with such uncertain tax positions are recorded as a component of income tax expense.Nitronex elected, for U.S. income tax purposes, to be taxed as a limited-liability company. As such, for the periods prior to its acquisition by us, Nitronex’sfederal and state income taxes are the responsibility of GaAs Labs and no provision for income taxes is recorded in the financial statements for such periods.Earnings Per Share —Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period, excluding the dilutive effect of common stock equivalents. Diluted net income (loss) per sharereflects the dilutive effect of common stock equivalents, such as stock options, warrants, and restricted stock units, using the treasury stock method.Fair Value Measurements —Financial assets and liabilities are measured at fair value. Fair value is an exit price, representing the amount that would bereceived from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-basedmeasurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering suchassumptions, we group financial assets and liabilities in a three-tier fair value hierarchy, according to the inputs used in measuring fair value as follows: Level 1—observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2—inputs other than quoted prices in active markets that areobservable either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical assets and liabilities inmarkets that are not active, and model-based valuation techniques for which significant assumptions are observable in active markets; and Level 3—unobservableinputs for which there is little or no market data, requiring us to develop our own assumptions for model-based valuation techniques. This hierarchy requires us touse observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. 70Table of ContentsThe carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these assets and liabilities.Contingent Consideration —We estimate and record at the acquisition date, the fair value of contingent consideration making up part of the purchase priceconsideration for acquisitions. Additionally, at each reporting period, we estimate the change in the fair value of contingent consideration, and any change in fairvalue is recognized in the consolidated statements of operations. We estimate the fair value of contingent consideration by discounting the associated expected cashflows, using a probability-weighted, discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to bemade regarding future operating results, discount rates, and probabilities assigned to various potential operating result scenarios.Share-Based Compensation —We account for all share-based compensation arrangements using the fair value method. We recognize compensationexpense over the requisite service period of the award, which is generally the vesting period, using the straight-line method and providing that the minimumamount of compensation recorded is equal to the vested portion of the award. We record the expense in the consolidated statements of operations in the samemanner in which the award recipients’ costs are classified. We use the Black-Scholes option-pricing model to estimate the fair value of stock options, inclusive ofassumptions for risk-free interest rates, dividends, expected terms, and estimated volatility. We derive the risk-free interest rate assumption from the U.S.Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to the expected term of the award being valued. We base the assumed dividend yieldon its expectation of not paying dividends in the foreseeable future. We calculate the weighted-average expected term of the options using the simplified method,which is a method of applying a formula that uses the vesting term and the contractual term to compute the expected term of a stock option. The decision to use thesimplified method is based on a lack of relevant historical data, due to our limited operating experience. In addition, due to our limited historical data, weincorporate the historical volatility of comparable companies with publicly available share prices to determine estimated volatility. The accounting for stock optionsrequires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.Guarantees and Indemnification Obligations —We enter into agreements in the ordinary course of business with, among others, customers, distributors,and original equipment manufacturers (OEM). Most of these agreements require us to indemnify the other party against third-party claims alleging that a Companyproduct infringes a patent and/or copyright. Certain agreements in which we grant limited licenses to specific Company trademarks require us to indemnify theother party against third-party claims alleging that the use of the licensed trademark infringes a third-party trademark. Certain of these agreements require us toindemnify the other party against certain claims relating to property damage, personal injury, or the acts or omissions, its employees, agents, or representatives. Inaddition, from time to time, we have made certain guarantees in the form of warranties regarding the performance of Company products to customers.We have agreements with certain vendors, creditors, lessors, and service providers pursuant to which we have agreed to indemnify the other party forspecified matters, such as acts and omissions, its employees, agents, or representatives.We have procurement or license agreements with respect to technology that are used in our products and agreements in which we obtain rights to a productfrom an OEM. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party with respect toour acts or omissions relating to the supplied products or technologies.Our certificate of incorporation and agreements with certain of our directors and officers and certain of our subsidiaries’ directors and officers provide themindemnification rights, to the extent legally permissible, against liabilities incurred by them in connection with legal actions in which they may become involved byreason of their service as a director or officer. As a matter of practice, we have maintained director and officer liability insurance coverage, including coverage fordirectors and officers of acquired companies. 71Table of ContentsWe have not experienced any losses related to these indemnification obligations in any period presented, and no claims with respect thereto were outstandingas of October 2, 2015. We do not expect significant claims related to these indemnification obligations and, consequently, have concluded that the fair value ofthese obligations is negligible. No liabilities related to indemnification liabilities have been established.Recent Accounting Pronouncements —In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . ASU 2014-09 requiresrevenue recognition to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled inexchange for those goods or services. ASU 2014-09 sets forth a new revenue recognition model that requires identifying the contract, identifying the performanceobligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing the revenue upon satisfaction ofperformance obligations. The amendments in ASU 2014-09 can be applied either retrospectively to each prior reporting period presented or retrospectively with thecumulative effect of initially applying the update recognized at the date of the initial application along with additional disclosures. On July 9, 2015, the FASB votedto defer the effective date by one year to interim and annual reporting periods beginning after December 15, 2017, and permitted early adoption of the standard, butnot for periods beginning on or before the original effective date of December 15, 2016. We have not yet selected a transition method and are currently evaluatingthe impact of ASU 2014-09.In June 2014, the FASB issued ASU 2014-12- Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms ofan Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) whichaddresses how to account for share-based performance awards including determining rendering service on the date the performance target is achieved. We arecurrently evaluating the impact of ASU 2014-12, which is effective for annual periods and interim periods within those annual periods, beginning afterDecember 15, 2015.In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis. ASU 2015-02 address concerns regarding thecurrent accounting for consolidation of certain legal entities. A reporting entity may apply the amendments in this Update using a modified retrospective approachby recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendmentsretrospectively. We are currently evaluating the impact of ASU 2015-02, which is effective for us in our fiscal years, and for interim periods within those fiscalyears, beginning after December 15, 2015.In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requiresthat debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability,consistent with debt discounts. We are currently evaluating the impact which is effective for us in our fiscal years beginning after December 15, 2015, and interimperiods within those fiscal years.In August 2015, the FASB issued Accounting Standards Update 2015-15 (“ASU 2015-15”), “Presentation and Subsequent Measurement of Debt IssuanceCosts Associated with Line-of-Credit Arrangements.” ASU 2015-15 supplements the requirements of ASU 2015-03 by allowing an entity to defer and present debtissuance costs related to a line of credit arrangement as an asset and subsequently amortize the deferred costs ratably over the term of the line of credit arrangement.We are currently evaluating the impact and do not expect the adoption to have a material impact on our consolidated financial statements.In September 2015, the FASB issued ASU 2015-16, “ Business Combinations (Topic 805): Simplifying the Accounting for Measurement-PeriodAdjustments, ” which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively.Acquirers would now recognize measurement-period adjustments during the period in which they determine the amount of the adjustment. This ASU is effectivefor annual and interim reporting periods beginning after December 15, 2015, including interim periods within those fiscal years, and should be appliedprospectively to adjustments for provisional amounts that occur after the effective date with early adoption permitted for financial statements that have not beenissued. We do not expect the adoption to have a material impact on our consolidated financial statements. 72Table of ContentsEvaluation of Subsequent Events —Management has evaluated subsequent events for potential recognition or disclosure in the accompanying auditedconsolidated financial statements through the date of the issuance of the consolidated financial statements. Subsequent events are events or transactions thatoccurred after the balance sheet date but before the accompanying consolidated financial statements are issued. See Note 25 to the Consolidated FinancialStatements.3. ACQUISITIONSAcquisition of BinOptics Corporation — On December 15, 2014, we completed the acquisition of BinOptics, a supplier of high-performance photonicsemiconductor products. In accordance with the related Agreement and Plan of Merger, all of the outstanding equity interests (including outstanding warrants) ofBinOptics were exchanged for aggregate consideration of approximately $208.4 million in cash. In addition we paid $14.6 million as part of a related retentionescrow agreement designed to retain certain BinOptics employees. This $14.6 million was included in the terms of the purchase agreement and has been accountedfor as a post-closing prepaid expense. We funded the BinOptics Acquisition with a combination of cash on hand and the incurrence of $100.0 million of additionalborrowings under our existing Revolving Facility. For the twelve months ended October 2, 2015, we recorded transaction costs of approximately $4.2 millionrelated to the BinOptics Acquisition in selling, general and administrative expense in the accompanying consolidated statements of operations.The BinOptics Acquisition was accounted for as a purchase and the operations of BinOptics have been included in our consolidated financial statementssince the date of acquisition.We recognize the BinOptics assets acquired and liabilities assumed based upon the fair value of such assets and liabilities measured as of the date ofacquisition. The aggregate purchase price for BinOptics is being allocated to the tangible and identifiable intangible assets acquired and liabilities assumed basedon their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenuesynergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated to goodwill,none of which is tax deductible.The Company expects to finalize its allocation of purchase price within 12 months of December 15, 2014. The preliminary allocation of purchase price as ofOctober 2, 2015, is as follows (in thousands): Original Allocation Allocation Adjustments October 2, 2015Adjusted Allocation Current assets $41,836 $(18,162) $23,674 Intangible assets 135,254 1,646 136,900 Other assets 14,090 (4,896) 9,194 Total assets acquired 191,180 (21,412) 169,768 Liabilities assumed: Debt 1,491 1,044 2,535 Deferred income taxes 37,745 (4,400) 33,345 Other liabilities 12,810 296 13,106 Total liabilities assumed 52,046 (3,060) 48,986 Net assets acquired 139,134 (18,352) 120,782 Consideration: Cash paid upon closing, net of cash acquired 224,114 (15,762) 208,352 Goodwill $84,980 $2,590 $87,570 73Table of ContentsThe $15,762 of allocation adjustments shown above in the “Cash paid upon closing, net of cash acquired” caption consists of the following (in thousands): Cash paid uponclosing, net of cash acquired Original Allocation $224,114 Reclassification of prepaid compensation (14,586) Reclassification of assumed capital lease debt (1,044) Reclassification of escrow fees (17) Cash received from acquiree related to working capital true-up (115) Allocation Adjustments (15,762) Adjusted Allocations at October 2, 2015 $208,352 The prepaid compensation item above is to reclassify the employee retention escrow payment previously reported as a cash outflow from investing activities,to cash outflows from operating activities. The assumed capital lease debt item above is to show the gross capital lease debt assumed in the acquisition, notpreviously shown as part of purchase consideration.The components of the acquired intangible assets on a preliminary basis are as follows (in thousands): Amount Useful Lives(Years) Developed technology $17,500 7 Customer relationships 119,400 10 $136,900 The overall weighted-average life of the identified intangible assets acquired in the BinOptics Acquisition is estimated to be 9.6 years and the assets arebeing amortized over their estimated useful lives based upon the pattern over which we expect to receive the economic benefit from these assets.The purchase accounting is preliminary and subject to completion including the areas of taxation where we are finalizing a study of the potential utilizationof acquired net operating losses is not yet complete, and certain fair value measurements, particularly the finalization of the valuation assessment of the acquiredtangible and intangible assets. The adjustments arising from the completion of the outstanding matters may materially affect the preliminary purchase accounting.The following is a summary of BinOptics revenue and earnings included in the accompanying consolidated statements of operations for the twelve monthsended October 2, 2015 (in thousands): Twelve Months EndedOctober 2, 2015 Revenue $61,549 Income before income taxes 354 Unaudited Supplemental Pro Forma Data —The pro forma statements of operations data for the twelve months ended October 2, 2015 and October 3,2014, below, give effect to the BinOptics Acquisition, described above, as if it had occurred at September 28, 2013. These amounts have been calculated afterapplying our accounting policies and adjusting the results of BinOptics to reflect the acquisition costs of $9.3 million, change of control and retention payments, theimpact of the step-up to the value of the acquired inventory, as well as additional amortization that would have been charged assuming the fair value adjustments tointangible assets and additional interest expense on acquisition-related borrowings had been applied and incurred since 74Table of ContentsSeptember 28, 2013. This pro forma data is presented for informational purposes only and does not purport to be indicative of our future results of operations. Twelve Months Ended October 2, 2015 October 3, 2014 Revenue $428,440 $384,452 Loss from continuing operations before income taxes (3,489) (98,119) The table above represents proforma net income (loss) which differs from the actual results due to adjustments related to inventory step-up and intangibleamortization expense which were reflected in fiscal 2014, as well as compensation costs paid to BinOptics employees and transaction costs paid to third parties inconnection with the BinOptics acquisition.Acquisition of Mindspeed Technologies, Inc. —On December 18, 2013, we completed the acquisition of Mindspeed Technologies, Inc. (Mindspeed), asupplier of semiconductor solutions for communications infrastructure applications (Mindspeed Acquisition). We acquired Mindspeed to further our expansion intohigh-performance analog products.We completed the Mindspeed Acquisition through a cash tender offer (Offer) by Micro Merger Sub, Inc. (Merger Sub), a wholly-owned subsidiary, for all ofthe outstanding shares of common stock, par value $0.01 per share, of Mindspeed (Shares) at a purchase price of $5.05 per share, net to the seller in cash, withoutinterest, less any applicable withholding taxes (Offer Price). Immediately following the Offer, Merger Sub merged with and into Mindspeed, with Mindspeedsurviving as a wholly-owned subsidiary. At the effective time of the merger, each Share not acquired in the Offer (other than shares held by us, Merger Sub andMindspeed, and shares of restricted stock assumed by us in the merger) was converted into the right to receive the Offer Price. We funded the MindspeedAcquisition through the use of available cash and borrowings under its revolving credit facility (see Note 8 below). The aggregate purchase price for the Shares, netof cash acquired, was $232.0 million and we assumed $81.3 million of liabilities and incurred costs of $4.5 million expensed during fiscal year 2014.The Mindspeed Acquisition was accounted for as a purchase and the operations of Mindspeed have been included in our consolidated financial statementssince the date of acquisition.We are recognizing all assets acquired and liabilities assumed based upon the fair value of such assets and liabilities measured as of the date of acquisition.The aggregate purchase price for Mindspeed is being allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on theirestimated fair values at the date of acquisition. None of the goodwill resulting from this acquisition is deductible for tax purposes. 