Macquarie Atlas Roads Limited
Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended September 27, 2019ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________to__________Commission file number: 001-35451MACOM Technology Solutions Holdings, Inc.(Exact name of registrant as specified in its charter)Delaware27-0306875(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)100 Chelmsford StreetLowell, MA 01851(Address of principal executive offices and zip code)(978) 656-2500(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each ClassTrading SymbolName of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per shareMTSINasdaq 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 Securities Act. Yes ☐ NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. 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 the preceding 12months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filer Non-accelerated filer Smaller reporting company Emerging growth company ☑☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☑ NoThe aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of March 29, 2019, the last business day of the registrant's second fiscalquarter, was approximately $762.2 million based on the closing price of the registrant’s common stock as of such date as reported on the Nasdaq Global Select Market. Forpurposes of the foregoing calculations only, shares of common stock held by each executive officer and director of the registrant and their respective affiliates have beenexcluded, as such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of November 21, 2019 was 66,161,045.DOCUMENTS INCORPORATED BY REFERENCEPart III incorporates certain information by reference from the registrant's definitive proxy statement for the 2020 Annual Meeting of Stockholders, which will be filed no laterthan 120 days after the close of the registrant's fiscal year ended September 27, 2019.MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.ANNUAL REPORT ON FORM 10-KFOR THE FISCAL YEAR ENDED SEPTEMBER 27, 2019TABLE OF CONTENTS PAGE NO.PART I ITEM 1: BUSINESS.4ITEM 1A: RISK FACTORS.10ITEM 1B: UNRESOLVED STAFF COMMENTS.31ITEM 2: PROPERTIES.31ITEM 3: LEGAL PROCEEDINGS.31ITEM 4: MINE SAFETY DISCLOSURES.32 PART II ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES.33ITEM 6: SELECTED FINANCIAL DATA.34ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.35ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.44ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.46ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.84ITEM 9A: CONTROLS AND PROCEDURES.84ITEM 9B: OTHER INFORMATION.86 PART III ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.86ITEM 11: EXECUTIVE COMPENSATION.87ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.87ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.87ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES.88 PART IV ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES.89ITEM 16: FORM 10-K SUMMARY92 SIGNATURES932CAUTIONARY 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, our future results of operations and our financial position. Forward-looking statements generallymay 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 of those terms.Forward-looking statements are neither historical facts nor assurances about future performance. Instead, they are based only on our current beliefs,expectations and assumptions. Because forward-looking statements relate to the future, such statements involve inherent risks, changes and uncertainties that aredifficult to predict and many of which are outside of our control. A number of important factors could cause actual results and outcomes to differ materially andadversely from those expressed or implied by our forward-looking statements. We urge you to consider the risks and uncertainties in “Item 1A - Risk Factors” andelsewhere in this Annual Report and the other documents filed by us with the Securities and Exchange Commission (the "SEC"). Except as required by law, weundertake no obligation to revise or update our forward-looking statements to reflect any event or circumstance that may arise after the date of this Annual Report.In this document, the words “MACOM,” “Company,” “we,” “our,” “us,” and similar terms refer only to MACOM Technology Solutions Holdings, Inc. andits consolidated subsidiaries, and not any other person or entity.“MACOM,” “M/A-COM,” “M/A-COM Technology Solutions,” “M/A-COM Tech,” “Partners in RF & Microwave” and related logos are trademarks ofMACOM Technology Solutions Holdings, Inc. All other brands and names listed are trademarks of their respective owners.3PART lITEM 1. BUSINESSOverviewWe design and manufacture semiconductor products for Data Center, Telecommunications ("Telecom") and Industrial and Defense ("I&D") applications.Headquartered in Lowell, Massachusetts, we have more than 65 years of application expertise, with silicon, gallium arsenide ("GaAs") and indium phosphide("InP") fabrication, manufacturing, assembly and test, and operational facilities throughout North America, Europe and Asia. We design, develop and manufacturedifferentiated, high-value semiconductor products for customers who demand high performance, quality and reliability. We offer a broad portfolio of thousands ofstandard and custom devices, which include integrated circuits ("IC"), multi-chip modules ("MCM"), diodes, amplifiers, switches and switch limiters, passive andactive components and complete subsystems, across dozens of product lines serving over 8,000 end customers in three primary markets. Our semiconductorproducts are electronic components that our customers incorporate into their larger electronic systems, such as wireless basestations, high speed optical networks,active antenna arrays, radar, medical systems and test and measurement. Our primary markets are: (1) Telecom, which includes carrier infrastructure like long-haul/metro, 5G and fiber-to-the-X ("FTTx")/ passive optical network ("PON"); (2) Data Centers, enabled by our broad portfolio of analog ICs and photoniccomponents for high speed optical module customers; and (3) I&D, which includes military and commercial radar, radio frequency ("RF") jammers, electroniccountermeasures, communication data links, satellite communications and multi-market applications, which include industrial, medical, test and measurement aswell as scientific applications.Many of our products have long life cycles ranging from five to ten years, and some of our products have been generating revenue for over twenty years. Wecontinue to develop new products and technologies to improve our ability to serve our primary markets. Our growth strategy is focused on strengthening ourcustomer relationships and capturing more design wins in order to increase our market share. As we grow our portfolio and technology base, we believe ourcustomers will select more of our components for use in their systems.Our manufacturing model consists of domestic semiconductor wafer fabrication capabilities coupled with our external foundry partners. This provides uswith a competitive advantage and an attractive financial model by allowing us to utilize our variable cost structure while enabling us to adapt to changing marketconditions and customer demands. We operate semiconductor fabrication facilities at our Lowell, Massachusetts headquarters and in Ann Arbor, Michigan. Ourfacilities are certified to the International Organization for Standardization ("ISO") 9001 international quality standard and ISO14001 environmental managementstandard. We manufacture compound semiconductors including GaAs and InP. In the I&D markets, a domestic fabrication facility may be a requirement to be astrategic supplier, and we believe our status as a “Trusted Foundry” offers us further competitive differentiation.We also utilize external semiconductor foundries to supply us with additional capacity, 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 that this strategy provides us with dependable supply, control over quality, reducedcapital investment requirements, faster time to market and additional outsourced capacity when needed. In addition, the experience base cultivated through thecontinued operation of our internal fabrication lines provides us with the expertise to better manage our external foundry suppliers.Research and DevelopmentOur research and development efforts are directed toward the rapid development of new and innovative products, process technologies and packagingtechniques. The interaction of semiconductor process technology, circuit design technology and packaging technology defines the performance parameters and thecustomers’ acceptance of our products. We believe some of our core competencies are the ability to model, design, test, integrate, package and manufacturedifferentiated solutions for our customers. We leverage this core competency to solve difficult and complex challenges that our customers face during their systemdesign phases. We believe 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.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.4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 heterolithic microwave integrated circuit ("HMIC"), which provides high integration, high power and low loss switching capabilitiesfor our primary markets. This technology replaces mechanical switches for very high-power applications such as wireless basestations.Our engineers’ radar, optical, microwave and millimeterwave system-level design expertise allows us to offer differentiated solutions that leverage multipleprocess technologies and are integrated into a single, higher-level assembly, thereby delivering our customers enhanced functionality.Our Markets & ProductsOur core strategy is to develop and innovate high-performance products that address our customers’ technical challenges in our primary markets: Telecom,Data Center and I&D. While sales in any or all of our primary markets may slow or decline from period to period, over the long-term we generally expect tobenefit from our strength in these markets. We expect our revenue in the Telecom market to be driven by 5G, with continued upgrades and expansion ofcommunications equipment to support mobile computing devices such as smartphones and tablets, increasing adoption of bandwidth rich services. We expect ourrevenue in the Data Center market to be driven by the adoption of cloud-based components and the migration to an application centric architecture, which weexpect will drive adoption of higher speed, 100G and higher speed optical and photonic wireless links. We expect our revenue in the I&D market to be driven bythe broad product portfolio we offer that services applications such as test and measurement, satellite communications, civil and military radar, industrial, scientificand medical applications. Growth in this market is subject to changes in governmental programs and budget funding, which is difficult to predict. We expectrevenue in this market to be further supported by growth in applications for our multi-market catalog products.Telecom. Growth in the Telecom market is driven by the proliferation of wireless and wired devices from smartphones and tablets to basestations, as well asthe data rich applications and services they enable such as mobile Internet, cloud computing, video-on-demand, social media, global positioning functionality andlocation-based services. Growth in global next-generation Internet and Internet of Things ("IoT") applications drives demand for communications infrastructureequipment requiring amplifiers, filters, receivers, switches, synthesizers, transformers, upconverters and other components to expand and upgrade cellularbackhaul, cellular infrastructure, wired broadband and fiber optic networks. Semiconductor products and solutions must continually deliver greater bandwidth andfunctionality as the demands of our customers and end users increase.Our expertise in system-level architectures and advanced IC design capability allow us to offer network original equipment manufacturer ("OEM") customershighly-integrated solutions optimized for performance and cost. Our portfolio of opto-electronics products includes lasers, clock and data recovery, optical postamplifiers, laser and modulator drivers, transimpedance amplifiers, transmitter and receiver applications in 2.5/10/40/100 gigabits per second ("Gbps") long haul,metro, data center links and fiber-to-the-X ("FTTx") fiber optic network components that enable telecommunications carriers and data centers to cost-efficientlyincrease their network capacity by a factor of four to ten times over earlier generation solutions. We match our opto-electronic components to various lasersenabling our customers to buy more complete solutions for their opto-electronic systems. For optical communications applications, we utilize a proprietarycombination of GaAs, InP and Silicon Germanium ("SiGe") technologies to obtain advantages in performance and size. For wired broadband applications, we offerOEM customers the opportunity to streamline their supply chain through our broad catalog of active components such as active splitters, amplifiers, multi-functionICs and switches, as well as passive components such as transformers, diplexers, filters, power dividers and combiners.Data Center. The demand by Cloud Data Center providers for faster data delivery speeds at cost-effective prices is growing rapidly, where higher speeds arenecessary to process the current growth in traffic. To solve these challenges, we leverage our broad optical and photonic portfolio of products to enable ourcustomers to deliver optical transceivers that meet the requirements of today’s Cloud Data Center deployments. By building a comprehensive portfolio ofcomplementary products that enable our customers’ optical transceiver applications, we offer high performing, cost-effective component solutions for next-generation networks.We enable the market with a complete product portfolio of PAM-4 PHYs, TIAs, Modulator Drivers, Lasers, and Silicon Photonics, and, in some cases,individual component designs are optimized for use together as a chip-set.Industrial & Defense. In the I&D market, military applications require advanced electronic systems, such as radar warning receivers, communications datalinks and tactical radios, unmanned aerial vehicles ("UAVs"), RF jammers, electronic countermeasures and smart munitions. Military applications are becomingmore sophisticated, favoring higher performance semiconductor ICs based on GaAs and Gallium Nitride ("GaN") technologies due to their high power density,improved power efficiency and broadband capability.We believe our in-depth knowledge of critical radar system requirements, integration expertise and track record of reliability make us a valued resource forour I&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 amplifiers,discrete components, switch limiters, phase shifters and integrated modules for transmit and receive functions in air traffic control, marine, weather, and militaryradar applications. For military communications data link and tactical radio applications, we offer a family of active, passive and discrete products, such as5Monolithic Microwave Integrated Circuits ("MMICs"), control components, voltage-controlled oscillators ("VCOs"), transformers, power pallets, amplifiers anddiodes. In some cases, we design parts specifically for these applications, while in others, our reputation for quality and our broad catalog allows these demandingcustomers to reduce the cost of their high-performance systems by designing in standard dual-use or commercial off-the-shelf parts that we have developed forother applications. We believe manufacturing many of these products in our Lowell, Massachusetts Trusted Foundry offers us a competitive advantage in the I&Dmarket because of certain I&D customers’ requirements for a domestic supply chain.Furthermore, growth in the I&D business is driven by multi-market applications encompassing industrial, medical, test and measurement and scientificapplications, where analog RF, microwave and millimeterwave semiconductor solutions are gaining prevalence. In addition, evolving medical technology hasincreased the need for high-performance MMICs and other semiconductor solutions in medical imaging and patient monitoring to provide enhanced analysis andfunctionality.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 HMIC process is ideal for high-performance, integrated bias networks and switches. Our catalog of generalpurpose GaAs ICs includes low noise amplifiers, switches and power amplifiers that address a wide range of applications such as industrial automation systems totest and measurement equipment.To address our primary markets, we offer a broad range of standard and custom ICs and components. Our product catalog currently consists of thousands ofproducts including the following key product platforms: amplifiers, ICs, diodes, switches and switch limiters, passive and active components and multi-chipmodules. Many of our product platforms are leveraged across multiple markets and applications. For example, our application expertise with regard to poweramplifier technology is leveraged across both scientific laboratory equipment applications and commercial and defense radar system applications. Our diodetechnology is used in switch filter banks of military tactical radios as well as medical imaging MRI systems. The table below presents the major product familiesand major applications in our primary markets.PRIMARYMARKETPRODUCT FAMILIES PRIMARYMARKETMAJOR PRODUCT FAMILIES PRIMARYMARKETMAJOR PRODUCT FAMILIESTelecomRF Power Products Data CenterLasers Industrial &DefenseRF Power ProductsDiodes Modulator Drivers DiodesPhase Shifters Clock and Data Recovery Phase ShiftersLimiters Optical Post Amplifiers LimitersSwitches PHY Embedded Processors SwitchesControl Products Photonic Devices Control ProductsSwitch LNAs Optical Receivers PassivesPHY Embedded Processors Crosspoint Switches AmplifiersPassives Silicon Photonic IntegratedDevices Comb GeneratorsHDcctv Cable Devices Voltage Controlled OscillatorsCrosspoint Switches SDI Products Amplifiers Comb Generators Voltage Controlled Oscillators 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. We havestrategically positioned our direct sales and applications engineering staff in locations worldwide, augmented by independent sales representatives and distributorswith additional domestic and foreign locations to offer responsive local support resources to our customers and to build long-term relationships. Our applicationengineers visit customers at their engineering and manufacturing facilities, aid them in understanding our capabilities and collaborate with them to deliver productsthat can optimize their system performance. Our global independent sales representatives and distributor network allow us to extend our sales capabilities to newcustomers in new geographies more cost effectively than using our direct sales force alone.6Our products are principally sold in North America, Asia and Europe, which is where we concentrate our direct sales force, application engineering staff,independent sales representatives and distributors. Sales to our distributors accounted for 33.3%, 29.0% and 19.3% of our revenue in fiscal years 2019, 2018 and2017, respectively. Our agreements with sales representatives, resellers and distributors may provide for an initial term of one or more years with the opportunityfor subsequent renewals or for an indefinite term, and also typically provide that either party may terminate the agreement for convenience with a minimum periodof prior notice to 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 inquire about our products, request samples and access our productselection guides, detailed product brochures and data sheets, application notes, suggested design block diagrams and test fixture information, technical articles andinformation regarding quality and reliability.CustomersOur customer base is diversified and includes OEM customers, contract manufacturers, resellers and distributors. For fiscal years 2019 and 2018, no directcustomer individually accounted for 10% or more of our revenue. For fiscal year 2017, one direct customer, Huawei Technologies Co., Ltd. ("Huawei") accountedfor 10% of our revenue. In addition, our principal distributor, Richardson Electronics, an Arrow Electronics Company ("Richardson"), accounted for 16.1%,12.5% and 10.5% of our revenue in fiscal years 2019, 2018 and 2017, respectively. Our top 25 direct customers accounted for an aggregate of 47.5%, 52.8% and59.1% of our revenue in fiscal years 2019, 2018 and 2017, respectively.Our orders from and sales to customers in the telecommunications infrastructure and networking markets may tend to be lower in our first fiscal quarter ascompared to other quarters due to seasonal inventory management by large OEM and contract manufacturing customers. 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 pricerequirements;▪the breadth and diversity of productofferings;▪the ability to provide a reliable supply of products in sufficient quantities and in a timely manner;▪the ability of engineering talent to drive innovation and new productdevelopment;▪the quality of customer service and technical support; and▪the financial reliability, operational stability and reputation of thesupplier.We believe that we compete favorably with respect to these factors. We compete primarily with both our customers' internal design resources and othersuppliers of high-performance analog semiconductor solutions for use in wireless and wireline RF, microwave, millimeterwave and photonic applications, some ofwhom have greater financial resources and scale than us. We expect competition in our markets to intensify, as new competitors enter these markets, existingcompetitors merge or form alliances and new technologies emerge. We believe that in the future there will be increased competition from companies utilizingalternative technologies, including high-volume manufacturers using low-cost silicon process technology. Some of our competitors are also our customers, and incertain product categories we compete with semiconductor manufacturers from which we also obtain foundry services, such as Sumitomo Electric DeviceInnovations, Inc.We compete with Broadcom Inc. ("Broadcom") across our primary markets, Telecom, Data Center and I&D. In the Telecom and Data Center markets, wecompete with NXP Semiconductors N.V. ("NXP"), Wolfspeed, Inphi Corporation ("Inphi"), Maxlinear Inc. ("Maxlinear") and Semtech Corporation ("Semtech").In the I&D market, we compete with Analog Devices, Inc. ("ADI"), Microchip Technology Incorporated ("Microchip"), Qorvo, Inc. ("Qorvo") and SkyworksSolutions, Inc. ("Skyworks").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 minimum amountof product over an extended period. On occasion, we ship finished goods inventory to certain customer or third-party “hub” locations, but do not recognize revenueassociated with such shipments until these customers consume the inventory from the hub. We also frequently ship products from our inventory shortly afterreceipt of an order, which we refer to as “turns business”. A substantial portion of our revenues for any particular fiscal quarter may be derived from turns businesstransacted in the last few weeks of the quarter, and unanticipated fluctuations in turns business may result in material shifts in revenue between fiscal quarters. Dueto the foregoing factors, different ordering patterns of our customers and the wide range of lead times to produce and deliver our products, we believe that backlogas of any particular date may not be a reliable indicator of our future revenue levels.7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 September 27, 2019, we had 684 U.S. and 148 foreign issued patents and 88 U.S. and 142 foreign pending patent applications covering elements ofcircuit design, manufacturing and wafer fabrication. We do not know whether any of our pending patent applications will result in the issuance of patents orwhether the examination process will require us to narrow our claims. The expiration dates of our patents range from 2019 to 2038. We do not regard any of thepatents scheduled to expire in the next twelve months as material to our overall intellectual property portfolio. Notwithstanding our active pursuit of patentprotection when available, we believe that our future success will be determined by the innovation, technical expertise and management abilities of our engineersand 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 ofadverse rulings. Claims of this sort could harm our relationships with our customers and might deter future customers from doing business with us. With respect toany intellectual property rights claims against us or our customers or distributors, we may be required to cease manufacture of the infringing product, pay damagesor settlement amounts, expend resources to develop non-infringing technology, seek a license, which may not be available on commercially reasonable terms or atall, or relinquish patents or other intellectual property rights.Manufacturing, Sources of Supply and Raw MaterialsWhen designing a product solution for our customers, we may choose to utilize our internal proprietary process technologies or technologies from externalfabrication facilities, or a combination of both. We believe our ability to select both internal and external technologies in our product solutions is a competitiveadvantage because it helps us to provide a unique and optimized solution for our customers. Our internal wafer fabrication and the majority of our internal assembly and test operations are conducted at our Lowell, Massachusetts headquarters. Webelieve having U.S.-based wafer fabrication is a competitive advantage for us over competitors that do not have this capability, because it provides us with greatercontrol over quality, a secure source of supply and a domestic source for U.S. I&D customers. We also believe that our U.S.-based wafer fabrication facilitatesshorter time to market for both new and existing products, shorter production lead times than if we utilized external foundries and allow us to efficiently produce awide range of low, medium and high volume products. We perform internal assembly and test functions at our Lowell, Massachusetts, Nashua, New Hampshire,Ann Arbor, Michigan and Hsinchu, Taiwan locations.We complement our internal manufacturing with outsourced foundry partners and other suppliers. Our operations team has extensive expertise in themanagement 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, and the lack of controlover delivery 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, performance, efficiency or cost considerations. For example,wafers procured from merchant foundries for a particular process technology are generally sourced through a single foundry on which we rely for all of our wafersin that process. Our reliance on external suppliers puts us at risk of supply chain disruption if a supplier does not have sufficient raw material inventory to meet ourmanufacturing needs, goes out of business, changes or discontinues the process in which components or wafers are manufactured or declines to continue supplyingus for competitive or other reasons, as discussed in more detail in “Item 1A. “Risk Factors” herein. Where practical, we attempt to mitigate these risks byqualifying multiple sources of supply, redesigning products for alternative components and purchasing incremental inventory of raw materials and components inorder to protect us against supply disruptions.8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 ISO provides models for quality assurance for various operational disciplines, such as design, manufacturing, and testing, which comprisepart of our overall quality management system. Our following locations have each received ISO 9001:2015 certifications in one or more of their principalfunctional areas: Lowell, Massachusetts; Cork, Ireland; Ithaca, New York; Santa Clara and Newport Beach, California; Morrisville, North Carolina; Ann Arbor,Michigan; Nashua, New Hampshire; and Hsinchu, Taiwan. In addition, our Lowell, Massachusetts facility has received an ISO 14001:2015 environmentalmanagement 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 the environmentin the U.S. and other countries. These regulations include limitations on discharge of pollutants into the air, water and soil; remediation requirements; productchemical content limitations; manufacturing chemical use and handling restrictions; pollution control requirements; waste minimization considerations; and,requirements 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 theU.S. Department of Commerce, Bureau of Industry and Security ("BIS"), which require that we obtain an export license before we can export certain controlledproducts or technology to specified countries. Additionally, some of our products are subject to the International Traffic in Arms Regulations, which restrict theexport of information and material that may be used for military or intelligence applications by a foreign person. Similar controls exist in other jurisdictions.Failure to comply with these laws could result in sanctions by the government, including substantial monetary penalties, denial of export privileges and debarmentfrom government contracts. We maintain an export compliance program staffed by dedicated personnel under which we screen export transactions against currentlists of restricted exports, destinations and end users with the objective of managing export-related decisions, transactions and shipping logistics to ensurecompliance with these requirements.EmployeesAs of September 27, 2019, we employed approximately 1,100 individuals worldwide. None of our domestic employees are represented by a collectivebargaining agreement; however, as of September 27, 2019, approximately 15 of our employees working in certain European locations were covered by collectivebargaining agreements. We consider our relations with employees to generally 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.MACOM Technology Solutions Inc., our primary operating subsidiary, which provides high-performance analog semiconductor solutions for use in wirelessand wireline applications across the RF, microwave, millimeterwave and lightwave spectrum, was incorporated under the laws of the state of Delaware on July 16,2008. MACOM Technology Solutions Limited, our primary foreign operating subsidiary, was incorporated under the laws of Ireland on November 18, 2008. Theheritage of some of our business operations date back over 65 years to the founding of Microwave Associates, Inc. and the MACOM brand dates back over 30years.We completed acquisitions and divestitures during fiscal years 2017 and 2018 to attempt to further align our businesses to our primary markets. Thosetransactions include:In January 2017, we acquired Applied Micro Circuits Corporation ("AppliedMicro"), a global provider of silicon solutions for next-generation cloudinfrastructure and Cloud Data Centers, as well as connectivity products for edge, metro and long-haul communications9equipment (the "AppliedMicro Acquisition"). We acquired AppliedMicro in order to expand our business in enterprise and Cloud Data Center applications.In connection with the acquisition of AppliedMicro, we announced a plan to divest their Compute business (the "Compute business"). On October 27, 2017,we sold the Compute business and received an equity interest in the buyer.In fiscal year 2017, we completed the acquisitions of Triple Play Communications Corporation ("TPC"), Antario Technologies ("Antario") and PicometrixLLC ("Picometrix") in order to further expand our design center capabilities and expand our business in enterprise and Cloud Data Center applications.In May 2018, we divested our long-range optical subassembly product line that we had acquired through our December 2015 acquisition of FiBest Limited("LR4 business"). The LR4 business did not meet our expectations for profitable growth.Our acquisition strategy is intended to accelerate our revenue growth, expand our technology portfolio, grow our addressable market and create shareholdervalue.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. We encourage investors to monitor our website, in addition tofollowing our press releases, SEC filings and public conference calls and webcasts, as well as our social media channels (MACOM’s LinkedIn, Facebook andYouTube pages and Twitter account (@MACOMtweets)). You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports onForm 8-K and amendments to those reports, as well as other reports relating to us that are filed with or furnished to the SEC, free of charge in the investors sectionof our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The SEC maintains a website that containsreports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of thewebsites mentioned above, as well as our LinkedIn, Facebook and YouTube pages and Twitter account, are not incorporated into and should not be considered apart of this report.ITEM 1A. 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 may also adversely affect ourCompany.Risks Relating to Our BusinessOur revenue growth and gross margin are 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. In addition, the average selling prices of our products are expected to decrease over time and we must introducenew products that can be manufactured at lower costs or that command higher prices based on superior performance to offset this expected price erosion. If we arenot able to repeatedly introduce, in successive years, new products that ship in volume, our revenue will likely not grow and may decline significantly and rapidly.The development of new products is a highly complex process, and we have in the past and may in the future experience delays and failures in completing thedevelopment and introduction of new products. Our successful product development depends on a number of factors, including the following:•the accurate prediction of market requirements, changes in technology and evolvingstandards; •the availability of qualified product designers and process technologies needed to solve difficult design challenges in a cost-effective, reliablemanner; •our ability to design products that meet customers’ cost, size and performance requirements and other technicalspecifications; •our ability to design and manufacture new products in volume with acceptable manufacturing yields, and deliver them to customers in time for theapplicable market adoption window; •our ability to offer new products at competitiveprices; •the acceptance by customers of our new productdesigns; •the identification of and timely entry into new markets for ourproducts; •the acceptance of our customers’ products by the market and the lifecycle of suchproducts;10•our ability to innovate, the strength of our intellectual property rights, and our ability to protect our intellectual propertyrights;•our ability to obtain, on commercially reasonable terms, licenses to necessary third party intellectual property rights;and•our ability to maintain and increase our level of product content in our customers’systems. A new product design effort may last twelve to eighteen months or longer, and requires significant investment in engineering hours and materials, as well assales and marketing expenses, which may not be recouped if the product launch is unsuccessful. The introduction of new products by our competitors, the delay orcancellation of a platform for which any of our semiconductor solutions is designed, the market acceptance of products based on new or alternative technologies orthe emergence of new industry standards could render our existing or future products uncompetitive from a pricing standpoint, obsolete and otherwiseunmarketable. Our failure to anticipate or timely develop new or enhanced products or technologies in response to technological shifts could result in decreasedrevenue and our competitors obtaining design wins. We may be unable to design, introduce, manufacture or deliver new products in a timely or cost-efficientmanner, and our new products may fail to meet the requirements of the market or our customers, or may be adopted by customers more slowly than we expect. Inthat case, our gross margin may decrease, we may not reach our expected level of production orders and we may lose market share, which could adversely affectour ability to sustain our revenue growth or maintain our current revenue levels.Underutilization, price competition, acquisitions and various other factors may reduce our gross margin, which could negatively affect our business, financialcondition 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 than average unit costs and lower gross margin. Similarly, when we compete for business on the basis of our products’unit price, the average selling price of our products is reduced, negatively affecting our gross margins. We have in the past and may in the future acquire businesseswith lower-margin products that reduce our overall gross margins. Our various products have different gross margins. Increased sales of lower-margin products,such as certain of our more mature products, in a given period relative to sales of higher-margin products, may cause us to report lower overall gross margin. Inaddition, increased raw material costs, changes in manufacturing yields, more complex engineering requirements and certain other factors can reduce our grossmargins from time to time. We have experienced periods where our gross margin declined due to these and other factors, and expect these factors will have anadverse impact on our business, financial condition and results of operations from time to time in the future. As a result of these or other factors, we may be unableto maintain or increase our gross margin in future periods and our gross margin may fluctuate from 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 aresult, 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 material 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 associated revenuedifficult 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 to resultin lower gross margin in that quarter and a shipment pattern weighted toward the latter part of a fiscal quarter tends to reduce our cash flows fromoperations 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 demand from or the financial condition of one or more keycustomers;▪fluctuations in the levels of component inventories held by our customers, as well as their ability to manage the inventory that they hold and to forecastaccurately their demand for our products;▪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 I&D market due to changes in government programs, budgets orprocurement;▪the market acceptance of our products and particularly the timing and success of new product and technology introductions by us, customers orcompetitors;11▪our ability to predict market requirements and evolving industry standards accurately and in a timelymanner;▪the amount, timing and relative success of our investments in research and development, which impacts our ability to develop, introduce and market newproducts and solutions on a timely basis;▪the period-to-period changes in the mix of products we sell, which can result in lower grossmargin;▪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 demand;▪the effects of competitive pricing pressures, including decreases in average selling prices of ourproducts;▪the effects of impairment charges associated with intangible assets, including goodwill and acquisition-related intangibleassets;▪the loss of key personnel or the shortage of available skilledworkers;▪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 limits onour ability to utilize net operating losses or tax credits and the geographic distribution of our income, which may change from period to period; ▪the exposure of our operations to possible capital and exchange controls, expropriation and other restrictive government actions, changes in intellectualproperty legal protections and remedies, as well as political unrest, unstable governments and legal systems and inter-governmental disputes;▪further clarifications and/or changes in interpretations of existing laws and regulations, trade policies or changes in laws and regulations, in the U.S. andother countries; and ▪the effects of war, natural disasters, acts of terrorism, macroeconomic uncertainty or decline or geopoliticalunrest.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 and has, in the past, declined as a result.If demand for our products in our primary markets declines or fails to grow, our revenue and profitability may suffer.Our future growth depends on our ability to anticipate demand and respond to that demand with products that address our customers' needs. To a significantextent, this growth depends on the continued growth in usage of advanced electronic systems in our primary markets: Telecom, Data Center and I&D generally,and in the optical networks market in particular, which accounted for 18.5% of our revenue in the fiscal year ended September 27, 2019. The rate and extent towhich these markets will grow, if at all, is uncertain. For example, we anticipate significant growth in the demand for our products in Cloud Data Centers, and havefocused significant internal resources to meet that anticipated demand. Our ability to capitalize on this and our other previously announced market opportunities in100G optical networks and GaN technology will depend on, among other things, the future size and growth rates of these markets, the next generationtechnologies selected by customers, the timing of network upgrades in these markets and the future pace of adoption of our products in these markets. Our marketsmay fail to grow or decline for many reasons, including macro-economic factors, insufficient consumer demand, technological hurdles, research and developmentdelays, lack of access to capital, sequestration or other changes in the U.S. defense budget and procurement processes and changes in export controls or otherregulatory environments. Even if our primary markets grow, demand for our products in those markets may fail to grow in the event that they fail to embrace next-generation technologies we offer such as GaN-on-Silicon and etched facet lasers, or adopt technologies other than those we offer or implement changes in networkspecifications that our products do not adequately address. For instance, if demand for our products targeting 10 Gigabit PON or Cloud Data Center deployments islower or slower to materialize than we anticipate, or we fail to deliver a portfolio of 10 Gigabit PON or Cloud Data Center products that meets the full set ofsolution requirements our customers demand within the requisite market window, our revenues could fail to grow or decline and our results of operations couldbe adversely affected. If demand for electronic systems that incorporate our products declines, fails to grow or grows more slowly than we anticipate, purchases ofour products may be reduced, which will adversely affect our business, financial condition and results of operations. A failure to predict demand or respond todemand with successful products in timely fashion will materially affect our revenues and profitability.We typically depend on orders from a limited number of customers for a significant percentage of our revenue.In the fiscal year ended September 27, 2019, no direct customer accounted for 10% or more of our revenue and sales to our top 10 direct and distributioncustomers accounted for an aggregate of 53.6% of our revenue. While the composition of our top 10 customers varies from year to year, we expect that sales to alimited number of customers will continue to account for a significant percentage of12our revenue for the foreseeable future. The purchasing arrangements with our customers are typically conducted on a purchase order basis that does not require ourcustomers to purchase any minimum amount of our products over a period of time. As a result, it is possible that any of our major customers could terminate theirpurchasing arrangements with us with little or no warning and without penalty, or significantly reduce or delay the amount 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 from any major customer may cause amaterial decline in revenue and adversely affect our results of operations.We are subject to risks from our international sales and operations. We have operations in Europe and Asia, and customers around the world. As a result, we are subject to regulatory, geopolitical and other risks associatedwith doing business outside the U.S. Global operations involve inherent risks, including currency controls, currency exchange rate fluctuations, new or potentialinternational trade agreements, tariffs, required import and export licenses, associated delays and other related international trade restrictions and regulations.Further, there is a risk that language barriers, cultural differences and other factors associated with our international operations may make them more difficult tomanage 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 52.1% of our revenue for the fiscal yearended September 27, 2019.Sales to customers located in China and the Asia Pacific region typically account for a substantial majority of our overall sales to customers located outsidethe U.S. We expect that revenue from international sales generally, and sales to China and the Asia Pacific region specifically, will continue to be a material part ofour total revenue. Therefore, any financial crisis, trade war or dispute or other major event causing business disruption in international jurisdictions generally, andChina and the Asia Pacific region in particular, could negatively affect our future revenues and results of operations. For example, in 2016 the BIS temporarilyblocked exports of U.S. products to Chinese telecommunications OEM Zhongxing Telecommunications Equipment Corporation ("ZTE"). More recently, in April2018, the BIS again blocked exports of U.S. products to ZTE, which were lifted in July 2018. ZTE is under a court-ordered monitorship, which means that if itdoes not comply with certain requirements similar export control prohibitions could be imposed again. Also, in August 2018, the BIS blocked exports of U.S.products to certain Chinese aerospace customers. More recently, in January 2019, the U.S. Department of Justice announced criminal charges against Huaweiincluding, but not limited to, attempts theft of trade secrets, wire fraud and violations of U.S. sanctions related to Iran. On May 16, 2019, the BIS added Huaweiand many of its affiliates to the Entity list, which effectively blocks exports of U.S. products to Huawei and the affiliates. A U.S. ban on exports to one or morelarge OEM customers could materially reduce our revenue and reduce the value of an investment in our common stock. Unlike other types of U.S. governmentsanctions, the Huawei Entity list prohibitions do not apply to the shipment from outside the United States of certain foreign-made items that are not within thejurisdiction of the export control regulations. We believe that a small number of our foreign-made products are not within the scope of the Entity List prohibitionsand we have resumed shipments of them to Huawei from outside the United States. If the U.S. Government is uncertain about whether such items were not subjectto U.S. export controls, it could conduct an investigation and, if it is determined that some of the items were subject to U.S. export control jurisdiction, result incosts, fines or penalties that could have a material impact on our business.Because the majority of our foreign sales are denominated in U.S. dollars, our products become less price-competitive in countries with currencies that arelow or are declining in value against the U.S. dollar. Also, we cannot be sure that our international customers will continue to accept orders denominated in U.S.dollars. If they do not, our reported revenue and earnings will become more directly subject to foreign exchange fluctuations. Some of our customer purchaseorders and agreements are governed by foreign laws, which may differ significantly from U.S. laws. As a result, we may be limited in our ability to enforce ourrights 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, natural disasters, embargoes or other economic sanctions, enforcementactions against governments, governmental entities or private entities or political instability occurs in the U.S. or other locations, such events may disrupt ourmanufacturing, assembly, logistics, security and communications, and could also result in reduced demand for our products. We have in the past and, may again inthe future, experience difficulties relating to employees traveling13in and out of countries facing civil unrest or political instability and with obtaining travel visas for our employees. Major health pandemics could also adverselyaffect our business and our customer order patterns. We could also be affected if labor issues disrupt our transportation arrangements or those of our customers orsuppliers. There can be no assurance that we can mitigate all identified risks with reasonable effort. The occurrence of any of these events could have a materialadverse effect on our operating results.Changes in U.S. and international laws, accounting standards, export and import controls and trade policies or the enforcement of, or attempt to enforce, suchlaws, standards, controls and policies, particularly with regard to China, may adversely impact our business and operating results.Our future results could be adversely affected by changes in interpretations of existing laws and regulations, or changes in laws and regulations, including,among others, changes in accounting standards, taxation requirements, competition laws, trade laws, import and export restrictions, privacy laws and environmentallaws in the U.S. and other countries.The U.S. government has recently made statements and taken certain actions that have led to, and may lead to further, changes to U.S. and internationalexport and import controls or trade policies, including recently-imposed tariffs affecting certain products exported by a number of U.S. trading partners, includingChina. In response, many of those trading partners, including China, have imposed or proposed new or higher tariffs on American products. It is unknown whetherand to what extent new tariffs (or other new laws or regulations) will be adopted, or the effect that any such actions would have on us or our industry andcustomers. Any unfavorable government policies on international trade, such as export and import controls, capital controls or tariffs, may affect the demand forour products and services, increase the cost of components, delay production, impact the competitive position of our products or prevent us from being able to sellproducts in certain countries. If any new export or import controls, tariffs, legislation and/or regulations are implemented or if existing trade agreements arerenegotiated such changes could have an adverse effect on our business, financial condition, results of operations. In addition, proceedings to enforce, or theenforcement of, any laws, regulations and policies by the U.S. or other countries, and the resulting response to such actions, may have an adverse effect on ourbusiness, financial condition and results of operations.Our investment in technology as well as research and development may not be successful, which may impact our profitability.The semiconductor industry requires substantial investment in technology as well as research and development in order to develop and bring to market newand enhanced technologies and products. Research and development expenses were $163.5 million for the fiscal year ended September 27, 2019. In each of the lastthree fiscal years, we invested in research and development as part of our strategy toward the development of innovative products and solutions to fuel our growthand profitability. We cannot assure you if, or when, the products and solutions where we have focused our research and development expenditures will becomecommercially successful. In addition, we may not have sufficient resources to maintain the level of investment in research and development required to remaincompetitive or succeed in our strategy. Our efforts to develop new and improved process technologies for use in our products require substantial expenditures thatmay not generate any return on investment, may take longer than we anticipate to generate a return or may generate a return on investment that is inadequate.Following our 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 GaN-on-Silicontechnology, which is a focus of the Nitronex business. We have in the past and continue to experience unexpected difficulties, expenses or delays in qualifying ourGaN-on-Silicon process technology either internally or at one or more third party foundries and qualifying related products with our customers, and we wereengaged in a litigation with the former licensor of this technology as described elsewhere in this Annual Report. We may not be successful in process or productqualification, manufacturing cost reduction or marketing efforts related to GaN-on-Silicon, may not realize the competitive advantage we anticipate from relatedinvestments and may not realize customer demand for this technology that meets our expectations, any of which could lead to higher than expected operatingexpense, lower than expected revenue and gross margin, associated charges or otherwise reduce the price of our common stock. We also have undertakensignificant research and development efforts aimed at new products targeting market segments where we see potential for growth including the wireless basestationand Cloud Data Center. We may not be successful in our research and development efforts or may not realize the competitive advantage, revenues or profits weanticipate from these new products, any of which may lead to higher research and development expense, lower than expected revenues and gross margin andreduced profitability, or may otherwise harm our business or reduce the price of our common stock. Such results, or anticipated results, may cause us to reevaluateour investment in those areas of our business. For example, in June 2019 we announced our plans to cease investing in the design and development of opticalmodules and subsystems for Data Center applications.14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, particularly when seeking to develop or introduce solutions innew markets. We may not win the competitive selection process or may never generate any revenue despite incurring significant design and developmentexpenditures and selling, general and administrative expenses. Failure to obtain a design win may prevent us from supplying components for an entire generationof a customer’s system. This can result in lost or foregone revenue and could weaken our position in future competitive selection processes or cause us to fail tomeet revenue projections or expectations.Even when we achieve a design win, success is not guaranteed. 