| MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. | ||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||
|
(unaudited and in thousands, except per share data) |
||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
|
June 30,
|
March 31,
|
July 1,
|
June 30,
|
July 1,
|
||||||||||||||||||
| Revenue | $ | 194,555 | $ | 186,084 | $ | 142,288 | $ | 532,391 | $ | 391,641 | ||||||||||||
| Cost of revenue | 101,926 | 117,220 | 68,326 | 292,403 | 191,836 | |||||||||||||||||
| Gross profit | 92,629 | 68,864 | 73,962 | 239,988 | 199,805 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||
| Research and development | 38,729 | 39,685 | 26,064 | 108,588 | 77,589 | |||||||||||||||||
| Selling, general and administrative | 46,666 | 62,326 | 35,866 | 145,488 | 105,169 | |||||||||||||||||
| Impairment charges | — | — | 760 | — | 11,765 | |||||||||||||||||
| Restructuring charges | 586 | 469 | 1,092 | 2,342 | 2,100 | |||||||||||||||||
| Total operating expenses | 85,981 | 102,480 | 63,782 | 256,418 | 196,623 | |||||||||||||||||
| Income (loss) from operations | 6,648 | (33,616 | ) | 10,180 | (16,430 | ) | 3,182 | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Warrant liability expense (gain) | (9,085 | ) | (2,573 | ) | 15,339 | (16,481 | ) | (3,741 | ) | |||||||||||||
| Interest expense, net | (7,178 | ) | (7,374 | ) | (4,363 | ) | (21,902 | ) | (13,117 | ) | ||||||||||||
| Other (expense) income, net | (1,139 | ) | (899 | ) | 16 | (2,042 | ) | 36 | ||||||||||||||
| Total other (expense) income | (17,402 | ) | (10,846 | ) | 10,992 | (40,425 | ) | (16,822 | ) | |||||||||||||
| (Loss) income before income taxes | (10,754 | ) | (44,462 | ) | 21,172 | (56,855 | ) | (13,640 | ) | |||||||||||||
| Income tax expense (benefit) | 3,223 | 89,805 | (181 | ) | 93,559 | (6,178 | ) | |||||||||||||||
| (Loss) income from continuing operations | (13,977 | ) | (134,267 | ) | 21,353 | (150,414 | ) | (7,462 | ) | |||||||||||||
| (Loss) income from discontinued operations | (13,700 | ) | 4,136 | 1,199 | (8,358 | ) | 3,794 | |||||||||||||||
| Net (loss) income | $ | (27,677 | ) | $ | (130,131 | ) | $ | 22,552 | $ | (158,772 | ) | $ | (3,668 | ) | ||||||||
| Net (loss) income per share: | ||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (0.22 | ) | $ | (2.21 | ) | $ | 0.40 | $ | (2.53 | ) | $ | (0.14 | ) | ||||||||
| (Loss) income from discontinued operations | (0.21 | ) | 0.07 | 0.02 | (0.14 | ) | 0.07 | |||||||||||||||
| (Loss) income per share - basic | $ | (0.43 | ) | $ | (2.14 | ) | $ | 0.42 | $ | (2.67 | ) | $ | (0.07 | ) | ||||||||
| Diluted: | ||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (0.22 | ) | $ | (2.21 | ) | $ | 0.11 | $ | (2.53 | ) | $ | (0.14 | ) | ||||||||
| (Loss) income from discontinued operations | (0.21 | ) | 0.07 | 0.02 | (0.14 | ) | 0.07 | |||||||||||||||
| (Loss) income per share - diluted | $ | (0.43 | ) | $ | (2.14 | ) | $ | 0.13 | $ | (2.67 | ) | $ | (0.07 | ) | ||||||||
| Shares - Basic | 64,019 | 60,813 | 53,516 | 59,524 | 53,253 | |||||||||||||||||
| Shares - Diluted | 64,019 | 60,813 | 55,288 | 59,524 | 53,253 | |||||||||||||||||
| MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
|
(unaudited and in thousands) |
||||||||||
|
June 30,
|
September
|
|||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 167,606 | $ | 332,977 | ||||||
| Short term investments | 81,641 | 23,776 | ||||||||
| Accounts receivable, net | 129,838 | 108,331 | ||||||||
| Inventories | 120,345 | 114,935 | ||||||||
| Income tax receivable | 20,617 | 21,607 | ||||||||
| Assets held for sale, current | 31,519 | — | ||||||||
| Prepaids and other current assets | 18,284 | 11,318 | ||||||||
| Total current assets | 569,850 | 612,944 | ||||||||
| Property and equipment, net | 121,413 | 99,167 | ||||||||
| Goodwill and intangible assets, net | 933,096 | 379,626 | ||||||||
| Deferred income taxes | 2,070 | 89,606 | ||||||||
| Other long-term assets | 6,450 | 7,208 | ||||||||
| TOTAL ASSETS | $ | 1,632,879 | $ | 1,188,551 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of lease payable | $ | 888 | $ | 1,152 | ||||||
| Current portion of long-term debt obligations | 7,071 | 6,051 | ||||||||
| Liabilities held for sale | 10,719 | — | ||||||||
| Accounts payable, accrued liabilities and other | 82,935 | 84,947 | ||||||||
| Total current liabilities | 101,613 | 92,150 | ||||||||
| Lease payable, less current portion | 15,117 | 2,463 | ||||||||
| Long-term debt obligations, less current portion | 662,260 | 573,882 | ||||||||
| Common stock warrant liability | 54,734 | 38,253 | ||||||||
| Deferred income taxes | 11,731 | 11,765 | ||||||||
| Other long-term liabilities | 8,043 | 7,254 | ||||||||
| Total liabilities | 853,498 | 725,767 | ||||||||
| Stockholders' equity | 779,381 | 462,784 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,632,879 | $ | 1,188,551 | ||||||
| MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
|
(unaudited and in thousands) |
|||||||||||
| Nine Months Ended | |||||||||||
| June 30, 2017 | July 1, 2016 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | (158,772 | ) | $ | (3,668 | ) | |||||
| Adjustments to reconcile loss to net operating cash | 229,591 | 91,282 | |||||||||
| Change in operating assets and liabilities | (22,130 | ) | (33,267 | ) | |||||||
| Net cash provided by operating activities | 48,689 | 54,347 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Acquisition of businesses, net | (231,712 | ) | (85,516 | ) | |||||||
| Purchases, sales and maturities of investments | (58,088 | ) | 15,412 | ||||||||
| Proceeds from discontinued operations | 23,645 | 3,750 | |||||||||
| Sale of businesses and assets | 215 | — | |||||||||
| Purchases of property and equipment | (24,496 | ) | (24,100 | ) | |||||||
| Acquisition of intellectual property | — | (777 | ) | ||||||||
| Net cash used in investing activities | (290,436 | ) | (91,231 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from notes payable | 96,558 | — | |||||||||
| Payments of financing costs | (9,077 | ) | — | ||||||||
| Proceeds from corporate facility financing obligation | 4,250 | — | |||||||||
| Payments of notes payable and assumed debt | (3,954 | ) | (12,178 | ) | |||||||