75Table of ContentsWe completed the allocation of purchase price during the fourth quarter of fiscal 2014, as follows (in thousands): Final Allocation Assets acquired: Current assets $50,612 Intangible assets 138,663 Deferred income taxes 92,881 Other assets 31,788 Total assets acquired 313,944 Liabilities assumed: Current liabilities 35,270 Debt 40,177 Other long-term liabilities 5,865 Total liabilities assumed 81,312 Net assets acquired 232,632 Consideration: Cash paid upon closing, net of cash acquired $232,028 Fair value of vested awards assumed in acquisition 785 Total consideration 232,813 Goodwill 181 In connection with the Mindspeed Acquisition, we assumed all of the outstanding options and all unvested restricted stock awards under Mindspeed’s equityplans and converted such options and stock awards into equivalent awards under the same general terms and conditions as were in existence with adjustments madeto shares and exercise prices, if any, pursuant to a formula stipulated in the terms of the acquisition. The fair value of the assumed options and stock awards was$4.1 million, of which $0.8 million relates to vested stock options which has been included in the purchase consideration and the remainder relates to unvestedstock options and stock awards, which will be expensed as the remaining services are provided.The elements of the acquired intangible assets were as follows (in thousands): Amount Useful Lives (Years)Developed technology $109,263 7Customer relationships 11,430 10In-process research and development 17,970 N/A $138,663 The overall weighted-average life of the identified intangible assets acquired in the acquisition is estimated to be seven years.The following is a summary of Mindspeed revenue and earnings included in our accompanying consolidated statements of operations for fiscal year 2014 (inthousands): Revenue $94,613 Loss from continuing operations before income taxes (9,266) 76Table of ContentsUnaudited Supplemental Pro Forma Data —The pro forma statements of operations data for fiscal year 2014 below give effect to the MindspeedAcquisition, described above, as if it had occurred at September 29, 2012. These amounts have been calculated after applying our accounting policies and adjustingthe results of Mindspeed to reflect the acquisition costs of $4.5 million paid by us, $14.1 million of restructuring charges and change-in-control payments, theimpact of the step-up to fair value of the acquired inventory, as well as the additional depreciation and amortization that would have been charged assuming the fairvalue adjustments to property, plant and equipment and intangible assets and additional interest expense on acquisition-related borrowings had been applied andincurred since September 29, 2012. This supplement pro forma earnings for fiscal year 2014 and 2013 were adjusted to exclude discontinued operations. This proforma data is presented for informational purposes only and does not purport to be indicative of our future results of operations. Twelve Months Ended October 3, 2014 September 27,2013 (in thousands) Revenue $358,645 $380,362 Loss from continuing operations before income taxes (21,164) (43,007) Acquisition under Common Control —On February 13, 2014, we acquired Nitronex, an entity under common control, through a cash payment of $26.1million for all of the outstanding ownership interests of Nitronex. We funded the Nitronex Acquisition through the use of available cash and borrowings under itsrevolving credit facility. The purchase price includes $3.9 million held on account by a third-party escrow agent pending any claims by us in connection withgeneral representation matters made by GaAs Labs in the transaction. The indemnification period expired in August 2015, at which point all but $500,000 of theescrow fund was released to GaAs Labs and the remainder was retained by the escrow agent pending final resolution of an outstanding indemnity claim.Other Acquisitions —In the fiscal fourth quarter of 2014 we acquired two businesses, IKE Micro and Photonic Controls. The first acquisition, IKE Micro,is a specialized build-to-print house based in Nashua, New Hampshire. The primary purpose of IKE Micro acquisition is to drive COGS reductions and furtherimprove gross margin in our Optoelectronics business. The second acquisition, Photonic Controls, is a small design company based in Corning, New York whichspecializes in photonic semiconductor development and system design. Their primary focus is to design silicon photonic chips for 100G/400G optical networks andfuture aerospace and defense applications.The assets acquired and liabilities assumed were recorded at their fair values and operating results were included in the consolidated financial statementsfrom the date of acquisition. All accounting has been completed for the acquisitions, which resulted in goodwill of $3.9 million and intangible assets, includingmanufacturing know-how and customer relationships, of $1.6 million recorded on the date of acquisition, which will be amortized over 7-10 years. Additionally,we recorded a contingent consideration liability of $1.2 million related to the acquisition of Photonic Controls which is included in other long-term liabilities in theaccompanying consolidated balance sheet as of October 2, 2015. The maximum possible payment of contingent purchase price is $1.3 million. Approximately $1.7million of the goodwill resulting from these acquisitions is deductible for tax purposes. The acquisitions were not material to our consolidated financial statements. 77Table of Contents4. INVESTMENTSDuring the fourth quarter of 2015, we purchased investment securities for approximately $40.2 million. We did not hold any available-for-sale securities asof October 3, 2014. All investments are classified as available-for-sale. The amortized cost, gross unrealized holding gains or losses, and fair value of our available-for-sale investments by major investments type are summarized in the tables below (in thousands): October 2, 2015 AmortizedCost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Aggregate Fair Value Corporate bonds $24,546 $5 $(89) $24,462 US treasuries and agency bonds 15,108 3 (16) 15,095 Total investments $39,654 $8 $(105) $39,557 The contractual maturities of available-for-sale investments were as follows (in thousands): October 2,2015 Less than 1 year $16,259 Over 1 year 23,298 Total investments $39,557 Available-for-sale investments are reported at fair value and as such, their associated unrealized gains and losses are reported as a separate component ofstockholders’ equity (deficit) within accumulated other comprehensive income (loss).Other Investments —We determined the appropriate classification of our investments at the time of acquisition and re-evaluate such determination at eachbalance sheet date. We record at cost non-marketable equity investments where we do not have the ability to exercise significant influence or control andperiodically reviews such investments for impairment.During fiscal year 2015 and 2014, we made a minority investment of $0.5 million and $0.3 million, respectively in the convertible debt of a privately-heldU.S. based company. This investment was included in the assets sold in connection with the Automotive business.During fiscal year 2014, we made a minority investment of $5.0 million in the equity of a privately-held U.S. based company. This minority equityinvestment was accounted for under the cost method and is included on the consolidated balance sheets in other long-term assets. During the second fiscal quarterof 2015, the privately-held U.S. based company was sold to a third party which provided us with information that the underlying value of the investment had beenimpaired at April 3, 2015. Accordingly, we recorded an impairment charge of $3.5 million which is included in Other Expense in the Consolidated Statement ofOperations during fiscal year 2015. We received $1.5 million in exchange for the equity investment during fiscal year 2015. 78Table of Contents5. FAIR VALUEAssets and liabilities measured at fair value on a recurring basis consist of the following (in thousands): October 2, 2015 Fair Value Active Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) Assets Money market funds $15,000 $15,000 $— $— US treasuries and agency bonds 15,095 — 15,095 — Corporate bonds 24,462 — 24,462 — Total assets measured at fair value $54,557 $15,000 $39,557 $— Liabilities Contingent consideration $1,150 $— $— $1,150 Common stock warrant liability 21,822 — — 21,822 Total liabilities measured at fair value $22,972 $— $— $22,972 October 3, 2014 Fair Value Active Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) Assets Trading securities $250 $— $— $250 Total assets measured at fair value $250 $— $— $250 Liabilities Contingent consideration $820 $— $— $820 Warrant liability 15,801 — — 15,801 Total liabilities measured at fair value $16,621 $— $— $16,621 The changes in assets and liabilities with inputs classified within Level 3 of the fair value hierarchy consist of the following (in thousands): Fiscal Year 2015 October 3, 2014 Net Realized/Unrealized Losses (Gains) Included in Earnings Purchases and Issuances Sales and Settlements Transfers in and/or (out) of Level 3 October 2, 2015 Trading securities $250 $— $500 $(750) $— $— Contingent consideration $820 $330 $— $— $— $1,150 Warrant liability $15,801 $6,021 $— $— $— $21,822 79Table of Contents Fiscal Year 2014 September 27, 2013 Net Realized/Unrealized Losses (Gains) Included in Earnings Purchases and Issuances Sales and Settlements Transfers in and/or (out) of Level 3 October 3, 2014 Trading securities $— $— $250 $— $— $250 Contingent consideration $— $— $820 $— $— $820 Warrant liability $11,873 $3,928 $— $— $— $15,801 Fiscal Year 2013 September 28, 2012 Net Realized/Unrealized Losses (Gains) Included in Earnings Purchases and Issuances Sales and Settlements Transfers in and/or (out) of Level 3 September 27, 2013 Contingent consideration $6,580 $(577) $— $(6,003) $— $— Warrant liability $7,561 $4,312 $— $— $— $11,873 Money market funds which are included in cash and cash equivalents, are actively traded and consist of highly liquid investments with original maturities of90 days or less. They are measured at their net asset value (“NAV”) and classified as Level 1. Corporate, treasury and agency bonds are categorized as Level 2assets except where sufficient quoted prices exist in active markets, in which case such securities are categorized as Level 1 assets. These securities are valuedusing third-party pricing services. These services may use, for example, model-based pricing methods that utilize observable market data as inputs. Broker dealerbids or quotes of securities with similar characteristics may also be used. Our policy is to recognize significant transfers between levels at the actual date of theevent. We had no transfers of financial assets or liabilities between Level 1, Level 2 or Level 3 during the periods presented.The fair values of the contingent consideration liabilities were estimated based upon a risk-adjusted present value of the probability-weighted expectedpayments by us. Specifically, we considered base, upside and downside scenarios for the operating metrics upon which the contingent payments are to be based.Probabilities were assigned to each scenario and the probability-weighted payments were discounted to present value using risk-adjusted discount rates.As of October 2, 2015 and October 3, 2014, the fair value of the common stock warrants has been estimated using a Black-Scholes option pricing modelgiving consideration to the quoted market price of the common stock on that date, an expected lives of 5.2 years and 6.2 years, expected volatility of 36.0% and42.3% and risk free rates of 1.30% and 2.16%, respectively. The change in approach to estimation results from our IPO in March 2012 and the availability of aquoted market price for the common stock underlying the warrants.These estimates include significant judgments and actual results could materially differ and have a material impact upon the values of the recorded liabilities.Any changes in the estimated fair values of the liabilities in the future will be reflected in our earnings and such changes could be material.6. INVENTORIESInventories consist of the following (in thousands): October 2, 2015 October 3, 2014 Raw materials $44,329 $34,919 Work-in-process 3,086 5,500 Finished goods 32,528 31,062 Total $79,943 $71,481 80Table of Contents7. PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment consist of the following (in thousands): October 2, 2015 October 3, 2014 Land, buildings and improvements $10,981 $— Machinery and equipment 89,852 67,427 Leasehold improvements 9,161 7,958 Furniture and fixtures 983 1,017 Construction in process 25,898 12,918 Computer equipment and software 9,307 7,648 Total property and equipment 146,182 96,968 Less accumulated depreciation and amortization (62,423) (46,916) Property and equipment — net $83,759 $50,052 Depreciation and amortization expense related to property and equipment for fiscal years 2015, 2014, and 2013 was $15.7 million, $14.0 million and $10.5million, respectively.8. DEBTOn September 26, 2013, and as amended November 5, 2013, we entered into an amended and restated loan agreement with a syndicate of lenders, whichprovided for a revolving credit facility of up to $300.0 million that was due to mature in September 2018 (Prior Facility). Borrowings under the revolving creditfacility bore a variable interest rate based on either the lender’s prime rate or a LIBOR rate, plus an applicable margin. The revolving credit facility was secured bya first priority lien on substantially all of our assets and required compliance with certain financial and non-financial covenants. In connection with the Mindspeedand Nitronex acquisitions, we borrowed an aggregate of $245.0 million of indebtedness on our Prior Facility.On May 8, 2014, we refinanced our outstanding indebtedness under the prior facility and discharged our obligations thereunder by entering into a creditagreement (Credit Agreement) with a syndicate of lenders. Concurrent with the execution of the Credit Agreement, we terminated the prior facility and repaid theoutstanding $245.0 million principal and interest due. Upon terminating the prior facility, previously deferred financing costs pertaining to that facility of $2.1million were expensed as additional interest.The Credit Agreement provides for term loans in an aggregate principal amount of $350.0 million, which mature in May 2021 (Term Loans) and a revolvingcredit facility of $100.0 million initially, which matures in May 2019 (Revolving Facility). In February 2015, we executed an amendment to the credit agreementthat increased our aggregate borrowing capacity under the Revolving Facility to $130.0 million. The Term Loans were issued with an original issue discount of0.75%, which is being amortized over the term of the Term Loans using the straight-line method, which approximates the effective interest rate method.Borrowings under the Term Loans bear interest (payable quarterly) at: (i) for LIBOR loans, a rate per annum equal to the LIBOR rate (subject to a floor of 0.75%),plus an applicable margin of 3.75%, and (ii) for base rate loans, a rate per annum equal to the prime rate (subject to a floor of 1.75%), plus an applicable margin of2.75%. Borrowings under the Revolving Facility bear interest (payable quarterly) at: (i) for LIBOR loans, a rate per annum equal to the LIBOR rate, plus anapplicable margin in the range of 2.00% to 2.50% (based on our total net leverage ratio being within certain defined ranges); and (ii) for base rate loans, a rate perannum equal to the prime rate, plus an applicable margin in the range of 1.00% to 1.50% (based on our total net leverage ratio being within certain defined ranges).The effective interest rate on our Term Loans was 4.5% as of October 2, 2015. We also pay a quarterly unused line fee for the Revolving Facility in the range of0.25% to 0.375% (based on our total net leverage ratio being within certain defined ranges) as well as overall agency fees. We borrowed $100.0 million ofindebtedness on our Revolving Facility in connection with the BinOptics Acquisition, which was paid down in full using net proceeds 81Table of Contentsfrom a public offering of common stock we completed in February 2015. As of October 2, 2015, we had $130.0 million of borrowing capacity under the RevolvingFacility.The Term Loans are payable in quarterly principal installments equal to 0.25% of the aggregate dollar amount of all Term Loans outstanding at the signingof the Credit Agreement, with the remainder due on the maturity date. In the event that we divest a business, the net cash proceeds of the divestment are generallyto be applied to repayment of outstanding Term Loans except to the extent we reinvest such proceeds in assets useful for its business within 18 months of receivingthe proceeds. To the extent we enter into a binding agreement to reinvest such proceeds within 18 months of receiving them, we have until the later of 18 monthsfollowing our receipt of the proceeds and six months following the date of such agreement to complete the reinvestment. We expect to reinvest the proceeds fromthe sale of the Automotive business.At the signing of the Credit Agreement, the entire $350.0 million principal amount of the Term Loans was funded. The Term Loans and Revolving Facilityare 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. Weincurred $8.7 million in fees for the issuance of the Credit Agreement which were recorded as deferred financing costs and are being amortized over the life ofCredit Agreement as interest expense. As of October 2, 2015, approximately $6.9 million of deferred financing costs remain unamortized.The Credit Agreement contains covenants that require, among other items, maintenance of certain financial ratios and also limit our ability to: issuedividends; acquire and dispose of businesses; and transfer assets among domestic and international entities.As of October 2, 2015, the following remained outstanding on the Term Loans: Principal balance $345,625 Unamortized discount (2,094) 343,531 Current portion 3,500 Long-term, less current portion $340,031 As of October 2, 2015, the minimum principal payments under the Term Loans in future fiscal years was as follows (in thousands): 2016 $3,500 2017 3,500 2018 3,500 2019 3,500 2020 3,500 Thereafter 328,125 Total $345,625 The fair value of the Term Loans was estimated to be approximately $346.5 million as of October 2, 2015 and was determined using Level 3 inputs,including a quoted rate from a bank.In connection with the BinOptics Acquisition during fiscal year 2015 we assumed capital lease obligations of approximately $2.5 million of whichapproximately $1.0 million was outstanding as of October 2, 2015.Additionally, the Company assumed $40.9 million of debt in the Mindspeed Acquisition. The Company paid off these assumed debt amounts of $40.9million during fiscal year 2014. 