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 I&D market, where we may spend material amounts and commit substantial design engineering 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 customer to win the business, government program cancellation, federal budget limitations orotherwise. Any of these events or any cancellation of a customer’s program or failure of our customer to market its own product successfully after our design win,could materially and adversely affect our business, financial condition and results of operations, as we may have incurred significant expense and generated norevenue.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 cantypically cancel purchase orders or defer product shipments for some period without incurring a liability to us. We typically plan production and inventory levelsbased on internal forecasts of customer demand, which can be highly unpredictable and can fluctuate substantially, leading to excess inventory write-downs andresulting negative impacts on gross margin and net income. We have limited visibility into our customers’ inventories, future customer demand and the productmix that our customers will require, which could adversely affect our production forecasts and operating margins. The difficulty in predicting demand may becompounded when we sell to OEM customers indirectly through distributors or contract manufacturers, or both, as our forecasts of demand are then based onestimates provided by multiple parties. In a number of markets we serve, large dollar value customer orders scheduled for delivery in the current fiscal quarter maybe canceled or rescheduled by the customer for delivery in a future fiscal quarter on short notice, which may cause our reported revenue to vary materially from ourprior expectations. In addition, the rapid pace of innovation in our industry could render significant portions of our inventory obsolete. If we overestimate ourcustomers’ requirements, we may have excess inventory, which could lead to obsolete inventory and unexpected costs. Further, if we build inventory specific tonon-recurring engineering ("NRE") arrangements that we may enter into with our customers from time to time and then fail to achieve one or more requiredmilestones in connection with such NRE arrangements, we may have excess, non-qualified or non-conforming customer specific inventory, which could lead tounsellable inventory and unexpected costs. Conversely, if we underestimate our customers’ requirements, we may have inadequate inventory, which could lead toforegone revenue opportunities, loss of potential market share and damage to customer relationships caused by late product deliveries disrupting our customers’production schedules. Some of our larger customers also require us to build and maintain minimum inventories and keep them available for purchase at specifiedlocations based on non-binding demand estimates that are subject to change, which exposes us to increased inventory risk and makes it more difficult to manageour working capital. If demand from such customers decreases, we may be left with excess or obsolete inventory that we are unable to sell. In response toanticipated long lead times to obtain inventory and materials from outside suppliers and foundries, we periodically order materials and build a stock of finishedgoods inventory in advance of customer demand. This advance ordering of raw material and building of finished goods inventory has in the past and may in thefuture 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. We work toactively manage the prices of our existing products, increase our sales volumes and introduce new process technologies and products in the market that exhibithigher performance, new features that are in demand or lower15manufacturing costs. Despite this strategy, we expect to experience price erosion in future periods. Failure to maintain our current prices, to offset price reductionsby increasing our sales volumes or to successfully execute on our new product development strategy may cause our revenue and gross margin to decline, whichcould decrease the value of your investment in our common stock.We 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 Broadcom across most of ourprimary markets. Our other significant competitors include, among others, NXP, Inphi, Maxlinear, Semtech, ADI, Microchip, 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 has in the past and could in the future lead to lower prices for our products, reduced demandfor our products and a corresponding 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, strong brand recognition and substantial technological capabilities. Many of them mayalso have greater financial, technical, manufacturing or marketing resources than we do. The semiconductor industry has experienced significant consolidationover the past several years. Consolidation among our competitors could lead to a changing competitive landscape, which could negatively impact our competitiveposition and market share and harm our results of operations. In addition, certain countries such as China have begun implementing initiatives to build domesticsemiconductor supply chains and we may be at a disadvantage in attempting to compete with entities associated with such foreign government efforts based ontheir lower cost of capital, access to government largesse, preferential sourcing practices, stronger local relationships or otherwise. Prospective customers maydecide not to buy from us due to concerns about our relative size, financial stability or other factors. Our failure to successfully compete could result in lowerrevenue, 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 this industrymay be prolonged, and downturns in many sectors of the electronic systems industry have in the past contributed to extended periods of weak demand forsemiconductor products. We have experienced decreases in our revenue, profitability, cash flows and stock price during such downturns in the past, and may besimilarly harmed by future downturns, particularly if we are unable to effectively respond to reduced demand in a particular market.If we are unable to further penetrate into and expand our share into strategic markets or accurately anticipate or react timely or properly to emerging trends,our revenues may not grow and could decline.Our primary markets, including the Cloud Data Center market, undergo transitions from time to time in which products incorporate new features,interoperability and performance standards on an industry-wide basis. If our products are unable to support the new features or standards required by OEMs or endcustomers in these markets, or if our products fail to be certified or adopted by OEMs, we will lose business from existing or potential customers and may not havethe opportunity to compete for new design wins or certification until the next product transition occurs. If we fail to develop products with required features orstandards, we experience a delay in certifying or bringing a new product to market, or our customers fail to achieve market acceptance of their products, ourrevenues could be significantly reduced for a substantial period. Many of our products targeting Cloud Data Center applications are relatively new or still indevelopment. Even if we succeed in generating customer demand for such products, if we are unable to deliver the quantities required by customers on time and atthe right price point, due to design challenges, manufacturing bottlenecks, supply shortages, manufacturing yield issues or otherwise, we may fail to secure ormaintain business and our revenues and gross and net margins could be materially and adversely affected.We may sell, wind down or exit one or more of our businesses or product lines, from time to time, as a result of our evaluation of our businesses, products andmarkets, and any such divestiture could adversely affect our continuing business.We periodically evaluate our various businesses and product lines and may, as a result, consider the divestiture, wind down or exit of one or more of thosebusinesses or product lines. For example, in August 2015, we sold our Automotive business based on our belief that it was not consistent with our long-termstrategic vision from a growth and profitability perspective. In October 2017, we sold the Compute business that we had acquired through the AppliedMicroAcquisition, as the products were not complementary to our product portfolio and did not strategically align with our long-term focus. In May 2018, we soldcertain capital equipment, inventory and other16assets associated with our LR4 business that we had acquired through our December 2015 acquisition of FiBest. More recently, in June 2019 we decided to ceaseR&D activities related to new programs and wind down ongoing development activities for a certain product line.Divestitures have inherent risks, including the inability to find potential buyers with favorable terms, the expense of selling the product line, the possibilitythat any anticipated sale will be delayed or will not occur, the potential impact on our cash flows and results of operations, the potential delay or failure to realizethe perceived strategic or financial merits of the divestment or receive milestone, earn-out, royalty or other post-closing payments, difficulties in the separation ofoperations, services, information technology, products and personnel, potential loss of customers or employees, exposure to unanticipated liabilities, unexpectedcosts associated with such separation, diversion of management’s attention from other business concerns and potential post-closing claims for alleged breaches ofrelated agreements, indemnification or other disputes.The product families we acquired in our AppliedMicro acquisition face challenges due to declining sales of older products and the evolving dynamics of thenetworking and communications industries.The product families we added through our AppliedMicro acquisition face industry-specific challenges, in addition to the risks applicable to our business as awhole. For our connectivity products, order patterns historically have been uneven from period to period. The unpredictable nature of demand in this sector makesit more difficult to forecast our revenues, and may cause us to incur additional expenses for inventory that may need to be written off. Our connectivity productlines are also subject to technology transitions within the communications industry. For example, as the communications industry has continued to shift away fromthe synchronous optical network ("SONET")/synchronous data hierarchy standard to the higher speed, lower power optical transport network ("OTN") standard,substantially all of our new connectivity product designs utilize the OTN standard. However, as a result of this transition, many of our older, SONET-basedconnectivity products are experiencing declining sales, while our newer connectivity products, such as the X-Weave product family, have not yet generatedsignificant revenue. Moreover, the transition to OTN, resulting in higher sales volumes and increased competition from integrated solutions providers, is in turnleading to price and margin erosion challenges. The introduction of other technological standards may also affect demand for our products. For our PowerPCproduct lines, as well, the migration of the networking industry away from products utilizing the PowerPC architecture and towards products utilizing otherarchitectures such as ARM, has presented challenges. In line with this migration, we are no longer introducing new PowerPC product designs and are reducing ourresources equipped to support our older PowerPC product lines. Moreover, many of our older, PowerPC-based computing products are experiencing decliningsales. If we are unable to develop and deliver new products in other areas that meet changing customer and industry needs and generate sufficient revenue to offsetthe decline in sales of our older product lines, our business, results of operations and financial condition could be adversely affected.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.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 BIS, which require that we obtain an export license beforewe can export products or technology to specified countries. Other 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. 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 in ways we do not yet fully understand and we haveexperienced and will continue to experience challenges in complying with the new rules as they become effective, resulting in difficulties or an inability to shipproducts 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 U.S. government, including substantial monetary penalties, denial of export privileges and debarment from government contracts.Export and import regulations may create delays in the introduction of our products in international markets or prevent the export or import of our products tocertain countries or customers altogether. Any change in export or import regulations or related legislation, shift in approach by regulators to the enforcement orscope of existing regulations, changes in the interpretation of existing regulations by regulators, specific sanctions by regulators or change in the countries, personsor technologies targeted by such regulations, could harm our business by resulting in decreased use of our products by or our decreased ability to export17or sell our products to, existing or potential customers with international operations. In addition, our sale of our products to or through third-party distributors,resellers and sales representatives creates the risk that any violation of these laws they may engage in may cause disruption in our markets or otherwise bringliability on us.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. For example, in 2018 weconcluded legal action against Infineon Technologies Americas Corporation and Infineon Technologies AG (collectively, "Infineon") that had been pending infederal court and was brought to confirm and defend our exclusive rights to use certain patented GaN-on-Silicon technology developed by Nitronex in our core RFmarkets. Other companies in the industry have 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 future be, subject to claims that we have breached infringed or misappropriated patent, license or other intellectualproperty rights. Our customers may assert claims against us for indemnification if they receive claims alleging that their or our products infringe upon others’intellectual property rights, and have in the past and may in the future choose not to purchase our products based on their concerns over such a pending claim. Inthe event of an adverse result of any intellectual property rights litigation, we could be required to incur significant costs to defend or settle such litigation, paysubstantial damages for infringement, expend significant resources to develop non-infringing technology, incur material liability for royalty payments or fees toobtain licenses to the technology covered by the litigation or be subjected to an injunction, which could prevent us from selling our products, and materially andadversely affect our revenue and results of operations. Negotiated settlements resolving such claims may require us to pay substantial sums. We cannot be surethat we will be successful in any such non-infringing development or that any such license would be available on commercially reasonable terms, if at all. Anyclaims relating to the infringement of third-party proprietary rights, even if not meritorious, could result in costly litigation, lost sales or damaged customerrelationships and diversion of management’s attention and resources.The success of any strategic alliances may be subject to significant uncertainty, and we may be substantially reliant upon certain partner(s) for thecommercial success of the opportunity.The terms of any strategic alliances may subject us to significant uncertainty regarding the success of such transaction as we may be substantially reliantupon a partner for the technical and/or commercial success of the opportunity. In addition, any such transactions may also divert our financial resources andmanagement’s attention from other important areas of our business. Furthermore, any failure of a transaction to satisfy customer expectations could adverselyimpact our own relationships with such customers and/or the reputation of our brand. If a transaction does not progress according to our expectations or anticipatedtiming, our business could be adversely affected and our investment in such transactions may not be successful. If a transaction is not successful, or not assuccessful as anticipated, we may also never realize the full, or any, benefit of royalty, milestone and/or other payment terms included in the transaction and maybe required to devote more management time and resources in connection with the conclusion of any such alliance.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 these markets 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, we couldlose market share and our revenue and results of operations could materially decline. For instance, our connectivity business is a licensee of ARM Limited("ARM") and Synopsys Inc. ("Synopsys") technology libraries, and continued license rights will depend upon our ability to successfully renew or otherwisemaintain our license rights to those libraries, as well as the timely delivery by ARM and Synopsys of various updates and other support under their respectivelicense agreements.In addition, disputes with third party licensors over required payments, scope of licensed rights and compliance with contractual terms are common in ourindustry 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 to incur significantcosts defending our license rights, divert management’s attention or result in our inability to sell or develop certain products. In such instances, we could also incursubstantial unanticipated costs or scheduling delays in developing substitute technology to deliver competitive products, damaged customer and vendorrelationships, indemnification liabilities and declining revenues and profitability. Such events could have an adverse effect on our financial condition and results ofoperations.18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. The long-term supply commitments we have may result in an obligation to purchase excess material, which may materially andnegatively impact our operating results. In terms of relative bargaining power, many of our suppliers are larger than we are, with greater resources, and many oftheir other customers are larger and have greater resources than we do. If these vendors experience shortages or fail to accurately predict customer demand, theymay have insufficient capacity to meet our demand, creating a capacity constraint on our business. They may also choose to supply others in preference to us intimes of capacity constraint or otherwise, particularly where the other customers purchase in higher volume. Third-party supplier capacity constraints have in thepast and may in the future prevent us from supplying customer demand that we otherwise could have fulfilled at attractive prices. If we have a firm commitment tosupply our customers but are unable to do so based on inability or unwillingness of one of our suppliers to provide related materials or services, we may be liablefor resulting damages and expense incurred by our customers.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 personnelis key 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, fromtime to 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 pastand could in the future, damage our business relationship with these parties. None of our senior management team is contractually bound to remain with us for aspecified period, and we generally do not maintain key person life insurance covering our senior management. The loss of any member of our senior managementteam could strengthen a competitor, weaken customer relationships or harm our ability to implement our business strategy.Our internal and external manufacturing, assembly and test model subjects us to various manufacturing and supply risks.We operate a leased semiconductor wafer processing and manufacturing facility at our headquarters in Lowell, Massachusetts, and at our Ithaca, New Yorkand Ann Arbor, Michigan sites. These facilities are also important internal design, assembly and test facilities. We maintain other internal assembly and testoperation facilities as well, including leased sites in Nashua, New Hampshire, and Hsinchu, Taiwan. We also use multiple external foundries for outsourcedsemiconductor wafer supply, as well as multiple domestic and Asian assembly and test suppliers to assemble and test our products. A number of factors will affectthe future success of these internal manufacturing facilities and outsourced supply and service arrangements, including the following:▪the level of demand for ourproducts;▪our ability to expand and contract our facilities and purchase commitments in a timely and cost-effective manner in response to changes in demand for ourproducts;▪our ability to generate revenue in amounts that cover the significant fixed costs of operating ourfacilities;19▪our ability to qualify our facilities for new products and process technologies in a timely manner and successfully avoid issues that may unduly prolong,or otherwise complicate, the qualification process;▪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;▪the availability and continued operation of key equipment, especially any that we may only have access to a limited numberof;▪our manufacturing cycle times andyields;▪the political and economic risks associated with our reliance on outsourced Asian assembly and testsuppliers;▪the location of our facilities and those of our outsourcedsuppliers;▪natural disasters, pandemics, acts of terrorism, armed conflicts or unrest impacting our facilities and those of our outsourcedsuppliers;▪our ability to hire, train, manage and retain qualified productionpersonnel;▪our compliance with applicable environmental and other laws andregulations;▪our ability to avoid prolonged periods of downtime or high levels of scrap in our and our suppliers’ facilities for any reason;and▪our ability to negotiate renewals to our existing lease agreements on favorable terms and without disruption to our wafer processing and manufacturingand internal assembly and test operations at our sites where such activities take place.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.Sources for certain components, materials and services 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, materials and services. We have in the past and may in thefuture, experience delays or reductions in supply shipments, which could reduce our revenue and profitability. If key components, materials or services areunavailable, our costs could increase and our revenue could decline.In 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 internally-manufactured semiconductor productsare fabricated in our Lowell, Massachusetts headquarters. The majority of the internal and outsourced assembly and test facilities we utilize are located in thePacific Rim and some of our internal design, assembly and test facilities are located in California regions with above average seismic and severe weather activity.In addition, our research and development personnel are concentrated in a few locations, with the expertise of the personnel at each such location generallyfocused on one or two specific areas. Any catastrophic loss or significant damage to any of these facilities would likely disrupt our operations, delay production,shipments and revenue and result in significant expenses to repair or replace the facility and, in some instances, could significantly curtail our research anddevelopment 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 Lowell, Massachusetts headquarters could materially and adversely affect our business and financial results, revenue and profitability.Remaining competitive in the semiconductor industry requires transitioning to smaller geometry process technologies and achieving higher levels of designintegration.In order to remain competitive, we expect to continue to transition our products to increasingly smaller geometries. This transition requires us to modify themanufacturing processes for our products, to design new products to more stringent standards and to redesign some existing products. In some instances, wedepend on our relationships with our third-party foundries to transition to smaller geometry processes successfully. Our foundries may not be able to effectivelymanage the transition or we may not be able to maintain our foundry relationships. If our foundries or we experience significant delays in this transition or fail toefficiently implement this transition, our business, financial condition and results of operations could be materially and adversely affected. As smaller geometryprocesses become more prevalent, we expect to continue to integrate greater levels of functionality into our products. However, we may not be able to achievehigher levels of design integration or deliver new integrated products on a timely basis or at all.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. Certain of our distributors20have inventory return and or rotation rights, which may result in higher than expected product returns. The many materials and vendors used in the manufacture ofour products increase the risk that some defects may escape detection in our manufacturing process and subsequently affect our customers, even in the case oflong-standing product designs. Our use of newly-developed or less mature semiconductor process technologies, such as GaN and InP, which have a less extensivetrack record of reliability in the field than other more mature process technologies, also increases the risk of performance and reliability problems. These mattershave 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 the future. Theoccurrence of defects could result in product returns and liability claims, reduced product shipments, the loss of customers, the loss of or delay in market acceptanceof our products, harm to our reputation, diversion of management’s time and resources, lower revenue, increased expenses and reduced profitability. Any warrantyor other rights we may have against our suppliers for quality issues caused by them may be more limited than those our customers have against us, based on ourrelative size, bargaining power or otherwise. In addition, even if we ultimately prevail, such claims could result in costly litigation, divert management’s time andresources and damage our customer and supplier 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, which are then sold to consumers in the marketplace. We may be named in product liability claims even if there is no evidence that our productscaused a loss. Product liability claims could result in significant expenses in connection with the defense of such claims and possible damages. In addition, we maybe required to participate in a recall if our products prove to be defective. Any product recall or product liability claim brought against us, particularly in high-volume consumer markets, could have a material negative impact on our reputation, business, financial condition or results of operations.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 or 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 onwafers;▪minute impurities in materialsused;▪contamination of the manufacturingenvironment;▪equipment failure or variations in the manufacturingprocesses;▪losses from broken wafers or other humanerrors;▪defects in packaging; and▪issues and errors intesting.Typically, 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 approximately33.3% of our revenue for the fiscal year ended September 27, 2019, and sales to our largest distributor, Richardson, represented 16.1% of our revenue in the sameperiod. If our sales representatives or distributors cease doing business with us or fail to successfully market and sell our products, our ability to sustain and growour revenue could be materially adversely affected.21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 the interpretationof those laws by regulators) or tax rates (particularly in the U.S. or Ireland), increases in non-deductible expenses, the availability of tax credits, material auditassessments or repatriation of non-U.S. earnings, each of which could materially affect our profitability. For example, as of September 27, 2019, we had $923.4million of gross federal net operating loss ("NOL") carryforwards, which, for those generated prior to the effective date of the 2017 Tax Cuts and Jobs Act ("TaxAct"), will expire at various dates through 2037, while those generated subsequent to the Tax Act have an indefinite carryforward with no expiration. However,our ability to use these federal NOL carryforwards and other deferred tax assets may be limited and, as a result of our conclusion that recovery of our U.S.deferred tax assets, including those assumed in the AppliedMicro Acquisition, is not considered more likely than not, we established a full valuation allowanceagainst our U.S. deferred tax assets as of September 29, 2017. 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 and interpretations (including new laws and interpretations) are introduced from time to time to reform taxation in the U.S., Ireland andother countries in which we have operations. Depending on the nature of such changes, if any, these consequences may be significant for us due to the large scaleof our international business activities. If any changes are enacted or otherwise implemented, they could have material adverse consequences on the amount of taxwe pay and, thereby, on our financial position and results of operations. In addition, on December 22, 2017, the U.S. government enacted the 2017 Tax Cuts andJobs Act ("Tax Act"). The changes included in the Tax Act are broad and complex, and we are not able to finalize our evaluation of the impact of the Tax Act atthis time due to uncertainties related to any future legislative or regulatory actions related to the Tax Act and availability of information needed to perform the finalcalculations. Accordingly, there is the risk that our use of deferred tax assets valuation allowance as well as our effective tax rate may be adversely affected.We may make future acquisitions and investments, which involve numerous risks.We routinely evaluate potential acquisitions, investments and strategic alliances involving complementary technologies, design teams, products andcompanies. We may pursue such transactions if appropriate opportunities arise. However, we may not be able to identify suitable transactions in the future or if wedo identify such transactions, we may not be able to complete them on commercially acceptable terms or at all. We also face intense competition for acquisitionsfrom other acquirers in our industry. These competing acquirers may have significantly greater financial and other resources than us, which may prevent us fromsuccessfully pursuing a transaction. In the event we pursue acquisitions, investments, joint ventures and strategic alliances, we will face numerous risks including:▪diversion of management’s attention from normal daily operations of ourbusiness;▪difficulties in entering markets where competitors have stronger marketpositions;▪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;▪loss of any key personnel of the acquired company as well as their know-how, relationships and expertise, which is common following anacquisition;▪maintaining customer, supplier or other favorable business relationships of acquiredoperations;▪generating insufficient revenue from completed acquisitions, investments, joint ventures and strategic alliances to offset increased expenses associatedwith any abandoned or completed transactions;▪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 weacquire.Our past transactions required or continue to require significant management time and attention relating to the transaction. Past transactions, whethercompleted or abandoned by us, have resulted, and in the future may result, in significant costs, expenses, liabilities and charges to earnings. The accountingtreatment for any future transaction may result in significant amortizable intangible assets which, when amortized, will negatively affect our consolidated results ofoperations. The accounting treatment may also result in significant goodwill, which, if impaired, will negatively affect our consolidated results of operations.Furthermore, we may incur debt or issue equity securities to pay for transactions. The incurrence of debt could limit our operating flexibility and be detrimental toour profitability, and the issuance of equity securities would be dilutive to our existing stockholders. Participation in joint ventures and strategic alliances may22limit our ability to realize the full benefit of our technology to the extent that, as a result of such transaction, the future benefit of such technology is shared withour transaction partners. Any or all of the above factors may differ from the investment community’s expectations in a given quarter, which could negatively affectour stock price. In addition, as a result of the foregoing, we may not be able to successfully execute transactions in the future to the same extent as we have the inthe 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.We may be unable to successfully integrate the businesses and personnel of our acquired companies and businesses, and may not realize the anticipatedsynergies and benefits of such acquisitions.From time to time, we complete acquisitions of companies and certain businesses of companies, and we may not realize the expected benefits from suchacquisitions because of integration difficulties or other challenges. The success of our acquisitions will depend, in part, on our ability to realize all or some of theanticipated synergies and other benefits from integrating the acquired businesses with our existing businesses. The integration process may be complex, costly andtime-consuming. The potential difficulties we may face in integrating the operations of our acquisitions include, among others:▪failure to implement our business plans for the combined businesses and consolidation or expansion of production capacity as planned and whereapplicable;▪unexpected losses of key employees, customers or suppliers of our acquired companies andbusinesses;▪unanticipated issues in conforming our acquired companies’ and businesses’ standards, processes, procedures and controls with ouroperations;▪coordinating new product and process development;▪increasing the scope, geographic diversity and complexity of ouroperations;▪diversion of management’s attention from other businessconcerns;▪adverse effects on our or our acquired companies’ and businesses’ existing businessrelationships;▪unanticipated changes in applicable laws andregulations;▪operating risks inherent in our acquired companies’ and businesses’ business andoperations;▪unanticipated expenses and liabilities;▪potential unfamiliarity with our acquired companies and businesses technology, products and markets, which may place us at a competitive disadvantage;and▪other difficulties in the assimilation of our acquired companies and businesses operations, technologies, products andsystems.Our acquired companies and businesses may have unanticipated or larger than anticipated liabilities for patent and trademark infringement claims, violationsof laws, commercial disputes, taxes and other known and unknown types of liabilities. There may be liabilities that we underestimated or did not discover in thecourse of performing our due diligence investigation of our acquired companies and businesses. We may have no recourse or limited recourse under the applicableacquisition-related agreement to recover damages relating to the liabilities of our acquired companies and businesses.We may not be able to maintain or increase the levels of revenue, earnings or operating efficiency that each of our acquired companies and businesses and ushad historically achieved or might achieve separately. In addition, we may not accomplish the integration of our acquired companies and businesses smoothly,successfully or within the anticipated costs or timeframe. If we experience difficulties with the integration process or if the business of our acquired companies orbusinesses deteriorates, the anticipated cost savings, growth opportunities and other synergies of our acquired companies and businesses may not be realized fullyor at all, or may take longer to realize than expected. If any of the above risks occur, our business, financial condition, results of operations and cash flows may bematerially and adversely impacted, we may fail to meet the expectations of investors or analysts, and our stock price may decline as a result.We 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 customerdemands;▪arranging for sufficient supply of key raw materials and services to avoid shortages or supplybottlenecks;23▪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 highvolume;▪managing the various components of our working capitaleffectively;▪upgrading our operational and financial systems, procedures and controls, including improvement of our accounting and internal managementsystems; and▪maintaining high levels of customersatisfaction.If we do not effectively manage any future growth, we may not be able to take advantage of attractive opportunities in our 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, or any benefits, of consolidation, outsourcing and restructuringinitiatives designed to reduce 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 ouroperations, including reductions in our number of manufacturing facilities, workforce reductions, establishing certain operations closer in location to our globalcustomers and evaluating functions that may be more efficiently performed through outsourcing arrangements. For example, on June 17, 2019, we committed to arestructuring plan designed to streamline and improve our operations. The plan includes the refocusing of certain research and development activities and areduction in workforce and is expected to provide annual expense savings of approximately $50.0 million once fully implemented. Our restructuring initiativecould result in potential adverse effects on employee capabilities, our continued ability to recruit, hire, retain and motivate highly-skilled engineering, operations,sales, administrative and managerial and other key personnel, our ability to achieve design wins and our ability to maintain and enhance our customer base. Suchevents could harm our efficiency and our ability to act quickly and effectively in the rapidly changing technology markets in which we sell our products. Inaddition, we may be unsuccessful in our efforts to realign our organizational structure and shift our investments. The potential negative impact of a restructuringplan on our employees may limit our ability to meet and satisfy the demands of our customers and, as a result, have a material impact on our business, financialcondition and results of operations.Restructuring initiatives can be substantial in scope and disruptive to our operations and they can involve large expenditures. In fiscal years 2019, 2018 and2017, we incurred restructuring charges of $19.5 million, $6.3 million and $2.7 million, respectively, consisting primarily of employee severance and related costsresulting from reductions in our workforce. Exiting a leased site may involve contractual or negotiated exit payments with the landlord, temporary holding over atan 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 capital expenses and the transfer of manufacturing processes and personnel from one site toanother, 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 othercertifications. We may experience shortages of affected products, delays and higher than expected expenses. Affected employees may be distracted by thetransition or may seek other employment, which could cause our overall operational efficiency to suffer. Any of these issues or our failure to realize the expectedbenefits of these initiatives could harm our results of operations and reduce the price of 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 solution has historically allowed.While these compound semiconductor materials offer high-performance features, it is generally more difficult to design and manufacture products with reliabilityand in volume using them. GaN and InP, in particular, are newer process technologies that do not have as extensive a track record of reliable performance in thefield as many of the competing process technologies. Compound semiconductor technology tends to be more expensive than silicon technology due to its above-described challenges and the generally lower volumes at which parts in those processes tend to be manufactured relative to silicon parts for high-volume consumerapplications.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 ourproducts;▪their concerns related to manufacturing costs andyields;24▪their unfamiliarity with our design and manufacturing processes;or▪uncertainties about the relative cost effectiveness of our products compared to high-performance siliconcomponents.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 willsuffer.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 suchmatters vigorously, 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 ofany amicable settlement, could subject us to material damage awards or settlement payments, loss of contractual or other rights, injunctions or other limitations onthe operation of our business or other material harm to our business.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,enforcement of agreements related to intellectual property and otherwise. We cannot be certain that any patents we apply for will be issued or that any claimsallowed from pending applications will be of sufficient scope or strength to provide meaningful protection or commercial advantage. Our competitors may also beable to design around our patents. Similarly, counterparties to our intellectual property agreements may fail to comply with their obligations under thoseagreements, requiring us to resort to expensive and time-consuming litigation in an attempt to protect our rights, which may or may not be successful. The laws ofsome countries in which our products are or may be developed, manufactured or sold, may not protect our products or intellectual property rights to the sameextent 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 to prevent 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 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. As a U.S. governmentcontractor or subcontractor, we may be subject to federal contracting regulations, including the Federal Acquisition Regulations, which govern the allowability ofcosts incurred by us in the performance of U.S. government contracts. Certain contract pricing is based on estimated direct and indirect costs, which are subject tochange. Additionally, the U.S. government is entitled after final payment on certain negotiated contracts to examine all of our cost records with respect to suchcontracts and to seek a downward adjustment to the price of the contract if it determines that we failed to furnish complete, accurate and current cost or pricing datain connection with the negotiation of the price of the contract.In connection with our U.S. government business, we may also be subject to government audits and to review and approval of our policies, procedures andinternal controls for compliance with procurement regulations and applicable laws. In certain circumstances, if we do not comply with the terms of a contract orwith regulations or statutes, we could be subject to downward contract price adjustments or refund obligations or could in extreme circumstances be assessed civiland criminal penalties or be debarred or suspended from obtaining25future contracts for a specified period of time. Any such suspension or debarment or other sanction could have an adverse effect on our business.Under some of our government subcontracts, we are required to maintain secure facilities and to obtain security clearances for personnel involved inperformance of the contract, in compliance with applicable federal standards. Complying with these standards can be both costly and time consuming, and canadversely affect our ability to compete in commercial markets. If we were unable to comply with these requirements or if personnel critical to our performance ofthese contracts were to lose their security clearances, we might be unable to perform these contracts or compete for other projects of this nature, which couldadversely affect our revenue.