| Proceeds from stock option exercises and employee stock purchases | 8,162 | 5,336 | |||||||||
| Repurchase of common stock | (18,092 | ) | (9,966 | ) | |||||||
| Other adjustments | (1,296 | ) | (1,195 | ) | |||||||
| Net cash provided by (used in) financing activities | 76,551 | (18,003 | ) | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (175 | ) | (583 | ) | |||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (165,371 | ) | (55,470 | ) | |||||||
| CASH AND CASH EQUIVALENTS — Beginning of period | 332,977 | 122,312 | |||||||||
| CASH AND CASH EQUIVALENTS — End of period | $ | 167,606 | $ | 66,842 | |||||||
| Supplemental disclosure of non-cash activities | |||||||||||
| Issuance of common stock in connection with the AppliedMicro Acquisition | 465,082 | — | |||||||||
| MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. | ||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP RESULTS | ||||||||||||||||||||||||||||||||||||
|
(unaudited and in thousands, except per share data) |
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|
|
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | ||||||||||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | |||||||||||||||||||||||||||
| Gross profit - GAAP | $ | 92,629 | 47.6 | $ | 68,864 | 37.0 | $ | 73,962 | 52.0 | $ | 239,988 | 45.1 | $ | 199,805 | 51.0 | |||||||||||||||||||||
| Amortization expense | 8,416 | 4.3 | 7,277 | 3.9 | 6,440 | 4.5 | 21,694 | 4.1 | 20,249 | 5.2 | ||||||||||||||||||||||||||
| Share-based and non-cash compensation | 956 | 0.5 | 966 | 0.5 | 685 | 0.5 | 2,716 | 0.5 | 1,918 | 0.5 | ||||||||||||||||||||||||||
| Impairment and restructuring charges | — | — | — | — | — | — | — | — | 1,950 | 0.5 | ||||||||||||||||||||||||||
| Acquisition and integration related costs | 11,736 | 6.0 | 31,793 | 17.1 | 422 | 0.3 | 45,075 | 8.5 | 3,102 | 0.8 | ||||||||||||||||||||||||||
| Adjusted gross profit (Non-GAAP) | $ | 113,737 | 58.5 | $ | 108,900 | 58.5 | $ | 81,509 | 57.3 | $ | 309,473 | 58.1 | $ | 227,024 | 58.0 | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | |||||||||||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | ||||||||||||||||||||||||||||
| Operating expenses - GAAP | $ | 85,981 | 44.2 | $ | 102,480 | 55.1 | $ | 63,782 | 44.8 | $ | 256,418 | 48.2 | $ | 196,623 | 50.2 | ||||||||||||||||||||||
| Amortization expense | (10,832 | ) | (5.6 | ) | (7,163 | ) | (3.8 | ) | (6,415 | ) | (4.5 | ) | (24,462 | ) | (4.6 | ) | (17,142 | ) | (4.4 | ) | |||||||||||||||||
| Share-based and non-cash compensation | (9,833 | ) | (5.1 | ) | (11,260 | ) | (6.1 | ) | (6,206 | ) | (4.4 | ) | (30,384 | ) | (5.7 | ) | (24,806 | ) | (6.3 | ) | |||||||||||||||||
| Impairment and restructuring charges | (586 | ) | (0.3 | ) | (469 | ) | (0.3 | ) | (1,852 | ) | (1.3 | ) | (2,342 | ) | (0.4 | ) | (13,865 | ) | (3.5 | ) | |||||||||||||||||
| Litigation costs | (569 | ) | (0.3 | ) | (780 | ) | (0.4 | ) | (818 | ) | (0.6 | ) | (1,610 | ) | (0.3 | ) | (1,159 | ) | (0.3 | ) | |||||||||||||||||
| Acquisition and integration related costs | (2,645 | ) | (1.4 | ) | (22,334 | ) | (12.0 | ) | (1,911 | ) | (1.3 | ) | (29,746 | ) | (5.6 | ) | (7,637 | ) | (2.0 | ) | |||||||||||||||||