82Table of Contents9. EMPLOYEE BENEFIT PLANSWe established a defined contribution savings plan under Section 401(k) of the Code (Section 401(k)) on October 1, 2009 (401(k) Plan). The 401(k) Planfollows a calendar year, covers substantially all U.S. employees who meet minimum age and service requirements, and allows participants to defer a portion oftheir annual compensation on a pretax basis, subject to legal limitations. Our contributions to the plan may be made at the discretion of the board of directors.During the fiscal year ended October 2, 2015, we contributed $1.4 million to our 401(k) Plan for calendar year 2014. There were no contributions made by us to the401(k) Plan for calendar year 2015 through October 2, 2015.Our employees located in foreign jurisdictions meeting minimum age and service requirements participate in defined contribution plans whereby participantsmay defer a portion of their annual compensation on a pretax basis, subject to legal limitations. Company contributions to these plans are discretionary and vary perregion. We expensed contributions of $1.0 million, $1.0 million, and $0.9 million for fiscal years 2015, 2014, and 2013, respectively.10. ACCRUED LIABILITIESAccrued liabilities consist of the following (in thousands): October 2,2015 October 3,2014 Compensation and benefits $20,711 $19,135 Product warranty 656 446 Professional fees 2,167 1,528 Software licenses 1,223 1,862 Distribution costs 3,091 1,757 Restructuring costs 943 801 Interest payable 3,502 2,447 Rent and utilities 1,458 1,658 Other 3,848 3,962 Total $37,599 $33,596 11. COMMITMENTS AND CONTINGENCIESOperating Leases —We have non-cancelable operating lease agreements for office, research and development and manufacturing space in the United Statesand foreign locations. We also have operating leases for certain equipment, automobiles and services in the United States and foreign jurisdictions. These leaseagreements expire at various dates through 2022 and certain agreements contain provisions for extension at substantially the same terms as currently in effect.Lease escalation clauses, rent abatements and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, are typically included in thedetermination of straight-line rent expense over the lease term.Future minimum lease payments for the next five fiscal years as of October 2, 2015, are as follows (in thousands): 2016 $7,343 2017 6,555 2018 5,177 2019 4,836 2020 2,038 Thereafter 4,279 Total minimum lease payments $30,228 83Table of ContentsRent expense incurred under non-cancelable operating leases was $6.5 million, $6.6 million, and $4.5 million in fiscal years 2015, 2014, and 2013,respectively.Asset Retirement Obligations —We are obligated under certain facility leases to restore those facilities to the condition in which we or our predecessorsfirst occupied the facilities. We are required to remove leasehold improvements and equipment installed in these facilities prior to termination of the leases. As ofOctober 2, 2015, October 3, 2014 and September 27, 2013, the estimated costs for the removal of these assets are recorded as asset retirement obligations was $1.3million, $1.8 million and $1.0 million, respectively.Unused Letter of Credit —As of October 2, 2015, we had outstanding unused letters of credit from a bank aggregating $0.4 million.Purchase Commitments —As of October 2, 2015, we had outstanding non-cancelable purchase commitments aggregating $1.2 million pursuant toinventory supply arrangements.Litigation —We are periodically subject to legal proceedings, claims and contingencies arising in the ordinary course of business.Patent Suit Against Laird . We brought a patent infringement suit against Laird Technologies, Inc. (Laird) in the Federal District Court for the District ofDelaware on February 11, 2014, seeking monetary damages and a permanent injunction. The suit alleged that Laird infringed on our United States PatentNo. 6,272,349 (‘349 Patent), titled “Integrated Global Positioning System Receiver,” by making, using, selling, offering to sell or selling products incorporating anintegrated global positioning receiver that include structure(s) recited in the ‘349 Patent, including global positioning system modules for Automotive industrycustomers. The court entered a preliminary injunction against Laird on June 13, 2014. On April 15, 2015, the parties reached a confidential settlement agreement,filed a stipulated permanent injunction with the court that is similar in scope to the preliminary injunction, and filed a stipulated dismissal of all claims. Thepermanent injunction and dismissal were entered on April 21, 2015 by the court.Class Action Suit Against Mindspeed Technologies , Inc . On March 10, 2015, Philip Alvarez, a former employee of Mindspeed filed a putative class actionlawsuit against Mindspeed in the Superior Court of California for the County of Orange. On April 24, 2015, Alvarez filed a First Amended Complaint adding oursubsidiary M/A-COM Technology Solutions Inc. as a defendant. The lawsuit alleged, among other things, that Alvarez and certain other employees who designedand manufactured hardware systems for Mindspeed or M/A-COM Technology Solutions Inc. between March 10, 2011 and the present were misclassified asexempt employees under California law. The lawsuit seeks recovery of alleged unpaid overtime wages, meal and rest period premiums, penalties and attorneys’fees. We dispute the allegations of the lawsuit. On June 15, 2015, Mindspeed removed the action to the United States District Court for the Central District ofCalifornia. On July 15, 2015, Plaintiff filed a Motion to Remand, which Motion was denied in an Order dated September 9, 2015. The parties have reached anagreement for the dismissal of all class action allegations and claims in the action, as well as certain other claims against Mindspeed and M/A-COM TechnologySolutions Inc. The parties have stipulated to the filing of a Second Amended Complaint that effectuates this agreement, and are awaiting order by the Court on thatstipulation. After the Second Amended Complaint is filed, the matter will proceed as an individual action by Alvarez seeking only his personal claims, as well asclaims under the Private Attorneys’ General Act.With respect to the above and other legal proceedings, we have not been able to reasonably estimate the amount or range of any possible loss, andaccordingly have not accrued or disclosed any related amounts of possible loss in the accompanying consolidated financial statements. 84Table of Contents12. RESTRUCTURINGSWe have periodically implemented restructuring actions in connection with broader plans to reduce staffing, reduce the its internal manufacturing footprint,and, generally, reduce operating costs. The restructuring expenses are comprised of direct and incremental costs related to facility closure, change-in-controlobligations, severance, and outplacement fees for the terminated employees. The following is a summary of the costs incurred and remaining balances included inaccrued expenses related to restructuring actions taken (in thousands): Total Balance — September 28, 2012 $328 Current period charges 1,060 Payments (1,243) Balance — September 27, 2013 145 Current period charges 14,823 Payments (14,167) Balance — October 3, 2014 801 Current period charges 1,280 Payments (1,138) Balance — October 2, 2015 $943 In fiscal year 2014, we implemented restructuring plans to reduce manufacturing and operating costs of the Mindspeed and Nitronex operations through areduction of staffing. In fiscal year 2015, we implemented additional restructuring actions primarily associated with employee-related separation costs. We do notanticipate any additional restructuring costs associated with the 2015 actions and expect the remaining balance outstanding as of October 2, 2015 to be paid duringthe upcoming fiscal quarters.13. PRODUCT WARRANTIESWe establish a product warranty liability at the time of revenue recognition. Product warranties generally have terms of between 12 months and 60 monthsand cover nonconformance with specifications and defects in material or workmanship. For sales to distributors, our warranty generally begins when the product isresold by the distributor. The liability is based on estimated costs to fulfill customer product warranty obligations and utilizes historical product failure rates.Should actual warranty obligations differ from estimates, revisions to the warranty liability may be required.Product warranty liability activity is as follows (in thousands): Fiscal Years 2015 2014 2013 Balance — beginning of year $446 $318 $549 Impact of acquisition 50 202 — Provisions 160 (74) (49) Direct charges — — (182) Balance — end of year $656 $446 $318 85Table of Contents14. INTANGIBLE ASSETSAmortization expense related to amortized intangible assets is as follows (in thousands): Fiscal Years 2015 2014 2013 Cost of revenue $27,285 $18,787 $2,986 Selling, general and administrative 11,695 1,806 1,335 Total $38,980 $20,593 $4,321 Intangible assets consist of the following (in thousands): October 2, 2015 October 3, 2014 Acquired technology $162,536 $131,953 Customer relationships 144,070 24,670 In-process research and development 8,000 17,970 Trade name 3,400 3,400 Total 318,006 177,993 Less accumulated amortization (74,340) (35,360) Intangible assets — net $243,666 $142,633 A summary of the activity in intangible assets and goodwill follows (in thousands): Total Acquired Technology Customer Relationships In-Process Research and Development Trade Name Goodwill Balance at September 27, 2013 $46,937 $23,637 $13,150 $— $3,400 $6,750 Net intangibles acquired 137,405 103,881 11,520 17,970 — 4,034 Other intangibles purchased 4,435 4,435 — — — — Balance at October 3, 2014 188,777 131,953 24,670 17,970 3,400 10,784 Net intangibles acquired 224,470 17,500 119,400 — — 87,570 Placed in service — 9,780 (9,780) — — Adjustment to fair value (190) — — (190) — — Goodwill allocation to discontinued operations (5,008) — — — — (5,008) Other intangibles purchased 3,303 3,303 — — — — Balance at October 2, 2015 $411,352 $162,536 $144,070 $8,000 $3,400 $93,346 As of October 2, 2015, estimated amortization of the intangible assets in future fiscal years, was as follows (in thousands): 2016 $43,266 2017 41,741 2018 36,354 2019 31,276 2020 25,779 Thereafter 53,996 Total $232,412 86Table of ContentsNeither the goodwill nor the “M/A-COM” trade name are subject to amortization; these are reviewed for impairment annually in August and more frequentlyif events or changes in circumstances indicate that the assets may be impaired. Accumulated amortization, for the acquired technology and customer relationships,was $52.0 million and $22.3 million, respectively, as of October 2, 2015, and $27.8 million and $7.6 million, respectively, as of October 3, 2014.In July 2013, we entered into a long term technology licensing and transfer agreement that calls for potential payments by us of up to $9.0 million throughJuly 2016 based upon the achievement of specified milestones. As of October 2, 2015, costs incurred in connection with the licensing and the transfer of thetechnology was $5.0 million and $2.7 million during fiscal years 2015 and 2014, respectively, and were capitalized as incurred as acquired technology. Costs willbe amortized to costs of sales upon completion of the transfer, which is currently expected to be completed through fiscal year 2017.15. INCOME TAXESDeferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposesand amounts used for income tax purposes. The components of our deferred tax assets and liabilities are as follows (in thousands): October 2, 2015 October 3, 2014 Current deferred tax assets: Accrued liabilities $11,332 $9,830 Inventory 5,043 8,088 Deferred revenue (3) 4,451 Accounts receivable 51 142 Federal net operating loss 11,186 15,452 Other current deferred tax assets — 46 Discontinued operations 2,703 — Deferred compensation 3,468 — Valuation allowance (2,349) (2,052) Current net deferred tax assets $31,431 $35,957 Non-current deferred tax assets (liabilities): Federal and foreign net operating losses and credits $70,448 $128,035 Intangible assets (44,196) (33,158) Property and equipment (2,977) (3,072) Other non-current deferred tax assets 292 272 Discontinued operations 9,191 — Deferred compensation 1,066 — Deferred gain 23,531 — Valuation allowance (9,116) (7,448) Non-current net deferred tax assets (liabilities) 48,239 84,629 Total deferred tax asset $79,670 $120,586 As of October 2, 2015, we have $193.5 million of gross federal net operating loss carryforward consisting of $26.2 million relating to the BinOpticsAcquisition, $158.9 million attributable to the Mindspeed Acquisition, and $8.4 million relating to a prior acquisition. The federal net operating loss carryforwardswill expire at various dates through 2034. The reported net operating loss carryforward includes any limitation under Sections 382 and 383 of the Internal RevenueCode of 1986, as amended, which applies to an ownership change as defined under Section 382. 87Table of ContentsThe domestic and foreign income (loss) from continuing operations before taxes were as follows (in thousands): Fiscal Years 2015 2014 2013 United States $(34,251) $(60,836) $(11,333) Foreign 18,851 19,936 14,279 (Loss) income from operations before income taxes $(15,400) $(40,900) $2,946 The components of the provision (benefit) for income taxes are as follows (in thousands): Fiscal Years 2015 2014 2013 Current: Federal $(19,015) $712 $2,923 State 688 (419) 1,024 Foreign 1,092 2,181 986 Current provision (benefit) (17,235) 2,474 4,933 Deferred: Federal 10,845 (16,557) (3,326) State (4,131) (756) (1,146) Foreign (1,302) (725) (273) Change in valuation allowance 1,965 (522) 95 Deferred provision (benefit) 7,377 (18,560) (4,650) Total provision (benefit) $(9,858) $(16,086) $283 Our net deferred tax asset relates predominantly to our operations in the United States. A valuation allowance is recorded when, based on assessment of bothpositive and negative evidence, management determines that it is not more likely than not that the assets are recoverable. Such assessment is required on ajurisdictional basis.The $11.5 million of valuation allowance as of October 2, 2015 relates primarily to state net operating loss (“NOL”) carryforwards assumed in theMindspeed Acquisition and UK tax credit and NOL carryforwards whose recovery is not considered more likely than not. The $9.5 million of valuation allowanceas of October 3, 2014 related primarily to state NOL carryforwards assumed in the Mindspeed Acquisition. The change during the year ending October 2, 2015 of$2.0 million primarily relates to reporting a $1.4 million gross R&D tax credit in the UK offset by a full valuation allowance, a $1.2 million state R&D tax creditoffset by a full valuation allowance less a reduction of $0.6 million related to foreign entities. 88Table of ContentsOur effective tax rates differ from the federal and statutory rate as follows: Fiscal Years 2015 2014 2013 Federal statutory rate 35.0% 35.0% 35.0% Foreign rate differential 30.5 11.2 (117.9) State taxes net of federal benefit 3.5 1.8 26.0 Warrant liabilities (13.7) (3.4) 51.2 Change in valuation allowance (6.0) (0.3) 3.2 Research and development credits 16.1 1.9 (98.6) Provision to return adjustments 9.9 — 7.3 Nondeductible compensation expense (8.9) (1.5) 7.0 Nondeductible legal fees (4.1) (1.9) — Nitronex losses — (2.6) 102.7 Other permanent differences 1.6 (0.8) (1.1) Effective income tax rate 63.9% 39.4% 14.8% For fiscal year 2015 and 2014, the effective tax rate to calculate the tax benefit on $15.4 million and $40.9 million, respectively, of pre-tax loss fromcontinuing operations was 63.9% and 39.4%, respectively. For fiscal year 2013, the effective tax rate to calculate the tax expense on pre-tax income of $2.9 millionwas 14.8%. The effective income tax rate for fiscal years 2015, 2014 and 2013 were primarily impacted by a lower income tax rate in many foreign jurisdictions inwhich our foreign subsidiaries operate, research and development tax credits, and the fair market value adjustment of warrant liabilities. For fiscal year 2015, therate was impacted by a retroactive enactment of the R&D tax credit from fiscal year 2014 and a larger shift of the revenue associated with foreign entities taxed atlower rates as part of our auto divestiture. In addition, the effective income tax rate for fiscal years 2014 and 2013 were impacted by pre-acquisition Nitronexlosses.All earnings of foreign subsidiaries are considered indefinitely reinvested for the periods presented. Undistributed earnings of all foreign subsidiaries as ofOctober 2, 2015 aggregated $71.3 million, with Ireland and Grand Cayman accounting for $34.8 million and $24.3 million, respectively. It is not practicable todetermine the U.S. federal and state deferred tax liabilities associated with such foreign earnings.Activity related to unrecognized tax benefits is as follows (in thousands): Amount Balance — September 27, 2013 — Additions based on tax positions (1,670) Reductions based on tax positions — Balance — October 3, 2014 $(1,670) Additions based on tax positions — Reductions based on tax positions — Balance — October 2, 2015 $(1,670) The balance of the unrecognized tax benefit as of October 2, 2015 is included in other long-term liabilities in the accompanying consolidated balance sheets.The entire balance of unrecognized tax benefits, if recognized, will reduce income tax expense. It is our policy to recognize any interest and penalties accruedrelated to unrecognized tax benefits in income tax expense. During fiscal year 2015, we did not make any payment of interest and penalties. There was nothingaccrued in the consolidated balance sheets for the payment of interest and penalties at October 2, 2015 as the remaining unrecognized tax benefits would only serveto reduce our current federal and state NOL carryforwards, if ultimately recognized. 