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 could be held financially responsible for remedial measures if ourproperties or those nearby are contaminated, even if we did not cause the contamination. We have incurred in the past and may in the future incur environmentalliability based on the actions of prior owners, lessees or neighbors of sites we have leased or may lease in the future, third party commercial waste disposal sites weutilize or sites we become associated with due to acquisitions. We cannot predict:▪changes in environmental or health and safety laws orregulations;▪the manner in which environmental or health and safety laws or regulations will be enforced, administered orinterpreted;▪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. For example, since 1993, MACOMConnectivity Solutions, LLC (formerly known as AppliedMicro) has been named as a potentially responsible party ("PRP") along with more than 100 othercompanies that used the Omega Chemical Corporation waste treatment facility in Whittier, California (the "Omega Site"). The U.S. Environmental ProtectionAgency has alleged that the Omega Site failed to properly treat and dispose of certain hazardous waste material. We are a member of a large group of PRPs,known as the Omega Chemical Site PRP Organized Group ("OPOG"), which has agreed to fund certain ongoing remediation efforts at and nearby the Omega Siteand with respect to the regional groundwater allegedly contaminated thereby.Based on currently available information with respect to the total anticipated level of investigatory, remedial and monitoring costs to be incurred by theOPOG and our allocable share of those costs, we have a loss accrual for the Omega Site that is not material. However, the proceedings are ongoing and severalfactors beyond our control, such as growth in overall remedial costs, insolvency of members of OPOG, or the prosecution of third party contribution or costrecovery actions against OPOG, could cause this loss accrual to prove inadequate. In addition, in 2012, as a result of the PRP group's modification of its liabilityallocation formulae and the withdrawal of PRP group members from OPOG, our proportional allocation of responsibility among the PRPs increased.Subsequently, certain other PRPs withdrew from OPOG or initiated bankruptcy proceedings, and legal proceedings and settlement negotiations with these partiesare continuing. Any future increases to our allocation of responsibility among the PRPs or the future reduction of parties participating in the PRP group couldmaterially increase our potential liability relating to the Omega Site.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 thesecould require us to redesign our products in order to comply with the standards, require the development of compliance administration systems or otherwise limitour flexibility in running our business or require us to incur substantial compliance costs. For example, RoHS requires that certain substances be removed frommost electronic components. The26WEEE directive makes producers of electrical and electronic equipment financially responsible for specified collection, recycling, treatment and disposal of pastand future covered products. We have already invested significant resources into complying with these regimes, and further investments may be required.Alternative designs implemented in response to regulation may be costlier to produce, resulting in an adverse effect on our gross profit margin. If we cannotdevelop compliant products in a timely fashion or properly administer our compliance programs, our revenue may also decline due to lower sales, which wouldadversely affect our operating results. Further, if we were found to be non-compliant with any rule or regulation, we could be subject to fines, penalties and/orrestrictions 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 September 27, 2019, we had a credit facility consisting of a term loan facility with an outstanding principle balance of $673.0 million and a revolvingcredit facility with $160.0 million of available borrowing capacity. The facility is secured by a first priority lien on our assets and those of our domesticsubsidiaries. The amount of our indebtedness could have important consequences, including the following:▪we may be unable or limited in our ability to obtain additional financing on favorable terms in the future for working capital, capital expenditures,acquisitions, general corporate or other purposes;▪we may be limited in our ability to make distributions to our stockholders in a sale or liquidation until our debt is repaid infull;▪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, leaseor transfer 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 ourability to 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 usat a competitive disadvantage relative to our competitors that are not subject to such restrictions. If we breach a loan covenant, the lenders could either refuse tolend funds 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.Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC promulgated rules regarding disclosure and reporting requirementsfor companies who use “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in their products. In the semiconductorindustry, these minerals are most commonly found in metals used in the manufacture of semiconductor devices and related assemblies. These requirements mayadversely affect our ability to source related minerals and metals and increase our related cost. We face difficulties and increased expenses associated withcomplying with the related disclosure requirements, such as costs related to determining the source of any conflict minerals used in our products. Continued timelyreporting is dependent upon the improvement and implementation of new systems and processes and information supplied by our suppliers of products thatcontain or potentially contain, conflict minerals. Our supply chain is complex and some suppliers may be unwilling to share related confidential informationregarding the source of their products or may provide us information that is inaccurate or inadequate. If those risks arise or if our processes in obtaining thatinformation do not fulfill the SEC’s requirements, we may face both reputational challenges and SEC enforcement risks based on our inability to sufficiently verifythe origins of the subject minerals and metals or otherwise. More recently, executive orders issued by the President of the United States have increased sanctions inthis area as well, which may impact us in the scenarios described above. Moreover, we may encounter challenges to satisfy any related requirements of ourcustomers, which may be different from or more onerous than the requirements of the related SEC rules and executive orders. If we cannot satisfy these customers,they may choose a competitor’s products or may choose to disqualify us as a supplier and we may experience lower than expected revenues or have to write offinventory in the event that it becomes unsalable as a result of these regulations.27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 futureoutstanding 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.Our business and operations could suffer in the event of a security breach, cybersecurity incident or disruption of our information technology systems.We increasingly rely on sophisticated information technology systems throughout our company to keep financial records and business data, employee data,process orders, manage inventory, coordinate shipments to customers, maintain confidential and proprietary information, assist in semiconductor engineering andother technical activities and operate other critical functions such as internet connectivity, network communications and email. We also manage and store variousproprietary information and sensitive confidential data related to our business, employees and operations. We maintain a system of controls over the physicalsecurity of our facilities. However, our physical facilities and our information technology systems may be susceptible to damage, disruptions or shutdowns due topower outages, hardware failures, telecommunication failures, user errors, catastrophes or other unforeseen events. If we fail to maintain the integrity of oursystems or data or if we experience a prolonged disruption in the information technology systems that involve our internal communications or our interactions withcustomers or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely and materially affect our business.We may also be subject to security breaches caused by human error, inadequate or outdated software or tools, computer viruses or ransomware, illegal break-ins or hacking, sabotage, misappropriation or acts of vandalism by employees or third parties. Cyber attacks and attempts by others to gain unauthorized access toour information technology systems are becoming more frequent and sophisticated and may be successful. These attempts, which might be related to industrial orother espionage, include covertly introducing malware to our computers and networks, exploiting vulnerabilities in our network infrastructure, or impersonatingauthorized users, among others. We seek to detect, contain and investigate all security incidents and to prevent their recurrence, but in some cases, we might beunaware of an incident or its magnitude and effects. The theft, unauthorized use or publication of our intellectual property and/or confidential business informationof us or third parties could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives orotherwise adversely affect our business and reputation. To the extent that any security breach impacts the operation of our products in the field or results ininappropriate disclosure of third party confidential information, we may incur liability, governmental sanctions, reputational damage or impaired businessrelationships as a result, which could harm our business. While we expect to continually invest in additional resources and services to bolster the security of ourinformation technology systems, no amount of investment will eliminate these risks entirely.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 whichwe self-insure increases, it could cause a material and adverse change to our reserves for self-insurance liabilities, as well as to our earnings.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 vendorslimit the 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 damageswould be 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.28Failure to comply with the General Data Protection Regulation or other data privacy regimes could subject us to significant fines and reputational harm.Global privacy legislation, enforcement and policy activity are rapidly expanding and creating a complex data privacy compliance environment and thepotential for high-profile negative publicity in the event of any data breach. We are subject to many privacy and data protection laws and regulations in the UnitedStates and around the world, some of which place restrictions on our ability to process personal data across our business. In particular, the General Data ProtectionRegulation ("GDPR") is a comprehensive update to the data protection regime in the European Economic Area that is effective as of May 25, 2018. The GDPRimposes new requirements relating to, among other things, consent to process personal data of individuals, the information provided to individuals regarding theprocessing of their personal data, the security and confidentiality of personal data, and notifications in the event of data breaches and use of third party processors. The GDPR imposes substantial fines for breaches of data protection requirements, which can be up to four percent of the worldwide revenue or 20 million Euros,whichever is greater. We have invested, and continue to invest, human and technology resources into our GDPR compliance efforts and our data privacycompliance efforts generally. These compliance efforts may be time-intensive and costly. Despite those efforts, there is a risk that we may be subject to fines andpenalties, litigation and reputational harm if we fail to protect the privacy of third party data or to comply with the GDPR or other applicable regimes.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. These, and anyfuture, reports or studies may also affect our ability to recruit and retain employees. In addition, a significant judgment against us or material defense costs couldharm our reputation, business, financial condition and results of operations.Our portfolio of marketable securities is significant and subject to market, interest and credit risk that may reduce its value. We maintain a significant portfolio of marketable securities. Changes in the value of this portfolio could adversely affect our earnings. In particular, thevalue of our investments may decline due to increases or decreases in interest rates, downgrades of money market funds, commercial paper, U.S. Treasuries andcorporate bonds included in our portfolio, instability in the global financial markets that reduces the liquidity of securities included in our portfolio and otherfactors. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio or sell investments for less than ouracquisition cost.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 ourperformance;•actual or anticipated fluctuations in our quarterly operatingresults;•changes in or failure to meet publicly disclosed expectations as to our future financialperformance;•changes in securities analysts’ estimates of our financial performance or lack of research and reports by industryanalysts;•changes in market valuations or earnings of similarcompanies;•changes in investor perception of us and the industry in which we operate;•addition or loss of significantcustomers;29▪announcements by us or our competitors, customers or suppliers of significant products, contracts, acquisitions, strategic partnerships or otherevents;▪developments or disputes concerning patents or proprietary rights, including any injunction issued or material sums paid for damage awards, settlementpayments, license fees, attorney’s fees or other litigation expenses associated with intellectual property lawsuits we may initiate, or in which we may benamed as defendants;▪failure to complete significant sales or to win a competitive selectionprocess;▪developments concerning current or future strategic alliances oracquisitions;▪any future sales of our common stock or other securities;and▪additions or departures of directors, executives or key personnel.For example, on August 1, 2017 we announced results of operations for our third quarter of fiscal year 2017 and a financial outlook for our fourth quarter offiscal year 2017 that were below the then-current consensus of securities analyst expectations. The closing price per share of our common stock thereafter declinedfrom $61.06 on August 1, 2017 to $45.50 on August 2, 2017, and further to $39.67 on August 18, 2017, representing a cumulative decline of approximately35.0%. Furthermore, the stock markets recently have experienced price and volume fluctuations that have affected and continue to affect the market prices ofequity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. Thesebroad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, interest rate changes or internationalcurrency fluctuations, may negatively impact the market price of our common stock. In the past, companies that have experienced volatility in the market price oftheir stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us couldresult in substantial 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. Wedo not 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 commonstock, 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 losevisibility in the 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.If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately report our financial results, which could have amaterial adverse effect on our operations, investor confidence in our business and the trading prices of our securities.We are required to maintain disclosure controls and procedures and internal controls over financial reporting that are effective for the purposes described in"Item 9A.- Controls and Procedures" below.The existence of a material weakness in our internal controls may adversely affect our ability to record, process, summarize and report financial informationtimely and accurately and, as a result, our financial statements may contain material misstatements or omissions, which could result in regulatory scrutiny, causeinvestors to lose confidence in our reported financial condition and otherwise have a material adverse effect on our business, financial condition, cash flow resultsof 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 September 27, 2019, John and Susan Ocampo beneficiallyowned 30.0% of our common stock. As a result, these stockholders will be able to exert a significant degree of influence over our management and affairs andcontrol over matters requiring stockholder approval, including the election of our directors and approval of significant corporate transactions. In addition, thisconcentration of ownership may delay or prevent a change in control of us and might affect the market price of our securities. In addition, the interests of thesestockholders may not always coincide with your interests or the interests of other stockholders.30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 fifth amended and restated certificate of incorporation and third amended and restated bylaws may discourage, delay or prevent a merger,acquisition or change of control that a stockholder may consider favorable. These provisions could also discourage proxy contests and make it more difficult forstockholders to elect directors and take other corporate actions. The existence of these provisions could limit the price that investors might be willing to pay in thefuture for shares of our common stock. These provisions include authorization of the issuance of “blank check” preferred stock, staggered elections of directorsand advance notice requirements for nominations for election to the board of directors and for proposing matters to be submitted to a stockholder vote. Provisionsof 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 outstanding voting 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, including restrictions under the terms of the agreements governing our indebtedness. Weanticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to paydividends 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 their investments.ITEM 1B. UNRESOLVED STAFF COMMENTS.None.ITEM 2. PROPERTIES.Our principal executive offices are located in a leased facility in Lowell, Massachusetts. We also maintain leased facilities for our design centers located inCalifornia, North Carolina, New York, Oregon, Michigan, New Jersey, Pennsylvania, Canada, Taiwan, Ireland, France and China as well as for our administrative,assembly and test operations located in California, New Hampshire, and Taiwan, and our local sales offices in California, North Carolina, Ireland, Canada, China,Taiwan, Japan and India. We believe that our leased facilities are adequate for our present operations. In addition to our corporate headquarters facility thefollowing is a list of our main leased facilities and their primary functions.SiteMajor Activity (1)Square FootageLease ExpirationLowell, MassachusettsA, P&F, T&A, AE and RT281,700October 2038Newport Beach, CaliforniaA, R&D, A&E and S&M68,435December 2029Ithaca, New YorkR&D and T&A20,600December 2025Cork, IrelandA, R&D, S&M, AE and RT21,422August 2026Santa Clara, CaliforniaA, R&D, A&E59,625October 2024Nashua, New HampshireR&D, T&A, P&F, RT17,000December 2021Ann Arbor, MichiganA, P&F, R&D and T&A, RT50,335May 2021(1) Major activities include Administration (A), Research and Development (R&D), Production and Fabrication (P&F), Sales andMarketing (S&M), Application Engineering (AE), Test and Assembly (T&A) and Reliability Testing (RT).For additional information regarding property, plant and equipment by geographic region for each of the last two fiscal years, see the Notes to ConsolidatedFinancial Statements in "Item 8. - Financial Statements and Supplementary Data" below.ITEM 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 would have a materialadverse effect on our business, operating results, financial condition or cash flows.Certain legal proceedings in which we are involved, if any, are discussed in Note 14 - Commitments and Contingencies to our Consolidated FinancialStatements included in this Annual Report which is incorporated by reference herein.31ITEM 4. MINE SAFETY DISCLOSURES.Not applicable.32PART 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 number of stockholders ofrecord of our common stock as of November 21, 2019 was approximately 16. The number of stockholders of record does not include beneficial owners whoseshares are held by nominees in street name.Stock Price Performance GraphThe following graph shows a comparison from October 3, 2014 through September 27, 2019 of the total cumulative return of our common stock with thetotal cumulative return of the NASDAQ Composite Index and the PHLX Semiconductor Index. The amounts represented below assume an investment of $100.00in our common stock at the closing price of $21.63 on October 3, 2014 and in the Nasdaq Composite Index and the PHLX Semiconductor Index on the closestmonth end date of October 3, 2014, and assume reinvestment of dividends. The comparisons in the graph are historical and are not intended to forecast or beindicative of possible future performance of our common stock. October 3, 2014 October 2, 2015 September 30,2016 September 29,2017 September 28,2018 September 27,2019 MACOM Technology Solutions Holdings, Inc.$100.00 $133.01 $195.75 $206.24 $95.24 $100.23Nasdaq Composite Index$100.00 $106.40 $121.55 $150.34 $188.18 $187.75PHLX Semiconductor Index$100.00 $99.42 $139.29 $198.64 $235.77 $271.56Issuer Purchases of Equity SecuritiesPeriod Total Numberof Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares(or Units)Purchased as Part ofPublicly AnnouncedPlans or Programs Maximum Number(or Approximate Dollar Value) ofShares (or Units)that May Yet BePurchased Under the Plans orProgramsJune 29, 2019—July 26, 2019 12,139 $15.63 — —July 27, 2019—August 23, 2019 3,879 19.52 — —August 24, 2019—September 27, 2019 — — — —Total 16,018 $16.57 — —(1)Our board of directors has approved “withhold to cover” as a tax payment method for vesting of restricted stock awards for our employees. Pursuant to an 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-announced repurchase plan, wewithheld from such employees the shares noted in the table above to cover tax withholding33related to the vesting of their awards. The average prices listed in the above table are averages of the fair market prices at which we valued shares withheld forpurposes of calculating the number of shares to be withheld.ITEM 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 1A - RiskFactors” and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report.We derived (i) the Statements of Operations data for the fiscal years 2019, 2018 and 2017, and (ii) the Balance Sheet data as of September 27, 2019 andSeptember 28, 2018, from our audited consolidated financial statements, which appear elsewhere in this Annual Report. We derived the Statements of Operationsdata for the fiscal years 2016 and 2015 and Balance Sheet data as of September 29, 2017, September 30, 2016 and October 2, 2015 from our audited consolidatedfinancial statements, adjusted for discontinued operations, which do not appear elsewhere in this Annual Report. We have a 52-or 53-week fiscal year ending onthe Friday closest to September 30.The historical results presented below are not necessarily indicative of financial results to be achieved in future periods. Fiscal Years 2019 2018 2017 2016 2015 (in thousands, except per share data)Statements of Operations Data (1): Revenue$499,708 $570,398 $698,772 $544,338 $420,609Gross profit220,708 245,706 326,884 281,609 203,590(Loss) income from operations(380,376) (106,520) (16,084) 13,248 10,092Loss before income taxes(423,153) (155,235) (49,505) (21,571) (15,400)Income tax (benefit) expense(39,355) (21,473) 100,911 (17,983) (9,858)Loss from continuing operations(383,798) (133,762) (150,416) (3,588) (5,542)(Loss) income from discontinued operations— (6,215) (19,077) 5,022 54,131Net (loss) income attributable to common stockholders$(383,798) $(139,977) $(169,493) $1,434 $48,589 Basic (loss) income per common share: Loss from continuing operations$(5.84) $(2.07) $(2.48) $(0.07) $(0.11)(Loss) income from discontinued operations— (0.10) (0.31) 0.09 1.06Net (loss) income - basic$(5.84) $(2.16) $(2.79) $0.03 $0.95Diluted (loss) income per common share: Loss from continuing operations$(5.84) $(2.47) $(2.48) $(0.07) $(0.11)(Loss) income from discontinued operations— (0.10) (0.31) $0.09 $1.06Net (loss) income - diluted$(5.84) $(2.57) $(2.79) $0.03 $0.95Shares used to compute net (loss) income per common share: Basic65,686 64,741 60,704 53,364 51,146Diluted65,686 65,311 60,704 53,364 51,146 As of September 27, 2019 September 28, 2018 September 29, 2017 September 30, 2016 October 2, 2015Consolidated Balance Sheet Data (in thousands): Cash and cash equivalents$75,519 $94,676 $130,104 $332,977 $122,312Working capital323,746 351,856 445,778 520,794 312,743Total assets1,105,574 1,482,495 1,637,123 1,188,551 860,834Long-term debt and capital leases, less current portion684,778 687,395 678,746 576,345 335,087Stockholders’ equity$313,896 $668,675 $777,374 $462,784 $424,533_______________________________________________________________________________________________________(1)See Results of Operations in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Statements of Operations and ourNotes to Consolidated Financial Statements for additional information for fiscal years 2019, 2018 and 2017 in Item 8 - Financial Statements and Supplementary Data.34ITEM 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 financialstatements and related notes that appear elsewhere in this Annual Report. In addition to historical information, the following discussion contains forward-lookingstatements that are subject to risks and uncertainties. Actual results may differ substantially and adversely from those referred to herein due to a number offactors, including but not limited to those described below and in "Item 1A - Risk Factors” and elsewhere in this Annual Report.OVERVIEWWe design and manufacture semiconductor products for Data Center, Telecommunications and Industrial and Defense applications. Headquartered in Lowell,Massachusetts, we have more than 65 years of application expertise, with silicon, gallium arsenide and indium phosphide fabrication, manufacturing, assembly andtest, and operational facilities throughout North America, Europe and Asia. We design, develop and manufacture differentiated, high-value products for customerswho demand high performance, quality and reliability. We offer a broad portfolio of thousands of standard and custom devices, which include integrated circuits("IC"), multi-chip modules ("MCM"), diodes, amplifiers, switches and switch limiters, passive and active components and complete subsystems, across dozens ofproduct lines serving over 8,000 end customers in three primary markets. Our semiconductor products are electronic components that our customers incorporateinto their larger electronic systems, such as, wireless basestations, high capacity optical networks, radar, medical systems and test and measurement. Our primarymarkets are: (1) Telecom, which includes carrier infrastructure like long-haul/metro, 5G and FTTx/PON; (2) Data Centers, enabled by our broad portfolio ofanalog ICs and photonic components for high speed optical module customers; and (3) I&D, which includes military and commercial radar, RF jammers,electronic countermeasures, communication data links, satellite communications and multi-market applications, which include industrial, medical, test andmeasurement and scientific applications.See "Item 1 - Business" for additional information. Basis of PresentationWe have one reportable operating segment and all intercompany balances have been eliminated in consolidation.We have a 52 or 53-week fiscal year ending on the Friday closest to the last day of September with fiscal years 2019, 2018 and 2017 each consisting of 52weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we typically include the extra week in the first quarter of our fiscal year.Description of Our RevenueRevenue. Substantially all of our revenue is derived from sales of high-performance RF, microwave and millimeterwave semiconductor products. We design,integrate, manufacture and package differentiated product solutions that we sell to customers through our direct sales organization, our network of independentsales representatives and distributors.We believe the primary drivers of our future revenue growth will include:•engaging early with our lead customers to develop custom and standard products and solutions that can be driven across multiple growthmarkets;•leveraging our core strength and leadership position in standard, catalog products that service all of our endapplications;•increasing content of our semiconductor solutions in our customers’ systems through cross-selling our dozens of productlines;•introducing new products through internal development and acquisitions with market reception that command higher prices based on the application ofadvanced technologies, added features, higher levels of integration and improved performance; and•continued growth in the demand for high-performance analog and optical semiconductors in our three primary markets inparticular.Our core strategy is to develop and innovate high-performance products that address our customers’ most difficult technical challenges in our primarymarkets: Data Center, Telecom and I&D. While sales in any or all of our primary markets may slow or decline from period to period, over the long-term wegenerally expect to benefit from our strength in these markets.We expect our revenue in the Data Center market to be driven by the adoption of cloud-based components and the migration to an application centricarchitecture, which we expect will drive adoption of higher speed optical and photonic components.We expect our revenue in the Telecom market to be driven by 5G, with continued upgrades and expansion of communications equipment to support mobilecomputing devices such as smartphones and tablets, increasing adoption of our high performance RF, millimeterwave, optical and photonic components.35We expect our revenue in the I&D market to be driven by the broad product portfolio we offer that services applications such as test and measurement,satellite communications, civil and military radar, industrial, scientific and medical applications. Growth in this market is subject to changes in governmentalprograms and budget funding, which is difficult to predict. We expect revenue in this market to be further supported by growth in applications for our multi-marketcatalog 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 ("GAAP") in the U.S., requires management to make estimates and judgmentsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportedamounts of revenue and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty andcould be material 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; warranty reserves; share-based compensation valuations and income taxes.When we evaluate inventory for excess quantities and obsolescence, we utilize historical product usage experience and expected demand for establishing ourreserve estimates. Our actual product usage may vary from the historical experience and estimating demand is inherently difficult, particularly given the cyclicalnature of the semiconductor industry, both of these factors may result in us recording excess and obsolete inventory amounts that do not match the requiredamounts.Our goodwill impairment assessment requires management to make assumptions and to apply judgment to items such as the determination of the reportingunit.We apply significant estimates and judgments in order to determine the fair value of the identified tangible and intangible assets acquired, liabilities assumedand goodwill recognized in business combinations. The value of all assets and liabilities are recognized at fair value as of the acquisition date using a marketparticipant approach. In measuring the fair value, we utilize a number of valuation techniques. The valuation of the identifiable assets and liabilities includesassumptions such as projected revenue, royalty rates, weighted average cost of capital, discount rates and estimated useful lives. These assessments can besignificantly affected by our judgments.Significant management judgment is required in our valuation of long-lived asset groups when assessing for potential impairment. These analyses are basedon the creation of forecasts of future operating results that are used in the valuation, including estimation of (i) future cash flows, (ii) the long-term rate of growthfor our business, (iii) the useful life over which cash flows will occur, (iv) terminal values, if applicable and (v) the determination of our weighted average cost ofcapital, which is used to determine the discount rate. It is possible that these forecasts may change and our projections included in our forecasts of future resultsmay prove to be inaccurate. If our actual results, or the forecasts and estimates used in future impairment analyses, are lower than the original estimates used toassess the recoverability of these assets, we could incur impairment charges. Our forecasts could be adversely affected by, but not limited to, a change in strategy,the outcome of development activities or slowdown in our primary markets. The value of our long-lived asset groups could also be impacted by future adversechanges such as a decline in the valuation of technology company stocks, including the valuation of our common stock, or a significant slowdown in theworldwide economy or in the semiconductor industry.We establish revenue reserves, primarily for distributor price adjustments, which requires the use of judgment and estimates that impact the amount andtiming of revenue recognition. We record reductions of revenue for such distributor pricing adjustments in the same period that the related revenue is recordedbased on estimates of historical pricing adjustments granted to distributors. The actual pricing adjustments granted to distributors may significantly exceed or beless than the historical estimates resulting in adjustments to revenue in the incorrect period.We establish a product warranty liability at the time of revenue recognition. Product warranties generally have terms of twelve months and covernonconformance with specifications and defects in material or workmanship. For sales to distributors, our warranty generally begins when the product is resold bythe distributor. The liability is based on estimated costs to fulfill customer product warranty obligations and utilizes historical product failure rates. Should actualwarranty obligations differ from estimates, revisions to the warranty liability may be required.We account for share-based compensation arrangements using the fair value method as described in Note 2 - Summary of Significant Accounting Policies toour Consolidated Financial Statements in this Annual Report. There are a significant number of estimates and assumptions required for the initial valuation as wellas for the ongoing valuation of certain share-based compensation items. These estimates may vary significantly and the assumptions may not be accurate resultingus to make adjustments to historically recorded balances.36We are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current taxexposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result indeferred tax assets and liabilities, which are included within our consolidated balance sheets. We then assess the likelihood that our deferred tax assets will berecovered from future taxable income within the relevant jurisdiction and to the extent we believe that recovery is not likely, we must establish a valuationallowance. We provided valuation allowances for certain of our deferred tax assets, where it is more likely than not that some portion, or all of such assets, will notbe realized. The application of tax laws and regulations to calculate our tax liabilities is subject to legal and factual interpretation, judgment, and uncertainty in amultitude of jurisdictions. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution ofregulations, and court rulings. We recognize potential liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on ourestimate of whether, and the extent to which, additional taxes and interest will be due. We record an amount as an estimate of probable additional income taxliability at the largest amount that we feel is more likely than not, based upon the technical merits of the position, to be sustained upon audit by the relevant taxauthority. Historically, we have not experienced material differences in our estimates and actual results.For additional information related to these and other accounting policies refer to Note 2 - Summary of Significant Accounting Policies to our ConsolidatedFinancial Statements included in this Annual Report which is incorporated by reference herein.37RESULTS OF OPERATIONSAs discussed in Note 23 - Divested Businesses and Discontinued Operations to our Consolidated Financial Statements included in this Annual Report, wehave adjusted certain amounts associated with discontinued operations in our results of operations, cash flows and assets and liabilities for all periods presented.The following table sets forth, for the periods indicated, our Statements of Operations data (in thousands): Fiscal Years 2019 2018 2017 Revenue$499,708 $570,398 $698,772Cost of revenue (1) (4) (7)279,000 324,692 371,888Gross profit220,708 245,706 326,884Operating expenses: Research and development (1)163,469 177,713 147,986 Selling, general and administrative (1) (3) (5) (8)153,286 161,673 187,886 Impairment charges (7)264,786 6,575 4,352 Restructuring charges (9)19,543 6,265 2,744 Total operating expenses601,084 352,226 342,968Loss from operations(380,376) (106,520) (16,084)Other (expense) income: Warrant liability gain (expense) (2)765 27,646 (2,522) Interest expense(35,803) (31,338) (28,855) Other expense, net (6) (10)(7,739) (45,023) (2,044) Other expense, net(42,777) (48,715) (33,421)Loss before income taxes(423,153) (155,235) (49,505)Income tax (benefit) expense(39,355) (21,473) 100,911Loss from continuing operations(383,798) (133,762) (150,416)Loss from discontinued operations (5) (6)— (6,215) (19,077)Net loss$(383,798) $(139,977) $(169,493)(1)Includes (a) Amortization expense related to intangible assets arising from acquisitions and (b) Share-based compensation expense included in our Consolidated Statementsof Operations as set forth below (in thousands): Fiscal Years 2019 2018 2017(a) Intangible amortization expense: Cost of revenue$29,847 $33,429 $30,286 Selling, general and administrative44,872 48,265 35,456(b) Share-based compensation expense: Cost of revenue2,936 3,869 3,189 Research and development8,551 13,448 10,565 Selling, general and administrative12,305 14,620 22,581(2)Represents changes in the fair value of common stock warrants recorded as liabilities and adjusted each reporting period to fair value.(3)Includes specific litigation costs of $0.2 million, $3.5 million and $2.3 million incurred in fiscal years 2019, 2018 and 2017, respectively, primarily related to a now settledlawsuit against Infineon Technologies Americas Corporation and Infineon Technologies AG.(4)In fiscal years 2018 and 2017, includes approximately $0.2 million and $43.2 million, respectively, of costs for step-up in valuation of acquired business inventories to fairvalue.(5)Includes change in control payments associated with the AppliedMicro Acquisition of $21.3 million for fiscal year 2017, of which $12.0 million was recorded as selling,general and administrative expenses and $9.3 million was recorded as discontinued operations.(6)See Note 23 - Divested Business and Discontinued Operations to the Consolidated Financial Statements included in this Annual Report for additional information.38(7)Impairment charges in fiscal year 2019 include $264.8 million for impairment of customer relationship and acquired technology intangible assets as well as equipment. Infiscal year 2018, impairment charges include $6.6 million related to property and equipment and other assets designated for future use with ZTE, and cost of revenueincludes $2.5 million related to inventory designated for future sale to ZTE. Additionally, cost of revenue includes inventory charges of $17.2 million associated withcertain production and product line exits during fiscal year 2018. Impairment related charges of $4.4 million during fiscal year 2017 related to the revaluation of in-processresearch and development ("IPR&D") technology placed in service during the fiscal year. See Note 17 - Impairments to the Consolidated Financial Statements included inthis Annual Report for additional information.(8)Includes acquisition and transaction related costs of $10.9 million associated with the AppliedMicro Acquisition during fiscal year 2017.(9)See Note 15 - Restructurings, to the Consolidated Financial Statements included in the Annual Report for additional information.(10)Includes $7.5 million and $10.4 million of losses for fiscal years 2019 and 2018, respectively, associated with our equity method investment in Compute based on ourproportionate share of the losses of Compute, as well as a $34.3 million loss on disposal of the LR4 business in fiscal year 2018. See Note 5 - Investments, Note 23 -Divested Business and Discontinued Operations and Note 25 - Supplemental Cash Flow Information to the Consolidated Financial Statements included in this AnnualReport for additional information.The following table sets forth, for the periods indicated, our Statements of Operations data expressed as a percentage of our revenue: Fiscal Years 2019 2018 2017Revenue100.0 % 100.0 % 100.0 %Cost of revenue55.8 56.9 53.2Gross profit44.2 43.1 46.8Operating expenses: Research and development32.7 31.2 21.2Selling, general and administrative30.7 28.3 26.9Impairment charges53.0 1.2 0.6Restructuring charges3.9 1.1 0.4 Total operating expenses120.3 61.8 49.1Loss from operations(76.1) (18.7) (2.3)Other (expense) income: Warrant liability gain (expense)0.2 4.8 (0.4)Interest expense, net(7.2) (5.5) (4.1)Other expense(1.5) (7.9) (0.3) Total other expense, net(8.6) (8.5) (4.8)Loss before income taxes(84.7) (27.2) (7.1)Income tax (benefit) expense(7.9) (3.8) 14.4Loss from continuing operations(76.8) (23.5) (21.5)Loss from discontinued operations— (1.1) (2.7)Net loss(76.8)% (24.5)% (24.3)%Comparison of Fiscal Year Ended September 27, 2019 to Fiscal Year Ended September 28, 2018Revenue. In fiscal year 2019, our revenue decreased by $70.7 million, or 12.4%, to $499.7 million from $570.4 million for fiscal year 2018.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 2019 2018 % ChangeTelecom$180,938 $222,940 (18.8)%Data Center114,132 162,098 (29.6)%Industrial & Defense204,638 185,360 10.4 % Total$499,708 $570,398 (12.4)% Telecom36.2% 39.1% Data Center22.8% 28.4% Industrial & Defense41.0% 32.5% Total100.0% 100.0% In fiscal year 2019, our Telecom market revenue decreased by $42.0 million, or 18.8%, compared to fiscal year 2018. The decrease was primarily due to thefull year effect of our May 2018 sale of the Japan-based long-range optical subassembly business (the "LR439Business"), lower sales of carrier-based optical semiconductor products to our Asia customer base, as well as lower sales of products targeting fiber to the homeapplications.In fiscal year 2019, our Data Center market revenue decreased by $48.0 million, or 29.6%, compared to fiscal year 2018. The decrease was primarily due tolower revenue related to sales of legacy optical products and lasers, partially offset by the recognition of $7.0 million of licensing revenue during the fiscal yearended September 27, 2019.In fiscal year 2019, our I&D market revenues increased by $19.3 million, or 10.4%, compared to fiscal year 2018. The increase was related to higher revenuefrom sales across the product portfolio.Gross profit. In fiscal year 2019, our gross profit decreased by $25.0 million, or 10.2%, compared to fiscal year 2018. Gross margin of 44.2% in fiscal year2019 increased 110 basis points, compared to fiscal year 2018. Gross profit during 2019 was primarily impacted by lower fiscal year 2019 revenue, lower grossprofit as a result of the May 2018 sale of our LR4 Business and higher inventory reserves primarily associated with Data Center products, partially offset by therecognition of $7.0 million of licensing revenue during fiscal year 2019.Research and development. In fiscal year 2019, research and development expense decreased by $14.2 million, or 8.0%, to $163.5 million representing 32.7%of revenue, compared with $177.7 million, or 31.2% of revenue in fiscal year 2018. Research and development expense decreased in the 2019 period primarily as aresult of lower compensation-related costs, lower share-based compensation, as well the closure of certain design facilities associated with restructuring actions.Research and development expense increased as a percentage of revenue due to the decrease in net revenue during fiscal year 2019.Selling, general and administrative. In fiscal year 2019, selling, general and administrative expenses decreased by $8.4 million, or 5.2% to $153.3 million, or30.7% of revenue, compared with $161.7 million, or 28.3% of revenue, for fiscal year 2018. Selling, general and administrative expenses decreased in thefiscal year 2019 period primarily due to lower share-based compensation, lower amortization expense, and lower other compensation-related costs as a result ofrestructuring actions. Selling, general and administrative expense increased as a percentage of revenue due to the decrease in net revenue during fiscal year 2019.Impairment charges. In fiscal year 2019 impairment charges were $264.8 million, or 53.0% of revenue, primarily related to the $257.0 million impairment ofintangible assets, as well as the impairment of $7.1 million impairment of equipment from construction in process that will not be placed in service. See Note 17 -Impairments to the Consolidated Financial Statements included in this Annual Report for additional information.Restructuring charges. In fiscal year 2019, restructuring charges were $19.5 million, or 3.9% of our revenue, compared with $6.3 million, or 1.1% of ourrevenue, for fiscal year 2018. During the fiscal quarter ended June 28, 2019, we committed to a plan to strategically realign, streamline and improve certain of ourbusiness and operations, including reducing our workforce by approximately 250 employees or 20% and exiting seven development facilities in France, Japan, theNetherlands, Florida, Massachusetts, New Jersey and Rhode Island. We also committed to reducing certain development activities for one of our product lines, andwill no longer invest in the design and development of optical modules and subsystems for Data Center applications. We incurred restructuring charges of $11.6million in fiscal year 2019 under this plan, including $6.3 million of employee-related costs, $4.0 million of impairment of fixed assets and $1.3 million of othercosts. We expect to incur restructuring costs of approximately $2.5 million to $3.4 million through fiscal year 2020 as we complete this restructuring action, whichprimarily consists of $2.6 million of employee related costs and $0.8 million of facility-related costs. We expect annual expense savings of approximately $50million dollars, primarily in research and development expenses, once this plan is fully implemented.During the fiscal quarter ended March 29, 2019, we committed to a plan to exit certain design facilities and activities ("Design Facilities Plan"). We incurredrestructuring charges of $2.5 million in fiscal year 2019 under this plan, which primarily consists of $0.3 million of employee-related costs and $2.2 million offacility-related costs. We do not expect to incur further restructuring costs for the Design Facilities Plan.During the fiscal quarter ended September 28, 2018, we committed to a plan to exit certain production and product lines, primarily related to certainproduction facilities located in Ithaca, New York ("Ithaca Plan"). For these facilities, we incurred restructuring charges of $5.5 million in fiscal year 2019,including $1.5 million of employee-related costs and $4.0 million of facility-related costs. We do not expect to incur further restructuring costs for the Ithaca Plan.Refer to Note 15 - Restructurings in this Annual report on Form 10-K for additional information.Warrant liability gain. In fiscal year 2019, we recorded a warrant gain of $0.8 million, or 0.2% of revenue, compared to a gain of $27.6 million, or 4.8% ofrevenue, for fiscal year 2018. The difference between periods were driven by a decrease in the estimated fair value of common stock warrants we issued inDecember 2010, which we carry as a liability at fair value.Provision for income taxes. In fiscal year 2019, the provision for income taxes was a benefit of $39.4 million, or 7.9% of revenue, compared to a benefit of$21.5 million, or 3.8% of revenue, for fiscal year 2018. The provision decreased primarily due to the immediate recognition of the current and deferred income taxeffects totaling $39.8 million from an intra-entity transfer of a license for intellectual property to a higher taxed jurisdiction that received a tax basis step-up. Forfiscal year 2018, the blended U.S. federal income tax rate was 24.5%. For fiscal year 2019, the U.S. federal income tax rate was 21%.40The difference between the U.S. federal income tax rate of 21% and our effective income tax rate of 9.3% for fiscal year 2019 was primarily impacted by thereduction of our NOLs from section 382 limitations, the immediate recognition of the current and deferred income tax effects of an intra-entity transfer of a licensefor intellectual property and the valuation allowance against our U.S. deferred tax assets. For fiscal year 2018, our effective income tax rate of 13.8% wasprimarily impacted by the Tax Act, partially offset by the valuation allowance against our U.S. deferred tax assets.Comparison of Fiscal Year Ended September 28, 2018 to Fiscal Year Ended September 29, 2017We acquired AppliedMicro on January 26, 2017 and certain assets of Picometrix on August 9, 2017, and we divested the Compute business on October 27,2017 and our LR4 business on May 10, 2018. For additional information related to acquisitions and divestitures refer to Note 4 - Acquisitions and Note 23 -Divested Business and Discontinued Operations, respectively, in this Annual Report. Our annual Statements of Operations includes activity since the dates ofacquisition for AppliedMicro and Picometrix and excludes activity for the Compute business and LR4 business after the date of the divestiture, representing lessthan twelve months of activity for AppliedMicro and Picometrix for the fiscal year ended September 29, 2017.Revenue. In fiscal year 2018, our revenue decreased by $128.4 million, or 18.4%, to $570.4 million from $698.8 million for fiscal year 2017.