| Other | (719 | ) | (0.4 | ) | (183 | ) | (0.1 | ) | — | — | (905 | ) | (0.2 | ) | — | — | |||||||||||||||||||||
| Adjusted operating expenses (Non-GAAP) | $ | 60,797 | 31.2 | $ | 60,291 | 32.4 | $ | 46,580 | 32.7 | $ | 166,969 | 31.4 | $ | 132,014 | 33.7 | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | ||||||||||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | |||||||||||||||||||||||||||
| Income (loss) from operations - GAAP | $ | 6,648 | 3.4 | $ | (33,616 | ) | (18.1 | ) | $ | 10,180 | 7.2 | $ | (16,430 | ) | (3.1 | ) | $ | 3,182 | 0.8 | |||||||||||||||||
| Amortization expense | 19,248 | 9.9 | 14,440 | 7.8 | 12,855 | 9.0 | 46,157 | 8.7 | 37,391 | 9.5 | ||||||||||||||||||||||||||
| Share-based and non-cash compensation | 10,789 | 5.5 | 12,226 | 6.6 | 6,891 | 4.8 | 33,100 | 6.2 | 26,723 | 6.8 | ||||||||||||||||||||||||||
| Impairment and restructuring charges | 586 | 0.3 | 469 | 0.3 | 1,852 | 1.3 | 2,342 | 0.4 | 15,815 | 4.0 | ||||||||||||||||||||||||||
| Litigation costs | 569 | 0.3 | 780 | 0.4 | 817 | 0.6 | 1,610 | 0.3 | 1,157 | 0.3 | ||||||||||||||||||||||||||
| Acquisition and integration related costs | 14,380 | 7.4 | 54,127 | 29.1 | 2,334 | 1.6 | 74,821 | 14.1 | 10,740 | 2.7 | ||||||||||||||||||||||||||
| Other | 719 | 0.4 | 183 | 0.1 | — | — | 905 | 0.2 | — | — | ||||||||||||||||||||||||||
| Adjusted income from operations (Non-GAAP) | $ | 52,939 | 27.2 | $ | 48,609 | 26.1 | $ | 34,929 | 24.5 | $ | 142,505 | 26.8 | $ | 95,008 | 24.3 | |||||||||||||||||||||
| Depreciation expense | 6,739 | 3.5 | 6,173 | 3.3 | 5,278 | 3.7 | 18,447 | 3.5 | 14,021 | 3.6 | ||||||||||||||||||||||||||
| Consulting income | 1,875 | 1.0 | 1,875 | 1.0 | 1,890 | 1.3 | 5,625 | 1.1 | 5,637 | 1.4 | ||||||||||||||||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 61,553 | 31.6 | $ | 56,657 | 30.4 | $ | 42,097 | 29.6 | $ | 166,577 | 31.3 | $ | 114,666 | 29.3 | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | |||||||||||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | ||||||||||||||||||||||||||||
| Net (loss) income - GAAP | $ | (27,677 | ) | (14.2 | ) | $ | (130,131 | ) | (69.9 | ) | $ | 22,552 | 15.8 | $ | (158,772 | ) | (29.8 | ) | $ | (3,668 | ) | (0.9 | ) | ||||||||||||||
| Amortization expense | 19,248 | 9.9 | 14,440 | 7.8 | 12,855 | 9.0 | 46,157 | 8.7 | 37,391 | 9.5 | |||||||||||||||||||||||||||
| Share-based and non-cash compensation | 10,789 | 5.5 | 12,226 | 6.6 | 6,891 | 4.8 | 33,100 | 6.2 | 26,723 | 6.8 | |||||||||||||||||||||||||||
| Impairment and restructuring charges | 586 | 0.3 | 469 | 0.3 | 1,852 | 1.3 | 2,342 | 0.4 | 15,815 | 4.0 | |||||||||||||||||||||||||||
| Warrant liability expense | 9,085 | 4.7 | 2,573 | 1.4 | (15,339 | ) | (10.8 | ) | 16,480 | 3.1 | 3,741 | 1.0 | |||||||||||||||||||||||||
| Non-cash interest, net | 1,122 | 0.6 | 721 | 0.4 | 405 | 0.3 | 2,546 | 0.5 | 1,228 | 0.3 | |||||||||||||||||||||||||||
| Litigation costs | 569 | 0.3 | 780 | 0.4 | 817 | 0.6 | 1,610 | 0.3 | 1,157 | 0.3 | |||||||||||||||||||||||||||
| Acquisition and integration related costs | 14,380 | 7.4 | 54,127 | 29.1 | 2,334 | 1.6 | 74,821 | 14.1 | 10,717 | 2.7 | |||||||||||||||||||||||||||