89Table of ContentsDuring fiscal year 2014, we settled the federal audit for fiscal years 2011 and 2012 with no material impact upon the financial statements. A summary of thefiscal tax years that remain subject to examination, as of October 2, 2015, for the Company’s significant tax jurisdictions are: Jurisdiction Tax Years Subject to Examination United States — federal 2013 — forward United States — various states 2012 — forward Ireland 2012 — forward Generally, we are no longer subject to federal income tax examinations for years before 2013, except to the extent of loss and tax credit carryforwards fromthose years.16. SHARE-BASED COMPENSATION PLANSThe following table presents the effects of stock-based compensation expense related to stock-based awards to employees and non-employees in ourconsolidated statements of operations during the periods presented (in thousands): Fiscal Years 2015 2014 2013 Cost of revenue $1,949 $1,771 $1,068 Research and development 5,447 2,818 1,739 Selling, general and administrative 12,039 6,688 3,649 Total $19,435 $11,277 $6,456 Amounts presented above included share-based compensation expense in 2015, 2014 and 2013 related to employees terminated in conjunction with theAutomotive divestiture in August 2015 of $0.4 million, $0.3 million and $0.1 million, respectively.We have three equity incentive plans: the Amended and Restated 2009 Stock Incentive Plan (2009 Plan), the 2012 Omnibus Incentive Plan (2012 Plan) andthe 2012 Employee Stock Purchase Plan (ESPP).Upon the closing of the IPO, all shares that were reserved under the 2009 Plan but not awarded were assumed by the 2012 Plan. No additional awards will bemade under the 2009 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 (RSAs), restricted stock units (RSUs), performance-based 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 notless than the fair value of our common stock on the date of grant. Options granted to date primarily vest over a four-year period with 25% vesting at the end of oneyear and the remaining vesting monthly thereafter. Certain of the share-based awards granted and outstanding as of October 2, 2015, are subject to acceleratedvesting upon a sale of the Company or similar changes in control. Options granted generally have a term of 7 to 10 years. As of October 2, 2015, we had 9.0million shares available for future grants under the 2012 Plan. 90Table of ContentsStock OptionsA summary of stock option activity for fiscal year 2015 is as follows (in thousands, except per share amounts): Number of Shares Weighted-Average Exercise Price per Share Weighted- Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value Options outstanding — October 3, 2014 948 $11.72 6.6 $10,015 Granted 255 33.60 Exercised (288) 9.08 Forfeited, canceled or expired (26) 27.11 Options outstanding — October 2, 2015 889 $18.4 6.19 $10,574 Options vested and expected to vest —October 2, 2015 889 $18.4 6.19 $10,574 Options exercisable — October 2, 2015 644 $12.63 6.03 $10,574 Aggregate intrinsic value represents the difference between our closing stock price on October 2, 2015, and the exercise price of outstanding, in-the-moneyoptions. The total intrinsic value of options exercised was $7.1 million, $7.6 million and $8.4 million for fiscal year 2015, 2014 and 2013, respectively.In April 2015 and May 2015, the Company granted 225,000 performance-based stock options for shares of common stock with an aggregate grant date fairvalue of $2.0 million that are subject to vesting based on a service and individual performance targets. The Company used the Black-Scholes valuation model forestimating the fair value on the date of grant of $10.35 and $10.12 per option share, respectively. The fair value of stock option awards is affected by valuationassumptions, including volatility, the Company’s stock price, expected term of the option, risk-free interest rate and expected dividends.The weighted-average assumptions used for calculating the fair value of stock options granted is as follows: Risk-free interest rate 1.2% Expected term (years) 4.0 Expected volatility 36.2% Expected dividends — % The performance-based stock options described above will vest and become exercisable in full if certain pre-established revenue and non-GAAP grossmargin targets are met or exceeded in any period of four consecutive fiscal quarters completed during the term of the options. The stock options have a term ofseven years, assuming continued employment with or services to the Company, and have an average exercise price of $34.06 and equal to the closing price of theCompany’s common stock on the date of grant.In September 2015, we granted 30,000 stock option awards, with an exercise price of $29.80, under the 2012 stock compensation plan with a grant date fairvalue of $0.4 million that are subject to vesting only upon the closing market price of the Company’s underlying public stock being equal to or in excess of $63.60per share for a period of not less than three consecutive trading days. These stock options fair value of $12.38 was estimated using a Monte Carlo simulation modelbased on the market conditions vesting condition. Compensation cost is recognized on a straight-line basis over the estimated service period of approximately threeyears, expiring in September 2022. 91Table of ContentsIn April 2014, we granted 405,000 options to purchase common stock with a grant date fair value of $3.5 million that are subject to vesting only upon themarket price of the Company’s underlying public stock closing at or above $32.55 per share within ten years of the grant date. Due to the market condition uponwhich vesting is based, the fair value of the awards was estimated using a Monte Carlo simulation model. Compensation cost is recognized regardless of thenumber of awards that are earned based on the market condition. Compensation cost is recognized on a straight-line basis over the estimated service period of threeyears. In the event that the Company’s common stock achieves the target price of $32.55 per share prior to the end of the estimated service period, any remainingunamortized compensation cost will be recognized.During the second fiscal quarter of 2015, the Company’s common stock closed at a price of $34.79 per share, exceeding the target price of $32.55 per share,which resulted in the recognition of approximately $2.5 million of compensation expense during the fiscal year.The weighted-average assumptions used for calculating the fair value of stock options granted during fiscal year 2014, is as follows: Risk-free interest rate 2.71% Expected term (years) 10% Expected volatility 42.6% Expected dividends — % Restricted Stock Awards and UnitsA summary of restricted stock awards and units activity for fiscal year 2015 is as follows (in thousands): Number ofShares Weighted-Average Remaining Contractual Term in Years Aggregate Intrinsic Value Issued and unvested — October 3, 2014 1,720 2.3 $37,200 Granted 821 Vested (704) Forfeited, canceled or expired (145) Issued and unvested shares — October 2, 2015 1,692 1.4 $48,375 Shares expected to vest 1,586 1.3 $45,328 As of October 2, 2015, the aggregate intrinsic value of vesting restricted stock units including time-based and performance units was $45.3 million for fiscalyear 2015. The total fair value of restricted stock awards and units vesting was $23.3 million, $9.2 million and $3.9 million for the fiscal years 2015, 2014 and2013, respectively.On April 22, 2015 and May 5, 2015, we issued performance-based RSUs which were divided into three equal tranches with one tranche based on ouradjusted earnings per share (EPS) growth during fiscal year 2015, one tranche based on adjusted EPS growth during fiscal years 2015-2016 and one tranche basedon adjusted EPS growth during fiscal years 2015-2017. A participant may earn between 0% to 300% of the targeted shares for each tranche based on actualperformance, and a straight-line interpolation will be applied for achievement between the specified performance ranges. Once earned, the performance-basedRSUs will be settled in shares of the Company’s common stock, assuming continued employment with or services to us through the vest date of May 15 following each tranches performance criteria being met at period end. 92thTable of ContentsA summary of PRSU activity during the fiscal year ended October 2, 2015 is as follows: Non-vested Performance-based Restricted Stock Units Weighted-Average Grant-Date Fair Value per PRSU Unvested shares at October 3, 2014 — Granted 83,954 $34.39 Change due to performance condition achievement 251,862 $34.39 Vested — Forfeited — Unvested shares at October 2, 2015 335,816 $34.39 The total fair value of restricted stock award units with time-based and performance vesting was $7.8 million for the fiscal year ended October 2, 2015.In April 2015, the Company approved an amended and restated Change in Control Plan to exclude certain performance-based options and to increase thepercentage by which outstanding performance-based equity awards, other than those specifically excluded) will be deemed earned in the event of a change incontrol, from 100% of target to 200% of targeted shares. Other share-based awards granted and outstanding as of October 2, 2015, are subject to accelerated vestingupon a sale of the Company or similar changes in control.In conjunction with the Automotive divestiture, the Compensation Committee approved the acceleration of all unvested and outstanding RSU awards foremployees who were terminated and accepted employment with the acquiring company effective upon the closing date of the transaction. Accordingly, during thefourth quarter of fiscal year ended October 2, 2015, we recorded additional stock compensation expense related to approximately 20 employees of $1.2 millionrelated to this equity modification to accelerate vesting of unvested shares.As of October 2, 2015, total unrecognized compensation cost, adjusted for estimated forfeitures, related to stock options, restricted stock awards and unitsincluding awards with time-based and performance vesting was $37.8 million, which is expected to be recognized over the next 3.4 years.Employee Stock Purchase Plan (ESPP)Concurrently with the IPO in March 2012, the ESPP became effective. The ESPP allows eligible employees to purchase shares of our common stock at adiscount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. In administering the ESPP, the board of directorshas limited discretion to set the length of the offering periods thereunder. As of October 2, 2015, total unrecognized compensation cost related to the ESPP was notmaterial. In fiscal years 2015 and 2014, approximately 176,000 and 150,000, respectively, of shares of common stock were issued under the ESPP.The 2012 Plan contains an “evergreen” provision, pursuant to which the number of shares of common stock available for issuance under the 2012 Plan canbe increased on the first day of each fiscal year equal to the lesser of (a) 4.0% of outstanding common stock on a fully diluted basis as of the end of the immediatelypreceding fiscal year, (b) 1.9 million shares of common stock, and (c) a lesser amount determined by the board of directors; provided, however, that any sharesfrom any increases in previous years that are not actually issued will continue to be available for issuance under the 2012 Plan. The ESPP also contains an“evergreen” provision, pursuant to which the number of shares of common stock available for issuance under the ESPP can be increased on the first day of eachfiscal year equal to the lesser of (a) 1.25% of outstanding common stock on a fully diluted basis as of the end of the immediately preceding fiscal year, (b) 550,000shares of common stock, and (c) a lesser amount 93Table of Contentsdetermined by the board of directors; provided, however, that any shares from any increases in previous years that are not actually issued will continue to beavailable for issuance under the ESPP. In fiscal year 2015, pursuant to the evergreen provisions, the number of shares of common stock available for issuanceunder the 2012 Plan and the ESPP were increased by 1.9 million shares and 550,000 shares, respectively.17. STOCKHOLDERS’ EQUITYOutstanding shares of common stock presented in the accompanying consolidated statements of stockholders’ equity as of October 2, 2015 and October 3,2014, exclude 11,000 and 59,000 shares, respectively, issued as compensation to employees that were subject to forfeiture, pending continued employment with usthrough stated vesting dates.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 expireDecember 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 capitalstock or other equity securities, including by merger, consolidation, recapitalization, or similar transactions. Prior to completion of the IPO in March 2012, thenumber of shares issuable upon exercise of the warrants were subject to potential increases pursuant to certain antidilution rights included in the agreements theholders of the warrants have the right in certain circumstances to require us to register the underlying shares of common stock for resale under the Securities Act.We do not currently have sufficient registered and available shares to immediately satisfy the request for registration, if such is made. As of October 2, 2015, noexercise 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 are recording the estimated fair values of the warrants as a long-term liability in the accompanying consolidated financial statements with changes in theestimated fair value being recorded in the accompanying statements of operations. The following is a summary of the activity of the warrant liability (in thousands): Balance — September 27, 2013 $11,873 Change in estimated fair value 3,928 Balance — October 3, 2014 15,801 Change in estimated fair value 6,021 Balance — October 2, 2015 $21,822 18. RELATED-PARTY TRANSACTIONSGaAs Labs, a former stockholder and an affiliate of directors and then majority stockholders John and Susan Ocampo, engaged the Company to provideadministrative and business development services to GaAs Labs on a time and materials basis. There are no minimum service requirements or payment obligationsand the agreement may be terminated by either party with 30 days notice. We did not record any related revenue in fiscal year 2015 and recorded related revenue of$0.1 million and $0.4 million in fiscal years 2014, and 2013, respectively. Services provided pursuant to this agreement, were recorded as other income in theaccompanying consolidated statements of operations.In fiscal years 2015, 2014 and 2013, we recorded revenue of $1.1 million, $0.2 million and $0.2 million, respectively, from sales of product to a privately-held company with a common director.19. DISCONTINUED OPERATIONSIn the fourth quarter of fiscal year 2015, we sold our Automotive business to Autoliv ASP Inc as the Automotive business was not consistent with our long-term strategic vision from both a growth and profitability perspective. The agreed consideration included $82.1 million in cash paid at closing, subject to customaryworking capital and other adjustments, $18.0 million payable in eighteen months pending resolution of any 94Table of Contentscontingencies as part of an indemnification agreement, plus the opportunity to receive up to an additional $30.0 million in cash based on achievement of revenue-based earnout targets through 2019. Additionally, we entered into a Consulting Agreement pursuant to which we may provide Autoliv with certain non-designadvisory services for a period of two years following the closing of the transaction for up to $15.0 million in cash.In the fourth quarter of fiscal year 2015, we recorded a pre-tax gain on the sale of the Automotive business of $61.8 million based on the $82.1 millionreceived at closing on August 17, 2015 as described above. We expect that the remainder of the consideration to be received from Autoliv, including any amountsrelated to the consulting agreement, will being accounted for in discontinued operations when the contingencies are finalized and the proceeds are realizable overthe next several years.In fiscal year 2014, subsequent to closing the Mindspeed Acquisition, we decided to divest the wireless business of Mindspeed. The operations of thewireless business are included in discontinued operations through the date of sale. There was no initial gain or loss on the sale which closed in February 2014. Wereceived $12.3 million of proceeds from the sale of the wireless business during fiscal 2014 and an additional $3.1 million during fiscal 2015 upon settlement ofindemnification holdbacks, resulting in a pre-tax gain of $1.6 million.Additionally during fiscal year 2014, we sold non-core assets representing one product line, receiving cash proceeds aggregating $12.0 million. We have nocontinuing interests in these assets. There was no gain or loss on the sale, which closed in May 2014 and results of this product line are included in continuingoperations.The accompanying consolidated statement of operations includes the following operating results related to these divested businesses (in thousands): Automotive Business Mindspeed Wireless Business Fiscal Years Fiscal Years 2015 2014 2013 2015 2014 Revenue $71,712 $79,473 $80,368 $— $2,439 Cost of revenue 46,931 51,425 53,153 — 1,249 Gross profit 24,781 28,048 27,215 — 1,190 Operating expenses: Research and development 2,319 2,334 2,083 — 4,531 Selling, general and administrative 2,441 3,586 747 — 1,078 Restructuring charges — — — — 2,962 Total operating expenses 4,760 5,920 2,830 — 8,571 Income (loss) from discontinued operations 20,021 22,128 24,385 — (7,381) Other income (expense) 4,000 — — — — Gain on sale 61,771 — — 1,550 — Income (loss) before income taxes 85,792 22,128 24,385 1,550 (7,381) Income tax provision (benefit) 32,652 8,032 8,852 559 (2,776) Income (loss) from discontinued operations $53,140 $14,096 $15,533 $991 $(4,605) Above includes depreciation & amortization of $189 $302 $311 $— $— Cashflow from Operating Activities $(9,513) $16,945 $11,798 $991 $(4,605) Cashflow from Investing Activities $(505) $(275) $(48) $— $— Cash flow from investing activities presented above excludes proceeds from the sale of business. 95Table of Contents20. EARNINGS PER SHAREThe following table set forth the computation for basic and diluted net income (loss) per share of common stock (in thousands, except per share data): Fiscal Years 2015 2014 2013 Numerator: Income (loss) from continuing operations $(4,597) $(24,814) $2,663 Loss from discontinued operations 54,131 9,491 15,533 Net income (loss) 48,589 (15,323) 18,196 Warrant liability gain — — — Net income (loss) attributable to common stockholders $48,589 $(15,323) $18,196 Denominator: Weighted average common shares outstanding-basic 51,146 47,009 45,916 Dilutive effect of options and warrants — — 1,221 Weighted average common shares outstanding-diluted 51,146 47,009 47,137 Common stock earnings per share-basic: Continuing operations $(0.11) $(0.53) $0.06 Discontinued operations 1.06 0.20 0.34 Net common stock earnings per share-basic $0.95 $(0.33) $0.40 Common stock earnings per share-diluted: Continuing operations $(0.11) $(0.53) $0.06 Discontinued operations 1.06 0.20 0.33 Net common stock earnings per share-diluted $0.95 $(0.33) $0.39 The following common equivalent shares were excluded from the calculation from net income per share as their inclusion would have been antidilutive (inthousands): Fiscal Years 2015 2014 2013 Stock options and restricted stock 1,342 1,079 — Warrants 714 329 — Total common stock equivalent shares excluded 2,056 1,408 — 21. SUPPLEMENTAL CASH FLOW INFORMATIONThe following is supplemental cash flow information regarding noncash investing and financing activities: Fiscal Years 2015 2014 2013 Cash paid for interest $15,607 $6,994 $501 Cash paid for income taxes $22,676 $4,668 $7,318 • As of October 2, 2015 and October 3, 2014, we had $3.2 million and $2.4 million, respectively, in unpaid amounts related to purchases of property andequipment and intangibles included in accounts 96Table of Contents payable and accrued liabilities. These amounts have been excluded from the payments for purchases of property and equipment until paid. • Upon closing the Mindspeed Acquisition, we assumed $40.2 million of the seller’s indebtedness, all of which was paid in fiscal year 2014.22. ACCUMULATED OTHER COMPREHENSIVE INCOMEThe components of accumulated other comprehensive income, net of income taxes, are as follows: Foreign currency items Other items Total Balance — September 27, 2013 $(167) $— $(167) Foreign currency translation adjustment (1,097) — (1,097) Pension adjustment, net of tax — (90) (90) Balance — October 3, 2014 (1,264) (90) (1,354) Foreign currency translation, net of tax (918) — (918) Other adjustments — 90 90 Unrealized gain/loss on short term investments — (97) (97) Balance — October 2, 2015 $(2,182) $(97) $(2,279) 23. GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATIONWe have one reportable operating segment which designs, develops, manufactures, and markets semiconductors and modules. The determination of thenumber of reportable operating segments is based on the chief operating decision maker’s use of financial information for the purposes of assessing performanceand making operating decisions. In evaluating financial performance and making operating decisions, the chief operating decision maker primarily usesconsolidated net revenue, gross profit, and operating income (loss).Information about our operations in different geographic regions, based upon customer locations, is presented below (in thousands): Fiscal Years Revenue by Geographic Region 2015 2014 2013 United States $152,974 $134,436 $110,686 China 92,493 33,308 21,057 Taiwan 56,421 34,344 10,612 Other countries (1) 118,721 137,101 100,348 Total $420,609 $339,189 $242,703 (1)No other international countries represented greater than 10% of total revenue during the periods presented. As of Long-Lived Assets by Geographic Region October 2,2015 October 3,2014 United States $72,617 $41,726 International (1) 11,142 8,326 Total $83,759 $50,052 • No other international country or region represented greater than 10% of the total net long-lived assets as of the dates presented. 