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 2018 2017 % ChangeTelecom$222,940 $340,022 (34.4)%Data Center162,098 172,481 (6.0)%Industrial & Defense185,360 186,269 (0.5)% Total570,398 698,772 (18.4)% Telecom39.1% 48.6% Data Center28.4% 24.7% Industrial & Defense32.5% 26.7% Total100.0% 100.0% In fiscal year 2018, our Telecom market revenue decreased by $117.1 million, or 34.4%, compared to fiscal year 2017. The decrease was primarily due tolower sales of carrier-based optical semiconductor products to our Asia customer base, lower sales of products targeting fiber to the home applications and the May2018 sale of our LR4 business.In fiscal year 2018, our Data Center market revenue decreased by $10.4 million, or 6.0%, compared to fiscal year 2017. The decrease was primarily due todecreased revenue from sales of legacy optical products and lasers and cloud data center applications.In fiscal year 2018, our I&D market revenues decreased by $0.9 million, or 0.5%, compared to fiscal year 2017. The decrease was primarily related to lowercertain legacy defense products partially offset by higher revenue across other areas within the product portfolio.Gross profit. In fiscal year 2018, our gross profit decreased by $81.2 million, or 24.8%, compared to fiscal year 2017. Gross margin of 43.1% in fiscal year2018 decreased 370 basis points, compared to fiscal year 2017. Gross profit during 2018 was negatively impacted by lower fiscal year 2018 revenue, ZTE-relatedinventory charges, production and product line exit costs of $17.2 million, higher depreciation and amortization expense primarily associated with theAppliedMicro and Picometrix Acquisitions, partially offset by lower acquisition related inventory fair market value step up expense recorded during fiscal year2017.Research and development. In fiscal year 2018, research and development expense increased by $29.7 million, or 20.1%, to $177.7 million representing31.2% of revenue, compared with $148.0 million, or 21.2% of revenue in fiscal year 2017. Research and development expense increased in the 2018 periodprimarily as a result of higher AppliedMicro-related compensation costs, share-based compensation and depreciation expense, as well as increased spending forData Center-related initiatives.Selling, general and administrative. In fiscal year 2018, selling, general and administrative expenses decreased by $26.2 million, or 14.0% to $161.7 million,or 28.3% of revenue, compared with $187.9 million, or 26.9% of revenue, for fiscal year 2017. Selling, general and administrative expenses decreased in thefiscal year 2018 period primarily due to no fiscal year 2018 AppliedMicro change in control payments, lower acquisition-related transaction expenses, lowerintegration costs and lower share-based compensation costs, partially offset by higher intangible amortization and acquisition-related compensation.Impairment charges. We recorded impairment charges of $6.6 million, or 1.2% of revenue, in fiscal year 2018, related to property and equipment and otherassets designated for future use with ZTE as a result of the April 15, 2018 denial order issued by the U.S. Department of Commerce's Bureau of Industry andSecurity's List of Denied Persons. During fiscal year 2017, we recorded impairment41charges of $4.4 million related to an in process research and development technology asset that was placed in service, at which time we determined that theintangible asset value was impaired due to lower than expected cash flow projections.Restructuring charges. In fiscal year 2018, restructuring charges were $6.3 million, or 1.1% of our revenue, compared with $2.7 million, or 0.4% of ourrevenue, for fiscal year 2017. The increase in restructuring charges during fiscal year 2018 was primarily related to the completion of our exit of facilities in LongBeach, California, Belfast, the United Kingdom and Sydney, Australia.Warrant liability gain. In fiscal year 2018, we recorded a warrant gain of $27.6 million, or 4.8% of revenue, compared to an expense of $2.5 million, or 0.4%of revenue, for fiscal year 2017. The difference between periods were driven by a decrease in the estimated fair value of common stock warrants we issued inDecember 2010, which we carry as a liability at fair value.Provision for income taxes. In fiscal year 2018, the provision for income taxes was a benefit of $21.5 million, or 3.8% of revenue, compared to an expense of$100.9 million, or 14.4% of revenue, for fiscal year 2017. The provision decreased primarily due to changes in the valuation allowance against our U.S. deferredtax assets, partially offset by the impact of the 2017 Tax Cuts and Jobs Act (“Tax Act”) which was enacted during our fiscal year 2018. For the fiscal year endedSeptember 28, 2018, the blended U.S. federal income tax rate was 24.5%.The difference between the blended U.S. federal income tax rate of 24.5% and our effective income tax rate for fiscal year 2018 was primarily impacted bythe Tax Act, partially offset by the valuation allowance against our U.S. deferred tax assets. For fiscal year 2017, our effective income tax rate was primarilyimpacted by an establishment of a full valuation allowance against our U.S. deferred tax assets as well as income taxed in foreign jurisdictions at tax ratesgenerally lower than the U.S. rate.During fiscal year 2018, the Company’s unrecognized tax benefits decreased by $1.4 million to $0.3 million due to the audit settlement of our fiscal year2014 U.S. tax filings. The remaining unrecognized tax benefits of $0.3 million primarily relates to transfer pricing positions taken on foreign tax filings in tax years2010 - 2013.LIQUIDITY AND CAPITAL RESOURCESThe following table summarizes our cash flow activities for the fiscal years ended September 27, 2019 and September 28, 2018, respectively (in thousands): Fiscal Year Ended September 27, 2019 September 28, 2018Cash and cash equivalents, beginning of period$94,676 $130,104Net cash provided by operating activities20,700 36,293Net cash used in investing activities(33,891) (67,119)Net cash used in financing activities(5,828) (4,451)Effect of exchange rates on cash balances(138) (151)Cash and cash equivalents, end of period$75,519 $94,676Cash Flow from Operating Activities:Our cash flow from operating activities for fiscal year 2019 was $20.7 million and consisted of a net loss of $383.8 million, plus adjustments to reconcile ournet loss to cash provided by operating activities of $371.5 million plus changes in operating assets and liabilities of $33.0 million. Adjustments to reconcile our netloss to cash provided by operating activities of $371.5 million primarily included impairment charges of $273.6 million, depreciation and intangible amortizationexpense of $104.4 million, share-based compensation expense of $23.8 million, loss on minority equity investment of $7.5 million and amortization of deferredfinancing costs of $4.1 million, partially offset by an increase in deferred tax assets of $41.3 million. In addition, cash from operating assets and liabilities was$33.0 million for fiscal year 2019, primarily driven by a decrease in accounts receivable of $27.6 million related to lower revenue from the prior fiscal year, and adecrease in inventory of $15.0 million, partially offset by a decrease in accounts payable of $12.2 million related to timing of vendor payments. The fiscal year2019 decrease in accounts receivable balances was primarily due to lower revenue compared to fiscal year 2018.42Our cash flow from operating activities for fiscal year 2018 was $36.3 million and consisted of a net loss of $140.0 million, plus adjustments to reconcile ournet loss to cash provided by operating activities of $153.7 million plus changes in operating assets and liabilities of $22.6 million. Adjustments to reconcile our netincome to cash provided by operating activities of $153.7 million primarily included depreciation and intangible amortization expense of $112.4 million, loss ondisposition of business of $34.3 million, share-based compensation expense of $31.9 million, loss on minority equity investment of $10.4 million and impairmentrelated charges of $9.1 million, partially offset by a warrant liability gain of $27.6 million. In addition, cash from operating assets and liabilities was $22.6 millionfor fiscal year 2018, primarily driven by a decrease in accounts receivable of $38.7 million, partially offset by an increase in prepaid expenses and other assets of$10.6 million, a decrease in income taxes payable of $3.1 million, a decrease in accounts payable of $2.6 million and an increase in inventory of $2.2 million.Inventory increases during fiscal year 2018 were expected to support anticipated customer demand and were net of production and product line exit write-offs anddivested businesses. The fiscal year 2018 decrease in accounts receivable balances was primarily due to lower revenue compared to fiscal year 2017.Cash Flow from Investing Activities:Our cash flow used by investing activities for fiscal year 2019 consisted primarily of $174.1 million in purchases of short-term investments and capitalexpenditures of $38.0 million, partially offset by received proceeds of $173.0 million related to the sale of short-term investments and $5.5 million related to thesale of assets.Our cash flow used by investing activities for fiscal year 2018 consisted primarily of $114.5 million in purchases of short-term investments, capitalexpenditures of $53.0 million and a $5.0 million equity investment, partially offset by received proceeds of $100.4 million related to the sale of short-terminvestments and $5.0 million from the sale of the LR4 business.Cash Flow from Financing Activities:During fiscal year 2019, our cash used in financing activities of $5.8 million was primarily related to $6.9 million of principal payments associated with ourTerm Loans (as defined in Note 10 - Debt to our Consolidated Financial Statements included in this Annual Report) and $4.1 million in purchases of stockassociated with employee tax withholdings, partially offset by $7.2 million of proceeds from stock option exercises and employee stock purchases.During fiscal year 2018, our cash used in financing activities of $4.5 million was primarily related to $6.9 million of principal payments associated with ourTerm Loans and $6.8 million in purchases of stock associated with employee tax withholdings, partially offset by $7.0 million of proceeds from stock optionexercises and employee stock purchases and $4.0 million of proceeds from the sale of our corporate headquarters facility.LiquidityAs of September 27, 2019, we held $75.5 million of cash and cash equivalents, primarily deposited with financial institutions as well as $101.2 million ofliquid short-term investments. The undistributed earnings of our foreign subsidiaries, other than our M/A-COM Technology Solutions International LimitedCayman Islands subsidiary ("Cayman Islands subsidiary"), are considered indefinitely reinvested for the periods presented and we do not intend to repatriate suchearnings. During fiscal year 2019 we changed our position for our Cayman Islands subsidiary to no longer have its earnings permanently reinvested. We believethe decision to reinvest these earnings will not have a significant impact on our liquidity. As of September 27, 2019, cash held by our indefinitely reinvestedforeign subsidiaries was $26.7 million, which, along with cash generated from foreign operations, is expected to be used in the support of international growth andworking capital requirements as well as the repayment of certain intercompany loans. As of September 27, 2019 we had $160.0 million in borrowing capacityunder our Revolving Facility (as defined in Note 10 - Debt to our Consolidated Financial Statements included in this Annual Report).We plan to use our remaining available cash and cash equivalents, short-term investments, and as deemed appropriate our borrowing capacity under ourRevolving Facility for general corporate purposes, including working capital, or for the acquisition of or investment in complementary technologies, design teams,products and businesses. We believe that our cash and cash equivalents, short-term investments, cash generated from operations and borrowing availability underour Revolving Facility will be sufficient to meet our working capital requirements for at least the next twelve months. We may need to raise additional capitalfrom time to time through the issuance and sale of equity or debt securities, and there is no assurance that we will be able do so on favorable terms or at all.OFF-BALANCE SHEET ARRANGEMENTSAs of September 27, 2019, we had no material transactions that meet the definition of an off-balance sheet arrangement required to be disclosed pursuant toSEC Regulation S-K Item 303(a)(4)(ii).43CONTRACTUAL OBLIGATIONSThe following is a summary of our contractual payment obligations for consolidated debt, purchase agreements, operating leases, other commitments andlong-term liabilities as of September 27, 2019 (in thousands): Payments Due By PeriodContractual Cash ObligationsTotal Less Than 1 Year 1-3 Years 3-5 Years More Than 5YearsPrincipal Payments on Long-term Debt (1)$672,971 $6,885 $13,770 $652,316 $—Interest Payments on Long-term Debt (1)133,752 29,263 57,467 47,022 —Capital Leases (3)28,881 1,084 2,110 1,840 23,847Estimated Interest Payments on Capital Leases (3)26,241 2,216 4,117 3,828 16,080Operating Lease Obligations (2)54,729 9,987 16,680 11,624 16,438Purchase Commitments (4)68,631 63,898 4,689 44 —Total Contractual Cash Obligations$985,205 $113,333 $98,833 $716,674 $56,365________________________________________________________________________________________________________(1)Our Term Loans will mature in May 2024. See Note 10 - Debt to the Consolidated Financial Statements included in this Annual Report for additional information.(2)We have non-cancelable operating lease agreements for office, research, development and manufacturing space in the U.S. and certain foreign locations. We also haveoperating leases for certain equipment and services. These lease agreements expire at various dates through 2029 and certain agreements contain provisions forextension at substantially the same terms as currently in effect.(3)See Note 11 - Capital Lease and Financing Obligations to the Consolidated Financial Statements included in this Annual Report for additional information.(4)We have purchase commitments primarily for capital equipment, services and inventory supply arrangements. Approximately $40.6 million is non-cancelable.As of September 27, 2019, we estimated $1.8 million in asset retirement obligations primarily for the restoration of leased facilities upon the termination ofthe related leases. Although it is reasonably possible that our estimates could materially change in the next twelve months, we are presently unable to reliablyestimate when any cash settlement of these obligations may occur.As of September 27, 2019, we recorded $0.3 million of unrecognized tax benefits. We are unable to make a reasonable estimate as to when and if suchamounts will be paid.OTHER MATTERSInflation did not have a material impact upon our results of operations during the three-year period ended September 27, 2019.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe are exposed to market risk in the ordinary course of business, which consists primarily of interest rate risk associated with our cash and cash equivalents,short-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.Interest rate risk. The primary objectives of our investment activity are to preserve principal, provide liquidity and invest excess cash for an average rate ofreturn. To minimize market risk, we maintain our portfolio in cash and diversified investments, which may consist of corporate bonds, bank deposits, moneymarket funds and commercial paper. The interest rates are variable and fluctuate with current market conditions. The risk associated with fluctuating interest ratesis limited to this investment portfolio. We believe that a 10% change in interest rates would not have a material impact on our financial position or results ofoperations. We do not enter into financial instruments for trading or speculative purposes.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 ofSeptember 27, 2019, we had $673.0 million of outstanding borrowings under the Credit Agreement. Assuming our outstanding debt remains constant under theCredit Agreement for an entire year and the applicable annual interest rate increases or decreases by 1%, our annual interest expense would increase or decrease by$6.7 million.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 continues to be in U.S. dollars with the remainingoperations being local currency. Increases in the value of the U.S. dollar relative to other currencies could make our products more expensive, which couldnegatively impact demand in certain regions. Conversely, decreases in the value of the U.S. dollar relative to other currencies could result in our products beingmore expensive to certain customers and could reduce44or delay orders, or otherwise negatively affect how they do business with us. The effects of exchange rate fluctuations on the net assets of the majority of ouroperations are accounted for as transaction gains or losses. We believe that a change of 10% in such foreign currency exchange rates would not have a materialimpact on our financial position or results of operations. In the future, we may enter into foreign currency exchange hedging contracts to reduce our exposure tochanges in exchange rates.45ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.INDEX TO FINANCIAL STATEMENTS PageMACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. Report of Independent Registered Public Accounting Firm47Consolidated Financial Statements: Consolidated Balance Sheets50Consolidated Statements of Operations51Consolidated Statements of Comprehensive Loss52Consolidated Statements of Stockholders’ Equity53Consolidated Statements of Cash Flows54Notes to Consolidated Financial Statements5546REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the stockholders and the Board of Directors of MACOM Technology Solutions Holdings, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of MACOM Technology Solutions Holdings, Inc. and subsidiaries (the "Company") as ofSeptember 27, 2019 and September 28, 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for eachof the three years in the period ended September 27, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financialstatements present fairly, in all material respects, the financial position of the Company as of September 27, 2019 and September 28, 2018, and the results of itsoperations and its cash flows for each of the three years in the period ended September 27, 2019, in conformity with accounting principles generally accepted in theUnited States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of September 27, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated November 25, 2019, expressed an unqualified opinion on theCompany's internal control over financial reporting.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company inaccordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures toassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believethat our audits provide a reasonable basis for our opinion.Critical Audit MattersThe critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated orrequired to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved ourespecially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financialstatements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on theaccounts or disclosures to which they relate.Impairment - Long-Lived Assets - Refer to Notes 2 and 17 to the financial statementsCritical Audit Matter DescriptionThe Company evaluates long-lived assets, which includes property, plant, and equipment and definite-lived intangible assets, for recoverability when eventsor changes in circumstances indicate that their carrying amounts may not be recoverable. In fiscal year 2019, the Company recorded impairment charges of $264.8million, including $219.9 million related to customer relationships, $37.1 million related to acquired technology and $7.8 million related to property, plant andequipment, primarily as a result of restructuring actions initiated during the year.The determination and valuation of long-lived asset groups, specifically the customer relationship and acquired technology intangible assets, requiresignificant management judgments when assessing for potential impairment. These analyses are based on the creation of forecasts of future operating results thatare used in the valuation for each identified asset group which requires management to make significant estimates and assumptions related to (1) forecastedrevenue used in the future cash flows and (2) the determination of the discount rate. Changes in these assumptions and judgments could have a significant impacton either the fair value, the amount of any impairment charge, or both for the identified asset groups.47We identified the valuation of the long-lived asset groups as a critical audit matter because of the significant estimates and assumptions management makesto determine the asset groups and to estimate the valuation of the customer relationships and acquired technology. This required a high degree of auditor judgmentand an increased extent of effort, including the need to involve our fair value specialists with quantitative and modeling expertise when performing auditprocedures to evaluate the reasonableness of management’s determination of the asset groups and forecasts of future operating results, including estimation of (1)forecasted revenue, particularly related to those new product lines that do not have historical experience, and (2) the determination of the discount rate.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to the valuation of the long-lived asset group, including management’s determination of the asset groups and forecasts of futureoperating results included the following, among others:•We tested the effectiveness of controls over the valuation of long-lived assets, including those controls over the identification of asset groups and thereview of (1) the forecasted revenue, particularly related to those new product lines that do not have historical experience, and (2) the determination of thediscount rate.•We evaluated the appropriateness of management’s conclusions regarding the identification of asset groups by holding discussions with senior financialand operating management to gain an understanding of the strategic plans for the business, assess the impact of recent changes within the business, andreview available discrete financial information.•We evaluated the forecasted revenue, particularly related to those new product lines that do not have historical experience, by performing the followingprocedures:•We obtained an understanding of the key assumptions used in the revenue forecast and corroborated the reasonableness of those assumptions bycomparing it to (1) historical revenues, (2) internal communications with management and the Board of Directors, and (3) forecasted informationincluded in analyst and industry reports for the Company and certain of its peer companies.•Due to the lack of historical experience available for certain new product lines, we evaluated the reasonableness of management’s revenueforecasts of the new product lines by comparing the forecasts to (1) internal communications to management and the board of directors, (2)customer produced forecasted demand, and (3) industry reports containing analyses of the Company’s and its competitor’s products.•With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rateby:•Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of thecalculation.•Developing a range of independent estimates and comparing those to the discount rate selected bymanagement.Inventories - Excess Quantities and Obsolescence Reserve - Refer to Notes 2 and 8 to the financial statementsCritical Audit Matter DescriptionThe Company evaluates inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historicalexperience, assessment of economic conditions, and expected demand. Once recorded, these reserves are considered permanent adjustments to the carrying valueof inventory. As of September 27, 2019, the Company has inventories of $107.9 million, net of excess quantities and obsolescence reserves.We identified the reserve for excess quantities and obsolete inventory as a critical audit matter because of the significant estimates and assumptionsmanagement makes to quantify and to record the reserve, including the determination of expected demand especially when considering the cyclical nature of thesemiconductor industry. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate themethodology and the reasonableness of assumptions including expected demand.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to the reserve for excess quantities and obsolete inventory including management’s estimate of expected demand, included thefollowing, among others:•We tested the effectiveness of controls over inventory, including those over the estimation of reserves for excess quantities and obsolescence and thereview of any adjustments to the reserve methodology.48•We selected a sample of inventory parts and performed corroborative inquiry with product line managers associated with the selected part to corroborateour understanding of the expected demand of the part including future sales plans, product life cycle, and utilization in other products.•We held discussions with senior financial and operating management to determine whether any strategic or operational changes in the business wereconsistent with the reserves as it relates to expected demand.•We performed a retrospective review on the prior year inventory reserve, including the prior year expected demand, and compared it to current yearactivity.•We compared the Company’s inventory reserve assumptions to events and trends discussed in industry and analyst reports, recent press releases from theCompany’s major customers (including financial information), and other industry data. In addition, we also considered any changes within the businessincluding restructuring events and strategic changes.Income Taxes - Intra-entity transfer of a license for intellectual property - Refer to Note 19 to the financial statementsCritical Audit Matter DescriptionDuring the year ended September 27, 2019, the Company completed an intra-entity transfer of a license for intellectual property to a higher tax jurisdiction.The Company determined there was an incremental tax basis due to the intra-entity transfer and recognized a deferred tax asset and related income tax benefit of$39.8 million based upon the tax basis step-up to the intellectual property’s current fair value.We identified management’s determination of the tax basis resulting from the intra-entity transfer of a license for intellectual property to be a critical auditmatter because of the significant judgments and estimates management made related to the interpretation and application of tax laws in the applicable jurisdiction.This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax and fair value specialists, whenperforming audit procedures to evaluate the reasonableness of management’s determination of the tax basis.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to the determination of the tax basis resulting from intra-entity transfer of a license for intellectual property, include the following,among others:•We tested the effectiveness of controls over the intra-entity transfer of a license for intellectual property, including management’s review of theunderlying agreements, estimation of fair value, and the tax laws applicable to the transfer of a license for intellectual property.•With the assistance of our income tax and fair value specialists, we evaluated the tax basis of the intra-entity transfer based upon applicable tax laws andevaluated the reasonableness of management’s conclusions./s/ Deloitte & Touche LLPBoston, MassachusettsNovember 25, 2019We have served as the Company’s auditor since 2010.49MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED BALANCE SHEETS(In thousands) September 27, 2019 September 28, 2018ASSETS Current assets: Cash and cash equivalents$75,519 $94,676Short-term investments101,226 98,221Accounts receivable (less allowances of $5,047 and $6,795, respectively)69,790 97,375Inventories107,880 122,837Income tax receivable16,661 17,601Assets held for sale— 4,840Prepaid and other current assets27,506 23,311 Total current assets398,582 458,861Property, plant and equipment, net132,647 149,923Goodwill314,727 314,076Intangible assets, net181,228 512,785Deferred income taxes43,812 2,272Other investments23,613 31,094Other long-term assets10,965 13,484Total assets$1,105,574 $1,482,495LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of leases payable$1,084 $467Current portion long-term debt6,885 6,885Accounts payable24,822 41,951Accrued liabilities39,908 49,945Deferred revenue2,137 7,757Total current liabilities74,836 107,005Leases payable, less current portion29,506 29,023Long-term debt, less current portion655,272 658,372Warrant liability12,364 13,129Other long-term liabilities19,068 5,902Deferred income taxes632 389Total liabilities791,678 813,820Stockholders' equity: Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued— —Common stock, $0.001 par value, 300,000 shares authorized; 66,177 and 65,202 shares issued and 66,154 and 65,179 sharesoutstanding as of September 27, 2019 and September 28, 2018, respectively, of which 0 and 6 shares, respectively, are subject toforfeiture66 65Treasury Stock, at cost, 23 shares as of both September 27, 2019 and September 28, 2018(330) (330)Accumulated other comprehensive income4,358 2,188Additional paid-in capital1,101,576 1,074,728Accumulated deficit(791,774) (407,976)Total stockholders' equity313,896 668,675Total liabilities and stockholders' equity$1,105,574 $1,482,495See notes to consolidated financial statements.50MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data) Fiscal Years 2019 2018 2017Revenue$499,708 $570,398 $698,772Cost of revenue279,000 324,692 371,888Gross profit220,708 245,706 326,884Operating expenses: Research and development163,469 177,713 147,986Selling, general and administrative153,286 161,673 187,886Impairment charges264,786 6,575 4,352Restructuring charges19,543 6,265 2,744 Total operating expenses601,084 352,226 342,968Loss from operations(380,376) (106,520) (16,084)Other (expense) income: Warrant liability gain (expense)765 27,646 (2,522)Interest expense, net(35,803) (31,338) (28,855)Other expense(7,739) (45,023) (2,044) Total other expense, net(42,777) (48,715) (33,421)Loss before income taxes(423,153) (155,235) (49,505)Income tax (benefit) expense(39,355) (21,473) 100,911Loss from continuing operations(383,798) (133,762) (150,416)Loss from discontinued operations— (6,215) (19,077)Net loss$(383,798) $(139,977) $(169,493) Net loss per share: Basic loss per share: Loss from continuing operations$(5.84) $(2.07) $(2.48)Loss from discontinued operations— (0.10) (0.31) Loss per share - basic$(5.84) $(2.16) $(2.79)Diluted loss per share: Loss from continuing operations$(5.84) $(2.47) $(2.48)Loss from discontinued operations— (0.10) (0.31) Loss per share - diluted$(5.84) $(2.57) $(2.79)Shares used: Basic65,686 64,741 60,704Diluted65,686 65,311 60,704 See notes to consolidated financial statements.51MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(In thousands) Fiscal Years 2019 2018 2017Net loss$(383,798) $(139,977) $(169,493)Unrealized gain (loss) on short-term investments, net of tax477 (287) (63)Foreign currency translation gain (loss), net of tax1,693 (502) (5,999)Other comprehensive income (loss), net of tax2,170 (789) (6,062)Total comprehensive loss$(381,628) $(140,766) $(175,555)See notes to consolidated financial statements.52MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(In thousands) AccumulatedOtherComprehensiveIncome (Loss) AdditionalPaid-InCapital Total Common StockTreasury StockAccumulatedStockholders' Shares AmountShares AmountDeficitEquityBalance - September 30, 201653,709 $54 (23) $(330) $9,039 $551,509 $(97,488) $462,784Stock option exercises234 — — — — 3,117 — 3,117Vesting of restricted common stock and units984 — — — — — — —Issuance of common stock pursuant to employeestock purchase plan145 — — — — 5,164 — 5,164Shares repurchased for tax withholdings onrestricted stock awards(382) — — — — (18,534) — (18,534)Share-based compensation— — — — — 36,335 — 36,335Shares issued in connection with the AppliedMicroacquisition including converted equity awards9,589 10 — — — 465,072 — 465,082Equity issuance costs— — — — — (1,019) — (1,019)Other comprehensive loss, net of tax— — — — (6,062) — — (6,062)Net loss— — — — — — (169,493) (169,493)Balance at September 29, 201764,279 $64 (23) $(330) $2,977 $1,041,644 $(266,981) $777,374Cumulative effect of ASU 2016-09— — — — — 1,018 (1,018) —Stock option exercises27 — — — — 76 — 76Vesting of restricted common stock and units906 1 — — — — — 1Issuance of common stock pursuant to employeestock purchase plan306 — — — — 6,881 — 6,881Shares repurchased for tax withholdings onrestricted stock awards(316) — — — — (6,828) — (6,828)Share-based compensation— — — — — 31,937 — 31,937Other comprehensive loss, net of tax— — — — (789) — — (789)Net loss— — — — — — (139,977) (139,977)Balance at September 28, 201865,202 $65 (23) $(330) $2,188 $1,074,728 $(407,976) $668,675Stock option exercises119 — — — — 1,608 — 1,608Vesting of restricted common stock and units673 1 — — — — — 1Issuance of common stock pursuant to employeestock purchase plan422 — — — — 5,585 — 5,585Shares repurchased for tax withholdings onrestricted stock awards(239) — — — — (4,137) — (4,137)Share-based compensation— — — — — 23,792 — 23,792Other comprehensive income, net of tax— — — — 2,170 — — 2,170Net loss— — — — — — (383,798) (383,798)Balance at September 27, 201966,177 $66 (23) $(330) $4,358 $1,101,576 $(791,774) $313,896See notes to consolidated financial statements.53MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Fiscal Years 2019 2018 2017CASH FLOWS FROM OPERATING ACTIVITIES: Net loss$(383,798) $(139,977) $(169,493)Adjustments to reconcile net (loss) income to net cash from operating activities: Depreciation and intangible amortization104,418 112,383 92,998 Share-based compensation23,792 31,937 36,335 Warrant liability (gain) expense(765) (27,646) 2,522 Acquired inventory step-up amortization— 224 44,022 Deferred financing costs amortization and write offs4,061 4,587 3,373 Acquisition prepaid compensation amortization— — 506 Loss (gain) from disposition of business— 34,343 (25,520) Deferred income taxes(41,297) (16,528) 92,171 Impairment related charges273,572 9,143 4,352 Loss on minority equity investment7,481 10,406 — Changes in assets held for sale from discontinued operations— (6,644) 218 Other adjustments, net194 1,463 2,400Change in operating assets and liabilities: Accounts receivable27,585 38,679 (15,754) Inventories14,964 (2,166) (4,094) Prepaid expenses and other assets3,419 (10,585) 1,126 Accounts payable(12,220) (2,609) 3,449 Accrued and other liabilities(2,486) 2,347 (15,176) Income taxes1,780 (3,064) 7,615 Net cash from operating activities20,700 36,293 61,050CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of businesses, net(375) (1,000) (270,008)Purchases of property and equipment(37,963) (53,044) (32,804)Proceeds from sale of assets5,541 1,274 215Proceeds from sales and maturities of short-term investments173,020 100,375 44,555Purchases of short-term investments(174,114) (114,461) (105,048)Purchases of other investments— (5,000) —Proceeds associated with divested business and discontinued operations— 4,737 25,520 Net cash used in investing activities(33,891) (67,119) (337,570)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock option exercises and employee stock purchases7,193 6,957 8,281Payments on notes payable(6,885) (6,885) (4,747)Payments of capital leases and assumed debt(1,421) (713) (1,137)Repurchase of common stock- tax withholdings on equity awards(4,137) (6,828) (18,534)Proceeds from corporate facility financing obligation— 4,000 —Payments of financing costs— (505) (9,077)Proceeds from notes payable— — 96,558Other adjustments, net(578) (477) 2,309 Net cash (used in) from financing activities(5,828) (4,451) 73,653Foreign currency effect on cash(138) (151) (6)NET CHANGE IN CASH AND CASH EQUIVALENTS(19,157) (35,428) (202,873)CASH AND CASH EQUIVALENTS — Beginning of year$94,676 $130,104 332,977CASH AND CASH EQUIVALENTS — End of year$75,519 $94,676 $130,104 Supplemental disclosure of non-cash activities (See Note 25 - Supplemental Cash Flow Information) Issuance of common stock in connection with the AppliedMicro Acquisition (See Note 3 - Acquisitions)$— $— $465,082See notes to consolidated financial statements.54MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF BUSINESSMACOM 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 next-generation Internet applications, the cloud connected apps economy, and the modern, networkedbattlefield across the RF, microwave, millimeterwave and lightwave spectrum. We design, develop, manufacture and have manufactured differentiated, high-valueproducts for customers 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.We have a 52- or 53-week fiscal year ending on the Friday closest to the last day of September. The fiscal years 2019, 2018 and 2017 included 52 weeks. Tooffset the effect of holidays, for fiscal years in which there are 53 weeks, we typically include the extra week arising 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 from these estimates and assumptions.Divested Businesses and Discontinued Operations—In the first quarter of fiscal year 2018, we divested AppliedMicro's compute business (the "Computebusiness"). The operating results of the Compute business are reflected in discontinued operations. In the third quarter of fiscal year 2018, we divested our Japan-based long-range optical subassembly business (the "LR4 business"). The operating results of the LR4 business have been reflected in our continuing operations upthrough the May 10, 2018 sale date, with the $34.3 million loss on disposal recorded as other expense. See Note 23 - Divested Business and DiscontinuedOperations for additional information.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 (loss) income.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 and administrative expensein the accompanying Consolidated Statements of Operations. Net foreign exchange transaction gains and losses for all periods presented were not material.Cash and Cash Equivalents—Cash equivalents are primarily composed of short-term, highly-liquid instruments with an original maturity of 90 days or lessand consist primarily of money market funds.Investments— Short-term investments: We classify our short-term investments as available-for-sale. Our investments classified as available-for-sale arerecorded at fair value based upon third party pricing at period end. Unrealized gains and losses that are deemed temporary in nature are recorded in accumulatedother comprehensive income and loss 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.Other investments: We use the equity method to account for investments in companies if the investment provides us with the ability to exercise significantinfluence over operating and financial policies of the investee. Our proportionate share of the net income (loss) resulting from these investments are reportedwithin the Other expense line in our Consolidated Statements of Operations.55The carrying value of our equity method investment is reported in Other investments in our Consolidated Balance Sheets. Our equity method investment isreported at cost and adjusted each period for our share of the investee’s income or loss and dividends paid, if any, as well as any changes attributable to the equityof the investee that would impact our ownership.Other investments that are not controlled, and over which we do not have the ability to exercise significant influence, are accounted for under the cost methodand reported in Other investments in our Consolidated Balance Sheets.We have elected that our cost method investments, which do not have readily determinable fair values and do not qualify for the practical expedient underAccounting Standards Codification ("ASC") 820, Fair Value Measurement, are carried at cost less any impairment. The investments do not have readilydeterminable fair values and are periodically evaluated for impairment. An impairment loss would be recorded whenever there is a decline in value of aninvestment below its carrying amount that is determined to be other than temporary.Refer to Note 5 - Investments, for additional information.Inventories—Inventories are stated at the lower of cost or net realizable value. We use a combination of standard cost and moving weighted-average costmethodologies to determine the cost basis for our inventories, approximating a first-in, first-out basis. The standard cost of finished goods and work-in-processinventory is composed of material, labor and manufacturing overhead, which approximates actual cost. In addition to stating inventory at the lower of cost or netrealizable value, we also evaluate inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based uponhistorical experience, assessment of economic conditions and expected demand. Once recorded, these reserves are considered permanent adjustments to thecarrying value of inventory.Property, Plant and Equipment—Property, plant and equipment is stated at cost, less accumulated depreciation and amortization. Expenditures formaintenance and repairs are charged to expense as incurred, whereas major improvements that significantly extend the useful life of the assets are capitalized asadditions to property and equipment.Property and equipment are depreciated or amortized using the straight-line method over the following estimated useful lives:Asset ClassificationEstimated Useful Life(In Years)Buildings and improvements20 – 40Capital lease assets5 - 20Computer equipment and software2 – 5Furniture and fixtures7 – 10Leasehold improvementsShorter of useful life or term ofleaseMachinery and equipment2 – 7 Goodwill 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 as of the end of our August fiscal month end and more frequently if events or changes in circumstancesindicate that the assets may be impaired. For our assessment of goodwill impairment, we compare the carrying value of the reporting unit to the fair value of theCompany. For our assessment of in-service indefinite-lived assets we compare the carrying value of the asset to the estimated fair value of the asset. For indefinite-lived assets not in service, such as in-process research and development, we perform both qualitative and quantitative assessments using an assumption of "morelikely than not" to determine if there are any impairment indicators. If impairment exists, a loss is recorded to write down the value of the assets to their impliedfair values. During the fiscal year ended September 29, 2017, we recorded impairment charges related to indefinite-lived intangible assets. See Note 17 -Impairments, for further detail of these impairment charges. There were no significant expenses related to abandoned in-process research and development projectsin any other period presented.Long-Lived Asset Valuation and Impairment Assessment—Long-lived assets include property and equipment and definite-lived intangible assets subjectto amortization. We evaluate long-lived assets for recoverability when events or changes in circumstances indicate that their carrying amounts may not berecoverable. Circumstances which 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 the business climate or legal factors, the accumulation of costs significantly in excess of the amount originally expected for theacquisition or construction of the asset, current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associatedwith the use of the asset and a current expectation that the asset will more likely than not, be sold or disposed of significantly before the end of its previouslyestimated 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 group,56an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. In fiscal year 2019, we recorded impairment chargesprimarily as a result of restructuring actions initiated during the year. In fiscal year 2018, we recorded impairment charges related to property and equipment andother assets designated for future use with Zhongxing Telecommunications Equipment Corporation ("ZTE"), as a result of the Bureau of Industry and Security("BIS") denial order on April 15, 2018. There were no impairments of long-lived assets in fiscal year 2017. See Note 17 - Impairments, for further detail of theseimpairment charges. 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 its estimated useful life. Intangibles related to abandoned in-process research and development projects areexpensed in the period the project is abandoned.