| Discontinued operations, excluding consulting income | 15,575 | 8.0 | (2,261 | ) | (1.2 | ) | 676 | 0.5 | 13,983 | 2.6 | 1,831 | 0.5 | |||||||||||||||||||||||||
| Other | 719 | 0.4 | 1,055 | 0.6 | — | — | 1,776 | 0.3 | — | — | |||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments | (516 | ) | (0.3 | ) | 85,424 | 45.9 | (5,111 | ) | (3.6 | ) | 81,098 | 15.2 | (19,491 | ) | (5.0 | ) | |||||||||||||||||||||
| Adjusted net income (Non-GAAP) | $ | 43,880 | 22.6 | $ | 39,423 | 21.2 | $ | 27,932 | 19.6 | $ | 115,141 | 21.6 | $ | 75,444 | 19.3 | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | ||||||||||||||||||||||||||||||||||||||
|
Net Income
|
Income (loss)
|
Net Income
|
Income (loss)
|
Net Income
|
Income (loss)
|
Net Income
|
Income (loss)
|
Net Income
|
Income (loss)
|
|||||||||||||||||||||||||||||||||
| Net (loss) income - diluted | $ | (27,677 | ) | $ | (0.43 | ) | $ | (130,131 | ) | $ | (2.14 | ) | $ | 7,213 | $ | 0.13 | $ | (158,772 | ) | $ | (2.67 | ) | $ | (3,668 | ) | $ | (0.07 | ) | ||||||||||||||
| Adjusted (Non-GAAP) | $ | 43,880 | $ | 0.67 | $ | 39,423 | $ | 0.63 | $ | 27,932 | $ | 0.51 | $ | 115,141 | $ | 1.87 | $ | 75,444 | $ | 1.37 | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | ||||||||||||||||
| Shares | Shares | Shares | Shares | Shares | ||||||||||||||||
| Diluted shares - GAAP | 64,019 | 60,813 | 55,288 | 59,524 | 53,253 | |||||||||||||||
| Incremental shares | 1,916 | 2,031 | — | 1,941 | 2,007 | |||||||||||||||
| Adjusted diluted shares (Non-GAAP) | 65,935 | 62,844 | 55,288 | 61,465 | 55,260 | |||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | ||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | |||||||||||||||||||
| Interest expense, net - GAAP | $ | 7,178 | 3.7 | $ | 7,374 | 4.0 | $ | 4,477 | 3.1 | $ | 21,902 | 4.1 | $ | 13,430 | 3.4 | |||||||||||||
| Non-cash interest expense | (1,122 | ) | (0.6 | ) | (721 | ) | (0.4 | ) | (405 | ) | (0.3 | ) | (2,546 | ) | (0.5 | ) | (1,228 | ) | (0.3 | ) | ||||||||
| Adjusted Interest Expense (Non-GAAP) | $ | 6,056 | 3.1 | $ | 6,653 | 3.6 | $ | 4,072 | 2.9 | $ | 19,356 | 3.6 | $ | 12,202 | 3.1 | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | July 1, 2016 | June 30, 2017 | July 1, 2016 | |||||||||||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | ||||||||||||||||||||||||||||
| Cash flow from operations | $ | 27,850 | 14.3 | $ | 432 | 0.2 | $ | 19,249 | 13.5 | $ | 48,689 | 9.1 | $ | 54,347 | 13.9 | ||||||||||||||||||||||
| Capital expenditures | (8,201 | ) | (4.2 | ) | (11,353 | ) | (6.1 | ) | (7,138 | ) | (5.0 | ) | (24,496 | ) | (4.6 | ) | (24,877 | ) | (6.4 | ) | |||||||||||||||||
| AppliedMicro transaction related payments | 419 | 0.2 | 28,114 | 15.1 | — | — | 28,533 | 5.4 | — | — | |||||||||||||||||||||||||||
| Free cash flow (Non-GAAP) | $ | 20,068 | 10.3 | $ | 17,193 | 9.2 | $ | 12,111 | 8.5 | $ | 52,726 | 9.9 | $ | 29,470 | 7.5 | ||||||||||||||||||||||
| Free cash flow as a percentage of adjusted net income | 46 | % | 44 | % | 43 | % | 46 | % | 39 | % | |||||||||||||||||||||||||||