97Table of ContentsThe following is a summary of customer concentrations as a percentage of total sales and accounts receivable as of and for the periods presented: Fiscal Years Revenue 2015 2014 2013 Customer A 18% 19% 21% Customer B 12% 10% — % October 2,2015 October 3,2014 Accounts Receivable Customer A 22% 20% Customer B 14% 2% Customer C 10% 8% No other customer represented more than 10% of revenue or accounts receivable in the periods presented in the accompanying consolidated financialstatements. In fiscal years 2015, 2014, and 2013, ten customers represented an aggregate of 57%, 52% and 47% of total revenue, respectively.24. QUARTERLY FINANCIAL DATA (UNAUDITED)(In thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year Fiscal Year 2015 Revenue $96,556 $102,431 $109,058 $112,564 $420,609 Gross profit 47,419 46,714 52,496 56,961 203,590 Income (loss) from continuing operations (1) (9,963) (11,176) 1,756 13,841 (5,542) Income (loss) from discontinued operations (1) 3,657 3,639 6,271 40,564 54,131 Per share data (2) Income (loss) from continuing operations, basic $(0.21) $(0.22) $0.03 $0.26 $(0.11) Income (loss) from discontinued operations, basic $0.08 $0.07 $0.12 $0.76 $1.06 Per share data (2) Income (loss) from continuing operations, diluted (3) $(0.21) $(0.22) $0.03 $0.08 $(0.11) Income (loss) from discontinued operations, diluted $0.08 $0.07 $0.11 $0.74 $1.06 Fiscal Year 2014 Revenue $64,278 $87,734 $93,318 $93,859 $339,189 Gross profit 28,408 20,142 43,606 48,784 140,940 Income (loss) from continuing operations (10,853) (23,189) (1,350) 10,578 (24,814) Income (loss) from discontinued operations (1) 1,932 1,067 2,533 3,959 9,491 Per share data (2) Income (loss) from continuing operations, basic $(0.23) $(0.50) $(0.03) $0.22 $(0.53) Income (loss) from discontinued operations, basic $0.04 $0.02 $0.05 $0.08 $0.20 Per share data (2) Income (loss) from continuing operations, diluted $(0.23) $(0.50) $(0.03) $0.22 $(0.53) Income (loss) from discontinued operations, diluted $0.04 $0.02 $0.05 $0.08 $0.20 98Table of Contents (1)During the fourth quarter of fiscal year 2015 we divested our Automotive business and during the second quarter of fiscal year 2014, we divested theMindspeed wireless business.(2)Earnings per share calculations for each of the quarters are based on the weighted average number of shares outstanding and included common stockequivalents in each period. Therefore, the sums of the quarters may not necessarily equal the full year earnings per share.(3)Diluted income (loss) per shares for the fiscal fourth quarter 2015 excludes $9.7 million related to warrant liability gain.25. SUBSEQUENT EVENTSOn November 17, 2015, we entered into a definitive agreement to acquire FiBest Limited (FiBest), a Japan-based merchant market component supplier ofoptical sub assemblies, in an all-cash transaction valued at approximately ¥7.3 billion, or $60 million. We expect to fund the purchase price of the acquisition withavailable cash. Closing is subject to customary closing conditions and is expected to occur during the company’s fiscal first quarter of 2016. 99Table of ContentsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.None.ITEM 9A. CONTROLS AND PROCEDURES.Evaluation of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),that are intended to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported withinthe time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the PrincipalExecutive Officer and the Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.We carried out an evaluation, under the supervision, and with the participation of our management, including our Principal Executive Officer and PrincipalFinancial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of October 2, 2015. We acquired BinOptics onDecember 15, 2014. During our fiscal year 2015 we commenced integrating BinOptics into our internal controls over financial reporting procedures. As such thescope of our evaluation of the effectiveness of our disclosure controls and procedures for fiscal year 2015 did not include the internal control over financialreporting of BinOptics for periods prior to integration. BinOptics pre-integration total assets and revenue were not material to our consolidated 2015 total assets andrevenue. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were noteffective as of October 2, 2015 due to the material weakness in internal control over financial reporting described below.Management has identified a material weakness in its internal control over financial reporting related to information technology general controls in the areasof user access security and program change management. For additional information regarding the nature of this material weakness, see “Management’s Report onInternal Control Over Financial Reporting” below. We have developed a remediation plan for this material weakness, which is described below under“Remediation Activities.”Notwithstanding the identified material weakness and management’s assessment that internal control over financial reporting was ineffective as ofOctober 2, 2015, management believes that the audited consolidated financial statements contained in this Annual Report fairly present, in all material respects, ourfinancial condition, results of operations and cash flows for the fiscal years presented in conformity with accounting principles generally accepted in the UnitedStates of America. Additionally, this material weakness did not result in any restatements of our audited consolidated financial statements and disclosures for anyprior period previously reported by us.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting isdefined in Rule 13a-15(f) promulgated under the Exchange Act as a process, designed by, or under the supervision of our principal executive and principal financialofficers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internalcontrol over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions and disposition of assets;providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receiptsand expenditures are made only in accordance with management and board authorizations; and providing reasonable assurance regarding prevention or timelydetection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. 100Table of ContentsBecause of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financialstatements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may becomeinadequate because of changes in conditions or that the degree of compliance with policies or procedures may deteriorate.Management, with the participation of our Principal Executive and Principal Financial Officers, conducted an evaluation of the effectiveness of our internalcontrol over financial reporting as of October 2, 2015 based on the framework and criteria established in Internal Control—Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of thedesign effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on the foregoing, managementconcluded that our internal control over financial reporting was not effective as of October 2, 2015 for the reasons described below.In the course of completing our assessment of internal control over financial reporting as of October 2, 2015, management identified a number ofdeficiencies related to the design and operating effectiveness of information technology (“IT”) general controls for certain information systems including ourprimary ERP system that comprise part of our system of internal control over financial reporting and are relevant to the preparation of its consolidated financialstatements (such information technology systems are referred to as the “affected IT systems”). Specifically, our process lacks sufficient internal controls intended toensure (i) that access to affected IT systems, and the ability to make program changes, were adequately restricted to appropriate personnel and (ii) that the activitiesof individuals with access to modify data and make program changes were appropriately monitored.As a result of the deficiencies within the aforementioned information technology environment, there is a possibility that the effectiveness of business processcontrols, which are dependent on the affected IT systems, or electronic data and financial reports, generated from the affected IT systems, could be adverselyimpacted. Therefore, management has concluded that, as of October 2, 2015, there was a material weakness in internal control over financial reporting related toinformation technology general controls in the areas of user access security and program change management for the affected IT systems. A material weakness is adeficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement ofour annual or interim financial statements will not be prevented or detected on a timely basis.Changes in Internal Control over Financial ReportingDuring our fourth fiscal quarter 2015 we implemented additional procedures associated with our acquisition related internal controls over financial reportingand also performed extensive analysis related to our acquisition related financial reporting and disclosures. As a result of the implementation of these additionalfourth quarter 2015 procedures and analysis we concluded that we have remediated the material weakness associated with purchase accounting and reporting of theBinOptics acquisition identified during the nine months ended July 3, 2015. In addition, during our fourth fiscal quarter we identified a material weakness in our ITsystems as described above. Other than these two items, there have been no changes in the Company’s internal control over financial reporting that occurred duringthe three months ended October 2, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financialreporting. 101Table of ContentsRemediation ActivitiesWe are actively engaged in the implementation of a remediation plan to ensure that controls contributing to this material weakness are designedappropriately and will operate effectively. The remediation actions we are taking and expect to take include the following: • Implementation of improved user access security and program management controls, inclusive of monitoring controls, to enable optimal securityconfiguration with appropriate segregation of duties for the affected IT systems. • Enhance existing program change management control activities for affected IT systems. • Expansion of resources in the functional areas that support and monitor our IT systems and the information generated therefrom.Management believes that these efforts will effectively remediate the material weakness. However, the material weakness in our internal control overfinancial reporting will not be considered remediated until the new controls are fully implemented, in operation for a sufficient period of time and tested andconcluded by management to be designed and operating effectively, and we cannot provide any assurance that these remediation efforts will be successful or thatour internal control over financial reporting will be effective as a result of these efforts. In addition, as we continue to evaluate and work to improve its internalcontrol over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify the remediationplan described above. Management will test and evaluate the implementation of these new processes and internal controls during fiscal 2016 to ascertain whetherthey are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material error in our financial statements. Subject tothe foregoing, management believes these remediation efforts will be completed during fiscal year 2016. 102Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders ofM/A-COM Technology Solutions Holdings, Inc.Lowell, MassachusettsWe have audited the internal control over financial reporting of M/A-COM Technology Solutions Holdings, Inc. and subsidiaries (the “Company”) as ofOctober 2, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control Over FinancialReporting” appearing at Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessaryin the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principalfinancial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receiptsand expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override ofcontrols, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness ofthe internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, orthat the degree of compliance with the policies or procedures may deteriorate.A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility thata material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following materialweakness has been identified and included in management’s assessment. Management identified a material weakness in internal control over financial reportingrelating to the design and operating effectiveness of user access and program change management controls related to certain information systems that are relevantto the preparation of the Company’s consolidated financial statements and system of internal control over financial reporting. This material weakness wasconsidered in determining the nature, timing and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year endedOctober 2, 2015, of the Company and this report does not affect our report on such financial statements. 103Table of ContentsIn our opinion, because of the effects of the material weakness identified above on the achievement of the objectives of the control criteria, the Company hasnot maintained effective internal control over financial reporting as of October 2, 2015, based on the criteria established in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) (United States), the consolidatedbalance sheets of M/A-COM Technology Solutions Holdings, Inc., and subsidiaries as of October 2, 2015 and October 3, 2014, and the related consolidatedstatements of operations, changes in stockholders’ equity, and cash flows for each of the three fiscal years in the period ended October 2, 2015 of M/A-COMTechnology Solutions Holdings, Inc., and subsidiaries and our report dated November 24, 2015 expressed an unqualified opinion thereon./s/ Deloitte & Touche LLPBoston, MassachusettsNovember 24, 2015ITEM 9B. OTHER INFORMATION.None. 104Table of ContentsPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2015Annual Meeting of Stockholders to befiled with the SEC within 120 days after October 2, 2015.We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executiveofficer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We make available our code of businessconduct and ethics free of charge through our website, which is located at www.macom.com. We intend to disclose any amendments to, or waivers from, our codeof business conduct and ethics that are required to be publicly disclosed pursuant to rules of the SEC and the NASDAQ Global Select Market by posting any suchamendment or waivers on our website and disclosing any such waivers in a Form 8-K filed with the SEC.ITEM 11. EXECUTIVE COMPENSATION.The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2015 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after October 2, 2015.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2015 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after October 2, 2015.Equity Compensation Plan InformationWe have two equity compensation plans under which shares are currently authorized for issuance, our 2012 Omnibus Incentive Plan (2012 Plan) and our2012 Employee Stock Purchase Plan (2012 ESPP). We also maintain our Amended and Restated 2009 Omnibus Incentive Plan (2009 Plan), however, no additionalawards may be issued under the 2009 Plan. Each of our aforementioned plans were approved by our stockholders prior to our initial public offering in March 2012.The following table provides information regarding securities authorized for issuance as of October 2, 2015 under our equity compensation plans. Plan Category (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) (b) Weighted-average exercise price of outstanding options, warrants and rights(1) (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(2)(3)(4) Equity Compensation Plans Approved bySecurity Holders 1,860,791 $1.23 9,238,981 Equity Compensation Plans Not Approved bySecurity Holders — — — Total 1,860,791 $1.23 9,238,981 1.Does not include 581,990 unvested shares outstanding as of October 2, 2015 in the form of restricted stock awards or restricted stock units under our 2012Plan, which do not require the payment of any consideration by the recipients.2.Reflects 450,617 restricted stock units granted and outstanding as of October 2, 2015. 105Table of Contents3.The 2012 Plan contains an “evergreen” provision, pursuant to which the number of shares of our common stock available for issuance under the 2012 Plancan be increased on the first day of each fiscal year equal to the lesser of (a) 4.0% of our outstanding common stock on a fully diluted basis as of the end ofour immediately preceding fiscal year, (b) 1.9 million shares of our common stock, and (c) a lesser amount determined by our board of directors; provided,however, that any shares from any increases in previous years that are not actually issued will continue to be available for issuance under the 2012 Plan.4.The 2012 ESPP contains an “evergreen” provision, pursuant to which the number of shares of our common stock available for issuance under the 2012 ESPPcan be increased on the first day of each fiscal year equal to the lesser of (a) 1.25% of our outstanding common stock on a fully diluted basis as of the end ofour immediately preceding fiscal year, (b) 550,000 shares of our common stock, and (c) a lesser amount determined by our board of directors; provided,however, that any shares from any increases in previous years that are not actually issued will continue to be available for issuance under the 2012 ESPP.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2015 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after October 2, 2015.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2015 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after October 2, 2015. 106Table of ContentsPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.