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 their estimated useful lives, which range from five to fourteen years, generally based on the pattern over whichwe expect to receive the economic benefit from these assets.Revenue Recognition—Substantially all of our revenue is derived from sales of high-performance RF, microwave, millimeterwave and lightwavesemiconductor solutions into three primary markets: Telecom, Data Centers and I&D.In fiscal years 2018 and 2017, we recognized revenue under Accounting Standards Codification ("ASC") 605, Revenue Recognition, when: (i) persuasiveevidence of an arrangement existed; (ii) delivery or services had been rendered; (iii) the price was fixed or determinable; and (iv) collectability was reasonablyassured. We recognized revenue with the transfer of title and risk of loss and provided for reserves for returns and other allowances.In fiscal year 2019, we recognized revenue within the scope of ASC 606, Revenue from Contracts with Customers. Revenue is recognized when a customerobtains control of products or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Todetermine revenue recognition for arrangements within the scope of ASC 606, we perform the following five steps: (1) identify the contract(s) with a customer; (2)identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in thecontract; and (5) recognize revenue when (or as) we satisfy performance obligations. Sales, value add and other taxes collected on behalf of third parties areexcluded from revenue. Our revenue arrangements do not contain significant financing components.Contracts with our customers principally contain only one distinct performance obligation, which is the sale of products. However, due to multiple productspotentially being sold on a single order, we are required to allocate consideration based on the estimated relative standalone selling prices of the promised products.Periodically, we enter into non-product development and license contracts with certain customers. We generally recognize revenue from these contracts over-time as services are provided based on the terms of the contract. Revenue is deferred for amounts billed or received prior to delivery of the services. Certaincontracts may contain multiple performance obligations for which we allocate revenue to each performance obligation based on the relative stand-alone sellingprice.Our product revenue is recognized when the customer obtains control of the product or services, which generally occurs at a point in time, and is based on thecontractual shipping terms of a contract. Non-product revenue is generally recognized over time. For each contract, the promise to transfer the control of theproducts or services, each of which is individually distinct, is considered to be the identified performance obligation. We provide an assurance type warrantywhich is not sold separately and does not represent a separate performance obligation. Therefore, we account for such warranties under ASC 460, Guarantees, andthe estimated costs of warranty claims are generally accrued as cost of revenue in the period the related revenue is recorded.We have agreements with certain distribution customers which may include certain rights of return and pricing programs, including returns for aged inventory,stock rotation and price protection which affect the transaction price. Sales to these customers and programs offered are in accordance with terms set forth inwritten agreements, which require us to assess the potential revenue effects of this variable consideration utilizing the expected value method. Variableconsideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract willnot occur. As such, revenue on sales to customers that include rights of return and pricing programs are recorded net of estimated variable consideration, utilizingthe expected value method based on historical sales data. We believe that the judgments and estimates we utilize are reasonable based upon current facts andcircumstances, however utilizing different judgments and estimates could result in different amounts.Practical Expedients and Elections—ASC 606 requires that we disclose the aggregate amount of transaction price that is allocated to performance obligationsthat have not yet been satisfied as of the reporting periods presented. The guidance provides certain practical expedients that limit this requirement and, therefore,we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for whichrevenue is recognized at the amount to which we have the right to invoice for services performed. We have elected not to disclose the aggregate amount oftransaction prices associated with unsatisfied or partially unsatisfied performance obligations for contracts where these criteria are met.Our policy is to capitalize any incremental costs incurred to obtain a customer contract, only to the extent that the benefit associated with the costs is expectedto be longer than one year. Capitalizable contract costs were not significant both at the date of adoption and as of September 27, 2019.We account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the57associated products. When shipping and handling costs are incurred after a customer obtains control of the products, we have elected to account for these as coststo fulfill the promise and not as a separate performance obligation. Shipping and handling costs associated with the distribution of products to customers arerecorded in costs of revenue generally when the related product is shipped to the customer.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 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.Earnings Per Share—Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common sharesoutstanding during the period, excluding the dilutive effect of common stock equivalents. Diluted net (loss) income per share reflects the dilutive effect ofcommon 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 at the measurement date under current market conditions in an orderly transaction between marketparticipants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing anasset or liability. As a basis for considering such assumptions, we group financial assets and liabilities in a three-tier fair value hierarchy, according to the inputsused in measuring fair value as follows: Level 1—observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2—inputsother than quoted prices in active markets that are observable either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities,quoted prices for identical assets and liabilities in markets that are not active and model-based valuation techniques for which significant assumptions areobservable in active markets; and, Level 3—unobservable inputs 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 to use observable market data, when available, and to minimize the use of unobservable inputs whendetermining fair value.Money market funds are actively traded and consist of highly liquid investments with original maturities of 90 days or less. They are measured at their netasset value and classified as Level 1. Corporate and agency bonds and commercial paper are categorized as Level 2 assets except where sufficient quoted pricesexist in active markets, in which case such securities are categorized as Level 1 assets. These securities are valued using third-party pricing services. These servicesmay use, for example, model-based pricing methods that utilize observable market data as inputs. We generally use quoted prices for recent trading activity ofassets with similar characteristics to the debt security or bond being valued. The securities and bonds priced using such methods are generally classified as Level 2.Broker dealer bids or quotes on securities with similar characteristics may also be used.The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-termnature of these assets and liabilities.Share-Based Compensation—We account for all share-based compensation arrangements using the fair value method. We recognize compensation expenseover the requisite service period of the award, which is generally the vesting period, using the straight-line method for service-based awards and the acceleratedmethod for performance-based awards, and providing that the minimum amount of compensation recorded is equal to the vested portion of the award. We recordthe expense in the Consolidated Statements of Operations in the same manner in which the award recipients’ salary costs are classified. For restricted stock awardswith service conditions we use the closing stock price on the date of grant to estimate the fair value of the awards. We use the Black-Scholes option-pricing modelto estimate the fair value of stock options with service and performance conditions, inclusive of assumptions for risk-free interest rates, dividends, expected termsand estimated volatility. We use the Monte Carlo Simulation analysis to estimate the fair value of stock options and awards with market conditions, inclusive ofassumptions for risk free interest rates, expected term, expected volatility and the target price. 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 historical data. Inaddition, we calculate our estimated volatility using our historical stock price volatility data. In fiscal year 2018 we adopted Accounting Standards Update ("ASU")2016-09, Compensation - Stock Compensation ("ASU 2016-09"), and upon adoption we elected to account for forfeitures when they occur. Prior to the adoption ofASU 2016-09 the accounting for share-based compensation required forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periodsif actual forfeitures differed from those estimates. Share-based awards that are settled in cash are recorded as liabilities. The measurement of the liability andcompensation cost for these awards is based on58the fair value of the award, and is recorded in operating income over the award’s vesting period. Changes in our payment obligation prior to the settlement date ofa stock-based award are recorded as compensation expense in operating income in the period of the change. The final payment amount for such awards isestablished on the date of the exercise of the award by the employee.Guarantees and Indemnification Obligations—We enter into agreements in the ordinary course of business with, among others, customers, distributors andOEMs. Most of these agreements require us to indemnify the other party against third-party claims alleging that a Company product infringes a patent and/orcopyright. Certain agreements in which we grant limited licenses to Company intellectual property require us to indemnify the other party against third-partyclaims alleging that the use of the licensed intellectual property infringes a third-party's intellectual property. Certain of these agreements require us to indemnifythe other party against certain claims relating to property damage, personal injury or the acts or omissions, its employees, agents or representatives. In addition,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 used in our products and agreements in which we obtain rights to a product from anOEM. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party with respect to our actsor 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 involvedby reason of their service as a director or officer. As a matter of practice, we have maintained director and officer liability insurance coverage, including coveragefor directors and officers of acquired companies.We have not experienced any losses related to these indemnification obligations in any period presented and no claims with respect thereto were outstandingas of September 27, 2019 and September 28, 2018. We do not expect significant claims related to these indemnification obligations and, consequently, haveconcluded that the fair value of these obligations is negligible. No liabilities related to indemnification liabilities have been established.Recent Accounting PronouncementsPronouncements Adopted in Fiscal Year 2019We adopted ASU 2014-09, Revenue from Contracts with Customers, on September 29, 2018. The Financial Accounting Standards Board ("FASB")subsequently issued several amendments and updates to the new revenue standard. We refer to ASU 2014-09 and its related ASUs as "ASC 606". We applied ASC606 using the modified retrospective method and elected to apply this initial application of the standard only to contracts that are not completed at the date of initialapplication. We have analyzed this effect and found the adoption of the new guidance did not have a material impact on our consolidated financial statements as ofthe adoption date. The reported results for our fiscal year 2019 reflect the application of ASC 606 guidance while the reported results for our fiscal year 2018 wereprepared under the guidance of ASC 605, Revenue Recognition.We adopted ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, on September 29, 2018. In February 2018, theFASB issued further amendments to this guidance. This ASU amended the guidance on the classification and measurement of financial instruments. The newstandard significantly revised an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation ofcertain fair value changes for financial liabilities measured at fair value. It also amended certain disclosure requirements associated with the fair value of financialinstruments. The adoption of this update did not have a material impact on our consolidated financial statements and related disclosures.We adopted ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, on September 29, 2018. This update addressed debt prepayment ordebt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to theeffective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims,proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitizationtransactions and separately identifiable cash flows and application of the predominance principle. The adoption of this update did not have a material impact onour consolidated financial statements and related disclosures.We adopted ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, on September 29, 2018. This update provides guidance that changes theaccounting for income tax effects of intra-entity transfers of assets other than inventory. Under the new guidance, the selling (transferring) entity is required torecognize a current tax expense or benefit upon transfer of the asset. Similarly, the purchasing (receiving) entity is required to recognize a deferred tax asset ordeferred tax liability, as well as the related deferred tax benefit or expense, upon receipt of the asset. The adoption of this standard did not have a material impacton our consolidated financial statements and related disclosures.59Pronouncements for Adoption in Subsequent PeriodsIn February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"). The FASB subsequently issued several amendments and updates to the new leasingstandard. The new standard increases transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the BalanceSheet and disclosing key information about leasing arrangements. Under ASC 842, leases are classified as either operating or finance, based on criteria similar tocurrent lease accounting, but without explicit bright lines. ASC 842 is effective for us as of September 28, 2019, and we will apply ASC 842 using the cumulative-effect adjustment on this date, with comparative periods presented in accordance with the previous guidance in ASC 840, Leases ("ASC 840"). We will use certaintargeted transitional approaches that are intended to provide relief in implementing the new standard which allows us to not reassess previous accountingconclusions around whether arrangements are, or contain, leases; the classification of leases; and the treatment of initial direct costs. We will make an accountingpolicy election to exclude leases with an initial term of twelve months or less from the Balance Sheet similar to existing guidance for operating leases under ASC840. We are currently assessing the impact that the adoption of ASC 842 will have on our consolidated financial statements. We currently expect a material impactto the Consolidated Balance Sheet in recognizing additional lease liabilities of $42.0 million to $46.0 million and right-of-use assets of $33.0 million to $37.0million as of September 28, 2019, primarily related to our operating leases. We will provide enhanced disclosures about our leasing arrangements in ourconsolidated financial statements for future periods. We do not expect that the new standard will have a material impact on our Consolidated Statements ofOperations or Cash Flows.In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This update amends the guidance on reporting creditlosses for assets held at amortized cost basis and available for sale debt securities. For available for sale debt securities, credit losses should be measured in amanner similar to current GAAP; however, this update will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 iseffective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are evaluating the effect that the updated standardwill have on our consolidated financial statements and related disclosures.3. REVENUEDisaggregation of RevenueWe disaggregate revenue from contracts with customers by markets and geography, as we believe it best depicts how the nature, amount, timing anduncertainty of revenue and cash flows are affected by economic factors.The following tables present our revenue disaggregated by markets and geography (in thousands): Fiscal Years 2019 2018 2017Telecom$180,938 $222,940 $340,022Data Center114,132 162,098 172,481Industrial & Defense204,638 185,360 186,269 Total$499,708 $570,398 $698,772 Fiscal YearsRevenue by Geographic Region2019 2018 2017United States$239,510 $272,951 $265,038China132,329 159,763 206,136Asia Pacific, excluding China (1)80,136 79,581 170,826Other Countries (2)47,733 58,103 56,772Total$499,708 $570,398 $698,772(1)Asia Pacific represents Taiwan, Japan, Singapore, India, Thailand, South Korea, Australia, Malaysia, New Zealand and thePhilippines.(2)No international country or region represented greater than 10% of the total revenue as of the dates presented, other than China and the Asia Pacific regionas presented above.Contract BalancesWe record contract assets or contract liabilities depending on the timing of revenue recognition, billings and cash collections on a contract-by-contract basis.Our contract liabilities primarily relate to deferred revenue, including advance consideration received from customers for contracts prior to the transfer of controlto the customer, and therefore revenue is recognized upon delivery of products and services or as the services are performed.60The following table presents the changes in contract liabilities during fiscal year 2019 (in thousands): September 27, 2019 September 28, 2018 $ Change % Change Contract liabilities$10,653 $7,757 $2,896 37%As of September 27, 2019, approximately $8.5 million of our contract liabilities were recorded as other long-term liabilities on our Balance Sheet with theremainder recorded as deferred revenue. The increase in contract liabilities during the fiscal year ended September 27, 2019 was primarily from the deferral ofrevenue for funds received prior to when certain of our customers obtain control of the product or services, partially offset by the recognition of $7.0 millionassociated with a license contract.During the fiscal year ended September 27, 2019, we recognized the following net sales as a result of changes in the contract liabilities balance (in thousands): September 27, 2019Net revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period$7,6464. ACQUISITIONSAcquisition of Applied Micro Circuits Corporation— On January 26, 2017, we completed the acquisition of Applied Micro Circuits Corporation("AppliedMicro"), a global provider of silicon solutions for next-generation cloud infrastructure and Cloud Data Centers, as well as connectivity products for edge,metro and long-haul communications equipment (the "AppliedMicro Acquisition"). We acquired AppliedMicro in order to expand our business in enterprise andCloud Data Center applications. In connection with the AppliedMicro Acquisition, we acquired all of the outstanding common stock of AppliedMicro for totalconsideration of $695.4 million, which included cash paid of $287.1 million, less $56.8 million of cash acquired, and equity issued at a fair value of $465.1million. In conjunction with the equity issued, we granted vested out-of-the-money stock options and unvested restricted stock units to replace outstanding vestedout-of-the-money stock options and unvested restricted stock units of AppliedMicro. The total fair value of granted vested out-of-money stock options andunvested restricted stock units was $14.5 million, of which $9.3 million was attributable to pre-combination service and was included in the total considerationtransferred. We funded the AppliedMicro Acquisition with cash on hand and short-term investments. There were no transaction costs for the fiscal years endedSeptember 27, 2019 and September 28, 2018, and during the fiscal year ended September 29, 2017, we recorded transaction costs of $11.9 million. We recordedtransaction costs related to the acquisition in selling, general and administrative expense, except for $1.0 million related to equity issuance costs that were recordedto additional paid-in capital. The AppliedMicro Acquisition was accounted for as a stock purchase and the operations of AppliedMicro have been included in ourconsolidated financial statements since the date of acquisition.We recognized the AppliedMicro 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 AppliedMicro has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumedbased on their estimated fair value at the date of acquisition. The excess of the purchase price over the fair value of the acquired net assets represents cost andrevenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and has been allocated togoodwill, none of which will be tax deductible.In connection with the acquisition of AppliedMicro, we entered into a plan to divest a portion of AppliedMicro's business specifically related to its computebusiness (the "Compute business"). The divestiture of the Compute business was completed on October 27, 2017. See Note 23 - Divested Business andDiscontinued Operations for further details of the divestiture.The following table summarizes the total estimated acquisition consideration (in thousands):Cash consideration paid to AppliedMicro common stockholders$287,060Common stock issued (9,544,125 shares of our common stock at $47.53 per share)453,632Equity consideration for vested "in-the-money" stock options and unvested restricted stock units2,143Fair value of the replacement equity awards attributable to pre-acquisition service9,307Total consideration paid, less cash acquired$752,14261We finalized the purchase accounting during the fiscal quarter ended December 29, 2017. The final purchase price allocation is as follows (in thousands): Final Allocation Current assets$69,881Intangible assets412,848Assets held for sale40,944Other assets9,800Total assets acquired533,473 Liabilities held for sale4,444Other liabilities18,278Total liabilities assumed22,722Net assets acquired510,751Consideration: Cash paid upon closing230,298Common stock issued455,775Equity instruments issued9,307Total consideration$695,380Goodwill$184,629The components of the acquired intangible assets were as follows (in thousands): Included In AssetsHeld For SaleIncluded InRetainedBusiness Useful Lives(Years)Developed technology$9,600$78,448 7 yearsCustomer relationships—334,400 14 years $9,600$412,848 The following is a summary of AppliedMicro revenue and earnings included in our accompanying Consolidated Statements of Operations for the fiscal yearended September 29, 2017 (in thousands): AmountRevenue$110,117Loss from continuing operations(27,222)Loss from discontinued operations(44,599)The pro forma statements of operations data for the fiscal year ended September 29, 2017, below, gives effect to the AppliedMicro Acquisition, describedabove, as if it had occurred at October 2, 2015. These amounts have been calculated after applying our accounting policies and adjusting the results ofAppliedMicro to reflect transaction costs, retention compensation expense, the impact of the step-up to the value of acquired inventory, as well as the additionalintangible amortization that would have been charged assuming the fair value adjustments had been applied and incurred since October 2, 2015. This pro formadata is presented for informational purposes only and does not purport to be indicative of our future results of operations. Fiscal Year Ended September 29, 2017Revenue$755,728Loss from continuing operations(104,828)Loss from discontinued operations(43,734)62Acquisition of Assets of Picometrix LLC— On August 9, 2017, we completed the acquisition of certain assets of Picometrix LLC ("Picometrix"), a supplierof optical-to-electrical converters for Cloud Data Center infrastructure (the "Picometrix Acquisition"). We acquired Picometrix in order to expand our business inenterprise and Cloud Data Center applications. The purchase consideration was $33.5 million, comprised of an upfront cash payment of $29.5 million, and $4.0million placed in escrow for potential satisfaction of certain indemnification obligations that may arise from the closing date through December 15, 2018. For thefiscal years ended September 27, 2019 and September 28, 2018, we recorded no transaction costs. For the fiscal year ended September 29, 2017, we recordedtransaction costs of $0.2 million in selling, general and administrative expense. The Picometrix Acquisition was accounted for as an asset purchase businesscombination, and the operations of Picometrix have been included in our consolidated financial statements since the date of acquisition.We recognized the Picometrix assets acquired based upon the fair value of such assets measured as of the date of acquisition. The aggregate purchase price forthe Picometrix assets has been allocated to the tangible and identifiable intangible assets acquired based on their estimated fair value at the date of acquisition. Theexcess of the purchase price over the fair value of the acquired assets represents cost and revenue synergies specific to the Company, as well as non-capitalizableintangible assets, such as the employee workforce acquired, and has been allocated to goodwill, all of which will be tax deductible.We finalized the purchase accounting during the fiscal quarter ended June 29, 2018. The final purchase price allocation is as follows (in thousands): Final Allocation Current assets$6,287Intangible assets19,000Other assets3,220Total assets acquired28,507 Current liabilities2,311Other liabilities465Total liabilities assumed2,776Net assets acquired25,731Consideration: Cash paid upon closing, net of cash acquired33,500Goodwill$7,769The pro forma financial information for fiscal year 2017, including revenue and net income, is immaterial, and has not been separately presented.Other Acquisitions— On July 31, 2017, we completed the acquisition of certain assets of Antario Technologies, Inc. ("Antario") a privately-held companybased in Taiwan and in California. The total cash consideration was approximately $5.8 million, of which $4.8 million was paid upon closing, andapproximately $1.0 million was withheld for potential satisfaction of certain indemnification obligations that may arise from the closing date through July 31,2018. We finalized the purchase accounting during the fiscal quarter ended December 29, 2017, which resulted in goodwill of $1.6 million and intangible assets,including acquired technology and customer relationships, of $4.1 million. The Antario transaction was accounted for as an asset purchase business combinationand the operations have been included in our consolidated financial statements since the acquisition date. Pro forma financial disclosures are not presented hereinas the financial results of Antario are considered immaterial.On May 26, 2017, we completed the acquisition of Triple Play Communications Corporation ("TPC") a privately-held company based in Melbourne, Florida.The total cash consideration was approximately $2.6 million, of which $2.2 million was paid upon closing, and approximately $0.4 million was withheld forpotential satisfaction of certain indemnification obligations from the closing date through November 23, 2018. We finalized the purchase accounting during thefiscal quarter ended December 29, 2017, which resulted in goodwill of $3.7 million and intangible assets, including customer relationships, of $0.2 million. TPCwas accounted for as a stock purchase business combination and the operations have been included in our consolidated financial statements since the acquisitiondate. Pro forma financial disclosures are not presented herein as the financial results of TPC are considered immaterial.635. INVESTMENTSAll investments are short-term in nature and are invested in corporate bonds and commercial paper, and are classified as available-for-sale. The amortizedcost, gross unrealized holding gains or losses and fair value of our available-for-sale investments by major investments type as of September 27, 2019 andSeptember 28, 2018 are summarized in the tables below (in thousands): September 27, 2019 Amortized CostGross UnrealizedHolding GainsGross UnrealizedHolding LossesAggregate FairValueCorporate bonds $29,578 $112 $(93) $29,597Commercial paper 71,646 1 (18) 71,629Total investments $101,224 $113 $(111) $101,226 September 28, 2018 Amortized CostGross UnrealizedHolding GainsGross UnrealizedHolding LossesAggregate FairValueCorporate bonds $28,731 $— $(460) $28,271Commercial paper 69,966 — (16) 69,950Total investments $98,697 $— $(476) $98,221The contractual maturities of available-for-sale investments were as follows (in thousands): September 27, 2019Less than 1 year$75,233Over 1 year25,993Total investments$101,226Available-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 within accumulated other comprehensive income (loss).We have determined that the gross unrealized losses on available for sale securities at September 27, 2019 and September 28, 2018 are temporary innature. We review our investments to identify and evaluate investments that have indications of possible impairment. The techniques used to measure the fair valueof our investments are described in Note 6 - Fair Value. Factors considered in determining whether a loss is temporary include the length of time and extent towhich fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and our intent and ability to hold the investmentfor a period of time sufficient to allow for any anticipated recovery in market value. Substantially all of our fixed income securities are rated investment grade orbetter.We received proceeds from sales of available-for-sale securities of $173.0 million and $100.4 million during the fiscal years 2019 and 2018, respectively.Such sales resulted in gross realized gains of $0.2 million and less than $0.1 million and gross realized losses of $0.2 million and $0.3 million during the fiscalyears ended September 27, 2019 and September 28, 2018, respectively, which have been recorded within other expense.Other Investments— As of September 27, 2019 and September 28, 2018 we held two non-marketable equity investments classified as other long-terminvestments.One of these is a minority investment in a preferred stock ownership of a privately held manufacturing corporation with preferred liquidation rights overother equity shares. This investment had a value of $5.0 million at the date of purchase and approximates the then current fair value. Since we do not have theability to exercise significant influence or control over the investee we account for this investment at cost, which we evaluate for impairment at each balance sheetdate and through September 27, 2019 no impairment has been recorded for this investment.In addition, we have a minority investment of less than 20.0% of the outstanding equity of a privately held limited liability corporation ("Compute"). Thisinvestment was acquired in conjunction with the divestiture of the Compute business during the fiscal quarter ended December 29, 2017, had an initial value of$36.5 million and is accounted for using the equity method. We have no obligation to provide further funding to Compute. This investment value is updatedquarterly based on our proportionate share of the losses or earnings of Compute, as well as any changes in Compute's equity, utilizing the equity method. Duringfiscal years 2019 and 2018, we recorded $7.5 million and $10.4 million of losses associated with this investment as other expense in our Consolidated Statementsof64Operations. The carrying value of this investment was $18.6 million and $26.1 million as of September 27, 2019 and September 28, 2018, respectively.6. FAIR VALUEWe group our financial assets and liabilities measured at fair value on a recurring basis in three levels, based on the markets in which the assets and liabilitiesare traded and the reliability of the assumptions used to determine fair value. These levels are:Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets withinsufficient volume or infrequent transactions (less active markets) or model-driven valuations in which all significant inputs areobservable or can be derived principally from, or corroborated with, observable market data.Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, includingassumptions and judgments made by us.Assets and Liabilities Measured and Recorded at Fair Value on a Recurring BasisWe measure certain assets and liabilities at fair value on a recurring basis such as our financial instruments. There have been no transfers between Level 1, 2or 3 assets or liabilities during the fiscal year ended September 27, 2019.Assets and liabilities measured at fair value on a recurring basis consist of the following (in thousands): September 27, 2019 Fair Value Active Markets forIdentical Assets(Level 1) Observable Inputs(Level 2) UnobservableInputs(Level 3)Assets Money market funds$261 $261 $— $—Commercial paper71,629 — 71,629 —Corporate bonds29,597 — 29,597 —Total assets measured at fair value$101,487 $261 $101,226 $—Liabilities Warrant liability12,364 — — 12,364Total liabilities measured at fair value$12,364 $— $— $12,364 September 28, 2018 Fair Value Active Markets forIdentical Assets(Level 1) Observable Inputs(Level 2) UnobservableInputs(Level 3)Assets Money market funds$253 $253 $— $—Commercial paper69,950 — 69,950 —Corporate bonds28,271 — 28,271 —Total assets measured at fair value$98,474 $253 $98,221 $—Liabilities Contingent consideration$585 $— $— $585Warrant liability13,129 — — 13,129Total liabilities measured at fair value$13,714 $— $— $13,71465The quantitative information utilized in the fair value calculation of our Level 3 liabilities are as follows:LiabilitiesValuation Technique Unobservable Input September 27, 2019 September 28, 2018Contingent considerationDiscounted cash flow Discount rate N/A 9.2% Probability of achievement N/A 90% Timing of cash flows N/A 1 monthWarrant liabilityBlack-Scholes model Volatility 61.4% 60.7% Discount rate 1.71% 2.81% Expected life 1.2 years 2.2 years Exercise price $14.05 $14.05 Stock price $21.68 $20.60 Dividend rate —% —%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.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 2019 September 28, 2018 NetRealized/UnrealizedLosses (Gains)Included in Earnings PurchasesandIssuances Sales andSettlements September 27, 2019Contingent consideration$585 $65 $— $(650) $—Warrant liability$13,129 $(765) $— $— $12,364 Fiscal Year 2018 September 29, 2017 NetRealized/UnrealizedLosses (Gains)Included in Earnings PurchasesandIssuances Sales andSettlements September 28, 2018Contingent consideration$1,679 $(394) $— $(700) $585Warrant liability$40,775 $(27,646) $— $— $13,129 Fiscal Year 2017 September 30, 2016 NetRealized/UnrealizedLosses (Gains)Included in Earnings PurchasesandIssuances Sales andSettlements September 29, 2017Contingent consideration$848 $180 $1,701 $(1,050) $1,679Warrant liability$38,253 $2,522 $— $— $40,775667. ACCOUNTS RECEIVABLES ALLOWANCESSummarized below is the activity in our accounts receivable allowances including compensation credits and doubtful accounts as follows (in thousands): Fiscal Year 2019 2018 2017Balance - beginning of year$6,795 $9,410 $3,279Provision, net11,989 15,465 29,512Charge-offs(13,737) (18,080) (23,381)Balance - end of year$5,047 $6,795 $9,410The balances at the end of fiscal years 2019, 2018 and 2017 are comprised primarily of compensation credits of $4.5 million, $6.3 million and $8.9 million,respectively.8. INVENTORIESInventories consist of the following (in thousands): September 27, 2019 September 28, 2018Raw materials$59,184 $71,408Work-in-process13,799 13,466Finished goods34,897 37,963Total$107,880 $122,8379. PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment consists of the following (in thousands): September 27, 2019 September 28, 2018Construction in process24,848 49,661Machinery and equipment175,696 174,638Leasehold improvements12,962 14,984Furniture and fixtures3,716 2,306Capital lease assets46,496 19,380Computer equipment and software18,116 17,317 Total property and equipment281,834 278,286Less accumulated depreciation and amortization(149,187) (128,363)Property and equipment — net$132,647 $149,923Depreciation and amortization expense related to property and equipment for fiscal years 2019, 2018 and 2017 was $29.7 million, $30.7 million and $27.3million, respectively. Accumulated depreciation on capital lease assets for fiscal years 2019 and 2018 was $5.3 million and $3.2 million, respectively.See Note 17 - Impairments and Note 15 - Restructurings for information related to property and equipment impaired during fiscal year 2019.10. DEBTAs of September 27, 2019, we are party to a credit agreement dated as of May 8, 2014 with a syndicate of lenders and Goldman Sachs Bank USA ("GoldmanSachs"), as administrative agent (as amended on February 13, 2015, August 31, 2016, March 10, 2017, May 19, 2017, May 2, 2018 and May 9, 2018, the “CreditAgreement”).As of September 27, 2019, the Credit Agreement consisted of term loans with an original principal amount of $700.0 million ("Term Loans") and a revolvingcredit facility with an aggregate, undrawn borrowing capacity of $160.0 million ("Revolving Facility"). The Revolving Facility will mature in November 2021 andthe Term Loans will mature in May 2024 and bear interest at: (i) for LIBOR loans for any interest period, a rate per annum equal to the LIBOR rate as determinedby the administrative agent, plus an applicable margin of 2.25%; and (ii) for base rate loans, a rate per annum equal to the greater of (a) the prime rate quoted inthe print edition of67the Wall Street Journal, Money Rates Section, (b) the federal funds rate plus one-half of 1.00% and (c) the LIBOR rate applicable to a one-month interest periodplus 1.00% (but, in each case, not less than 1.00%), plus an applicable margin of 1.25%.All principal amounts outstanding and interest rate information as of September 27, 2019, for the Credit Agreement were as follows (in thousands, except ratedata): PrincipalOutstandingLIBOR RateMarginEffective InterestRateTerm loans$672,9712.11%2.25%4.36%As of September 27, 2019, approximately $8.0 million of deferred financing costs remain unamortized, of which $7.4 million is related to the Term Loansand is recorded as a direct reduction of the recognized debt liabilities in our accompanying Consolidated Balance Sheet, and $0.6 million is related to theRevolving Facility and is recorded in other long-term assets in our accompanying Consolidated Balance Sheet.The Term Loans and Revolving Facility are secured by a first priority lien on substantially all of our assets and provide that we must comply with certainfinancial and non-financial covenants.The Term Loans are payable in quarterly principal installments of approximately $1.7 million on the last business day of each calendar quarter, with theremainder due on the maturity date. In the event that we divest a business, the net cash proceeds of the divestment are generally required, subject to certainexceptions, to be applied to repayment of outstanding Term Loans except to the extent we reinvest such proceeds in assets useful for our business within 18 monthsof receiving the proceeds. If we enter into a binding agreement to reinvest such proceeds within 18 months of receiving them, we have until the later of 18 monthsfollowing our receipt of the proceeds and six months following the date of such agreement to complete the reinvestment.As of September 27, 2019, we had $160.0 million of borrowing capacity under our Revolving Facility.As of September 27, 2019, the following remained outstanding on the Term Loans: September 27, 2019Principal balance$672,971Unamortized discount(3,414)Unamortized deferred financing costs(7,400)Total term loans662,157Current portion6,885Long-term, less current portion$655,272As of September 27, 2019, the minimum principal payments under the Term Loans in future fiscal years were as follows (in thousands):Fiscal year ending:Amount2020$6,88520216,88520226,88520236,8852024645,431Total$672,971The fair value of the Term Loans was estimated to be approximately $585.5 million as of September 27, 2019 and was determined using Level 2 inputs,including a quoted price from a bank.6811. CAPITAL LEASE AND FINANCING OBLIGATIONSCorporate Facility Financing ObligationOn December 28, 2016, we entered into three lease agreements including: (1) a 20-year leaseback of the facility located at 100 Chelmsford Street, (2) a 20-year build-to-suit lease arrangement for the construction and subsequent lease back of a new facility to be located at 144 Chelmsford Street, and (3) a 14-yearbuilding lease renewal of an adjacent facility at 121 Hale Street (collectively, the "Lowell Leases"). We account for the Lowell Leases as a single unit ofaccounting under the financing method. As of October 1, 2018, the construction of the facility at 144 Chelmsford Street was completed, the building was placed inservice and the associated lease term commenced.We calculated a lease obligation based on the future minimum lease payments discounted at 7.2%. The discount rate represents the estimated incrementalborrowing rate over the lease term of 20 years. The minimum lease payments are recorded as interest expense and in part as a payment of principal reducing thelease obligation. The real property assets in the transaction remain on the Consolidated Balance Sheets and continue to be depreciated over their remaining usefullives. As of September 27, 2019 and September 28, 2018, the outstanding lease obligations associated with the Lowell Leases included in leases payable in theConsolidated Balance Sheets were $28.2 million and $28.3 million, respectively.Additionally, we have capital equipment lease obligations, of which approximately $2.3 million and $1.2 million were outstanding as of September 27, 2019and September 28, 2018, respectively.As of September 27, 2019, future minimum payments under capital lease obligations related to all of our in service leases were as follows (in thousands):Fiscal year ending: Amount2020 $3,2992021 3,3432022 2,8842023 2,8162024 2,853Thereafter 39,927Total minimum capital lease payments $55,122Less amount representing interest (26,241)Present value of net minimum capital lease payments $28,88112. EMPLOYEE BENEFIT PLANSWe established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code of 1986, as amended on October 1, 2009("401(k) Plan"). The 401(k) Plan follows a calendar year, covers substantially all U.S. employees who meet minimum age and service requirements and allowsparticipants to defer a portion of their annual compensation on a pretax basis, subject to legal limitations. Our contributions to the 401(k) Plan may be made at thediscretion of the board of directors. During the fiscal year ended September 27, 2019, we contributed $2.6 million to our 401(k) Plan for calendar year 2018. As ofSeptember 27, 2019 there were no contributions made by us to the 401(k) Plan for calendar year 2019. During the fiscal year ended September 28, 2018, wecontributed $2.7 million to our 401(k) Plan for calendar year 2017. During the fiscal year ended September 29, 2017, we contributed $2.4 million to our 401(k)Plan for calendar year 2016.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 varyper region. We expensed contributions of $1.1 million, $1.2 million and $1.3 million for fiscal years 2019, 2018 and 2017, respectively.6913. ACCRUED LIABILITIESAccrued liabilities consist of the following (in thousands): September 27, 2019 September 28, 2018Compensation and benefits$20,455 $22,935Distribution costs7,797 10,670Product warranty3,273 5,756Restructuring costs2,527 89Professional fees1,554 1,875Rent and utilities701 1,660Income taxes payable1,233 415Contingent consideration— 585Purchase price holdback— 375Other2,368 5,585Total$39,908 $49,94514. 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 and services in the United States and foreign jurisdictions. These lease agreementsexpire at various dates through 2029, and certain agreements contain provisions for extension at substantially the same terms as currently in effect. Leaseescalation 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 September 27, 2019, are as follows (in thousands): Fiscal year ending:Amount2020$9,98720219,23320227,44720236,06120245,564Thereafter16,437Total minimum lease payments$54,729Rent expense incurred under non-cancelable operating leases was $9.7 million, $9.5 million and $10.9 million in fiscal years 2019, 2018 and 2017,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 ofthe end of fiscal years 2019 and 2018, the estimated costs for the removal of these assets are recorded as asset retirement obligations in other long-term liabilitieswere $1.8 million and $1.8 million, respectively.Purchase Commitments—As of September 27, 2019, we had outstanding non-cancelable purchase commitments aggregating to $40.6 million primarily forpurchases of capital equipment, services and inventory supply arrangements.Litigation—From time to time we may be subject to commercial disputes, employment issues, claims by other companies in the industry that we haveinfringed their intellectual property rights and other similar claims and litigations. Any such claims may lead to future litigation and material damages and defensecosts. We were not involved in any material pending legal proceedings during the year ended September 27, 2019.15. RESTRUCTURINGSWe have periodically implemented restructuring actions in connection with broader plans to reduce staffing, our internal manufacturing footprint and overalloperating costs. The restructuring expenses are primarily comprised of direct and incremental costs related to headcount reductions including severance andoutplacement fees for the terminated employees, as well as facility closure costs.70The following is a summary of the restructuring charges incurred for the periods presented (in thousands): Fiscal Years 2019 2018 2017Employee-related expenses$8,084 $2,789 $2,744Facility-related expenses11,459 3,476 —Total restructuring expenses$19,543 $6,265 $2,744The following is a summary of the costs incurred and remaining balances included in accrued expenses related to restructuring actions taken (in thousands): Employee-RelatedExpense (1) Facility-RelatedExpense (2) TotalBalance - September 29, 2017$627 $— $627Charges2,789 3,476 6,265Charges paid/settled(3,327) (3,476) (6,803)Balance - September 28, 2018$89 $— $89Charges8,084 11,459 19,543Charges paid/settled(6,624) (10,481) (17,105)Balance - September 27, 2019$1,549 $978 $2,527(1) Primarily includes severance charges associated with the reduction of our workforce in certain facilities.(2) Primarily includes activities associated with the closure of certain facilities, including any associated asset impairments and contracttermination costs.Long Beach, Belfast and Sydney PlanDuring the fiscal quarter ended December 29, 2017, we initiated plans to restructure and close our facilities in Long Beach, California, Belfast, UnitedKingdom and Sydney, Australia(the “Long Beach, Belfast and Sydney Plan”). The operations from the Long Beach facility were consolidated into our otherCalifornia locations in order to achieve operational synergies. The Belfast and Sydney facilities were closed as we discontinued certain product developmentactivities that were performed in those locations. During the fiscal year ended September 28, 2018, we incurred $6.3 million, including $2.8 million of employee-related costs and $3.5 million of facility-related costs and the charges paid were $6.2 million. During the fiscal year ended September 27, 2019 we incurred nocharges for this plan. This action was complete in fiscal 2018 and no further costs will be incurred.Details of the Long Beach, Belfast and Sydney Plan activities during fiscal years ended September 28, 2018 and September 27, 2019 are as follows: Employee-RelatedExpense Facility-RelatedExpense TotalBalance - September 29, 2017$— $— $—Charges2,789 3,476 6,265Charges paid/settled(2,700) (3,476) (6,176)Balance - September 28, 2018$89 $— $89Charges— — —Charges paid/settled(89) — (89)Balance - September 27, 2019$— $— $—Ithaca PlanDuring the fiscal quarter ended December 28, 2018, we commenced a plan to exit certain production and product lines, primarily related to certainproduction facilities located in Ithaca, New York (the "Ithaca Plan"). For these facilities, we incurred $5.5 million of restructuring charges in the fiscal year endedSeptember 27, 2019, including $1.5 million of employee-related costs and $4.0 million of facility-related costs. This action was complete in fiscal 2019 and nofurther costs will be incurred. The remaining charges are expected to be paid in the first quarter of fiscal year 2020.Details of the Ithaca Plan activities during fiscal year ended September 27, 2019 are as follows:71 Employee-RelatedExpense Facility-RelatedExpense TotalBalance - September 28, 2018$— $— $—Charges1,481 3,969 5,450Charges paid/settled(1,468) (3,899) (5,367)Balance - September 27, 2019$13 $70 $83Design Facilities PlanDuring the fiscal quarter ended March 29, 2019, we committed to a plan to exit certain design facilities and activities (the "Design Facilities Plan"). Weincurred restructuring charges of $2.5 million in the fiscal year ended September 27, 2019, including $0.3 million of employee-related costs and $2.2 million offacility-related costs. This action was complete in fiscal 2019 and no further costs will be incurred. The remaining charges are expected to be paid in fiscal year2020.Details of the Design Facilities Plan activities during fiscal year ended September 27, 2019 are as follows: Employee-RelatedExpense Facility-RelatedExpense TotalBalance - September 28, 2018$— $— $—Charges338 2,190 2,528Charges paid/settled(338) (1,739) (2,077)Balance - September 27, 2019$— $451 $4512019 PlanDuring the fiscal quarter ended June 28, 2019, we committed to a plan to strategically realign, streamline and improve certain of our business and operations,including reducing our workforce by approximately 250 employees and exiting seven development facilities in France, Japan, the Netherlands, Florida,Massachusetts, New Jersey and Rhode Island (the "2019 Plan"). We also committed to reducing certain development activities for one of our product lines.Additionally, we decided to no longer invest in the design and development of optical modules and subsystems for Data Center applications. Total restructuringcharges expected to be incurred in connection with this plan are approximately $14.1 million to $15.0 million. We incurred restructuring charges of $11.6 millionin the fiscal year ended September 27, 2019 under the 2019 Plan, including $6.3 million of employee-related costs, $4.0 million of impairment expense for fixedassets and $1.3 million of other facility-related costs. The remaining charges are expected to be paid in fiscal year 2020. We expect to incur restructuring costs ofapproximately $2.5 million to $3.4 million through fiscal year 2020 as we complete this restructuring action, including approximately $2.6 million of employee-related costs and $0.8 million of facility-related costs.Details of the 2019 Plan activities during fiscal year ended September 27, 2019 are as follows: Employee-RelatedExpense Facility-RelatedExpense TotalBalance - September 28, 2018$— $— $—Charges6,265 5,300 11,565Charges paid/settled(4,729) (4,843) (9,572)Balance at September 27, 2019$1,536 $457 $1,99316. PRODUCT WARRANTIESWe establish a product warranty liability at the time of revenue recognition. Product warranties generally have terms of 12 months and covernonconformance with specifications and defects in material or workmanship. For sales to distributors, our warranty generally begins when the product is resold bythe distributor. The liability is based on estimated costs to fulfill customer product warranty obligations and utilizes historical product failure rates. Should actualwarranty obligations differ from estimates, revisions to the warranty liability may be required.72Product warranty liability activity is as follows (in thousands): Fiscal Years 2019 2018 2017Balance — beginning of year$5,756 $3,672 $1,039(Divested)/acquired— (49) 952Provisions/(expense)(3,053) 1,865 1,737Direct charges/(payments)570 268 (56)Balance — end of year$3,273 $5,756 $3,67217. IMPAIRMENTSDuring fiscal year 2019, we initiated a plan to strategically realign, streamline and improve our operations, including reducing our workforce and exitingcertain product offerings and research and development facilities. See Note 15 - Restructurings, for additional information about the 2019 Plan. These activities ledus to reassess our previous estimates for expected future revenue growth. We performed impairment analyses to determine whether our goodwill and long-livedassets, comprised of definite-lived intangible assets and property, plant and equipment, were recoverable. During the fiscal quarter ended June 28, 2019, weperformed a goodwill impairment test for our consolidated reporting unit. We calculated the fair value of our reporting unit using market capitalization andcompared its fair value to its carrying amount, including goodwill. The fair value exceeded the carrying amount, therefore we determined that goodwill of thereporting unit was not impaired. Based on the estimated undiscounted cash flow assessment for long-lived assets, we determined that for an asset group, the cashflows were not sufficient to recover the carrying value of the long-lived assets over their remaining useful lives. Accordingly, we recorded impairment charges of$217.5 million and $33.2 million to our customer relationship intangible assets and technology intangible assets, respectively, in the fiscal quarter ended June 28,2019, based on the difference between the fair value and the carrying value of the long-lived assets. We will continue to monitor for events or changes in businesscircumstances that may indicate that the remaining carrying value of the asset group may not be recoverable. We used the income approach to determine the fairvalue of the definite-lived intangible assets and the cost approach to determine the fair value of our property, plant and equipment.Additionally, in connection with the 2019 Plan, we determined that certain intangible assets were abandoned and would not have a future benefit.Accordingly, we recorded impairment charges of $2.4 million and $3.9 million to our customer relationship intangible assets and technology intangible assets,respectively, during fiscal year 2019.During fiscal year 2019, we also abandoned equipment recorded as construction in process. Accordingly, we recorded impairment charges of $7.8 million toreflect the estimated salvage value of the equipment.Total impairment charges recorded on intangible assets and assets recorded as construction in process for fiscal year 2019 were $264.8 million.During fiscal year 2018, we recorded impairment charges of $6.6 million related to property and equipment and other assets designated for future use withZTE.During fiscal year 2017, we completed an IPR&D project and placed the acquired technology into service. Prior to placing the technology into service weperformed an impairment assessment, at which time we determined that the value of the technology was impaired by $4.4 million, which was expensed in ourfiscal fourth quarter of 2017. The remaining $3.6 million was placed in service as acquired technology.See Note 15 - Restructurings for information related to property and equipment impaired as part of our restructuring actions.18. INTANGIBLE ASSETSAmortization expense related to intangible assets is as follows (in thousands): Fiscal Years 2019 2018 2017Cost of revenue$29,847 $33,429 $30,286Selling, general and administrative44,872 48,265 35,456Total$74,719 $81,694 $65,74273Intangible assets consist of the following (in thousands): September 27, 2019 September 28, 2018Acquired technology$179,682 $251,673Customer relationships245,870 518,234Trade name, indefinite lived3,400 3,400Total428,952 773,307Less accumulated amortization(247,724) (260,522)Intangible assets — net$181,228 $512,785As of September 27, 2019, our estimated amortization of our intangible assets in future fiscal years, was as follows (in thousands): 20202021202220232024ThereafterAmortization expense$50,33046,21333,43326,04815,4106,394Accumulated amortization for the acquired technology and customer relationships was $134.8 million and $112.9 million, respectively, as of September 27,2019, and $140.0 million and $120.5 million, respectively, as of September 28, 2018.A summary of the activity in intangible assets and goodwill follows (in thousands): Gross Intangible Assets TotalIntangibles AcquiredTechnology CustomerRelationships TradeName TotalGoodwillBalance at September 29, 2017$811,703 $251,655 $556,648 $3,400 $313,765Allocation to divested business(39,285) — (39,285) — (2,560)Fair value adjustment— — — — 2,790Currency translation adjustments889 18 871 — 81Balance at September 28, 2018773,307 251,673 518,234 3,400 314,076Currency translation adjustments270 270 — — 651Impairments of intangible assets(344,625) (72,261) (272,364) — —Balance at September 27, 2019$428,952 $179,682 $245,870 $3,400 $314,727In connection with the impairment of certain customer relationships and acquired technology intangible assets in 2019, we revised the useful lives of theseintangible assets to reflect the estimated period over which these assets are expected to contribute to future cash flows, resulting in weighted-average amortizationperiods for our customer relationships and acquired technology of nine years and seven years, respectively. See Note 17 - Impairments, for additional informationrelated to the impairment of our intangible assets.19. 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): September 27, 2019 September 28, 2018Deferred tax assets (liabilities): Federal and foreign net operating losses and credits$263,199 $321,982 Intangible assets9,887 (94,929) Property and equipment(1,473) (6,293) Other non-current deferred tax assets16,933 13,850Deferred compensation— 3,810Deferred gain— 6,575Interest7,170 — Valuation allowance(252,536) (243,112)Total deferred tax asset$43,180 $1,88374As of September 27, 2019, we had $923.4 million of gross federal net operating loss ("NOL") carryforwards consisting of $479.2 million relating to theAppliedMicro Acquisition, $158.9 million relating to our acquisition of Mindspeed Technologies, Inc. in 2013, $26.2 million relating to our acquisition ofBinOptics Corporation in 2014 and $259.1 million relating to losses generated by MACOM. The federal NOL carryforwards will expire at various dates through2037 for losses generated prior to the tax period ended September 28, 2018. For losses generated during the tax period ended September 28, 2018 and future years,the NOL carryforward period is infinite. The reported net operating loss carryforward includes any limitation under Sections 382 and 383 of the Internal RevenueCode of 1986, as amended, which applies to an ownership change as defined under Section 382.The domestic and foreign income (loss) from continuing operations before taxes were as follows (in thousands): Fiscal Years 2019 2018 2017United States$(458,617) $(145,851) $(111,432)Foreign35,464 (9,384) 61,927(Loss) income from operations before income taxes$(423,153) $(155,235) $(49,505)The components of the (benefit) provision for income taxes are as follows (in thousands): Fiscal Years 2019 2018 2017Current: Federal$70 $(6,876) $100 State36 (160) 225 Foreign876 1,642 7,307 Current provision (benefit)982 (5,394) 7,632Deferred: Federal(21,560) 75,428 (42,637) State12,907 (15,526) (4,037) Foreign(41,108) (24,652) (466) Change in valuation allowance9,424 (51,329) 140,419 Deferred (benefit) provision(40,337) (16,079) 93,279Total (benefit) provision$(39,355) $(21,473) $100,911We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making this determination, weconsider available positive and negative evidence and factors that may impact the valuation of our deferred tax asset including results of recent operations, futurereversals of existing taxable temporary differences, projected future taxable income, and tax-planning strategies. A significant piece of objective negative evidenceevaluated was the cumulative U.S. loss incurred over the three-year period ended September 27, 2019 which we believe limited our ability to consider othersubjective evidence, such as our projections for future growth.Certain transaction- and integration-related expenses incurred in the U.S., associated primarily with the AppliedMicro Acquisition during the three monthsended March 31, 2017, resulted for the first time in significant negative objective evidence in the form of adjusted cumulative losses in the U.S. over the past three-year period. This resulted in our determination that there was not sufficient objectively verifiable positive evidence to offset this negative objective evidence and weconcluded that a full valuation allowance totaling $93.5 million was required for our U.S. deferred tax assets as of September 29, 2017. In addition, a fullvaluation allowance was established against the U.S. deferred tax assets acquired in connection with the AppliedMicro Acquisition.The $252.5 million of valuation allowance as of September 27, 2019 relates primarily to federal and state NOLs, tax credit carryforwards and a partialvaluation allowance on tax credits in Canada of $19.0 million whose recovery is not considered more likely than not. The $243.1 million of valuation allowance asof September 28, 2018 related primarily to federal and state NOLs, tax credit carryforwards and a partial valuation allowance on tax credits in Canada of $13.6million whose recovery is not considered more likely than not. The change during the fiscal year ended September 27, 2019 of $9.4 million primarily relates to thereduction of our NOLs due to section 382 limitations, the changes in our temporary differences, and the lower U.S federal tax rate.75Our effective tax rates differ from the federal and statutory rate as follows: Fiscal Years 2019 2018 2017Federal statutory rate21.0% 24.5% 35.0%Foreign rate differential1.6 5.1 31.9State taxes net of federal benefit0.9 0.8 0.2Warrant liabilities— 4.4 (1.8)Change in valuation allowance(2.4) 34.0 (270.0)Research and development credits1.4 9.0 12.8Provision to return adjustments0.3 8.3 (4.0)Section 382 adjustment(19.3) — —Nondeductible compensation expense(0.6) 1.4 (4.1)Global Intangible Low Taxed Income(2.9) — —Nondeductible legal fees— 0.9 (3.9)2017 tax reform— (73.7) —Intra-entity license transfer9.4 — —Other permanent differences(0.1) (0.9) 0.1Effective income tax rate9.3% 13.8% (203.8)% For fiscal years 2019, 2018 and 2017, the effective tax rates on $423.2 million, $155.2 million and $49.5 million, respectively, of pre-tax loss fromcontinuing operations were 9.3%, 13.8% and (203.8)%, respectively. For fiscal year 2019, the effective tax rate was primarily impacted by a change in our NOLcarryforward due to an adjustment in our Section 382 limitation from a prior period acquisition and the immediate recognition of the current and deferred incometax effects totaling $39.8 million from an intra-entity transfer of a license for intellectual property to a higher taxed jurisdiction that received a tax basis step-up.For fiscal year 2018, the effective tax rate was primarily impacted by the Tax Cuts and Jobs Act (the "Tax Act"). The effective income tax rates for fiscal years2019, 2018 and 2017 were also impacted by a lower income tax rate in many foreign jurisdictions in which our foreign subsidiaries operate, changes in valuationallowance, research and development tax credits, and a fair market value adjustment of warrant liabilities.All earnings of foreign subsidiaries, other than our M/A-COM Technology Solutions International Limited Cayman Islands subsidiary ("Cayman Islandssubsidiary"), are considered indefinitely reinvested for the periods presented. During fiscal year 2019 we changed our position for our Cayman Islands subsidiaryto no longer have its earnings permanently reinvested. Although a foreign subsidiary would typically have to accrue for foreign withholding tax liabilitiesassociated with undistributed earnings, Cayman Islands has no withholding tax under domestic law, therefore, we did not accrue for foreign withholding tax.During fiscal year 2019 we finalized our calculation of the one-time deemed repatriation of gross foreign earnings and profits, totaling $156.8 million, whichresulted in approximately $86.7 million in U.S. taxable income for the year ended September 28, 2018 with Grand Cayman and Ireland accounting for $59.7million and $25.6 million, respectively. Due to the fact that we are in a full U.S. valuation allowance, this one-time deemed repatriation had no impact on our taxexpense for fiscal year 2018.Our fiscal year 2019 tax provision incorporated changes required by the Tax Act. Some of these changes include a new limitation on the deductible interestexpense, inclusion of Global Intangible Low Taxed Income earned by controlled foreign corporations, computation of the new base erosion anti-abuse minimumtax, repealing the performance-based compensation exception to section 162(m) and revising the definition of a covered employee.Activity related to unrecognized tax benefits is as follows (in thousands): AmountBalance - September 29, 2017(1,670) Additions based on tax positions— Reductions based on tax positions1,370Balance - September 28, 2018$(300) Additions based on tax positions— Reductions based on tax positions—Balance at September 27, 2019$(300)The balance of the unrecognized tax benefit as of September 27, 2019, is included in other long-term liabilities in the accompanying Consolidated BalanceSheets. The entire balance of unrecognized tax benefits, if recognized, will reduce income tax expense.It is our policy to recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. During fiscal year 2019, we did notmake any payment of interest and penalties. There was nothing accrued in the Consolidated Balance Sheets76for the payment of interest and penalties at September 27, 2019, as the remaining unrecognized tax benefits would only serve to reduce our current federal and stateNOL carryforwards, if ultimately recognized.A summary of the fiscal tax years that remain subject to examination, as of September 27, 2019, for the Company’s significant tax jurisdictions are:JurisdictionTax Years Subject to ExaminationUnited States—federal2015 - forwardUnited States—various states2015 - forwardIreland2016 - forwardGenerally, we are no longer subject to federal income tax examinations for years before 2015, except to the extent of loss and tax credit carryforwards fromthose years.20. SHARE-BASED COMPENSATION PLANSStock PlansWe have three equity incentive plans: the Amended and Restated 2009 Omnibus Stock Plan ("2009 Plan"), the 2012 Omnibus Incentive Plan, as amended("2012 Plan") and the 2012 Employee Stock Purchase Plan, as amended and restated ("ESPP").Upon the closing of our initial public offering, all shares that were reserved under the 2009 Plan but not awarded were assumed by the 2012 Plan. Noadditional awards will be made under the 2009 Plan. Under the 2012 Plan, we have the ability to issue incentive stock options ("ISOs"), nonqualified stock options("NQs"), stock appreciation rights, restricted stock ("RSAs"), restricted stock units ("RSUs"), performance-based stock units ("PRSUs") and other equity-basedawards to employees, directors and outside consultants. The ISOs and NQs must be granted at a price per share not less than the fair value of our common stock onthe date of grant. Options granted to date primarily vest based on certain market-based and performance-based criteria as described below. Certain of the share-based awards granted and outstanding as of September 27, 2019, are subject to accelerated vesting upon a sale of the Company or similar changes in control.Options granted generally have a term of four to seven years.As of September 27, 2019, we had 15.7 million shares available for future issuance under the 2012 Plan and 3.4 million shares available for issuance underour ESPP.Outside of the three equity plans described above, we also grant incentive stock units ("ISUs") to certain of our international employees which typically vestover four years and for which the fair value is determined by our underlying stock price, which are classified as liabilities and settled in cash upon vesting. As ofSeptember 27, 2019, we had 195,598 ISU awards outstanding with a fair value of $2.0 million recorded as an accrued compensation liability. As of September 28,2018, we had approximately 191,620 ISU awards outstanding with a fair value of $1.9 million recorded as an accrued compensation liability. During fiscal year2019, 69,035 ISU awards vested and were paid at a fair value of $1.2 million. We recorded an expense for these ISU awards of $1.3 million in fiscal year 2019,primarily as a result of an increase in our stock price, and we recorded a gain of $1.1 million and an expense of $3.9 million in fiscal years 2018 and 2017,respectively.Employee Stock Purchase PlanThe ESPP allows eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 15% of their eligiblecompensation, subject to any plan limitations. In administering the ESPP, the board of directors has limited discretion to set the length of the offering periodsthereunder. As of September 27, 2019, total unrecognized compensation cost related to the ESPP was $0.3 million. In fiscal years 2019, 2018 and 2017, 421,777,305,851 and 146,149 shares of common stock were issued under the ESPP, respectively.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 by 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 by 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 determined by the board of directors; provided, however, that any shares from any increases in previous years thatare not actually issued will continue to be available for issuance under the ESPP. In fiscal year 2019, pursuant to the evergreen provisions, the number of shares ofcommon stock available for issuance under the 2012 Plan and the ESPP were increased by 1.9 million shares and 550,000 shares, respectively.77Share-Based CompensationThe following table shows a summary of share-based compensation expense included in the Consolidated Statements of Operations during the periodspresented (in thousands): Fiscal Years 2019 2018 2017Cost of revenue$2,936 $3,869 $3,189Research and development8,551 13,448 10,565Selling, general and administrative12,305 14,620 22,581Total$23,792 $31,937 $36,335Amounts presented above include share-based compensation expense of $0.8 million for fiscal year 2017, which is recorded as discontinued operationsrelated to employees of our Compute business.As of September 27, 2019, the total unrecognized compensation costs related to outstanding stock options, restricted stock awards and units including awardswith time-based, performance-based, and market-based vesting was $47.0 million, which we expect to recognize over a weighted-average period of 2.9 years.Stock OptionsA summary of stock option activity for fiscal year 2019 is as follows (in thousands, except per share amounts and contractual term): Number of Shares Weighted-AverageExercise Price perShare Weighted-AverageRemainingContractual Term (inYears) Aggregate IntrinsicValueOptions outstanding - September 28, 20181,408 $32.05 Granted585 15.44 Exercised(119) 13.48 Forfeited, canceled or expired(1,497) 31.68 Options outstanding - September 27, 2019376 $13.58 7.03 $3,046Options vested and expected to vest - September 27, 2019376 $13.58 7.03 $3,046Options exercisable - September 27, 201991 $9.82 2.48 $1,081Aggregate intrinsic value represents the difference between our closing stock price on September 27, 2019, and the exercise price of outstanding, in-the-money options. The total intrinsic value of options exercised was $0.7 million, $0.9 million and $8.9 million for fiscal years 2019, 2018 and 2017, respectively.Stock Options with Time-based Vesting CriteriaIn November 2017, we granted 10,924 incentive stock options and 69,076 non-qualified stock options with a total grant date fair value of $17.55 per share,or $1.4 million. These stock options were valued using a Black-Scholes model, using a volatility rate of 45.7%, a risk-free rate of 2.21%, a strike priceof $36.61 and an expected term of 6.5 years. Share-based compensation expense is recognized on a straight-line basis over the service period which approximated4.5 years for these awards. These awards were included in the cancellation during the fiscal first quarter of 2019 as discussed in the section below.Stock Options with Market-based Vesting CriteriaWe grant NQs that are subject to vesting only upon the market price of our underlying public stock closing above a certain price target within seven years ofthe date of grant. Share-based compensation expense is recognized regardless of the number of awards that are earned based on the market condition and isrecognized on a straight-line basis over the estimated service period of approximately three years. If the required service period is not met for these options, thenthe share-based compensation expense would be reversed. In the event that our common stock achieves the target price per share based on a 30-day trailingaverage prior to the end of the estimated service period, any remaining unamortized compensation cost will be recognized.Stock options with market-based vesting criteria granted for fiscal years 2019, 2018 and 2017 were 585,000, 325,000 and 320,000, respectively, atweighted average grant date fair values of $7.47, $15.52 and $13.18 per share, or total grant date fair value $2.4 million, $5.0 million and $4.3 million,respectively.78These NQs with market-based vesting criteria were valued using a Monte Carlo simulation model. The weighted average Monte Carlo input assumptionsused for calculating the fair value of these market-based stock options are as follows: Fiscal Years 2019 2018 2017Risk-free interest rate2.8% 2.3% 1.9%Expected term (years)3.9 3.4 7.0Expected volatility51.9% 45.8% 32.3%Target price$53.87 $98.99 $67.39During our fiscal first quarter of 2019, we canceled 1,122,500 performance-based stock options with a concurrent grant of 748,328 PRSUs for 13 employees,which was accounted for as a modification. The incremental compensation cost resulting from the modification was $8.2 million, and was being recognized asshare-based compensation expense over the requisite service period of three years for the new PRSU awards. As a result of subsequent actions that resulted inforfeitures, the remaining compensation expense associated with this modification as of September 27, 2019 is $2.8 million.Restricted Stock Awards and UnitsA summary of restricted stock awards and units activity for fiscal year 2019 is as follows (in thousands): Number of Shares Weighted-AverageGrant Date FairValue AggregateIntrinsic ValueIssued and unvested - September 28, 20181,872 $34.15 $38,452Granted2,977 18.18 Vested(673) 34.87 Forfeited, canceled or expired(1,563) 24.06 Issued and unvested - September 27, 20192,613 21.81 $56,649As of September 27, 2019, the aggregate intrinsic value of expected to vest restricted stock units including time-based, performance-based, and market-basedunits was $56.3 million for fiscal year 2019. The total fair value of restricted stock awards and units vested was $11.7 million, $19.7 million and $51.2 million forthe fiscal years 2019, 2018 and 2017, respectively. RSUs granted generally vest over a period of four years.In addition to RSUs, we also issue PRSUs with specific performance vesting criteria. These PRSUs have both a service and performance-based vestingcondition and awards are divided into three equal tranches and vest based on achieving certain adjusted earnings per share growth metrics. The service conditionrequires participants to be employed on May 15th of the following year once the performance condition has been met. Depending on the actual performanceachieved, a participant may earn between 0% to 300% of the targeted shares for each tranche, which is determined based on a straight-line interpolation appliedfor the achievement between the specified performance ranges. As of September 27, 2019, the performance condition targets for awards with future serviceconditions had not been met. We granted 1,005,854 PRSUs during fiscal year 2019 and 745,047 were forfeited. The amount of incremental PRSU awards thatcould ultimately vest if all performance criteria are achieved would be 1,196,337 shares assuming a maximum of 300% of the targeted shares.We granted 200,000 market-based RSUs during fiscal year 2019, at a weighted average grant date fair value of $17.65 per share, and a total fair value of $3.5million. Recipients may earn between 0% and 150% of the target number of shares based on the Company's achievement of total shareholder return in comparisonto a peer group of companies in the Nasdaq composite index over a period of approximately three years. The fair value of the awards was estimated using a MonteCarlo simulation and compensation expense is recognized ratably over the service period based on the grant date fair value of the awards of $3.5 million subject tothe market condition. The expected volatility of the Company's common stock was estimated based on the historical average volatility rate over the three-yearperiod. The dividend yield assumption was based on historical and anticipated dividend payouts. The risk-free rate assumption was based on observed interest ratesconsistent with the three-year measurement period. The assumptions used to value the awards are as follows:79 Fiscal Year 2019Risk free interest rate1.9%Years to maturity3.33Expected volatility rate61.5%Dividend yield—21. STOCKHOLDERS’ EQUITYWe have authorized 10 million shares of $0.001 par value preferred stock and 300 million shares of $0.001 par value common stock as of September 27,2019 and September 28, 2018. The outstanding shares of common stock as of September 28, 2018, presented in the accompanying Consolidated Statements ofStockholders’ Equity, excludes 6,100 unvested shares of restricted stock awards, respectively, issued as compensation to employees that were subject to forfeiture.There were no unvested shares of restricted stock awards that were subject to forfeiture as of September 27, 2019.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. We do not currently have sufficient registered andavailable shares to immediately satisfy a request for registration, if such a request were made. As of September 27, 2019, no exercise of the warrants had occurredand 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 balance sheets with changes in theestimated fair value being recorded in the accompanying statements of operations.22. RELATED-PARTY TRANSACTIONSCadence Design Systems, Inc. ("Cadence") provides us with certain engineering licenses on an ongoing basis. Geoffrey Ribar, who joined our board ofdirectors on March 22, 2017, served as an officer of Cadence through September 30, 2017 and served as a Senior Advisor to Cadence until March 31, 2018.During fiscal year 2018, we made payments of $4.1 million to Cadence prior to March 31, 2018. During fiscal year 2017, we made payments of $6.3 millionsubsequent to Mr. Ribar joining our board of directors.23. DIVESTED BUSINESS AND DISCONTINUED OPERATIONSDivested BusinessOn May 10, 2018, we completed the sale and transfer of certain assets associated with our Japan-based long-range optical subassembly business (the "LR4business"), pursuant to an Asset Purchase and Intellectual Property License Agreement, dated April 30, 2018 (the "LR4 Agreement"). The LR4 Agreementprovided that the buyer would pay us $5.0 million within 30 days following the closing of the transactions contemplated by the LR4 Agreement, provide us withthe opportunity to supply components, and would pay us further amounts to be determined for inventory and fixed assets within 60 days of receipt of requiredChinese government approvals. As of September 28, 2018, $7.4 million had been recorded as Prepaid and other current assets and $4.8 million had been recordedas Assets held for sale, as the assets had not been transferred to the buyer as of September 28, 2018.As a result of the transaction, during fiscal year 2018 we recorded a loss on disposal of $34.3 million associated with LR4 business as other expense,comprised of expected proceeds of $17.2 million, subject to receipt of required Chinese government approvals, less the carrying value of assets sold, primarilyincluding customer relationship intangible assets of $27.7 million, inventory of $13.7 million, fixed assets of $7.6 million and goodwill of $2.6 million. Thetransaction did not meet the criteria of discontinued operations. We also entered into a Transition Services Agreement (the "LR4 TSA") with the buyer, pursuant towhich we agreed to incur up to $2.0 million of operating expenses for certain ongoing administrative services to support the buyer for up to six months after theclosing of the transaction. During fiscal year 2019, we incurred no expenses associated with the LR4 TSA. During fiscal year 2018, we incurred $2.0 million ofexpenses associated with the LR4 TSA which were recorded as general and administrative expenses.As of September 27, 2019, we have $14.0 million of receivables, net of a $0.3 million reserve, associated with the LR4 Agreement recorded as Prepaid andother current assets, which includes $11.9 million of additional consideration, net of tax, and $1.5 million associated with the LR4 TSA.80Discontinued OperationsOn October 27, 2017, we entered into a purchase agreement to sell the Compute business. In consideration for the transfer and sale of the Compute business,we received an equity interest in the buyer valued at approximately $36.5 million, representing the carrying value of the assets divested and representing less than20.0% of the buyer's total outstanding equity. The operations of the Compute business were accounted for as discontinued operations through the date ofdivestiture.We also entered into a transition services agreement (the "Compute TSA"), pursuant to which we agreed to perform certain primarily general andadministrative functions on the buyer's behalf during a migration period and for which we are reimbursed for costs incurred. During the fiscal year 2019, wereceived $0.1 million of reimbursements under the Compute TSA, which was recorded as a reduction of our general and administrative expenses. During the fiscalyear 2018, we received $3.6 million of reimbursements under the Compute TSA, which was recorded as a reduction of our general and administrative expenses.In August of fiscal year 2015, we sold our Automotive business, as the Automotive business was not consistent with our long-term strategic vision from botha growth and profitability perspective. Additionally, we entered into a Consulting Agreement with the buyer pursuant to which we were to provide the buyer withcertain non-design advisory services for a period of two years following the closing of the transaction for up to $15.0 million, from which we have recorded $7.5million as other income during both fiscal years 2017 and 2016. No income was recognized during fiscal years 2019 or 2018. During fiscal year 2017, we received$18.0 million, the full amount of the indemnification escrow.The accompanying Consolidated Statements of Operations includes the following operating results related to these discontinued operations (in thousands): Fiscal Years 2018 2017Revenue (1)$— $660Cost of revenue (1)(596) 2,252Gross profit (loss)596 (1,592)Operating expenses: Research and development (1)5,251 29,167Selling, general and administrative (1)1,560 13,840Total operating expenses6,811 43,007Loss from discontinued operations (1)(6,215) (44,599)Other income (2)— 7,500Gain on sale (2)— 18,022Loss income before income taxes(6,215) (19,077)Income tax provision (benefit)— —Loss income from discontinued operations(6,215) (19,077) Cash flow used in Operating Activities (1)(10,734) (42,776)Cash flow from Investing Activities (2)— 25,522(1) Amounts are associated with the Compute business.(2) Amounts are associated with the Automotive business.8124. EARNINGS PER SHAREThe following table set forth the computation for basic and diluted net income (loss) per share of common stock (in thousands, except per share data): Fiscal Years 2019 2018 2017Numerator: Loss from continuing operations$(383,798) $(133,762) $(150,416)Loss from discontinued operations— (6,215) (19,077)Net loss(383,798) (139,977) (169,493)Warrant liability gain— (27,646) —Net loss attributable to common stockholders$(383,798) $(167,623) $(169,493)Denominator: Weighted average common shares outstanding-basic65,686 64,741 60,704Dilutive effect of warrants— 570 —Weighted average common shares outstanding-diluted65,686 65,311 60,704Common stock earnings per share-basic: Continuing operations$(5.84) $(2.07) $(2.48)Discontinued operations— (0.10) (0.31)Net common stock earnings per share-basic$(5.84) $(2.16) $(2.79)Common stock earnings per share-diluted: Continuing operations$(5.84) $(2.47) $(2.48)Discontinued operations— (0.10) (0.31)Net common stock earnings per share-diluted$(5.84) $(2.57) $(2.79)As of September 27, 2019, we had warrants outstanding which were reported as a liability on the consolidated balance sheet. During fiscal years 2019and 2018, we recorded gains of $0.8 million and $27.6 million, respectively, associated with adjusting the fair value of the warrants, in the ConsolidatedStatements of Operations primarily as a result of declines in our stock price. When calculating earnings per share we are required to adjust for the dilutive effect ofoutstanding common stock equivalents, including adjustment to the numerator for the dilutive effect of contracts that must be settled in common stock. During thefiscal year ended September 27, 2019, we excluded the effects of the warrant gain and the 214,303 of potential shares of common stock issuable upon exercise ofwarrants as the inclusion would be anti-dilutive. During the fiscal year ended September 28, 2018, we adjusted the numerator to exclude the warrant gain $27.6million, and we also adjusted the denominator for the dilutive effect of the incremental warrant shares of 569,667 under the treasury stock method. For the fiscalyears 2018, the table above excludes the effects of 375,940 shares of potential shares of common stock issuable upon exercise of stock options, restricted stockand restricted stock units as the inclusion would be anti-dilutive. The table excludes the effects of 386,552 and 1,877,401 shares for fiscal years 2019 and 2017,respectively, of potential shares of common stock issuable upon exercise of stock options, restricted stock, restricted stock units and warrants as the inclusionwould be anti-dilutive.25. SUPPLEMENTAL CASH FLOW INFORMATIONAs of September 27, 2019 and September 28, 2018, we had $0.6 million and $4.0 million, respectively, in unpaid amounts related to purchases of propertyand equipment included in accounts payable and accrued liabilities. These amounts have been excluded from the payments for purchases of property andequipment in the accompanying Consolidated Statements of Cash Flows until paid.In January 2017, we issued common stock with a fair value of $465.1 million in connection with the AppliedMicro Acquisition. This was accounted for as anon-cash transaction as no shares were purchased or sold as part of the transaction.During fiscal years 2019 and 2018, we capitalized $1.5 million and $18.4 million, respectively, of net construction costs relating to the 144 ChelmsfordStreet facility, of which $0.3 million and $12.7 million, respectively, were accounted for as a non-cash transaction as the costs were paid by the developer.During fiscal year 2018, we divested the Compute business with net assets valued at approximately $36.5 million in exchange for a $36.5 million equityinterest in Compute. During fiscal years 2019 and 2018, we recorded $7.5 million and $10.4 million, respectively, of losses associated with this investment basedon our proportionate share of the losses of Compute.82The following is supplemental cash flow information regarding non-cash investing and financing activities (in thousands): Fiscal Years 2019 2018 2017 Cash paid for interest$34,157 $29,698 $30,529 Cash (refunded) paid for income taxes$(1,931) $3,559 $(3,161)26. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)The components of accumulated other comprehensive income (loss), net of income taxes, are as follows: Foreign CurrencyItems Other Items TotalBalance - September 29, 2017$3,139 $(162) $2,977Foreign currency translation loss, net of tax(502) — (502)Unrealized loss on short-term investments, net of tax— (287) (287)Balance - September 28, 20182,637 (449) 2,188Foreign currency translation gain, net of tax1,693 — 1,693Unrealized gain on short-term investments, net of tax— 477 477Balance at September 27, 2019$4,330 $28 $4,35827. GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATIONWe have one reportable operating segment that designs, develops, manufactures and markets semiconductors and modules. The determination of reportableoperating segments is based on the chief operating decision maker’s ("CODM") definition of the business and the nature and use of financial information providedfor the purposes of assessing performance and making operating decisions. The Company's CODM is its President and Chief Executive Officer. The results ofoperations provided to and analyzed by the CODM are at the consolidated level and accordingly, key resources and assessments of performance are performed atthe consolidated level. The Company assesses its determination of operating segments at least annually. We continue to evaluate our internal reporting structureand the potential impact of any changes on our segment reporting.For information regarding revenue by geographic regions, based upon customer locations, see Note 3 - Revenue. Information regarding long-lived assets indifferent geographic regions is presented below (in thousands): As of September 27, 2019 September 28, 2018Long-Lived Assets by Geographic Region United States$116,037 $122,888Asia Pacific (1)8,917 24,702Other Countries (2)7,693 2,333Total$132,647 $149,923(1) Asia Pacific represents Taiwan, Japan, India, Thailand, South Korea, Malaysia, the Philippines, Vietnam and China.(2) No international country or region represented greater than 10% of the total net long-lived assets as of the dates presented, other than the Asia-Pacific region aspresented above.The following is a summary of customer concentrations as a percentage of total sales and accounts receivable as of and for the periods presented: Fiscal YearsRevenue2019 2018 2017Customer A16% 13% 11%Customer B7% 6% 10% September 27, 2019 September 28, 2018Accounts Receivable Customer A24% 19%Customer C10% 26%83No other customer represented more than 10% of revenue or accounts receivable in the periods presented in the accompanying consolidated financialstatements. In fiscal years 2019, 2018 and 2017, our top ten customers represented an aggregate of 54%, 57% and 52% of total revenue, respectively.28. QUARTERLY FINANCIAL DATA (UNAUDITED)(In thousands, except per share data) First Quarter SecondQuarter Third Quarter FourthQuarter Fiscal Year Fiscal Year 2019 Revenue$150,689 $128,465 $108,306 $112,248 $499,708 Gross profit76,625 57,330 33,828 52,925 220,708 (Loss) income from continuing operations(23,396) (46,204) (324,714) 10,516 (383,798) Per share data (2) (Loss) income from continuing operations, basic$(0.36) $(0.71) $(4.93) $0.16 $(5.84) Per share data (2) (3) (Loss) income from continuing operations, diluted$(0.44) $(0.71) $(4.95) $0.16 $(5.84) Fiscal Year 2018 Revenue$130,925 $150,414 $137,872 $151,187 $570,398 Gross profit60,954 65,601 48,169 70,982 245,706 Loss from continuing operations(16,970) (15,466) (85,210) (16,116) (133,762) Loss from discontinued operations (1)(5,599) (18) (220) (378) (6,215) Per share data (2) Loss from continuing operations, basic$(0.26) $(0.24) $(1.31) $(0.25) $(2.07) Loss from discontinued operations, basic$(0.09) $0.00 $0.00 $(0.01) $(0.10) Per share data (2) (3) Loss from continuing operations, diluted$(0.49) $(0.50) $(1.31) $(0.29) $(2.47) Loss from discontinued operations, diluted$(0.09) $0.00 $0.00 $(0.01) $(0.10)(1)During fiscal year 2017, we announced a plan to divest the Compute business of AppliedMicro, and have included the results of the Compute business as discontinuedoperations in each subsequent quarter.(2)Earnings per share calculations for each of the quarters are based on the weighted average number of shares outstanding and included common stock equivalents in eachperiod. Therefore, the sums of the quarters do not necessarily equal the full year earnings per share.(3)Diluted loss per share for the fiscal first and third quarters of 2019 and the fiscal first, second and fourth quarters of 2018 excluded $5.5 million, $1.9 million, $14.6million, $17.0 million and $2.8 million, respectively, related to warrant liability gain.ITEM 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.An evaluation was performed, 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 September 27, 2019. Based on this evaluation, ourprincipal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 27, 2019.84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) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, thecompany’s principal executive and principal financial officers 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 and includes those policies and procedures that:•Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of thecompany;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of managementand directors of the company; and•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that couldhave a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.Our management assessed the effectiveness of our internal control over financial reporting as of September 27, 2019. In making this assessment, thecompany’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated 2013 Framework.Based on this assessment, our management concluded that, as of September 27, 2019, our internal control over financial reporting is effective based on thosecriteria.The effectiveness of our internal control over financial reporting as of September 27, 2019 has been audited by Deloitte & Touche LLP, an independentregistered public accounting firm, as stated in their report which is included herein.Changes in Internal Control over Financial ReportingThere have been no changes in the Company’s internal control over financial reporting that occurred during the Company's fiscal quarter endedSeptember 27, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.85Report of Independent Registered Public Accounting FirmTo the stockholders and the Board of Directors of MACOM Technology Solutions Holdings, Inc.Opinion on Internal Control over Financial ReportingWe have audited the internal control over financial reporting of MACOM Technology Solutions Holdings, Inc. and subsidiaries (the “Company”) as ofSeptember 27, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as ofSeptember 27, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedfinancial statements as of and for the year ended September 27, 2019, of the Company and our report dated November 25, 2019, expressed an unqualified opinionon those financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control Over Financial Reporting” appearing inItem 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicablerules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understandingof internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our auditprovides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ Deloitte & Touche LLPBoston, MassachusettsNovember 25, 2019ITEM 9B. OTHER INFORMATION.None.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.86The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after September 27, 2019.We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer,principal financial officer, principal accounting officer or controller, and persons performing similar functions. We make available our code of business conductand 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 code ofbusiness 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.ITEM 11. EXECUTIVE COMPENSATION.The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after September 27, 2019.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.Certain information required by this item is incorporated herein by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholdersto be filed with the SEC within 120 days after September 27, 2019.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 Stock 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 March2012. The following table provides information regarding securities authorized for issuance as of September 27, 2019 under our equity compensation plans.Plan Category (a)Number of securities to beissued upon exercise ofoutstanding options, warrantsand rights(1) (b)Weighted-average exerciseprice of outstanding options,warrants and rights(1) (c)Number of securitiesremaining available for futureissuance under equitycompensation plans (excludingsecurities reflected in column(a))(2)(3)Equity Compensation Plans Approved by Security Holders 1,657,514 $13.09 19,095,586Equity Compensation Plans Not Approved by Security Holders — — —Total 1,657,514 $13.09 19,095,586(1) Does not include 2,612,950 unvested shares outstanding as of September 27, 2019 in the form of restricted stock awards or restricted stock units under our 2012 Plan,which do not require the payment of any consideration by the recipients.(2) The 2012 Plan contains an “evergreen” provision, pursuant to which the number of shares of our common stock available for issuance under the 2012 Plan can beincreased on the first day of each fiscal year by the lesser of (a) 4.0% of our outstanding common stock on a fully diluted basis as of the end of our immediately precedingfiscal 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 increasesin previous years that are not actually issued will continue to be available for issuance under the 2012 Plan.(3) The 2012 ESPP contains an “evergreen” provision, pursuant to which the number of shares of our common stock available for issuance under the 2012 ESPP can beincreased on the first day of each fiscal year by the lesser of (a) 1.25% of our outstanding common stock on a fully diluted basis as of the end of our immediately precedingfiscal 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 inprevious 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 2020 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after September 27, 2019.87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 2020 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after September 27, 2019.88PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.