(a) Financial Statements (included in Item 8 of this Annual Report on Form 10-K):Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of October 2, 2015 and October 3, 2014Consolidated Statements of Operations for the Fiscal Years Ended October 2, 2015, October 3, 2014 and September 27, 2013Consolidated Statements of Cash Flows for the Fiscal Years October 2, 2015, October 3, 2014 and September 27, 2013Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the Fiscal Years Ended October 2, 2015, October 3, 2014 andSeptember 27, 2013Notes to Consolidated Financial Statements(b) ExhibitsThe exhibits required by Item 601 of Regulation S-K are filed herewith and incorporated by reference herein. Exhibit Number Description 2.1 Membership Interest Purchase Agreement by and among M/A-COM Technology Solutions Inc., Nitronex, LLC and GaAs Labs, LLC, datedFebruary 13, 2014 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on February 13, 2014). 2.2 Agreement and Plan of Merger by and among M/A-COM Technology Solutions Inc., BinOptics Corporation, Borealis Merger Sub, Inc. andIthaca Stockholders’ Agent, LLC, as stockholders’ agent, dated November 17, 2014 (incorporated by reference to Exhibit 2.1 to our CurrentReport on Form 8-K filed on November 19, 2014). 2.3 Stock Purchase Agreement, dated July 16, 2015, among Autoliv ASP Inc., M/A-COM Technology Solutions Inc., M/A-COM Auto SolutionsInc. and M/A-COM Technology Solutions Holdings, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed onJuly 17, 2015). 3.1 Fourth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to Amendment No. 6 to our RegistrationStatement on Form S-1 (File No. 333-175934) filed on February 28, 2012). 3.2 Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to Amendment No. 6 to our Registration Statement on Form S-1 (File No. 333-175934) filed on February 28, 2012). 4.1 Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to our Registration Statement on FormS-1 (File No. 333-175934) filed on November 23, 2011). 4.2 Form of Common Stock Purchase Warrant issued on December 21, 2010 (incorporated by reference to Exhibit 4.3 our Registration Statementon Form S-1 (File No. 333-175934) filed on August 1, 2011). 107Table of Contents 4.3 Second Amended and Restated Investor Rights Agreement, dated February 28, 2012 (incorporated by reference to Exhibit 4.2 to AmendmentNo. 6 to our Registration Statement on Form S-1 (File No. 333-175934) filed on February 28, 2012). 4.4 First Amendment to the Second Amended and Restated Investor Rights Agreement, dated May 20, 2013 (incorporated by reference to Exhibit4.5 to our Registration Statement on Form S-3 (File No. 333-188728) filed on May 21, 2013). 4.5 Second Amendment to the Second Amended and Restated Investor Rights Agreement, dated February 2, 2015 (incorporated by reference toExhibit 4.5 to our Registration Statement on Form S-3 ASR (File No. 333-201827) filed on February 2, 2015). 10.1* Form of Indemnification Agreement between M/A-COM Technology Solutions Holdings, Inc. and each of its directors and executive officers(incorporated by reference to Exhibit 10.1 to Amendment No. 3 to our Registration Statement on Form S-1 (File No. 333-175934) filed onOctober 21, 2011). 10.2 M/A-COM Technology Solutions Holdings, Inc. Amended and Restated 2009 Omnibus Stock Plan, as amended (incorporated by reference toExhibit 10.2 to our Annual Report on Form 10-K filed on November 28, 2012). 10.3 Form of Incentive Stock Option Agreement under the M/A-COM Technology Solutions Holdings, Inc. 2009 Omnibus Stock Plan (incorporatedby reference to Exhibit 10.3 to our Registration Statement on Form S-1 (File No. 333-175934) filed on August 1, 2011). 10.4* Form of Restricted Stock Agreement under the M/A-COM Technology Solutions Holdings, Inc. 2009 Omnibus Stock Plan (incorporated byreference to Exhibit 10.4 to our Registration Statement on Form S-1 (File No. 333-175934) filed on August 1, 2011). 10.5* M/A-COM Technology Solutions Holdings, Inc. 2012 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.5 to ourAnnual Report on Form 10-K filed on November 28, 2012). 10.6* Form of Restricted Stock Unit Award Agreement under 2012 Omnibus Incentive Plan (Time-Based and Performance-Based) (incorporated byreference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 27, 2015). 10.7* Form of Nonqualified Stock Option Agreement under 2012 Omnibus Incentive Plan (Performance-Based) (incorporated by reference to Exhibit10.2 to our Current Report on Form 8-K filed on April 27, 2015). 10.8* M/A-COM Technology Solutions Holdings, Inc. 2012 Employee Stock Purchase Plan, as amended. (incorporated by reference to Exhibit 10.4to our Quarterly Report on Form 10-Q filed on February 2, 2015). 10.9* Mindspeed Technologies, Inc. 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filedby Mindspeed Technologies, Inc. on February 12, 2013 (File No. 001-31650)). 10.10* Mindspeed Technologies, Inc. 2003 Long-Term Incentives Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-Kfiled by Mindspeed Technologies, Inc. on April 8, 2011 (File No. 001-31650)). 10.11* M/A-COM Technology Solutions Holdings, Inc. Change in Control Plan, as amended and restated through November 13, 2015. 10.12* Offer of Employment Letter to Michael Murphy, dated September 28, 2009, as amended (incorporated by reference to Exhibit 10.13 to ourRegistration Statement on Form S-1 (File No. 333-175934) filed on August 1, 2011). 108Table of Contents 10.13* Offer of Employment to John Croteau, dated September 6, 2012 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-Kfiled on September 7, 2012). 10.14* Offer of Employment to Robert McMullan, dated December 11, 2013 (incorporated by reference to Exhibit 10.2 to our Current Report on Form8-K filed on December 16, 2013). 10.15* Offer of Promotion and Revised Terms of Employment Letter, dated September 24, 2013, between M/A-COM Technology Solutions Inc. andRobert Dennehy (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on February 2, 2015). 10.16* Offer of Employment Letter, dated as of December 11, 2013, between M/A-COM Technology Solutions Inc. and Preetinder Virk (incorporatedby reference to Exhibit (d)(8) to Amendment No. 4 to our Tender Offer Statement on Schedule TO filed with the SEC on December 11, 2013). 10.17 Credit Agreement by and among M/A-COM Technology Solutions Holdings, Inc., Goldman Sachs Bank USA, as Administrative Agent,Collateral Agent, Swing Line Lender and an L/C Issuer, and the other agents and lenders party thereto, dated May 8, 2014 (incorporated byreference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 12, 2014). 10.18 Incremental Amendment, dated February 13, 2015, among Morgan Stanley Senior Funding, Inc., M/A-Com Technology Solutions Holdings,Inc., and Goldman Sachs Bank USA incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on May 13, 2015. 10.19* Form of Restricted Stock Award Agreement under 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our QuarterlyReport on Form 10-Q filed on August 12, 2015). 10.20 Consulting Agreement, dated July 16, 2015, among M/A-COM Technology Solutions Inc., M/A-COM Auto Solutions Inc. and Autoliv ASPInc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 17, 2015). 10.21 Agreement of Purchase and Sale, dated June 17, 2015, between Cobham Properties, Inc. and M/A-COM Technology Solutions Inc.(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 23, 2015). 21.1 Subsidiaries of Registrant. 23.1 Consent of Deloitte & Touche LLP. 31.1 Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 31.2 Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 32.1 Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of1934, as amended, and 18 U.S.C. §1350.101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Calculation Linkbase Document101.DEF XBRL Taxonomy Definition Linkbase Document101.LAB XBRL Taxonomy Label Linkbase Document101.PRE XBRL Taxonomy Presentation Linkbase Document *Management contract or compensatory plan. 109Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on itsbehalf by the undersigned, thereunto duly authorized.Date: November 24, 2015 M/A-COM TECHNOLOGY SOLUTIONSHOLDINGS, INC.Registrant By: /s/ John Croteau John Croteau President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and inthe capacities indicated on November 24, 2015. Signature and Title Signature and Title/s/ John Croteau /s/ John OcampoJohn Croteau John OcampoPresident and Chief Executive Officer Chairman of the BoardDirector(principal executive officer) /s/ Robert J. McMullanRobert J. McMullanSenior Vice President andChief Financial Officer(principal accounting and financial officer) /s/ Susan OcampoSusan OcampoDirector /s/ Peter ChungPeter ChungDirector /s/ Gil Van LunsenGil Van LunsenDirector /s/ Charles BlandCharles BlandDirector /s/ Stephen DalyStephen DalyDirector 110Table of ContentsEXHIBIT INDEX Exhibit Number Description 2.1 Membership Interest Purchase Agreement by and among M/A-COM Technology Solutions Inc., Nitronex, LLC and GaAs Labs, LLC, datedFebruary 13, 2014 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on February 13, 2014). 2.2 Agreement and Plan of Merger by and among M/A-COM Technology Solutions Inc., BinOptics Corporation, Borealis Merger Sub, Inc. and IthacaStockholders’ Agent, LLC, as stockholders’ agent, dated November 17, 2014 (incorporated by reference to Exhibit 2.1 to our Current Report onForm 8-K filed on November 19, 2014). 2.3 Stock Purchase Agreement, dated July 16, 2015, among Autoliv ASP Inc., M/A-COM Technology Solutions Inc., M/A-COM Auto Solutions Inc.and M/A-COM Technology Solutions Holdings, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on July 17,2015). 3.1 Fourth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to Amendment No. 6 to our RegistrationStatement on Form S-1 (File No. 333-175934) filed on February 28, 2012). 3.2 Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to Amendment No. 6 to our Registration Statement on Form S-1(File No. 333-175934) filed on February 28, 2012). 4.1 Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to our Registration Statement on Form S-1(File No. 333-175934) filed on November 23, 2011). 4.2 Form of Common Stock Purchase Warrant issued on December 21, 2010 (incorporated by reference to Exhibit 4.3 our Registration Statement onForm S-1 (File No. 333-175934) filed on August 1, 2011). 4.3 Second Amended and Restated Investor Rights Agreement, dated February 28, 2012 (incorporated by reference to Exhibit 4.2 to Amendment No. 6to our Registration Statement on Form S-1 (File No. 333-175934) filed on February 28, 2012). 4.4 First Amendment to the Second Amended and Restated Investor Rights Agreement, dated May 20, 2013 (incorporated by reference to Exhibit 4.5to our Registration Statement on Form S-3 (File No. 333-188728) filed on May 21, 2013). 4.5 Second Amendment to the Second Amended and Restated Investor Rights Agreement, dated February 2, 2015 (incorporated by reference toExhibit 4.5 to our Registration Statement on Form S-3 ASR (File No. 333-201827) filed on February 2, 2015). 10.1* Form of Indemnification Agreement between M/A-COM Technology Solutions Holdings, Inc. and each of its directors and executive officers(incorporated by reference to Exhibit 10.1 to Amendment No. 3 to our Registration Statement on Form S-1 (File No. 333-175934) filed onOctober 21, 2011). 10.2 M/A-COM Technology Solutions Holdings, Inc. Amended and Restated 2009 Omnibus Stock Plan, as amended (incorporated by reference toExhibit 10.2 to our Annual Report on Form 10-K filed on November 28, 2012). 10.3 Form of Incentive Stock Option Agreement under the M/A-COM Technology Solutions Holdings, Inc. 2009 Omnibus Stock Plan (incorporated byreference to Exhibit 10.3 to our Registration Statement on Form S-1 (File No. 333-175934) filed on August 1, 2011). 10.4* Form of Restricted Stock Agreement under the M/A-COM Technology Solutions Holdings, Inc. 2009 Omnibus Stock Plan (incorporated byreference to Exhibit 10.4 to our Registration Statement on Form S-1 (File No. 333-175934) filed on August 1, 2011). 111Table of Contents 10.5* M/A-COM Technology Solutions Holdings, Inc. 2012 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.5 to ourAnnual Report on Form 10-K filed on November 28, 2012). 10.6* Form of Restricted Stock Unit Award Agreement under 2012 Omnibus Incentive Plan (Time-Based and Performance-Based) (incorporated byreference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 27, 2015). 10.7* Form of Nonqualified Stock Option Agreement under 2012 Omnibus Incentive Plan (Performance-Based) (incorporated by reference to Exhibit10.2 to our Current Report on Form 8-K filed on April 27, 2015). 10.8* M/A-COM Technology Solutions Holdings, Inc. 2012 Employee Stock Purchase Plan, as amended. (incorporated by reference to Exhibit 10.4 toour Quarterly Report on Form 10-Q filed on February 2, 2015). 10.9* Mindspeed Technologies, Inc. 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed byMindspeed Technologies, Inc. on February 12, 2013 (File No. 001-31650)). 10.10* Mindspeed Technologies, Inc. 2003 Long-Term Incentives Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filedby Mindspeed Technologies, Inc. on April 8, 2011 (File No. 001-31650)). 10.11* M/A-COM Technology Solutions Holdings, Inc. Change in Control Plan, as amended and restated through November 13, 2015. 10.12* Offer of Employment Letter to Michael Murphy, dated September 28, 2009, as amended (incorporated by reference to Exhibit 10.13 to ourRegistration Statement on Form S-1 (File No. 333-175934) filed on August 1, 2011). 10.13* Offer of Employment to John Croteau, dated September 6, 2012 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-Kfiled on September 7, 2012). 10.14* Offer of Employment to Robert McMullan, dated December 11, 2013 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on December 16, 2013). 10.15* Offer of Promotion and Revised Terms of Employment Letter, dated September 24, 2013, between M/A-COM Technology Solutions Inc. andRobert Dennehy (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on February 2, 2015). 10.16* Offer of Employment Letter, dated as of December 11, 2013, between M/A-COM Technology Solutions Inc. and Preetinder Virk (incorporated byreference to Exhibit (d)(8) to Amendment No. 4 to our Tender Offer Statement on Schedule TO filed with the SEC on December 11, 2013). 10.17 Credit Agreement by and among M/A-COM Technology Solutions Holdings, Inc., Goldman Sachs Bank USA, as Administrative Agent, CollateralAgent, Swing Line Lender and an L/C Issuer, and the other agents and lenders party thereto, dated May 8, 2014 (incorporated by reference toExhibit 10.1 to our Current Report on Form 8-K filed on May 12, 2014). 10.18 Incremental Amendment, dated February 13, 2015, among Morgan Stanley Senior Funding, Inc., M/A-Com Technology Solutions Holdings, Inc.,and Goldman Sachs Bank USA incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on May 13, 2015. 10.19* Form of Restricted Stock Award Agreement under 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our QuarterlyReport on Form 10-Q filed on August 12, 2015). 10.20 Consulting Agreement, dated July 16, 2015, among M/A-COM Technology Solutions Inc., M/A-COM Auto Solutions Inc. and Autoliv ASP Inc.(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 17, 2015). 112Table of Contents 10.21 Agreement of Purchase and Sale, dated June 17, 2015, between Cobham Properties, Inc. and M/A-COM Technology Solutions Inc. (incorporatedby reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 23, 2015). 21.1 Subsidiaries of Registrant. 23.1 Consent of Deloitte & Touche LLP. 31.1 Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 31.2 Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 32.1 Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of1934, as amended, and 18 U.S.C. §1350.101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Calculation Linkbase Document101.DEF XBRL Taxonomy Definition Linkbase Document101.LAB XBRL Taxonomy Label Linkbase Document101.PRE XBRL Taxonomy Presentation Linkbase Document *Management contract or compensatory plan. 113Exhibit 10.11M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CHANGE IN CONTROL PLANEffective as of October 3, 2014Amended and Restated on April 22, 2015, September 3, 2015 and November 13, 2015The Plan is established by M/A-COM Technology Solutions Holdings, Inc., a Delaware corporation, to secure for the benefit of the Company the services ofthe participating Employees in the event of a potential or actual Change in Control without concern for whether such Employees might be hindered in dischargingtheir duties by the personal uncertainties and risks associated with a Change in Control, by affording such Employees the opportunity to protect the share value theyhave helped create as of the date of any Change in Control and offering income protection to such Employees in the event their employment terminatesinvoluntarily without Cause or for Good Reason in connection with a Change in Control. All capitalized terms in the Plan have the meaning set forth in Section 2 oras defined elsewhere in the Plan. 1.Purpose, Establishment and Applicability of Plan .1.1 Establishment of Plan . As of the Effective Date, the Company hereby establishes its Change in Control Plan, as set forth in this document.1.2 Applicability of Plan . Subject to the terms of the Plan, the benefits provided by the Plan shall be available to those Employees who, on or after theEffective Date, receive a Notice of Participation, pursuant to Section 3.1.3 Contractual Right to Benefits . The Plan and the Notice of Participation establish and vest in each Participant a contractual right to the benefits to whichhe or she is entitled pursuant to the terms and conditions thereof, enforceable by the Participant against the Company. 