(a)Financial Statements (included in" Item 8. - Financial Statements and Supplementary Data" of this AnnualReport):Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of September 27, 2019 and September 28, 2018Consolidated Statements of Operations for the Fiscal Years Ended September 27, 2019, September 28, 2018 andSeptember 29, 2017Consolidated Statements of Stockholders’ Equity and Comprehensive (Loss) Income for the Fiscal Years EndedSeptember 27, 2019, September 28, 2018 and September 29, 2017Consolidated Statements of Cash Flows for the Fiscal Years September 27, 2019, September 28, 2018 and September29, 2017Notes to Consolidated Financial Statements(b)ExhibitsThe exhibits required by Item 601 of Regulation S-K are filed herewith and incorporated by reference herein.ExhibitNumberDescription2.1Purchase Agreement by and among MACOM Connectivity Solutions, LLC, Project Denver Holdings LLC, and MACOMTechnology Solutions Holdings, Inc., dated October 27, 2017 (incorporated by reference to Exhibit 2.1 to our Current Reporton Form 8-K filed on October 27, 2017).2.2Asset Purchase and Intellectual Property License Agreement, dated as of April 30, 2018, by and among CIG Shanghai Co.,Ltd., MACOM Japan Limited and MACOM Technology Solutions Holdings, Inc (solely with respect to Sections 2.5 and12.16 thereof) (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on May 15, 2018).2.3Amendment to Asset Purchase and Intellectual Property License Agreement, dated as of May 10, 2018, by and amongMACOM Japan Limited and CIG Shanghai Co., Ltd. (incorporated by reference to Exhibit 2.2 to our Current Report onForm 8-K filed on May 15, 2018).3.1Fifth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report onForm 8-K filed on June 2, 2016).3.2Third Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed onJune 2, 2016).4.1Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to our RegistrationStatement on Form S-1 (File No. 333-175934) filed on November 23, 2011).4.2Form of Common Stock Purchase Warrant issued on December 21, 2010 (incorporated by reference to Exhibit 4.3 ourRegistration Statement on Form S-1 (File No. 333-175934) filed on August 1, 2011).4.3Second Amended and Restated Investor Rights Agreement, dated February 28, 2012 (incorporated by reference to Exhibit4.2 to Amendment No. 6 to our Registration Statement on Form S-1 (File No. 333-175934) filed on February 28, 2012).4.4First Amendment to the Second Amended and Restated Investor Rights Agreement, dated May 20, 2013 (incorporated byreference to Exhibit 4.5 to our Registration Statement on Form S-3 (File No. 333-188728) filed on May 21, 2013).4.5Second Amendment to the Second Amended and Restated Investor Rights Agreement, dated February 2, 2015 (incorporatedby reference to Exhibit 4.5 to our Registration Statement on Form S-3 ASR (File No. 333-201827) filed on February 2,2015).4.6Third Amendment to the Second Amended and Restated Investor Rights Agreement, dated June 6, 2018 (incorporated byreference to Exhibit 4.6 to our Registration Statement on Form S-3 ASR (File No. 333-225509) filed on June 8, 2018).10.1*Form of Indemnification Agreement between MACOM Technology Solutions Holdings, Inc. and each of its directors andexecutive 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 on October 21, 2011).10.2*MACOM Technology Solutions Holdings, Inc. Amended and Restated 2009 Omnibus Stock Plan, as amended (incorporatedby reference to Exhibit 10.2 to our Annual Report on Form 10-K filed on November 28, 2012).8910.3*Form of Incentive Stock Option Agreement under the MACOM Technology Solutions Holdings, Inc. 2009 Omnibus StockPlan (incorporated by reference to Exhibit 10.3 to our Registration Statement on Form S-1 (File No. 333-175934) filed onAugust 1, 2011).10.4*Form of Restricted Stock Agreement under the MACOM Technology Solutions Holdings, Inc. 2009 Omnibus Stock Plan(incorporated by reference to Exhibit 10.4 to our Registration Statement on Form S-1 (File No. 333-175934) filed on August1, 2011).10.5*MACOM Technology Solutions Holdings, Inc. 2012 Omnibus Incentive Plan, as amended (incorporated by reference toExhibit 10.5 to our Annual Report on Form 10-K filed on November 28, 2012).10.6*Form of Restricted Stock Unit Award Agreement under the MACOM Technology Solutions Holdings, Inc. 2012 OmnibusIncentive Plan (Time-Based and Performance-Based) (incorporated by reference to Exhibit 10.6 to our Annual Report onForm 10-K filed on November 16, 2018).10.7*Form of Nonqualified Stock Option Agreement under the MACOM Technology Solutions Holdings, Inc. 2012 OmnibusIncentive Plan (Performance-Based) (incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K filed onNovember 16, 2018).10.8*M/A-COM Technology Solutions Holdings, Inc. 2012 Employee Stock Purchase Plan, as amended. (incorporated byreference to Exhibit 10.4 to our Quarterly Report on Form 10-Q filed on February 2, 2015).10.9*Offer of Employment to John Croteau, dated September 6, 2012 (incorporated by reference to Exhibit 10.1 to our CurrentReport on Form 8-K filed on September 7, 2012).10.10*Separation Agreement, by and between John Croteau and MACOM Technology Solutions Inc., dated July 11, 2019(incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q filed on August 6, 2019).10.11*Offer of Employment to Robert McMullan, dated December 11, 2013 (incorporated by reference to Exhibit 10.2 to ourCurrent Report on Form 8-K filed on December 16, 2013).10.12*General Release Agreement of Robert J. McMullan, dated July 1, 2019 (incorporated by reference to Exhibit 10.3 to ourQuarterly Report on Form 10-Q filed on August 6, 2019).10.13*Offer of Promotion and Revised Terms of Employment Letter, dated September 24, 2013, between MACOM TechnologySolutions Inc. and Robert Dennehy (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed onFebruary 2, 2015).10.14*Offer of Employment Letter, dated as of December 11, 2013, between MACOM Technology Solutions Inc. and PreetinderVirk (incorporated by reference to Exhibit (d)(8) to Amendment No. 4 to our Tender Offer Statement on Schedule TO filedwith the SEC on December 11, 2013).10.15*Form of Nonqualified Stock Option Agreement under the MACOM Technology Solutions Holdings, Inc. 2012 OmnibusIncentive Plan (incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K filed on November 16, 2018).10.16*Form of Incentive Stock Option Agreement under the MACOM Technology Solutions Holdings, Inc. 2012 OmnibusIncentive Plan (incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K filed on November 16, 2018).10.17*Form of Restricted Stock Award Agreement under the MACOM Technology Solutions Holdings, Inc. 2012 OmnibusIncentive Plan (incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K filed on November 16, 2018).10.18Credit Agreement by and among MACOM Technology Solutions Holdings, Inc., Goldman Sachs Bank USA, asAdministrative Agent, Collateral Agent, Swing Line Lender and an L/C Issuer, and the other agents and lenders party thereto,dated May 8, 2014 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 12, 2014).10.19Incremental Amendment, dated February 13, 2015, among Morgan Stanley Senior Funding, Inc., MACOM TechnologySolutions Holdings, Inc., and Goldman Sachs Bank USA (incorporated by reference to Exhibit 10.1 to our Quarterly Reporton Form 10-Q filed on May 13, 2015).10.20Incremental Term Loan Amendment, dated August 31, 2016, by and among MACOM Technology Solutions Holdings, Inc.,Goldman Sachs Bank USA, as the administrative agent, and the lender party thereto (incorporated by reference to ourCurrent Report on Form 8-K filed August 31, 2016).10.21Lease Agreement for 100 Chelmsford Street by and between MACOM Technology Solutions Holdings, Inc., CPI 100Chelmsford, LLC and CPI 144 Chelmsford, LLC, dated December 28, 2016 (incorporated by reference to Exhibit 10.1 to ourCurrent Report on Form 8-K filed on January 5, 2017).10.22Lease Agreement for 144 Chelmsford Street by and between MACOM Technology Solutions Holdings, Inc., CPI 100Chelmsford, LLC and CPI 144 Chelmsford, LLC, dated December 28, 2016 (incorporated by reference to Exhibit 10.2 to ourCurrent Report on Form 8-K filed on January 5, 2017).10.23MACOM Technology Solutions Holdings, Inc. Amended and Restated Change in Control Plan and Form of ParticipationNotice, amended and restated on February 11, 2017 (incorporated by reference to Exhibit 10.1 to our Current Report on Form8-K filed on February 16, 2017).10.24Second Incremental Amendment, dated as of March 10, 2017, by and among MACOM Technology Solutions Holdings, Inc.,Barclays Bank PLC and Goldman Sachs Bank USA, as Administrative Agent (incorporated by reference to Exhibit 10.1 toour Current Report on Form 8-K filed on March 13, 2017).9010.25Amendment No. 4 to Credit Agreement, dated as of March 10, 2017, by and among MACOM Technology SolutionsHoldings, Inc., the revolving credit lenders and Goldman Sachs Bank USA, as Administrative Agent (incorporated byreference to Exhibit 10.2 to our Current Report on Form 8-K filed on March 13, 2017).10.26Refinancing Amendment, dated as of March 10, 2017, by and among MACOM Technology Solutions Holdings, Inc., thelenders party thereto and Goldman Sachs Bank USA, as Administrative Agent (incorporated by reference to Exhibit 10.3 toour Current Report on Form 8-K filed on March 13, 2017).10.27Second Refinancing Amendment, dated as of May 19, 2017, by and among MACOM Technology Solutions Holdings, Inc.,Morgan Stanley Senior Funding, Inc. and the other term lenders party thereto and Goldman Sachs Bank USA, asAdministrative Agent (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 19, 2017).10.28Second Incremental Term Loan Amendment, dated as of May 19, 2017, by and among MACOM Technology SolutionsHoldings, Inc., Morgan Stanley Senior Funding, Inc., as the initial lender, and Goldman Sachs Bank USA, as AdministrativeAgent (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on May 19, 2017).10.29Amendment No. 8 to Credit Agreement, dated as of May 2, 2018, by and among MACOM Technology Solutions Holdings,Inc., certain revolving credit lenders and Goldman Sachs Bank USA, as Administrative Agent (incorporated by reference toExhibit 10.1 to our Quarterly Report on Form 10-Q filed on August 1, 2018).10.30Amendment No. 9 to Credit Agreement, dated as of May 9, 2018, by and among MACOM Technology Solutions Holdings,Inc., certain revolving credit lenders and Goldman Sachs Bank USA, as Administrative Agent (incorporated by reference toExhibit 10.2 to our Quarterly Report on Form 10-Q filed on August 1, 2018).10.31*Offer of Employment to Stephen G. Daly, dated May 15, 2019 (incorporated by reference to Exhibit 10.1 to our QuarterlyReport on Form 10-Q filed on August 6, 2019).10.32*Offer of Promotion to John F. Kober, dated May 23, 2019 (incorporated by reference to Exhibit 10.2 to our Quarterly Reporton Form 10-Q filed on August 6, 2019).10.33*Consulting Agreement, by and between Vivek Rajgarhia and MACOM Technology Solutions Inc., dated September 13,2019.10.34*General Release Agreement of Vivek Rajgarhia, dated August 21, 2019.10.35*Separation Agreement, by and between Preetinder S. Virk and MACOM Technology Solutions Inc., dated August 5, 2019.10.36*General Release Agreement of Preetinder S. Virk, dated November 11, 201910.37*Form of Restricted Stock Unit Award Agreement under the MACOM Technology Solutions Holdings, Inc. 2012 OmnibusIncentive Plan (Time-Based and Performance-Based).21.1Subsidiaries of Registrant.23.1Consent of Deloitte & Touche LLP.31.1Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of1934, as amended.31.2Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of1934, as amended.32.1Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the SecuritiesExchange Act of 1934, as amended, and 18 U.S.C. §1350.101The following material from the Annual Report on Form 10-K of MACOM Technology Solutions Holdings, Inc. for thefiscal year ended September 27, 2019, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) ConsolidatedStatements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements ofStockholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements and (vii)document and entity information, tagged as blocks of text and including detailed tags.104The cover page for the Annual Report on Form 10-K of MACOM Technology Solutions Holdings, Inc. for the fiscal yearended September 27, 2019, formatted in Inline XBRL and included as Exhibit 101*Management contract or compensatory plan.91ITEM 16. FORM 10-K SUMMARY.None.92SIGNATURESPursuant 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 onits behalf by the undersigned, thereunto duly authorized.Date: November 25, 2019 MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. Registrant By:/s/ Stephen G. Daly Stephen G. Daly President and Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities indicated on November 25, 2019. Signature and Title Signature and Title /s/ Stephen G. Daly /s/ John OcampoStephen G. Daly John OcampoPresident and Chief Executive Officer Chairman of the BoardDirector (Principal Executive Officer) /s/ Susan Ocampo Susan Ocampo/s/ John Kober DirectorJohn Kober Senior Vice President and Chief Financial Officer /s/ Peter Chung Peter Chung(Principal Accounting and Financial Officer) Director /s/ Gil Van Lunsen Gil Van Lunsen Director /s/ Charles Bland Charles Bland Director /s/ Geoffrey Ribar Geoffrey Ribar Director93CONSULTING AGREEMENTTHIS CONSULTING AGREEMENT (this “Agreement”) is made this 13th day of September 2019, by and between MACOM Technology SolutionsInc., a Delaware corporation (“MACOM”), and Vivek Rajgarhia, an individual (“Consultant”).1.Services. Subject to the terms and conditions of this Agreement, MACOM hereby engages Consultant as an independent contractor, andnot as an employee, to be available to MACOM on an on-call, as-needed basis to answer questions and provide business-level support forMACOM’s lightwave business unit and to provide certain monthly deliverables (the “Monthly Deliverables”), as reasonably requested byMACOM (the “Services”), and Consultant hereby accepts such engagement as an independent contractor. Consultant shall not use orengage any other party to perform all or a portion of the Services.2.Term and Compensation. The term of engagement (the “Term”), compensation and provisions for payment thereof shall be as set forth onExhibit A attached hereto. Exhibit A may be amended in writing from time to time, by agreement of Consultant and MACOM.3.Expenses. Consultant shall be responsible for all expenses incurred while performing the Services. This includes, without limitation,license fees, memberships and dues; automobile and other travel expenses; meals and entertainment; insurance premiums.4.Confidentiality. Consultant acknowledges that during the engagement it will have access to and become acquainted with various tradesecrets, inventions, innovations, processes, information, records and specifications owned or licensed by MACOM and/or used by MACOMin connection with the operation of its business including, without limitation, products, machines, methods, manufacture, compositions,inventions, discoveries, trade secrets, secret processes, price lists, logical flow diagrams, computer program (including, without limitation,object and source code, computer language, and methods, techniques or algorithms of organizing or applying the same), customer lists,business plans, internal memoranda, manuals, business forms, or any other information of the business or affairs of MACOM andinformation concerning a third party which MACOM is under an obligation to keep confidential (all herein referred to without limitation as“Confidential Information”). Consultant agrees that it will not disclose any Confidential Information, directly or indirectly, or use any of themin any manner, either during the Term or at any time thereafter. Consultant recognizes that receipt of the MACOM’s ConfidentialInformation is not a license to use such information, except exclusively in the course of Consultant’s engagement with the MACOM. AllConfidential Information, whether prepared by Consultant or otherwise coming into its possession, shall remain the exclusive property ofMACOM. Consultant shall not retain any copies of the Confidential Information without MACOM’s prior written permission. Upon theexpiration or earlier termination of this Agreement, or whenever requested by MACOM, Consultant shall immediately deliver to MACOM allConfidential Information in its possession or under its control. Consultant further agrees that it will not disclose its retention as anindependent contractor or the terms of this Agreement to any person without the prior written consent of MACOM and shall at all timespreserve the confidential nature of its relationship to MACOM and of the services hereunder. The obligations of Consultant under thisSection 4 shall not apply to any such Confidential Information which: (a) is in or comes into the public domain without violation of thisAgreement; (b) is known by Consultant prior to disclosure; (c) is independently developed by Consultant; (d) is received lawfully withoutrestriction by Consultant from a third party subsequent to this Agreement; or (e) is required to be disclosed by court order or governmentalagency, provided that Consultant promptly notifies MACOM of such process and provides reasonable assistance to MACOM regarding anyprotective order that MACOM may seek.5.“Works-Made-For Hire.” Consultant acknowledges that all works of authorship created by Consultant during and within the scope ofConsultant’s engagement, are the subject of copyright protection and are “works made for hire” as that term is defined in the U.S. CopyrightAct, 17 U.S.C. § 101 (the “Act”), and therefore such works shall be owned by the MACOM. Consultant further agrees that in the event anywork of authorship does not qualify as a “work made for hire” within the Act, then Consultant agrees to and hereby assigns all right, title andinterest in and to such work to the MACOM. Whenever requested to do so by MACOM, Consultant shall, without charge to MACOM, do allsuch acts and execute, acknowledge and/or deliver all such instruments of assignment, transfer and conveyance, and any and all suchfurther instruments and documents, in form and substance reasonably satisfactory to MACOM, as MACOM shall deem necessary oradvisable to vest in MACOM all the right, title and interest of Consultant in and to such works made for hire.6.Conflicts of Interest; No-Hire Provision. Consultant represents that it is free to enter into this Agreement and that this engagement doesnot violate the terms of any agreement between Consultant and any third party. Further, Consultant, in rendering its duties shall not utilizeany invention, discovery, development, improvement, innovation, or trade secret in which it does not have a proprietary interest. During theTerm, Consultant shall devote as much of their productive time, energy and abilities as are reasonably required to perform the Services in atimely and productive manner. For a period of twelve (12) months following any termination, Consultant shall not, directly or indirectly hire,solicit, or encourage to leave MACOM’s employment, any employee, consultant or contractor of MACOM or hire any such employee,consultant or contractor who has left MACOM’s employment or contractual engagement within one year of such employment orengagement.7.Non-Competition. Consultant agrees that during the Term, Consultant shall not, anywhere in the United States or in any other geographicareas worldwide in which MACOM, conducts, conducted or is actively engaged in pursuing the Business (defined below) during the Term,directly or indirectly, including through any affiliate, compete with MACOM with respect to the Business, or own, manage, operate, control,be employed by, provide services to, or otherwise deal with, engage or participate in, or be connected as an owner, partners, equityholder,financing source, principal, sales representative, employee, or member of the board of directors of, or advisor or consultant to, any person(including, but no limited to, an governmental authority or entity) that competes, directly or indirectly, including through an affiliate, withMACOM (each, a “Competitor”). The term “Business” means the manufacturing, selling, distributing, developing, researching and/orservicing of monolithically integrated optoelectronic components based on indium phosphide and/or other semiconductor materials and/orproviding custom integrated microphotonic solutions for optical systems and subsystems. Notwithstanding the foregoing provisions of thisSection 7, Consultant may own securities in any Competitor that is a publicly-held corporation, but only to the extent that Consultant doesnot own, of record or beneficially, more than one percent (1%) of the outstanding beneficial ownership of any such Competitor.8.Right to Injunction. The parties hereto acknowledge that the Services to be rendered by Consultant and its obligations hereunderincluding, without limitations, its obligation under Sections 4, 5 and 6 and the rights and privileges granted to MACOM under this Agreementare of a special, unique, unusual and extraordinary character which gives them a peculiar value, the loss of which cannot be reasonably oradequately compensated by damages in any action at law, and the breach by Consultant of any of the provisions of this Agreement willcause MACOM irreparable injury and damage. Consultant expressly agrees that MACOM shall be entitled to injunctive and other equitablerelief in the event of, or to prevent, a breach of any provision of this Agreement by Consultant. Resort to such equitable relief, however, shallnot be construed to be a waiver of any other rights or remedies that MACOM may have for damages or otherwise. The various rights andremedies of MACOM under this Agreement or otherwise shall be construed to be cumulative, and no one of them shall be exclusive of anyother or of any right or remedy allowed by law.9.Termination. Either party may terminate this Agreement at any time by providing ten (10) working days’ written notice to the other party. Inaddition, if Consultant is convicted of any crime or offense, fails or refuses to comply with the written policies or reasonable directive ofMACOM, is guilty of serious misconduct in connection with performance hereunder, or materially breaches any provision of this Agreement,MACOM may terminate the engagement of Consultant immediately and without prior written notice to Consultant.10.Independent Contractor. This Agreement shall not render Consultant an employee, partner, agent of or joint-venturer with MACOM forany purpose. Consultant is and will remain an independent contractor in its relationship to MACOM and will not become a MACOMemployee. MACOM shall not be responsible for withholding taxes with respect to Consultant’s compensation hereunder. MACOM shall notand shall have no obligation to: (a) (i) withhold FICA (Social Security and Medicare taxes) from Consultant’s payments or make FICApayments on Consultant’s behalf, (ii) make state or federal unemployment compensation contributions or payments on Consultant’s behalf,or (iii) withhold state or federal income tax from Consultant’s payments (collectively referred to as “Taxes”); or (b) obtain workers’compensation insurance or any other insurance coverage of any kind on behalf of Consultant (collectively the “Insurances”). Consultant isnot eligible to participate in any employee pension, health, vacation pay, sick pay or other fringe benefit plan of MACOM (collectively“Benefits”). Consultant and MACOM agree that: (a) the parties will mutually agree on the means, manner and method by which the servicesrequired by this Agreement will be performed; and (b) Consultant has the right to perform the services required by this Agreement at anylocation or time. Consultant specifically agrees to comply at all times with MACOM’s Insider Trading Policy Statement, a copy of which has beenprovided to Consultant by MACOM.11.Indemnification. Consultant shall protect, defend, indemnify and hold MACOM harmless from any damages, losses, expenses or liabilitiesarising or resulting from or in connection with: (a) Consultant’s breach of this Agreement; (b) Consultant’s acts or omissions outside thescope of the Services; (c) Consultant’s negligent acts or omissions in performing the Services and (d) the Taxes, Insurances or Benefits.12.Successors and Assigns; No Third Party Beneficiary Rights. All of the provisions of this Agreement shall be binding upon and inureonly to the benefit of the parties hereto and their respective heirs, if any, successors, and assigns. No provision of this Agreement shall inany way inure to the benefit of any third party (including the public at large) so as to constitute any such person a third party beneficiary ofthis Agreement or any provision hereof, or otherwise give rise to any cause of action in any person not a party hereto.13.Choice of Law; Venue; Attorney Fees. The construction, interpretation, and performance of this Agreement shall be governed by andconstrued in accordance with the laws of the Commonwealth of Massachusetts without regard to conflicts of laws principles. The partieshereto agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated exclusively in the State andFederal courts located in the County of Middlesex, Commonwealth of Massachusetts. The aforementioned choice of venue is intended bythe parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between the parties with respect toor arising out of this Agreement in any jurisdiction other than that specified in this section. Each party hereby waives any right it may have toassert the doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordancewith this Section 13, and stipulates that the State and Federal courts located in the County of Middlesex, Commonwealth of Massachusettsshall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy, or proceeding arisingout of or related to this Agreement. Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction in anyaction against it as contemplated by this Section 13 by registered or certified mail, return receipt requested, postage prepaid, to its addressfor the giving of notices as set forth in this Agreement. Any final judgment rendered against a party in any action or proceeding shall beconclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law. In anylitigation or other proceeding by which one party either seeks to enforce its rights under this Agreement (whether in contract, tort, or both) orseeks a declaration of any rights or obligations under this Agreement, the prevailing party shall be awarded its reasonable attorney fees,and costs and expenses incurred.14.Section Headings; Incorporation of Annexes; Interpretation; and Gender. The headings of the sections herein are inserted forconvenience only and are not intended to affect the meaning or interpretation of this Agreement. The Annexes hereto are incorporated intothis Agreement and shall be deemed a part hereof as if set forth herein in full. References herein to “this Agreement” and the words“herein,” “hereof” and words of similar import refer to this Agreement (including its Annexes as an entirety). In the event of any conflictbetween the provisions of this Agreement and any such Annex the provisions of this Agreement shall control. The pronouns it, its and itselfshall refer to as herein he, she, his, her, himself and herself where appropriate.15.Waiver. Waiver by one party hereto of breach of any provision of this Agreement by the other shall not operate or be construed as acontinuing waiver.16.Assignment. Consultant shall not assign any of its rights under this Agreement, or delegate the performance of any of its duties hereunder,without the prior written consent of MACOM.17.Notices. All notices, demands, consents, approvals or other communications (“Notices”) required or permitted in connection with thisAgreement shall be in writing and shall be personally served, mailed by registered or certified air mail, postage prepaid, or by overnightcourier service, service fee prepaid to the address of each party above, or to such other addresses as may be designated by each Party inwriting from time to time in accordance with this Section 17, with a hard copy to follow via air mail or overnight courier service inaccordance with this Section 17. If such Notice is served personally, notice shall be deemed constructively made at the time of suchpersonal service. If such Notice is given by mail, such Notice shall be conclusively deemed given five days after deposit thereof in theUnited States mail addressed to the party to whom such Notice is to be given.18.Modification or Amendment. No amendment, change or modification of this Agreement shall be valid unless in writing signed by theparties hereto.19.Entire Understanding. This Agreement and any Annex attached hereto constitute the entire understanding and agreement of the parties,and any and all prior agreements, understandings, and representations are hereby terminated and canceled in their entirety and are of nofurther force and effect.20.Unenforceability of Provisions. If any provision of this Agreement, or any portion thereof, is held to be invalid and unenforceable, thenthe remainder of this Agreement shall nevertheless remain in full force and effect.21.Survivability. The obligations of Consultant under Sections 4, 5, 6, 8, 11 and 21 of this Agreement continue beyond the termination,cancellation, or expiration of this Agreement.22.Executed Counterparts; Facsimiles. This Agreement may be executed in any number of counterparts, and all counterparts shall beconsidered together as one agreement. The parties hereto agree that scan or facsimile signatures shall be as effective as if originals.23.Jury Trial Waivers. To the fullest extent permitted by law, and as separately bargained-for-consideration, each party hereby waives anyright to trial by jury in any action, suit, proceeding, or counterclaim of any kind arising out of or relating to this Agreement.IN WITNESS WHEREOF the undersigned have executed this Agreement as of the day and year first written above.MACOM Technology Solutions Inc. Vivek Rajgarhia ConsultantBy:/s/ Ambra R. Roth By:/s/ Vivek RajgarhiaName:Signature of Authorized RepresentativeAmbra R Roth Name:Signature of Authorized RepresentativeVivek RajgarhiaTitle:PrintVice President, General Counsel and Secretary Title:Print CONFIDENTIALGENERAL RELEASE AGREEMENTIn consideration for the severance payments and benefits to be provided to me by MACOM Technology Solutions Inc. (“MACOM”)as set forth in the attached letter dated July 1, 2019, to which I am not otherwise entitled, I, on behalf of myself and my heirs,spouse, executors, administrators, beneficiaries, personal representatives, agents and assigns, hereby completely release and foreverdischarge MACOM, its predecessors (including but not limited to Optomai, Inc.), successors, affiliates, subsidiaries and/or relatedentities and each of its and their past, present, and future officers, directors, stockholders, agents, employees, attorneys, insurers,employee benefit plans, partners, administrators, agents, trustees, representatives, successors and assigns, each individually and intheir formal capacities (collectively with MACOM, the “Releasees”) from any and all claims of any and every kind, nature, andcharacter, known or unknown, foreseen or unforeseen, arising from, connected with or related to the dealings between me and any ofthe Releasees prior to the date of this General Release Agreement (this “Release”).Without limiting the generality of the foregoing, I also specifically release the Releasees from any and all claims arising out of myoffer of employment, my employment or other association, or the termination of my employment or other association with any of theReleasees, including but not limited to claims for wrongful discharge, claims related to any contracts of employment, express orimplied, claims for breach of privacy, defamation or any other tort, claims for attorneys’ fees and costs, claims under the laws of thestate or states where I have provided services to any of the Releasees relating to wages and hours, compensation, overtime,commissions and breaks, claims relating to leaves of absence and reasonable accommodation, and claims relating to harassment,discrimination, retaliation and/or civil rights.This Release also includes, but is not limited to, any and all claims arising under any federal, state and/or municipal law, regulation,ordinance or common law, including but not limited to any claims under Title VII of the Civil Rights Act of 1964, the Equal PayAct, the Family and Medical Leave Act, the Americans With Disabilities Act, the Fair Labor Standards Act, the False Claims Act,the Age Discrimination in Employment Act (the “ADEA”), the Older Workers Benefit Protection Act (the “OWBPA”), the WorkerAdjustment and Retraining Notification Act, the California Fair Employment and Housing Act, the Massachusetts Fair EmploymentPractices Act, the Texas Employment Discrimination Law, the New Jersey Law Against Discrimination, the New Hampshire LawAgainst Discrimination, the New York Human Rights Act, the Oregon Fair Employment Act, and any other federal, state or localstatute, regulation, ordinance or common law. I understand that the only claims that are not covered by this Release are claimsexpressly exempted by law, such as claims that may arise under the ADEA after the effective date of this Release, unemploymentinsurance claims or certain workers’ compensation claims, or claims exempted by the express terms of a written benefit plan.I expressly waive and release any rights or benefits that I have or may have under Section 1542 of the California Civil Code, whichprovides as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect toexist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his orher settlement with the debtor or released party.” Thus, notwithstanding the provisions of Section 1542, and for the purpose ofimplementing a full and complete release and discharge of all Releasees, I expressly acknowledge that this Release is intended toinclude in its effect, without limitation, all claims which I do not know or suspect to exist in my favor against the Releasees, or anyof them, at the time of execution of this Release, and that this Release contemplates the extinguishment of any such claims.I agree that I will not file or cause to be filed any claims, actions, lawsuits, or legal proceedings against any of the Releaseesinvolving any matter occurring up to or on the date of this Release or involving any continuing effects of any acts or practices thatmay have arisen or occurred before the date of this Release. I further agree that I will not participate in a representative capacity, orjoin or participate as a member of a class, collective or representative action instituted by someone else against any of the Releasees,and will expressly opt-out of any such proceeding. Notwithstanding the foregoing, nothing in this Release shall prohibit me fromcontacting, filing of claims with, providing information to or participating in any proceeding before the federal Equal EmploymentOpportunity Commission, Securities and Exchange Commission or any other government agency; provided, however, that I herebywaive any right to recover monetary damages or other personal relief in connection with any such claims or proceedings, with theexception of an award for information provided pursuant to a whistleblower protection law. This Release also does not precludea court action, claim or other legal proceeding to challenge the validity of this Release. If I file a claim, action, lawsuit or legalproceeding in violation of this paragraph, other than a claim pursuant to the ADEA or the OWBPA, I shall be obligated to return allconsideration received for this Release and will be liable for attorney’s fees, costs and expenses incurred by the Releasees or theirinsurer(s) in defending such claim.This Release and its attachments constitutes the entire agreement between the Releasees and me on the matters addressed in thisRelease, provided, however, that I shall remain bound by any agreements related to the arbitration of disputes, confidentiality, returnof property, non-competition, non-solicitation, no-hire, ownership of inventions, and/or ownership/assignment of intellectualproperty rights that I signed with respect to any of the Releasees. I have not been influenced to sign this Release by, nor am I relyingon, any agreement, representation, statement, omission, understanding, or course of conduct by MACOM or any other Releasee thatis not expressly set forth in this Release.I understand and agree that this Release should not be deemed or construed at any time, or for any purpose, as an admission of anyliability or wrongdoing by any Releasee or by me. I also agree that if any provision of this Release is deemed invalid, the remainingprovisions will still be given full force and effect. This Release cannot be orally modified, orally revised, or orally rescinded, andcan only be amended in a written instrument signed by both me and an authorized representative of MACOM. The terms andconditions of this Release will be interpreted and construed in accordance with the law of the state in which I work.Before signing this Release, I have obtained sufficient information to intelligently exercise my own judgment about whether to signit. I acknowledge that MACOM has advised me to consult an attorney before signing this Release. I acknowledge that MACOM hasgiven me twenty-one (21) days in which to consider this Release, and explained to me that if I decide to sign this Release, it shouldnot be dated, signed and returned until after the date that my employment terminates, and if I sign this Release prior to the end of thetwenty one (21) day period, I have done so voluntarily and of my own free will. I understand that once I sign this Release, I shallhave seven (7) calendar days from the date of my signature to revoke this Release. Notice of revocation must be in writing, andsubmitted to MACOM within the seven-day period. This Release shall not become effective or enforceable, and severance benefitsotherwise payable in respect of this Release shall not become payable, until such revocation period has expired. I acknowledge thatthe consideration given for this Release is in addition to anything of value to which I was already entitled absent my signing,delivering and not revoking this Release.Except as otherwise provided by applicable law, at all times following the signing of this Release, I shall not engage in anydisparagement or vilification of any Releasee, my employment experience with any Releasee, or any Releasee’s products, services,agents, representatives, directors, officers, stockholders, attorneys, employees, or affiliates, and I represent that I shall refrain frommaking any false, negative, critical or otherwise disparaging statements, implied or expressed, concerning the management style,methods of doing business, role in the community, treatment of employees or the circumstances and events regarding anyseparation, with regard to any Releasee. For purposes of this Paragraph, “disparagement” or “disparaging” shall refer to the makingof any statements or insinuations, or undertaking any conduct, that would tend to lessen the standing or stature of an institution orperson in the eyes of an ordinary citizen. I acknowledge that I further agree to do nothing that would damage any Releasee’sbusiness reputation or good will, nor will I make any statements to the press regarding the Releasees. For the avoidance of doubt, Ifurther acknowledge that I will not make or post any disparaging comments regarding the Releasees in any sort of internet posting orsocial media forum, such as Facebook, LinkedIn, Twitter, Glassdoor.com, Monster.com, or any similar internet website or onlineplatform The provisions of this paragraph, however, shall not apply to communications with the Equal Employment OpportunityCommission (“EEOC”) or a state or local anti-discrimination agency, nor shall such provisions (or any provision of this Release)prohibit me from reporting possible violations of federal law or regulation to any government agency or entity, including but notlimited to the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General, ormaking other disclosures that are protected under the whistleblower provisions of federal law or regulation. I expressly acknowledgeand agree that if I engage in any conduct in violation of this section, I shall be obligated to return the consideration received underthis Release and will be liable for attorneys’ fees and costs incurred by MACOM or its insurer(s) in enforcing their rights under thisparagraph, as well as any actual damages suffered by MACOM as a result of my conduct. The Release shall otherwise remain in fullforce and effect.I represent and warrant that I have returned all MACOM property and Confidential Information (as defined in the MACOMConfidentiality and Invention Assignment Agreement in Connection with Severance attached hereto, which I am signingconcurrently with this Release) to MACOM, and that I neither possess nor will use any such MACOM property or ConfidentialInformation after the date of this Release. The provisions of this paragraph, however, shall not apply to communications with theEEOC or a state or local anti-discrimination agency, nor shall such provisions prohibit me from reporting possible violations offederal law or regulation to any government agency or entity, including but not limited to the Department of Justice, the Securitiesand Exchange Commission, the Congress and any agency Inspector General, or making other disclosures that are protected underthe whistleblower provisions of federal law or regulation. I further understand that, pursuant to 18 USC Section 1833(b), I shall notbe held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a) inconfidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purposeof reporting or investigating a suspected violation of law; or (b) in a complaint or other document filed in a lawsuit or otherproceeding, if such filing is made under seal. Further, I understand that an individual who files a lawsuit for retaliation by anemployer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the tradesecret information in the court proceeding, if the individual: (i) files any document containing the trade secret under seal; and (ii)does not disclose the trade secret, except pursuant to court order.I have read this Release, and I understand all of its terms. I further acknowledge and agree that I have signed this Releasevoluntarily, without coercion, and with full knowledge of its significance. I am of sound mind and competent to manage my legal,personal and business affairs and enter into a binding agreement in this regard, and am not currently prevented from doing so by theeffects of any intoxicant, drug, medication, health condition or other influence.I agree that any breach of this Release may result in irreparable injury to the Releasees for which there is no adequate remedy at lawand that in the event of such a breach, the Releasees in addition to any other rights or remedies that they may have, shall be entitledto a temporary restraining order and/or preliminary or permanent injunction, restraining me from violations of this Release. I alsoagree that if I violate this Release, the Releasees will be entitled any damages arising from such breach and shall also be entitled torecovertheir costs and expenses, including attorneys’ fees, that are incurred in enforcing their rights under this Release. Each Releasee shallhave an independent right to enforce the terms of this Release against me, without need of any consent or other action by any otherReleasee.I acknowledge that MACOM may have a legal obligation to report the terms of this Release to the federal government pursuant toSection 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA). I represent and warrant that no Medicare orMedicaid liens, claims, demands, subrogated interests, or causes of action of any nature or character exist or have been assertedarising from or related to my employment with MACOM or arising from any claim released above. I further agree that I and not theReleasees shall be responsible for satisfying all such liens, claims, demands, subrogated interests, or cause of action that may existor have been asserted or that may in the future exist or be asserted.[Remainder of Page Intentionally Left Blank] EMPLOYEE’S ACCEPTANCE OF RELEASEI have carefully read, fully understand, and voluntarily agree to all of the terms of this Release in exchange for the severancebenefits to which I would not otherwise be entitled.8/21/19 /s/ Vivek Rajgarhia_____________________________ __________________________________________Date SignatureVivek Rajgarhia______________________________Printed NameAttachments:Letter Regarding Benefits on TerminationMACOM Confidentiality and Invention Assignment Agreement in Connection with Severance BY HANDAugust 5, 2019Preet VirkDear Preet:The purpose of this letter agreement (this “Agreement”) is to confirm the terms of your transition from employment withMACOM Technology Solutions Inc. (the “Company”).1.Transition Period and Separation Date.(a)Effective as of August 5, 2019 (the “Transition Date”) your role as Senior Vice President andGeneral Manager, Networks, of the Company terminated, provided that you will remain employed by the Company as anadvisor to provide certain transition services to the Company through the date that your employment terminates (the“Separation Date”). Provided that you comply in full with your obligations hereunder, it is expected that the Separation Datewill be November 3, 2019. The period beginning on the Transition Date and concluding on the Separation Date is hereinafterreferred to as the “Transition Period”.(b)During the Transition Period, you will continue to receive your base salary, payable at the rate ineffect as of the date hereof, and to participate in all employee benefit plans of the Company accordance with the terms ofthose plans, except that you will not continue to accrue vacation time. During the Transition Period, you shall continue toabide by Company policies and be available on an on-call basis to support the business’s key deliverables as requested by theCompany from time to time, including without limitation, transitioning all of your responsibilities, relationships, and files toany authorized Company designees. You will not incur any business expenses during the Transition Period without theadvance approval of the Chief Executive Officer of the Company.(c)Effective as of the Transition Date, you will be deemed to have resigned from any and all positionsand offices that you hold (as applicable) with the Company or any of its Affiliates, other than your continued employment asa senior advisor through the Transition Period, without any further action required therefor (collectively, the“Resignations”). The Company, on its own behalf and on behalf of its Affiliates, hereby accepts the Resignations as of theTransition Date. For purposes of this Agreement, “Affiliates” means all persons and entities directly or indirectly controlling,controlled by or under common control with the Company.2.Final Salary and Vacation Pay. You will receive, on the Separation Date, pay for all work you haveperformed for the Company through the Separation Date, to the extent not previously paid, as well as pay, at your final baserate of pay, for all vacation days you have earned but not used, determined in accordance with Company policy and asreflected on the books of the Company. You will receive the payments described in this Section 2 regardless of whether ornot you elect to sign this Agreement.3.Severance Benefits. In consideration of your execution of this Agreement, the ECIA (as defined below),and the Supplemental Release (as defined below), as well as your continued compliance with the Continuing Obligations (asdefined in Section 6(a) below):(a)The Company will pay you the severance payments and related benefits to which you are entitledpursuant to Section 7 of the Letter from the Company to you dated December 11, 2013 regarding Offer of Employment withthe Company (the “Employment Agreement” and attached hereto as Exhibit A), which include the following:1.continued salary payments at the rate of $12,115.38 per bi-weekly pay period (the “SeverancePayments”), for a period of six (6) months following your termination date (such period, the“Severance Period”), such that the aggregate amount of Severance Payments potentially payablehereunder is $157,500, subject to normal withholding; and2.to the extent that you or any of your dependents may be covered under the terms of any Companymedical and dental plans immediately prior to the termination of your employment, and you elect tocontinue such coverages at your own expense under the provisions set forth by the ConsolidatedOmnibus Budget Reconciliation Act of 1985 as described below, the Company will provide you withreimbursement for premiums paid for the continuation of such benefits for you and those dependentsfor the same or equivalent coverages through the end of the Severance Period (the “HealthContinuation Payments” and, together with the Severance Payments, the “Severance Benefits”). TheCompany is under no obligation to provide reimbursement for special coverages for you that wouldnot be covered by the plans applicable to employees generally. The reimbursement payable to youpursuant to this paragraph shall be reduced by the amount equal to the contributions required fromtime to time from other employees for equivalent coverages under the Company’s medical or dentalplans. Notwithstanding the foregoing, in the event that the Company’s payment of the HealthContinuation Payments would subject the Company to any tax or penalty under the Patient Protectionand Affordable Care Act (as amended from time to time, the “ACA”) or Section 105(h) of the InternalRevenue Code of 1986, as amended (“Section 105(h)”), or applicable regulations or guidance issuedunder the ACA or Section 105(h), you and the Company agree to work together in good faith,consistent with the requirements for compliance with or exemption from Section 409A of the InternalRevenue Code of 1986, as amended, to restructure such benefit.(b)The Severance Payments and Health Continuation Payments will be made in accordance with theCompany’s regular payroll schedule, and will begin on the first regularly scheduled Company payday occurring after thedate that the Supplemental Release takes effect (i.e., after your Supplemental Release has been signed and any applicablerevocation period has elapsed without your revoking the Supplemental Release); provided, however, that the first suchpayment shall include any installments of Severance Payments and Health Continuation Payments that you would havereceived prior to such pay day had your Supplemental Release been effective on the date of your termination of employment. 4.Acknowledgement of Full Payment and Withholding. You acknowledge and agree that the paymentsprovided under Section 2 of this Agreement are in complete satisfaction of any andall compensation or benefits due to you from the Company or any of its Affiliates, whether for services provided to theCompany or otherwise, through the Separation Date. You further acknowledge that, except as expressly provided hereunder,no further compensation or benefits are owed or will be provided to you by the Company or any of its Affiliates. Allpayments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheldby the Company under applicable law and all other lawful deductions authorized by you.5.Status of Employee Benefits, Paid Time Off, and Expenses.(a)Except for any right you may have to continue your participation and that of your eligibledependents in the Company’s group health plans under the federal law known as “COBRA” or similar applicable law, andsubject to the Health Continuation Payments, your participation in all employee benefit plans of the Company will end as ofthe Separation Date in accordance with the terms of those plans. You will not continue to earn paid time off after theTransition Date, but will be entitled to continued health coverage benefits consistent with your current plan enrollmentsthrough the Separation Date. You will receive information about your COBRA continuation rights under separate cover.(b)On or before the Separation Date, you must submit your final expense reimbursement statementreflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement, and, inaccordance with Company policy, reasonable substantiation and documentation for the same. The Company will reimburseyou for any such authorized and documented expenses within thirty (30) days of receiving such statement pursuant to itsregular business practice.6.Continuing Obligations, Confidentiality and Non-Disparagement.(a)You acknowledge that you will be bound by the Employee Confidentiality and InventionAssignment Agreement (the “ECIA”), which is attached hereto as Exhibit B and which must be executed by you as acondition to your receipt of severance, and any other obligations relating to confidentiality, non-competition, non-solicitation,no-hire, invention assignment and/or any other restrictive covenants in any agreement by and between you and the Companyor any of its Affiliates, to the extent that such obligations survive termination of your employment by the terms thereof(collectively, the “Continuing Obligations”). The obligation of the Company to provide you with payments or benefits underSection 3 of this Agreement, and your right to retain the same, is expressly conditioned upon your continued fullperformance of your obligations hereunder and of the Continuing Obligations.(b)You agree that you will continue to protect Confidential Information, as defined herein, and that youwill never, directly or indirectly, use or disclose it, except as required by applicable law. For purposes of this Agreement,“Confidential Information” means any and all information of the Company or any of its Affiliates that is not generally knownto the public, together with any and all information received by the Company or any of its Affiliates from any third partywith any understanding, express or implied, that the information would not be disclosed.(c)You agree that you will not disclose, directly or by implication, this Agreement or any of its termsor provisions, except to members of your immediate family and to your legal and tax advisors, and then only on conditionthat they agree not to further disclose this Agreement or any of its terms or provisions to others.(d)During the Transition Period and following the Separation Date, you agree (i) to cooperate with theCompany and its Affiliates hereafter with respect to all matters arising during or related to your employment, including butnot limited to all matters in connection with any governmental investigation, litigation or regulatory or other proceedingwhich may have arisen or which may arise following the signing of this Agreement and (ii) to be reasonably available toassist with the transition of your duties and business relationships to Company designees as may be requested by theCompany from time to time. The Company will reimburse you for any reasonable expenses incurred in rendering suchcooperation and approved by the Company in advance.(e)Except as otherwise required by law, you agree that you will never disparage or criticize theCompany, its Affiliates, their business, their management or their products or services, or any of the Released Parties (asdefined in Section 8 below) (including without limitation, in any conversations you may have with any current, prospectiveor former employees, independent contractors, customers, suppliers, vendors, investors, lenders, insurers or other businesspartners of the Company or any of its Affiliates, or in any public forum or with members of the press), and that you will nototherwise do or say anything that could disrupt the good morale of employees of the Company or any of its Affiliates or harmthe interests or reputation of the Company or any of its Affiliates, and you hereby represent that you have not between thedate you received this Agreement and its effective date said or done any of the things proscribed by this Section 6(e).(f)For the avoidance of doubt, (i) nothing contained in this Agreement limits, restricts or in any otherway affects your communicating with any governmental agency or entity, or communicating with any official or staff personof a governmental agency or entity, concerning matters relevant to such governmental agency or entity and (ii) you will notbe held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret (y) in confidence toa federal, state, or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reportingor investigating a suspected violation of law, or (z) in a complaint or other document filed under seal in a lawsuit or otherproceeding; provided, however, that notwithstanding this immunity from liability, you may be held liable if you unlawfullyaccess trade secrets by unauthorized means.7.Return of Company Documents and Other Property. In signing this Agreement, you agree that you willreturn to the Company, on or before the Separation Date, any and all documents, materials and information (whether inhardcopy, on electronic media or otherwise) related to the business of the Company and its Affiliates (whether present orotherwise), and all keys, access cards, credit cards, computer hardware and software, telephones and telephone-relatedequipment and all other property of the Company or any of its Affiliates in your possession or control. Further, you agree thatyou will not retain any copy or derivation of any documents, materials or information (whether in hardcopy, on electronicmedia or otherwise) of the Company or any of its Affiliates. Recognizing that your employment with the Company will beterminating on the Separation Date, you agree that you will not, following the Separation Date, for any purpose, attempt toaccess or use any computer or computer network or system of the Company or any of its Affiliates, including withoutlimitation the electronic mail system. Further, you agree to disclose to the Company, on or before the Separation Date, allpasswords necessary or desirable to obtain access to, or that would assist in obtaining access to, all information which youhave password-protected on any computer equipment, network or system of the Company or any of its Affiliates.8.General Release and Waiver of Claims.(a)In exchange for your continued engagement during the Transition Period and the payments andbenefits provided to you under Section 3 of this Agreement, to which you would not otherwise be entitled, on your ownbehalf and that of your heirs, executors, administrators, beneficiaries, personal representatives and assigns, you agree thatthis Agreement shall be in complete and final settlement of any and all causes of action, rights and claims, whether known orunknown, accrued or unaccrued, contingent or otherwise, that you have had in the past, now have, or might now have, in anyway related to, connected with or arising out of your employment, its termination, your other associations with the Company,its predecessors (including but not limited to Mindspeed Technologies, LLC), successors, affiliates, subsidiaries and/orrelated entities and each of its and their past, present, and future officers, directors, stockholders, agents, employees,attorneys, insurers, employee benefit plans, partners, administrators, agents, trustees, representatives, successors and assigns,each individually and in their formal capacities (collectively with the Company, the “Releasees”) from any and all claims ofany and every kind, nature, and character, known or unknown, foreseen or unforeseen, arising from, connected with orrelated to the dealings between you and any of the Releasees prior to the date of this Agreement. Without limiting thegenerality of the foregoing, you also specifically release the Releasees from any and all claims arising out of your offer ofemployment, your employment or other association, or the termination of your employment or other association with any ofthe Releasees, including but not limited to claims for wrongful discharge, claims related to any contracts of employment,express or implied, claims for breach of privacy, defamation or any other tort, claims for attorneys’ fees and costs, claimsunder the laws of the state or states where you have provided services to any of the Releasees relating to wages and hours,compensation, overtime, commissions and breaks, claims relating to leaves of absence and reasonable accommodation, andclaims relating to harassment, discrimination, retaliation and/or civil rights. This general release of claims also includes, butis not limited to, any and all claims arising under any federal, state and/or municipal law, regulation, ordinance or commonlaw, including but not limited to any claims under Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Familyand Medical Leave Act, the Americans With Disabilities Act, the Fair Labor Standards Act, the False Claims Act, the AgeDiscrimination in Employment Act (the “ADEA”), the Older Workers Benefit Protection Act (the “OWBPA”), the WorkerAdjustment and Retraining Notification Act, the Massachusetts Fair Employment Practices Act, and any other federal, stateor local statute, regulation, ordinance or common law. You understand that the only claims that are not covered by thisgeneral release of claims are claims expressly exempted by law, such as claims that may arise under the ADEA after theeffective date of this Agreement, unemployment insurance claims or certain workers’ compensation claims, or claimsexempted by the express terms of a written benefit plan. You agree that you will not file or cause to be filed any claims,actions, lawsuits, or legal proceedings against any of the Releasees involving any matter occurring up to or on the date of thisAgreement or involving any continuing effects of any acts or practices that may have arisen or occurred before the date ofthis Agreement. You further agree that you will not participate in a representative capacity, or join or participate as a memberof a class, collective or representative action instituted by someone else against any of the Releasees, and will expressly opt-out of any such proceeding. Notwithstanding the foregoing, nothing in this Agreement shall prohibit you from contacting,filing of claims with, providing information to or participating in any proceeding before the federal Equal EmploymentOpportunity Commission, Securities and Exchange Commission or any other government agency; provided, however, thatyou hereby waive any right to recover monetary damages or other personal relief in connection with any such claims orproceedings, with the exception of an award for information provided pursuant to a whistleblower protection law. ThisAgreement also does not preclude a court action, claim or other legal proceeding to challenge the validity of this release ofclaims. If you file a claim, action, lawsuit or legal proceeding in violation of this paragraph, other than a claim pursuant tothe ADEA or the OWBPA, you shall be obligated to return all consideration received for this Agreement and will be liablefor attorney’s fees, costs and expenses incurred by the Releasees or their insurer(s) in defending such claim.(b)Nothing in this Agreement shall be construed to prohibit you from filing a charge with orparticipating in any investigation or proceeding conducted by the federal Equal Employment Opportunity Commission or acomparable state or local agency; provided, however, that you hereby agree to waive your right to recover monetary damagesor other personal relief in any such charge, investigation or proceeding, or in any related complaint or lawsuit, filed by you orby anyone else on your behalf.(c)This Agreement, including the general release and waiver of claims set forth in this Section 8, andthe Supplemental Release, create legally binding obligations, and the Company and its Affiliates therefore advise you toconsult an attorney before signing this Agreement or the Supplemental Release. In signing this Agreement, you give theCompany and its Affiliates assurance that you have signed it voluntarily and with a full understanding of its terms; that youhave had sufficient opportunity of not less than twenty-one (21) days before signing it, to consider its terms and to consultwith an attorney, if you wished to do so, or to consult with any other of those persons to whom reference is made in Section6(c) above; and that you have not relied on any promises or representations, express or implied, that are not set forthexpressly in this Agreement.(d)You agree to sign the general release and waiver of claims in the form attached hereto as Exhibit C(the “Supplemental Release”) within seven (7) days following the Separation Date, which will be at least twenty-one (21)days following the date of your initial receipt of a copy of this Agreement and the Supplemental Release. You further agreethat a signed and unrevoked Supplemental Release is an express condition to your receipt and retention of the severancebenefits described in Section 3 above. You agree that you have had not less than twenty-one (21) days from the date of yourinitial receipt of the Supplemental Release to consider the terms of the Supplemental Release and to consult with an attorney,if you wish to do so, or to consult with any other of those persons to whom reference is made in Section 6(c) of thisAgreement. You may not sign the Supplemental Release before the Separation Date.9.Miscellaneous.(a)This Agreement, including the Supplemental Release, constitutes the entire agreement between youand the Company or any of its Affiliates, and supersedes all prior and contemporaneous communications, agreements andunderstandings, whether written or oral, with respect to your employment, its termination and all related matters, excludingonly the Continuing Obligations and, with respect to any outstanding equity, any applicable award agreements and plandocuments, in each case which shall remain in full force and effect in accordance with their terms, except as expresslymodified herein.(b)This Agreement may not be modified or amended, and no breach shall be deemed to be waived,unless agreed to in writing by you and an expressly authorized representative of the Company. The captions and headings inthis Agreement are for convenience only, and in no way define or describe the scope or content of any provision of thisAgreement.(c)This Agreement may be executed in counterparts, each of which together shall constitute a singleagreement. A signed agreement transmitted by facsimile, electronically in .pdf format or by similar means shall be treated asan original.[Signature page immediately follows.]If the terms of this Agreement are acceptable to you, please sign, date and return it to me within seven (7) days following theSeparation Date. You may revoke this Agreement at any time during the seven (7)-day period immediately following the date ofyour signing by notifying me in writing of your revocation within that period, and this Agreement shall not become effective orenforceable until that seven (7)-day revocation period has expired. If you do not revoke this Agreement, then, on the eighth (8th)day following the date that you signed it, this Agreement shall take effect as a legally binding agreement between you and theCompany on the basis set forth above. You agree that if there have been any changes to a prior version of this Agreement (materialor immaterial), the 21-day consideration period will not be reset. Sincerely,MACOM Technology Solutions Inc.By: _/s/ Ambra R. Roth___________________________Name: Ambra R. RothTitle: Vice President, General Counsel and SecretaryAccepted and agreed:Signature: __/s/ Preetinder Virk___________Preetinder VirkDate: __8/6/2019__________________________Attachments:Letter Regarding Benefits on TerminationGENERAL RELEASE AGREEMENTIn consideration for and as a condition precedent to my receipt of the severance payments and benefits to be provided to me byMACOM Technology Solutions Inc. (“MACOM”) pursuant to Section 7 of that certain letter agreement between MACOM and me,dated December 11, 2013 (the “Offer Letter”) and as set forth in the attached letter dated August 5, 2019, to which I am nototherwise entitled, I, on behalf of myself and my heirs, spouse, executors, administrators, beneficiaries, personal representatives,agents and assigns, hereby completely release and forever discharge MACOM, its predecessors (including but not limited toMindspeed Technologies, LLC), successors, affiliates, subsidiaries and/or related entities and each of its and their past, present, andfuture officers, directors, stockholders, agents, employees, attorneys, insurers, employee benefit plans, partners, administrators,agents, trustees, representatives, successors and assigns, each individually and in their formal capacities (collectively with MACOM,the “Releasees”) from any and all claims of any and every kind, nature, and character, known or unknown, foreseen or unforeseen,arising from, connected with or related to the dealings between me and any of the Releasees prior to the date of this General ReleaseAgreement (this “Release”).Without limiting the generality of the foregoing, I also specifically release the Releasees from any and all claims arising out of myoffer of employment, my employment or other association, or the termination of my employment or other association with any of theReleasees, including but not limited to claims for wrongful discharge, claims related to any contracts of employment, express orimplied, claims for breach of privacy, defamation or any other tort, claims for attorneys’ fees and costs, claims under the laws of thestate or states where I have provided services to any of the Releasees relating to wages and hours, compensation, overtime,commissions and breaks, claims relating to leaves of absence and reasonable accommodation, and claims relating to harassment,discrimination, retaliation and/or civil rights.This Release also includes, but is not limited to, any and all claims arising under any federal, state and/or municipal law, regulation,ordinance or common law, including but not limited to any claims under Title VII of the Civil Rights Act of 1964, the Equal PayAct, the Family and Medical Leave Act, the Americans With Disabilities Act, the Fair Labor Standards Act, the False Claims Act,the Age Discrimination in Employment Act (the “ADEA”), the Older Workers Benefit Protection Act (the “OWBPA”), the WorkerAdjustment and Retraining Notification Act, the California Fair Employment and Housing Act, the Massachusetts Fair EmploymentPractices Act, the Texas Employment Discrimination Law, the New Jersey Law Against Discrimination, the New Hampshire LawAgainst Discrimination, the New York Human Rights Act, the Oregon Fair Employment Act, and any other federal, state or localstatute, regulation, ordinance or common law. I understand that the only claims that are not covered by this Release are claimsexpressly exempted by law, such as claims that may arise under the ADEA after the effective date of this Release, unemploymentinsurance claims or certain workers’ compensation claims, or claims exempted by the express terms of a written benefit plan.I expressly waive and release any rights or benefits that I have or may have under Section 1542 of the California Civil Code, whichprovides as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect toexist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his orher settlement with the debtor or released party.” Thus, notwithstanding the provisions of Section 1542, and for the purpose ofimplementing a full and complete release and discharge of all Releasees, I expressly acknowledge that this Release is intended toinclude in its effect, without limitation, all claims which I do not know or suspect to exist in my favor against the Releasees, or anyof them, at the time of execution of this Release, and that this Release contemplates the extinguishment of any such claims.I agree that I will not file or cause to be filed any claims, actions, lawsuits, or legal proceedings against any of the Releaseesinvolving any matter occurring up to or on the date of this Release or involving any continuing effects of any acts or practices thatmay have arisen or occurred before the date of this Release. I further agree that I will not participate in a representative capacity, orjoin or participate as a member of a class, collective or representative action instituted by someone else against any of the Releasees,and will expressly opt-out of any such proceeding. Notwithstanding the foregoing, nothing in this Release shall prohibit me fromcontacting, filing of claims with, providing information to or participating in any proceeding before the federal Equal EmploymentOpportunity Commission, Securities and Exchange Commission or any other government agency; provided, however, that I herebywaive any right to recover monetary damages or other personal relief in connection with any such claims or proceedings, with theexception of an award for information provided pursuant to a whistleblower protection law. This Release also does not preclude acourt action, claim or other legal proceeding to challenge the validity of this Release. If I file a claim, action, lawsuit or legalproceeding in violation of this paragraph, other than a claim pursuant to the ADEA or the OWBPA, I shall be obligated to return allconsideration received for this Release and will be liable for attorney’s fees, costs and expenses incurred by the Releasees or theirinsurer(s) in defending such claim.This Release and its attachments constitutes the entire agreement between the Releasees and me on the matters addressed in thisRelease, provided, however, that I shall remain bound by any agreements related to confidentiality, return of property, non-competition, non-solicitation, no-hire, ownership of inventions, and/or ownership/assignment of intellectual property rights, andmutual binding arbitration that I signed with respect to any of the Releasees. I have not been influenced to sign this Release by, noram I relying on, any agreement, representation, statement, omission, understanding, or course of conduct by MACOM or any otherReleasee that is not expressly set forth in this Release.I understand and agree that this Release should not be deemed or construed at any time, or for any purpose, as an admission of anyliability or wrongdoing by any Releasee or by me. I also agree that if any provision of this Release is deemed invalid, the remainingprovisions will still be given full force and effect. This Release cannot be orally modified, orally revised, or orally rescinded, andcan only be amended in a written instrument signed by both me and an authorized representative of MACOM. The terms andconditions of this Release will be interpreted and construed in accordance with the law of the state in which I work.Before signing this Release, I have obtained sufficient information to intelligently exercise my own judgment about whether to signit, including but not limited to the information set forth in Section 7 of the Offer Letter. I acknowledge that MACOM has advised meto consult an attorney before signing this Release. I acknowledge that MACOM has given me twenty-one (21) days in which toconsider this Release and explained to me that if I decide to sign this Release, it should not be dated, signed and returned until afterthe date that my employment terminates, and if I sign this Release prior to the end of the twenty one (21) day period, I have done sovoluntarily and of my own free will. I understand that once I sign this Release, I shall have seven (7) calendar days from the date ofmy signature to revoke this Release. Notice of revocation must be in writing, and submitted to MACOM within the seven-dayperiod. This Release shall not become effective or enforceable, and severance benefits otherwise payable in respect of this Releaseshall not become payable, until such revocation period has expired. I acknowledge that the consideration given for this Release is inaddition to anything of value to which I was already entitled absent my signing, delivering and not revoking this Release.At all times following the signing of this Release, I shall not engage in any disparagement or vilification of any Releasee, myemployment experience with any Releasee, or any Releasee’s products, services, agents, representatives, directors, officers,stockholders, attorneys, employees, or affiliates, and I represent that I shall refrain from making any false, negative, critical orotherwise disparaging statements, implied or expressed, concerning the management style, methods of doing business, role in thecommunity, treatmentof employees or the circumstances and events regarding any separation, with regard to any Releasee. For purposes of this Paragraph,“disparagement” or “disparaging” shall refer to the making of any statements or insinuations, or undertaking any conduct, that wouldtend to lessen the standing or stature of an institution or person in the eyes of an ordinary citizen. I acknowledge that I further agreeto do nothing that would damage any Releasee’s business reputation or good will, nor will I make any statements to the pressregarding the Releasees. For the avoidance of doubt, I further acknowledge that I will not make or post any disparaging commentsregarding the Releasees in any sort of internet posting or social media forum, such as Facebook, LinkedIn, Twitter, Glassdoor.com,Monster.com, or any similar internet website or online platform. The provisions of this paragraph, however, shall not apply tocommunications with the Equal Employment Opportunity Commission (“EEOC”) or a state or local anti-discrimination agency, norshall such provisions (or any provision of this Release) prohibit me from reporting possible violations of federal law or regulation toany government agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission,the Congress and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisionsof federal law or regulation. I expressly acknowledge and agree that if I engage in any conduct in violation of this section, I shall beobligated to return the consideration received under this Release and will be liable for attorneys’ fees and costs incurred byMACOM or its insurer(s) in enforcing their rights under this paragraph, as well as any actual damages suffered by MACOM as aresult of my conduct. The Release shall otherwise remain in full force and effect.I represent and warrant that I have returned all MACOM property and Confidential Information (as defined in the MACOMConfidentiality, Non-Solicitation, Non-Interference and Invention Assignment Agreement in Connection with Severance attachedhereto, which I am signing concurrently with this Release) to MACOM, and that I neither possess nor will use any such MACOMproperty or Confidential Information after the date of this Release. The provisions of this paragraph, however, shall not apply tocommunications with the EEOC or a state or local anti-discrimination agency, nor shall such provisions prohibit me from reportingpossible violations of federal law or regulation to any government agency or entity, including but not limited to the Department ofJustice, the Securities and Exchange Commission, the Congress and any agency Inspector General, or making other disclosures thatare protected under the whistleblower provisions of federal law or regulation. I further understand that, pursuant to 18 USC Section1833(b), I shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secretthat is made: (a) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, andsolely for the purpose of reporting or investigating a suspected violation of law; or (b) in a complaint or other document filed in alawsuit or other proceeding, if such filing is made under seal. Further, I understand that an individual who files a lawsuit forretaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individualand use the trade secret information in the court proceeding, if the individual: (i) files any document containing the trade secretunder seal; and (ii) does not disclose the trade secret, except pursuant to court order.I have read this Release, and I understand all of its terms. I further acknowledge and agree that I have signed this Releasevoluntarily, without coercion, and with full knowledge of its significance. I am of sound mind and competent to manage my legal,personal and business affairs and enter into a binding agreement in this regard, and am not currently prevented from doing so by theeffects of any intoxicant, drug, medication, health condition or other influence.I agree that any breach of this Release may result in irreparable injury to the Releasees for which there is no adequate remedy at lawand that in the event of such a breach, the Releasees in addition to any other rights or remedies that they may have, shall be entitledto a temporary restraining order and/or preliminary or permanent injunction, restraining me from violations of this Release. I alsoagree that if I violate this Release, the Releasees will be entitled any damages arising from such breach and shall also be entitled torecovertheir costs and expenses, including attorneys’ fees, that are incurred in enforcing their rights under this Release. Each Releasee shallhave an independent right to enforce the terms of this Release against me, without need of any consent or other action by any otherReleasee.I acknowledge that MACOM may have a legal obligation to report the terms of this Release to the federal government pursuant toSection 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA). I represent and warrant that no Medicare orMedicaid liens, claims, demands, subrogated interests, or causes of action of any nature or character exist or have been assertedarising from or related to my employment with MACOM or arising from any claim released above. I further agree that I and not theReleasees shall be responsible for satisfying all such liens, claims, demands, subrogated interests, or cause of action that may existor have been asserted or that may in the future exist or be asserted.[Remainder of Page Intentionally Left Blank] EMPLOYEE’S ACCEPTANCE OF RELEASEI have carefully read, fully understand, and voluntarily agree to all of the terms of this Release in exchange for the severancebenefits to which I would not otherwise be entitled.[TO BE SIGNED ON OR WITHIN 7 DAYS AFTER SEPARATION DATE]11/11/19 /s/ Preetinder S. Virk_____________________________ __________________________________________Date SignaturePreetinder S. Virk______________________________Printed Name MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.RESTRICTED STOCK UNIT AWARD NOTICE2012 OMNIBUS INCENTIVE PLAN(Time-Based and Performance-Based)MACOM Technology Solutions Holdings, Inc. (the “Company”) has granted to you a Restricted Stock Unit Award (the “Award”). TheAward is subject to all the terms and conditions set forth in this Restricted Stock Unit Award Notice (the “Award Notice”), the RestrictedStock Unit Award Agreement and the Company’s 2012 Omnibus Incentive Plan (the “Plan”), which are either attached hereto or have beenmade available to you via the electronic brokerage account you accessed through www.etrade.com to accept this Award electronically, andwhich are hereby incorporated into the Award Notice in their entirety. Participant: ________________ Grant Date: ________________ Number of Time-Based RestrictedStock Units: _______ Target Number of Performance-Based Restricted Stock Units: _______ Vesting Schedule for Time-Based Restricted Stock Units: The Time-Based Restricted Stock Units will vest with respect to the number ofUnits on the Vesting Dates indicated below:Vesting DateNumber of Restricted Stock Units Vesting________________________________________________________Vesting Schedule for Performance-Based Restricted Stock Units: The number of Performance-Based Restricted Stock Units that becomeearned and vested (if any) will be determined in accordance with the performance measures, targets and methodology set forth in Exhibit Aattached hereto.Additional Terms/Acknowledgement: You acknowledge receipt of, and understand and agree to, the Award Notice, the Restricted StockUnit Award Agreement and the Plan. You further acknowledge that as of the Grant Date, the Award Notice, the Restricted Stock Unit AwardAgreement and the Plan set forth the entire understanding between Participant and the Company regarding the Award and supersede all priororal and written agreements on the subject.MACOM TECHNOLOGY SOLUTIONSHOLDINGS, INC. PARTICIPANT By: Name: Its: Taxpayer ID: Additional Documents: Address: 1. Restricted Stock Unit Award Agreement 2. 2012 Omnibus Incentive Plan 3. Plan Summary MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.2012 OMNIBUS INCENTIVE PLANRESTRICTED STOCK UNIT AWARD AGREEMENTPursuant to your Restricted Stock Unit Award Notice (the “Award Notice”) and this Restricted Stock Unit Award Agreement (this“Agreement”), MACOM Technology Solutions Holdings, Inc. (the “Company”) has granted you a Restricted Stock Unit Award (the“Award”) under its 2012 Omnibus Incentive Plan (the “Plan”) for the number of Time-Based Restricted Stock Units and the targetnumber of Performance-Based Restricted Stock Units indicated in your Award Notice. Capitalized terms not explicitly defined inthis Agreement but defined in the Plan shall have the same definitions as in the Plan.The details of the Award are as follows:1.Vesting and SettlementThe Award will vest and become payable according to the vesting schedule set forth in the Award Notice and Exhibit Athereto, as applicable (the “Vesting Schedule”). One share of the Company’s Common Stock will be issuable for each RestrictedStock Unit that vests and becomes payable. Restricted Stock Units that have vested and are no longer subject to forfeiture accordingto the Vesting Schedule are referred to herein as “Vested Units.” Restricted Stock Units that have not vested and remain subject toforfeiture under the Vesting Schedule are referred to herein as “Unvested Units.” The Unvested Units will vest (and to the extent sovested cease to be Unvested Units remaining subject to forfeiture) and become payable in accordance with the Vesting Schedule(the Unvested and Vested Units are collectively referred to herein as the “Units”). As soon as practicable, but in any event within 30days, after Unvested Units become Vested Units subject to income tax withholdings (as outlined below), the Company will settle theVested Units by issuing to you one share of the Company’s Common Stock for each Vested Unit. The Award will terminate and theUnits will be subject to forfeiture upon your Termination of Service as set forth in Section 2.2.Termination of Award upon Termination of ServiceUnless the Plan Administrator determines otherwise prior to your Termination of Service, upon your Termination of Serviceany portion of the Award that has not vested as provided in Section 1 will immediately terminate and all Unvested Units shallimmediately be forfeited without payment of any further consideration to you.3.Securities Law Compliance3.1 You represent and warrant that you (a) have been furnished with a copy of the Plan and all information which you deemnecessary to evaluate the merits and risks of receipt of the Award, (b) have had the opportunity to ask questions and receive answersconcerning the information received about the Award and the Company, and (c) have been given the opportunity to obtain anyadditional information you deem necessary to verify the accuracy of any information obtained concerning the Award and theCompany.3.2 You hereby agree that you will in no event sell or distribute all or any part of the shares of the Company’s Common Stockthat you receive pursuant to settlement of this Award (the “Shares”) unless (a) there is an effective registration statement under theSecurities Act and applicable state securities laws covering any such transaction involving the Shares or (b) the Company receivesan opinion of your legalcounsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Companyotherwise satisfies itself that such transaction is exempt from registration. You understand that the Company has no obligation toyou to maintain any registration of the Shares with the SEC and has not represented to you that it will so maintain registration of theShares.3.3 You confirm that you have been advised, prior to your receipt of the Shares, that neither the offering of the Shares nor anyoffering materials have been reviewed by any administrator under the Securities Act or any other applicable securities act (the“Acts”) and that the Shares cannot be resold unless they are registered under the Acts or unless an exemption from such registrationis available.3.4 You hereby agree to indemnify the Company and hold it harmless from and against any loss, claim or liability, includingattorneys’ fees or legal expenses, incurred by the Company as a result of any breach by you of, or any inaccuracy in, anyrepresentation, warranty or statement made by you in this Agreement or the breach by you of any terms or conditions of thisAgreement.4.Transfer RestrictionsUnits shall not be sold, transferred, assigned, encumbered, pledged or otherwise disposed of, whether voluntarily or byoperation of law.5.No Rights as StockholderYou shall not have voting or other rights as a stockholder of the Common Stock with respect to the Units.6.Independent Tax AdviceYou acknowledge that determining the actual tax consequences to you of receiving or disposing of the Units and Shares may becomplicated. These tax consequences will depend, in part, on your specific situation and may also depend on the resolution ofcurrently uncertain tax law and other variables not within the control of the Company. You are aware that you should consult acompetent and independent tax advisor for a full understanding of the specific tax consequences to you of receiving the Units andreceiving or disposing of the Shares. Prior to executing this Agreement, you either have consulted with a competent tax advisorindependent of the Company to obtain tax advice concerning the receipt of the Units and the receipt or disposition of the Shares inlight of your specific situation or you have had the opportunity to consult with such a tax advisor but chose not to do so.7.WithholdingYou are ultimately responsible for all taxes arising in connection with this Award (e.g., at vesting and/or upon receipt of theShares), including any domestic or foreign tax withholding obligation required by law, whether national, federal, state or local,including FICA or any other social tax obligation (the “Tax Withholding Obligation”), regardless of any action the Company or anyRelated Company takes with respect to any such Tax Withholding Obligation that arises in connection with this Award. As acondition to the issuance of Shares pursuant to this Award, you will be required to satisfy the Tax Withholding Obligation that arisesupon receipt of the Shares or otherwise. The Company may refuse to issue any Shares to you until you satisfy the Tax WithholdingObligation. The Company may withhold from the shares otherwise payable to you with respect to your Vested Units the number ofwhole shares of the Company’s common stock required to satisfy the minimum applicable Tax Withholding Obligation,the number to be determined by the Company based on the Fair Market Value of the Company’s Common Stock on the date theCompany is required to withhold. The Company will require you to satisfy your Tax Withholding Obligation by instructing andauthorizing the Company and the brokerage firm determined acceptable to the Company for such purpose to sell on your behalf awhole number of Shares from those Shares issuable to you in payment of Vested Units as the Company determines to be appropriateto generate cash proceeds sufficient to satisfy the Tax Withholding Obligation. Notwithstanding the forgoing, to the maximumextent permitted by law, you hereby grant the Company and any Related Company the right to deduct without notice from salary orother amounts payable to you, an amount sufficient to satisfy the Tax Withholding Obligation.8.ClawbackBy accepting this Award, you acknowledge and agree that this Award and all other awards granted to you under the Plan, anyshares issued in respect thereof, and any proceeds and other amounts received in respect of this Award, other awards or such sharesare subject to forfeiture and repayment (i) under the Company’s Compensation Recoupment Policy, as from time to time amendedand in effect; (ii) under any other policy of, or agreement with, the Company or any Related Company that is applicable to you andthat provides for the cancellation, forfeiture, disgorgement, repayment or clawback of incentive compensation; and (iii) to the extentrequired by law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Exchange Act. Acopy of the Company’s Compensation Recoupment Policy as in effect on the date of this Agreement has been provided to you,which you acknowledge and agree is subject to amendment and/or amendment and restatement from time to time.9.General Provisions9.1 Assignment. The Company may assign its forfeiture rights at any time, whether or not such rights are then exercisable, toany person or entity selected by the Company’s Board of Directors.9.2 No Waiver. No waiver of any provision of this Agreement will be valid unless in writing and signed by the person againstwhom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of thesame or a waiver of any other right hereunder.9.3 Undertaking. You hereby agree to take whatever additional action and execute whatever additional documents theCompany may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed oneither you or the Units pursuant to the express provisions of this Agreement.9.4 Successors and Assigns. The provisions of this Agreement will inure to the benefit of, and be binding on, the Companyand its successors and assigns and you and your legal representatives, heirs, legatees, distributees, assigns and transferees byoperation of law, whether or not any such person will have become a party to this Agreement and agreed in writing to join hereinand be bound by the terms and conditions hereof.9.5 No Employment or Service Contract. Nothing in this Agreement will affect in any manner whatsoever the right or powerof the Company, or a Related Company, to terminate your employment or services on behalf of the Company, for any reason, withor without Cause.9.6 Relationship Between The Plan And Your Employment. Awards made under the Plan and any profits or gains made as aresult of such Awards are not pensionable under any pension arrangements of the Company or any Related Company. Participationin this Award is a matter entirely separate from any pension right or entitlement which you may have, and from your terms andconditions of employment.Participation in the Award shall in no respects whatever affect in any way your pension rights (if any), entitlements or terms orconditions of employment, and in particular (but without limiting the generality of the foregoing words) neither the provisions of theAward Notice, the Plan nor this Agreement shall form part of any contract of employment between you and the Company and/or anyRelated Company, nor shall it be taken into account for the purpose of calculating any redundancy or unfair dismissal payment orwrongful dismissal payment, nor shall it confer on you any legal or equitable rights whatsoever against the Company or any RelatedCompany.Participation in the Plan does not impose upon the Company, any Related Company, the Committee or any of their representatives,agents and employees any liability whatsoever (whether in contract, tort, or otherwise howsoever) in connection with:(a) the loss of your Award(s) under the Plan;(b) the loss of your eligibility to be granted Award(s) under the Plan; and/or(c) the manner in which any power or discretion under the Plan is exercised or the failure or refusal of any person to exercise anypower or discretion under the Plan.9.7 Data Protection. By accepting this Award, you hereby consent to personal information obtained in relation to the Plan, theAward Notice and this Agreement being handled by the Company, Related Companies and their delegates, agents or affiliates inaccordance with applicable law. Information in relation to you will be held, used, disclosed and processed for the purposes of: (a)managing and administering the Awards you hold under the Plan; (b) complying with any applicable audit, legal or regulatoryobligations including, without limitation, legal obligations under company law and anti-money laundering legislation; (c) disclosureand transfer whether in your country of residence or elsewhere (including companies situated in countries which may not have thesame data protection laws as your country of residence) to third parties including regulatory bodies, auditors and any of theirrespective related, associated or affiliated companies for the purposes specified above; (d) or for other legitimate business interestsof the Company and Related Companies.EXHIBIT A(For Performance-Based Restricted Stock Units Granted on ____, 20__)This Exhibit A is applicable to the Performance-Based Restricted Stock Units (“PRSUs”) granted by MACOM TechnologySolutions Holdings, Inc. under the 2012 Omnibus Incentive Plan. Capitalized terms not explicitly defined in in this Exhibit A butdefined in the Restricted Stock Unit Award Agreement to which this Exhibit A relates shall have the same definitions as set forththerein.The number of PRSUs that become earned and vested (if any) in each Performance Period will be determined in accordancewith the performance measures, targets and methodology set forth herein.SUBSIDIARIES OF THE REGISTRANT NameJurisdiction of IncorporationMACOM Technology Solutions Inc.DelawareMindspeed Technologies, LLCDelawareNitronex, LLCDelawareBinOptics, LLCDelawareMACOM Connectivity Solutions, LLCDelawareM/A-COM Technology Solutions International LimitedIrelandM/A-COM Technology Solutions (UK) LimitedNorthern IrelandM/A-COM Technology Solutions (Holding) Company LimitedIrelandMACOM Technology Solutions LimitedIrelandM/A-COM Tech Asia Inc.TaiwanMACOM Technology Solutions (Bangalore) Private LimitedIndiaM/A-COM Technology Solutions (Shanghai) Company LimitedChinaMACOM Technology Solutions (HK) LimitedHong KongMACOM Japan LimitedJapanMACOM Technology Solutions Canada Inc.CanadaMACOM Technology Solutions S.A.S.FranceMindspeed Technologies (Mauritius) LimitedMauritiusMACOM Technology Solutions GmbHGermanyMindspeed Technologies Ukraine, LLCUkraineMindspeed Telecommunications Technologies Development (Shenzhen) Company LimitedChinaMindspeed Technologies India Private LimitedIndiaMACOM Technology Solutions (India) LimitedIndiaMACOM Wireless Cayman LimitedCaymanMACOM Wireless (HK) LimitedHong KongEXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statements No. 333-216406, No. 333-209610, No. 333-193098, and No. 333-180219 on Form S-8 andRegistration Statements No. 333-225509 and No. 333-188728 on Form S-3 of our reports dated November 25, 2019, relating to the consolidated financialstatements of MACOM Technology Solutions Holdings, Inc., and the effectiveness of MACOM Technology Solutions Holdings, Inc.’s internal control overfinancial reporting, appearing in this Annual Report on Form 10-K of MACOM Technology Solutions Holdings, Inc. for the year ended September 27, 2019./s/ Deloitte & Touche LLPBoston, MassachusettsNovember 25, 2019EXHIBIT 31.1CERTIFICATION OF THE CEO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Stephen G. Daly, certify that:1.I have reviewed this annual report on Form 10-K of MACOM 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 registrant andhave: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; andd)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; and5.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; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date:11/25/2019 /s/ Stephen G. Daly Stephen G. Daly President and Chief Executive OfficerEXHIBIT 31.2CERTIFICATION OF THE CFO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, John Kober, certify that:1.I have reviewed this annual report on Form 10-K of MACOM 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 registrant andhave: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; andd)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; and5.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; andb)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date:11/25/2019 /s/ John Kober John Kober Senior Vice President and ChiefFinancial Officer EXHIBIT 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002In connection with the Annual Report of MACOM Technology Solutions Holdings, Inc. (the “Company”) on Form 10-K for the fiscal year ended September 27,2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Stephen G. Daly, as President and Chief Executive Officer of theCompany, and John Kober, 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./s/ Stephen G. DalyStephen G. DalyPresident and Chief Executive Officer11/25/2019 /s/ John Kober John Kober Senior Vice President and Chief Financial Officer 11/25/2019

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