2.Definitions and Construction .Whenever capitalized in the Plan, the following terms shall have the meanings set forth below.2.1 Administrator . “Administrator” shall mean the Board, or its Compensation Committee or either of their designees, as shall be responsible foradministering the Plan.2.2 Base Salary . “Base Salary” shall mean an amount equal to the sum of the Participant’s gross monthly base salary, as in effect immediately preceding theChange in Control (and as may have been increased after the date of such Change in Control).2.3 Board . “Board” shall mean the Board of Directors of the Company.2.4 Cause . “Cause” shall mean (a) an act of fraud by the Participant in connection with the Participant’s responsibilities as an Employee; (b) theParticipant’s conviction of, or pleaof nolo contendere to, a felony, or commission of an act of moral turpitude; (c) the Participant’s gross misconduct; or (d) the Participant’s material failure todischarge his or her employment duties after having received a written demand for performance from the Company (or notice of misconduct, where applicable)specifying the breach of employment duties and the Participant’s failure to cure such breach (where such breach is curable) within 30 days of the date of suchnotice from the Company.2.5 Change in Control . “Change in Control” shall mean the occurrence of any of the following events:(a) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) ofbeneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (i) the then outstanding shares ofcommon stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of theCompany entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following acquisitionsof Outstanding Company Common Stock and Outstanding Company Voting Securities: (1) any acquisition directly from the Company, other than an acquisitionby virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition bythe Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company, or (4) any acquisition by any Personpursuant to a transaction that complies with clauses (i), (ii) and (iii) of Section 2.5(c); or(b) A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”)cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a member of the Board subsequent to theEffective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of those individuals whoare members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though suchindividual was a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of or inconnection with an actual or threatened election contest with respect to the removal of directors or other actual or threatened solicitation of proxies or consents byor on behalf of a Person other than the Board shall not be considered a member of the Incumbent Board; or(c) The consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company(“Business Combination”); excluding, however, such a Business Combination pursuant to which:(i) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock andOutstanding Company Voting Securities immediately prior to such Business Combination shall beneficially own, directly or indirectly, more than 50% of,respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in theelection of directors, as the case may be, of the corporation resulting from suchBusiness Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of theCompany’s assets) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding CompanyCommon Stock and Outstanding Company Voting Securities, as the case may be,(ii) no Person (other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by theCompany or such corporation resulting from such Business Combination) shall beneficially own, directly or indirectly, 50% or more of, respectively, theoutstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding votingsecurities of such corporation entitled to vote generally in the election of directors, except to the extent that such ownership existed with respect to the Companyprior to the Business Combination, and(iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination shall have been membersof the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.2.6 Code . “Code” shall mean the Internal Revenue Code of 1986, as amended.2.7 Company . “Company” shall mean M/A-COM Technology Solutions Holdings, Inc., any successor entities as provided in Section 8 and anySection 409A Affiliates as defined in Section 10.2(b).2.8 Disability . “Disability” shall mean a mental or physical impairment of the Participant that is expected to result in death or that has lasted or is expectedto last for a continuous period of 12 months or more and that causes the Participant to be unable to perform his or her material duties for the Company and to beengaged in any substantial gainful activity, in each case as determined by the Administrator, whose determination shall be conclusive and binding.2.9 Effective Date . “Effective Date” for purposes of the Plan shall mean the date stated on the first page of the Plan.2.10 Employee . “Employee” shall mean an employee of the Company.2.11 ERISA . “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.2.12 Exchange Act . “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.2.13 Good Reason . “Good Reason” shall mean any of the following that occur without the Participant’s express written consent and that the Company failsto cure within the time frame specified in Section 12.3: (a) the material reduction of the Participant’s authority, duties orresponsibilities, or assignment to the Participant of duties, in either case which results in a material diminution of the Participant’s authority, duties orresponsibilities in effect immediately prior to such action; (b) a material reduction in the Participant’s Base Salary; (c) a material reduction in the Participant’s“target” bonus opportunity, “target” long-term incentive opportunity, or “target” equity incentive opportunity, as determined by taking into account eachopportunity in effect immediately prior to a Change in Control (and as may have been increased after the date of a Change in Control); (d) any action or inaction bythe Company that constitutes a material breach by the Company of the Plan; or (e) a change in the Participant’s geographic work location of over 50 miles from theParticipant’s geographic work location immediately prior to such change, except for required travel in furtherance of the Company’s business to the extentconsistent with the Participant’s duties.2.14 Participant . “Participant” shall mean each Employee designated by the Administrator as a Participant and who signs and returns to the Company aNotice of Participation indicating that such Employee agrees to be a Participant.2.15 Release . “Release” means a general waiver and release of claims substantially in the form provided to the Participant together with the Notice ofParticipation.2.16 Notice of Participation . “Notice of Participation” shall mean an individualized written notice of participation in the Plan from an authorized officer ofthe Company.2.17 Plan . “Plan” shall mean the M/A-COM Technology Solutions Holdings, Inc. Change in Control Plan, as set forth herein, together with all amendmentshereto.2.18 Severance Payments . “Severance Payments” shall mean the severance compensation and benefits as provided in Section 4. 3.Eligibility .3.1 Release of Claims . As a condition of receiving any payments or benefits under the Plan, a Participant must sign (and not revoke, if applicable) a Release,which Release must become effective ( i.e. , the Participant must sign the Release and any revocation period specified therein must have expired without theParticipant revoking the Release) no later than 60 days following the Participant’s termination of employment (or, if earlier, by the date specified in the Release). Ifthe Release does not become effective by the deadline specified in the immediately preceding sentence, then none of such payments or benefits shall be provided tothe Participant.3.2 Participation in Plan . Each Employee who is designated by the Administrator as a Participant and who signs and returns to the Company a Notice ofParticipation within the time set forth in such Notice shall be a Participant in the Plan. A Participant shall cease to be a Participant in the Plan upon ceasing to be anEmployee; provided, however, that once a Participant has become entitled to payments and benefits hereunder, he or she shall remain a Participant in the Plan untilthe full amount of the payments and benefits has been delivered to the Participant.4.Severance Payments .4.1 Cash Severance Payments . If, within one year following a Change in Control, a Participant’s employment is terminated by the Company involuntarilywithout Cause or by the Participant for Good Reason then, subject to Sections 3.1, 5 and 6, the Participant shall be entitled to receive the following cash payments:(a) the cash amount determined in accordance with the Participant’s Notice of Participation; and(b) an amount equal to that percentage specified in a Participant’s Notice of Participation of the Participant’s annual bonus potential at “target” ratherthan “maximum” level of achievement as in effect immediately prior to a Change in Control (and as may have been increased after the date of a Change inControl).4.2 Treatment of Equity Awards . Notwithstanding any provision in the instrument evidencing an equity award:(a) If, within one year following a Change in Control, a Participant’s employment is terminated by the Company involuntarily without Cause or by theParticipant for Good Reason then, subject to Sections 3.1, 5 and 6, all then outstanding equity-based awards that become exercisable, vested or payable based solelyon continued service granted to the Participant under any applicable equity compensation plans of the Company as in effect on the date of the Change in Control,whether granted before or after the Effective Date, shall become fully vested and exercisable or payable as of the effective date of the Participant’s termination;provided, that if an award provides deferred compensation subject to Code Section 409A, such award will be paid at the same time and in the same form as it wouldhave been paid had no Change in Control occurred.(b) All outstanding equity-based awards, but excluding the stock options granted by the Company on April 29, 2014, April 22, 2015, May 5,2015, September 3, 2015, and November 13, 2015, that are eligible to become exercisable, vested or payable (or that provide for accelerated vesting or payment)upon the attainment of specified performance goals granted to the Participant under any applicable equity compensation plans of the Company as in effect on thedate of the Change in Control, whether granted before or after the Effective Date, shall be deemed earned at 200% of “target” immediately prior to the Change inControl and shall be converted, without proration, into that number of restricted stock units equal to the number of shares that would have been payable had theperformance goals been attained at 200% of the “target” performance level, such restricted stock units to become vested and payable upon completion of theapplicable performance period and any further service-based vesting period relating to such award, subject to the Participant’s continued employment; provided,that, subject to Sections 3.1, 5 and 6, such restricted stock units shall immediately become fully vested and payable if, within one year following a Change inControl, a Participant’s employment is terminated by the Company involuntarily without Cause or by the Participant for Good Reason; provided further, that if anaward provides deferred compensation subject to Code Section 409A, such award will be paid at the same time and in the same form as it would have been paidhad no Change in Control occurred.(c) For the avoidance of doubt, any unvested equity-based awards shall cease vesting immediately on the date of Participant’s termination ofemployment, but shall not terminate until the date on which it is determined whether the Participant is eligible to receive accelerated vesting under this Section 4.2.4.3 Method of Payment . Any cash Severance Payment to which a Participant becomes entitled pursuant to Section 4.1shall be paid to the Participant in alump sum within 10 days of the effective date of the Participant’s Release. If a Participant dies after becoming eligible for a cash Severance Payment and executinga Release but before payment of the cash Severance Payment, the cash Severance Payment will be paid to the Participant’s estate in a lump sum within 60 days ofthe Participant’s death, provided that the Release becomes effective prior to such date. If a Participant dies after becoming eligible for a cash Severance Paymentbut before executing a Release, the personal representative of the Participant’s estate shall be permitted to sign a Release on the Participant’s (and the Participant’sestate’s) behalf. All payments and benefits under the Plan will be net of amounts withheld with respect to taxes, offsets or other obligations.4.4 Voluntary Resignation; Termination for Cause . If (a) the Participant’s employment terminates by reason of the Participant’s voluntary resignation after aChange in Control other than for Good Reason or (b) the Company terminates the Participant for Cause, then the Participant shall not be entitled to receive anypayments or benefits under the Plan and shall be entitled only to those payments and benefits (if any) as may be available under the Company’s then existingbenefit plans and policies at the time of such termination.4.5 Disability; Death . If the Participant’s employment terminates by reason of the Participant’s death, or in the event the Company terminates theParticipant’s employment following his or her Disability, the Participant shall not be entitled to receive any payments or benefits under the Plan and shall beentitled only to those payments and benefits (if any) as may be available under the Company’s then existing benefits plans and policies at the time of suchtermination. 5.Golden Parachute Excise Tax .5.1 Gross-Up Payment . In the event that a Participant becomes entitled to receive any payment or benefit under the Plan, either alone or when aggregatedwith any other payments or benefits received (or to be received) by a Participant from the Company (each a “Payment” and, collectively, the “Total Payments”) andany of the Total Payments will be subject to any excise tax pursuant to Section 4999 of the Code or any similar or successor provision (the “Excise Tax”), theCompany shall make an additional lump-sum cash payment to the Participant (a “Gross-Up Payment”) in an amount such that after payment by the Participant ofall taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income and employment taxes (and any interestand penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up Payment equalto the Excise Tax imposed upon the Total Payments.5.2 Timing of Payment . A Gross-Up Payment, if any, shall be made by the Company to the Participant on or within 10 business days of the date that therelated Excise Tax on the Total Payments is required to be remitted to the relevant taxing authorities. Notwithstanding anything to the contrary in this Section 5, inno event will a Gross-Up Payment be made on a day that is later than the last day of the Participant’s taxable year that immediately follows the Participant’s taxableyear in which the related Excise Tax on the Total Payments is remitted to the relevant taxing authorities.5.3 Determination . Unless the Company and the Participant otherwise agree in writing, any determination required under this Section 5 or the Participant’sNotice of Participation shall be made in writing by an independent accounting firm appointed by the Company (the “Accountants”), whose determination shall beconclusive and binding upon the Participant and the Company. For purposes of making the calculations required by Section 5, the Accountants may makereasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application ofCode Sections 280G and 4999. The Company and the Participant shall furnish to the Accountants such information and documents as the Accountants mayreasonably request in order to make a determination under this Section 5. The Company shall bear all costs the Accountants may reasonably incur in connectionwith any calculations pursuant to this Section 5. 6.Forfeiture of Severance Payments .The Severance Payments are conditioned on a Participant’s compliance with the Company’s code of conduct, code of ethics, and any restrictive covenantscontained in the Participant’s Release (collectively, the “restrictive covenants”). Notwithstanding any other provision of the Plan to the contrary, if it is determinedby the Company that the Participant has violated any of the restrictive covenants, the Participant shall be required to repay to the Company an amount equal to theeconomic value of all payments and benefits already paid or provided to the Participant under the Plan and the Participant (including the Participant’s estate andsuccessors) shall forfeit all other entitlements under the Plan. Additional forfeiture provisions may apply under the Plan or other agreements between the Participantand the Company, and any such forfeiture provisions shall remain in full force and effect. 7.Employment Status; Withholding .7.1 Employment Status . The Plan does not constitute a contract of employment or impose on the Participant or the Company any obligations to retain theParticipant as an Employee, to change the status of the Participant’s employment, or to change the Company’s policies regarding termination of employment. TheParticipant’s employment is and shall continue to be at will, as defined under applicable law.7.2 Tax Withholdings . All payments and benefits made or provided pursuant to the Plan shall be subject to applicable payroll and income tax withholdingand other legally required deductions; provided that the amount so withheld shall not exceed the minimum amount required to be withheld by law.8.Successors to Company and Participants .8.1 Company’s Successors . Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation orotherwise) or acquiror of all or substantially all of the Company’s business and/or assets shall assume the obligations under the Plan and agree expressly to performthe obligations under the Plan. For all purposes under the Plan, the term “Company” shall include any successor to the Company or acquiror of the Company’sbusiness and/or assets pursuant to the terms of an agreement between the Company and such successor or acquiror or by operation of law.8.2 Participant’s Successors . All rights of the Participant hereunder shall inure to the benefit of, and be enforceable by, the Participant’s personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 9.Duration, Amendment and Termination .9.1 Duration . The Plan shall terminate 3 years from the Effective Date, unless (a) the Plan is extended by the Administrator, (b) a Change in Control occurswhile the Plan is in effect, or (c) the Administrator terminates the Plan in accordance with Section 9.2 below. If a Change in Control occurs prior to termination ofthe Plan pursuant to the preceding sentence, then the Plan shall terminate upon the date that all obligations of the Company hereunder have been satisfied.9.2 Amendment and Termination . The Administrator shall have the discretionary authority to amend the Plan in any respect, including as to the removal oraddition of Participants, or to terminate or suspend the Plan, by resolution adopted by a majority of the Administrator; provided, however, that with respect to anyParticipant that has been designated by the Administrator as a Participant and has signed and returned to the Company a Notice of Participation indicating that suchEmployee has agreed to be a Participant, no such amendment, termination or suspension of the Plan shall be effective as to such Participant unless (a) theParticipant would not be adversely affected in any way by such amendment, termination or suspension or (b) the Participant consents in writing to suchamendment, termination or suspension. 10.Administration .10.1 Power and Authority . The Administrator has all power and authority necessary or convenient to administer the Plan, including, but not limited to, theexclusive authority and discretion: (a) to construe and interpret the Plan; (b) to decide all questions of eligibility for and the amount of benefits under the Plan;(c) to prescribe procedures to be followed and the forms to be used by the Participants pursuant to the Plan; and (d) to request and receive from all Participants suchinformation as the Administrator determines is necessary for the proper administration of the Plan.10.2 Code Section 409A . The provisions for Code Section 409A shall be applied as follows:(a) The Company makes no representations or warranties to any Employee with respect to any tax, economic or legal consequences of the Plan or anypayments to any Participant hereunder, including, without limitation, under Code Section 409A, and no provision of the Plan shall be interpreted or construed totransfer any liability for failure to comply with Code Section 409A or any other applicable legal requirements from the Participant or other individual to theCompany or any of its affiliates. Each Participant, by executing a Notice of Participation, shall be deemed to have waived any claim against the Company and itsaffiliates with respect to any such tax, economic or legal consequences. However, the payments and benefits provided under the Plan are not intended to constitutedeferred compensation that is subject to the requirements of Code Section 409A. Rather, the Company intends that the Plan and the payments and other benefitsprovided hereunder be exempt from the requirements of Code Section 409A, whether pursuant to the short-term deferral exception described in Treas. Reg.§ 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treas. Reg. § 1.409A-1(b)(9)(iii) or otherwise. Notwithstanding any provision of thePlan to the contrary, the Plan shall be interpreted, operated and administered in a manner consistent with such intention;(b) Without limiting the generality of the foregoing, and notwithstanding any other provision of the Plan to the contrary, all references herein to aParticipant’s termination of employment are intended to mean the Participant’s “separation from service” from the Company and its Section 409A Affiliates withinthe meaning of Code Section 409A. “Section 409A Affiliates” means each entity that is required to be included in the Company’s controlled group of corporationswithin the meaning of Code Section 414(b) or (c); provided, however, that the phrase “at least 50 percent” shall be used in place of the phrase “at least 80 percent”each place it appears therein or in the regulations thereunder;(c) If the Company determines that any of the payments or benefits under the Plan constitute “deferred compensation” under Code Section 409A andthe Participant is, on the date of his or her termination of employment, a “specified employee” of the Company, as such term is defined in Code Section 409A(a)(2)(B)(i), then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Code Section 409A, the timing of the payment ofsuch pay or benefits shall be delayed until the earlier to occur of the date that is six months and one day after the Participant’s termination of employment or thedate of the Participant’s death after the Participant’s termination of employment;(d) To the extent that any reimbursement under Section 4 is deemed to constitute taxable compensation to a Participant, such reimbursement will bemade no later than December 31 of the year following the year in which the expense was incurred. The amount of any such reimbursement provided in one yearshall not affect the expenses eligible for reimbursement in any subsequent year, and the Participant’s right to such reimbursement will not be subject to liquidationor exchange for any other benefit; and(e) If any payments or benefits under the Plan would violate the terms of Section 16(b) of the Exchange Act or other federal securities laws, or anyother applicable law, then the payment or the provision of such payments or benefits shall be delayed until the earliest date on which making such payment orproviding such benefit would not violate such law.11.Claims Process .11.1 Claim for Benefits . A Participant (or any individual authorized by such Participant) has the right under ERISA and the Plan to file a written claim forbenefits. To file a claim, the Participant must send the written claim to the Company’s Vice President of Human Resources. If such claim is denied in whole or inpart, the Participant shall receive written notice of the decision of the Company’s Vice President of Human Resources within 90 days after the claim is received.Such written notice shall include the following information: (a) specific reasons for the denial; (b) specific reference to pertinent Plan provisions on which thedenial is based; (c) a description of any additional material or information necessary for the perfection of the claim and an explanation of why it is needed; and(d) steps to be taken if the Participant wishes to appeal the denial of the claim, including a statement of the Participant’s right to bring a civil action underSection 502(a) of ERISA upon an adverse decision on appeal. If the Company’s Vice President of Human Resources needs more than 90 days to make a decision,he or she shall notify the Participant in writing within the initial 90 days and explain why more time is required, and how long is needed. If a Participant (or anyindividual authorized by such Participant) submits a claim according to the procedures above and does not hear from the Company’s Vice President of HumanResources within the appropriate time, the Participant may consider the claim denied.11.2 Appeals . The following appeal procedures give the rules for appealing a denied claim. If a claim for benefits is denied, in whole or in part, or if theParticipant believes benefits under the Plan have not been properly provided, the Participant (or any individual authorized by such Participant) may appeal thisdenial in writing within 60 days after the denial is received by filing a written request for review with the Administrator. The Administrator shall conduct a reviewand make a final decision within 60 days after receiving the Participant’s written request for review. If the Administrator needs more than 60 days to make adecision, it shall notify the Participant in writing within the initial 60 days and explain why more time is required and the date by which the Administrator expectsto render its decision. The Administrator may then take 60 more days to make a decision. If such appeal is denied in whole or in part, the decision shall be inwriting and shall include the following information: (a) specific reasons for the denial; (b) specific reference to pertinent Plan provisions on which the denial isbased; (c) a statement of the Participant’s right to access and receive copies, upon request and free of charge, of all documents and other information relevant tosuch claim for benefits; and (d) a statement of the Participant’s (or representative’s) right to bring a civil action under Section 502(a) of ERISA. If theAdministrator does not respond within the applicable time frame, the Participant may consider the appeal denied. If a Participant’s claim is denied, in whole or inpart, the Participant (or any individual authorized by such Participant) will be provided, upon request and free of charge, reasonable access to, and copies of, alldocuments, records and other information relevant (within the meaning of 29 C.F.R. § 2560.503-1(m)(8)) to his or her claim. Likewise, a Participant (or anyindividual authorized by such Participant) who submits a written request to appeal a denied claim shall have the right to submit any comments, documents, recordsor other information relating to the claim that he or she wishes to provide.11.3 Limitations Period . A Participant must pursue the claim and appeal rights described above within 365 days following the date of which the Participantknew of should have known that the benefits in dispute would not be paid under the Plan. The Participant mustexhaust the claim and appeals rights described above before seeking any other legal recourse regarding a claim for benefits. The Participant may thereafter file anaction in a court of competent jurisdiction, but he or she must do so within 365 days after the date of the notice of decision on appeal or such action will be foreverbarred. Any judicial review of the Administrator’s decision on a claim will be limited to whether, in the particular instance, the Administrator abused its discretion.In no event will such judicial review be on a de novo basis, because the Administrator has discretionary authority to determine eligibility for (and the amount of)payments and benefits under the Plan and to construe and interpret the terms and provisions of the Plan. 12.Notices and Assignment .12.1 General . Notices and all other communications contemplated by the Plan shall be in writing and shall be deemed to have been duly given whenpersonally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Participant, mailed noticesshall be addressed to him or her at the home address that he or she most recently communicated to the Company in writing. In the case of the Company, mailednotices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Vice President of Human Resources.12.2 Notice of Termination by the Company . Any termination of employment by the Company in connection with a Change in Control pursuant to the termsherein shall be communicated by a notice of termination of employment to the Participant at least five days prior to the date of such termination (or at least 30 daysprior to the date of a termination by reason of the Participant’s Disability). Such notice shall indicate the specific termination provision or provisions in the Planrelied upon (if any), shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision or provisions soindicated, and shall specify the termination date.12.3 Notice of Good Reason Termination by the Participant . For purposes of the Plan, a Participant’s termination of employment shall be for Good Reasononly if (a) the Participant delivers written notice to the Company of the existence of the condition which the Participant believes constitutes Good Reason within90 days of the initial existence of such condition (which notice specifically identifies such condition), (b) the Company fails to remedy such condition within30 days after the date on which it receives such notice (the “Good Reason Cure Period”), and (c) the Participant actually terminates employment with the Companywithin 90 days after the expiration of the Good Reason Cure Period. If the Company fails to remedy the condition constituting Good Reason during the GoodReason Cure Period and the Participant decides to terminate his or her employment for Good Reason, then the Participant shall provide the Company with writtennotice of such intent to terminate. Subject to the first sentence of this Section 12.3, any such termination shall be effective on the date such notice of termination isgiven to the Company or on such later date specified therein.12.4 Assignment by Company . The Company may assign its rights under the Plan to an affiliate, and an affiliate may assign its rights under the Plan toanother affiliate of the Company or to the Company. In the case of any such assignment, the term “Company” when used in the Plan shall mean the entity thatactually employs the Participant.13.Miscellaneous .13.1 Governing Law, Jurisdiction and Venue . The Plan is intended to be, and shall be interpreted as, an unfunded employee welfare benefit plan (within themeaning of Section 3(1) of ERISA) for a select group of management or highly compensated employees (within the meaning of 29 C.F.R. §2520.104-24) and itshall be enforced in accordance with ERISA. Any Participant or other Person filing an action related to the Plan shall be subject to the jurisdiction and venue of thefederal courts of the State of Delaware.13.2 Employment Status . Except as may be provided under any other agreement between a Participant and the Company, the employment of the Participantby the Company is “at will” and may be terminated by either the Participant or the Company at any time, subject to applicable law.13.3 Indebtedness of Participant . If a Participant is indebted to the Company, the Company reserves the right to offset any Severance Payments by theamount of such indebtedness, to the full extent permitted by applicable law; provided that such offset is structured in a manner intended to comply with CodeSection 409A.13.4 Severability . In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect theremaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. Further, the captions of thePlan are not part of the provisions hereof and shall have no force and effect.13.5 Effect of Plan . The Plan, as amended, shall completely replace and supersede any prior version of the Plan and any other verbal or written promise,agreement, document or communication concerning the payments or benefits under the Plan. Without limiting the generality of the foregoing, effectiveimmediately upon delivery by the Participant of a signed Notice of Participation, the Participant (a) thereby waives, without need of any further agreement oraction, any potential rights the Participant may have to severance pay, equity acceleration or other benefits specifically arising from or in respect of a Change inControl occurring during the term of the Plan (including any such potential rights arising from any verbal or written promise, offer letter, employment agreement,other agreement, document, or communication between the Participant and the Company or pre-existing practice of the Company with respect to such benefits, butexpressly excluding any rights to benefits arising from the Plan), and (b) thereby agrees that, if the Participant has an existing agreement with the Company relatingto potential rights to severance pay, equity acceleration or other benefits specifically arising from or in respect of a Change in Control, those rights shall be deemedcompletely replaced and superseded by the Participant’s rights under the Plan with respect to any Change in Control occurring during the term of the Plan; providedthat, except as specifically modified (mutatis mutandis) by the foregoing subsection (b), such agreement shall remain enforceable and in full force and effect. Inaddition, none of the payments or benefits under the Plan shall be counted as “compensation” or any equivalent term for purposes of determining benefits underother plans, programs or practices owing to the Participant from the Company, except to the extent expressly provided therein. Except as otherwise specificallyprovided for in the Plan, the Participant’s rights under all such agreements, plans, provisions and practices continue to be subject to the respective terms andconditions thereof.M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CHANGE IN CONTROL PLANNOTICE OF PARTICIPATIONTo:Date: , 20 The Administrator has designated you as a Participant in the Plan, a copy of which is attached hereto. The terms and conditions of your participation in thePlan are as set forth in the Plan and herein. The terms defined in the Plan shall have the same defined meanings in this Notice of Participation. As a condition ofreceiving any payments or benefits under the Plan, you must sign (and not revoke, if applicable) a Release substantially in the form provided to you together withthis Notice of Participation, which Release must become effective ( i.e. , you must sign the Release and any revocation period specified therein must have expiredwithout you revoking the Release) no later than 60 days following your termination of employment (or, if earlier, by the date specified in the Release).As provided in Section 4.1 of the Plan, the following terms apply to your participation in the Plan:(a) Cash Amount: (A) [12 times][6 times] your monthly Base Salary, plus (B) $[25,000][12,500].(b) Percentage of Annual Bonus Potential at Target: [100%][50%]If you agree to participate in the Plan on these terms and conditions, please acknowledge your acceptance by signing below. Also by signing below, youacknowledge and agree that the payments and benefits under the Plan are subject to forfeiture or repayment in certain cases if you have violated the Company’scode of conduct or code of ethics or any restrictive covenants contained in your Release.Please return the signed copy of this Notice of Participation within 10 days of the date set forth above to:M/A-COM Technology Solutions Holdings, Inc.Attn: Vice President of Human Resources100 Chelmsford StreetLowell, MA 01851Your failure to timely remit this signed Notice of Participation will result in your immediate removal from the Plan. Please retain a copy of this Notice ofParticipation, along with the Plan, for your records. Date: Signature: Exhibit 21.1SUBSIDIARIES OF THE REGISTRANT Name Jurisdiction of IncorporationM/A-COM Technology Solutions Inc. DelawareMindspeed Technologies, Inc. DelawareM/A-COM Tech Asia, Inc. TaiwanMACOM Technology Solutions (Bangalore) Private Limited IndiaM/ACOM Technology Solutions (Cork) Limited IrelandM/A-COM Technology Solutions (Holding) Company Limited IrelandM/A-COM Technology Solutions International Limited IrelandM/A-COM Technology Solutions (UK) Limited Northern IrelandM/A-COM Technology Solutions (Shanghai) Company Limited ChinaNitronex, LLC DelawarePhotonic Controls, LLC New YorkMindspeed Technologies B.V. NetherlandsMindspeed Technologies Canada, Inc. CanadaMindspeed Technologies K.K. JapanMindspeed Technologies Israel Ltd. IsraelPlatinum Acquisition (UK) Ltd. United KingdomMindspeed Technologies Ltd. United KingdomMindspeed Technologies U.K., Ltd. United KingdomMindspeed Technologies S.A.S. FranceMindspeed Technologies (Mauritius) Ltd. MauritiusMindspeed Technologies Asia Pacific, Ltd. Hong KongMindspeed Technologies GmbH GermanyMindspeed Technologies Ukraine, LLC UkraineMindspeed Development Malaysia Sdn Bhd MalaysiaMindspeed Telecommunications Technologies Development (Shenzhen) Co. Ltd. ChinaMindspeed Technologies India Private Ltd. IndiaBinOptics, LLC DelawareBinOptics (HK) Ltd. Hong KongExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statements No. 333-193098 and No. 333-180219 on Form S-8 and Registration Statement No. 333-188728 and No. 333-201827 on Form S-3 of our reports dated November 24, 2015, relating to the consolidated financial statements of M/A-COM TechnologySolutions Holdings, Inc., and the effectiveness of M/A-COM Technology Solutions Holdings, Inc.’s internal control over financial reporting (which reportexpresses an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of a material weakness) appearing in thisAnnual Report on Form 10-K for the year ended October 2, 2015. /s/ Deloitte & Touche LLPBoston, MassachusettsNovember 24, 2015EXHIBIT 31.1CERTIFICATION OF THE CEO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, John Croteau, certify that: 1.I have reviewed this annual report on Form 10-K of M/A-COM Technology Solutions Holdings, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: November 24, 2015 /s/ John CroteauJohn CroteauPresident and Chief Executive Officer(Principal Executive Officer)EXHIBIT 31.2CERTIFICATION OF THE CFO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Robert J. McMullan, certify that: 1.I have reviewed this annual report on Form 10-K of M/A-COM Technology Solutions Holdings, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: November 24, 2015 /s/ Robert J. McMullanRobert J. McMullanSenior Vice President and Chief Financial Officer(Principal Financial Officer)EXHIBIT 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF2002In connection with the Annual Report of M/A-COM Technology Solutions Holdings, Inc. (the “Company”) on Form 10-K for the fiscal year ended October 2,2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John Croteau, as President and Chief Executive Officer of theCompany, and Robert J. McMullan, as Senior Vice President and Chief Financial Officer, each hereby certifies, pursuant to and solely for the purpose of 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for theperiod covered by the Report.Date: November 24, 2015 /s/ John CroteauJohn CroteauPresident and Chief Executive Officer(Principal Executive Officer)/s/ Robert J. McMullanRobert J. McMullanSenior Vice President and Chief Financial Officer(Principal Financial Officer)

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