 M/A-COM Technology Solutions (MTSI)
November 2013
Exhibit 99.1 |
 2
Forward-Looking Statement Safe Harbor and
Use of Non-GAAP Financial Measures
This presentation contains forward-looking statements based on
management’s beliefs and assumptions and on information currently
available to our management. Forward-looking statements include, among
others, statements concerning the Mindspeed transaction, including those
regarding the potential date of closing of the acquisition, and any potential benefits and synergies, strategic plans,
divestitures, restructuring, cost savings, accretion, and financial and business
expectations associated with the acquisition, as well as any other
statements regarding our plans, beliefs or expectations regarding the transaction or its future business or financial results.
Forward-looking statements include all statements that are not historical
facts and generally may be identified by terms such as
"anticipates,"
"believes,"
"could,"
"estimates,"
"expects,"
"intends,"
"may,"
"plans,"
"potential,”
"predicts,"
"projects,"
"seeks,"
"should,"
"will,"
"would"
or
similar
expressions
and
the
negatives
of
those
terms.
Our forward-looking statements are subject to assumptions, risks and
uncertainties, and are not guarantees of future results. Actual results may
differ materially from the outcomes stated or implied by our forward-looking statements based on any assumptions and risk
factors
we
may
mention
today
or
otherwise,
including
the
factors
set
forth
in
the
press
release
we
issued
November
5,
2013
related
to
the
Mindspeed
acquisition,
our
Quarterly
Report
on
Form
10-Q
filed
with
the
SEC
on
August
5,
2013,
and
other
information
we
file
with
the
SEC,
which
are
publicly-available
on
the
SEC's
EDGAR
database
located
at
www.sec.gov.
We
undertake
no
obligation
to
update
these statements at a later date. All projections in this presentation are made as
of November 5, 2013 only and are not being reaffirmed hereby. MACOM
undertakes no obligation to update them at any future date. We make
references in this presentation to certain financial information calculated on a basis other than in accordance with accounting
principles
generally
accepted
in
the
United
States
(GAAP).
These
non-GAAP
measures
are
provided
as
additional
insight
into
on-going
financial
performance
and
to
enhance
the
user’s
overall
understanding
of
the
potential
impact
of
the
Mindspeed
acquisition.
These
non-
GAAP measures are provided in addition to, and not as a substitute for, or
superior to, measures of financial performance prepared in accordance
with
GAAP.
See
reconciliation
of
MACOM
results
to
the
nearest
GAAP
measure
in
the
appendix.
We
are
unable
to
provide
a
quantitative reconciliation for certain non-GAAP measures presented herein to
the most directly comparable GAAP measure because we cannot reliably
forecast acquisition, integration and other costs related to the Mindspeed acquisition, which are difficult to predict and
estimate. We do not provide a reconciliation for Mindspeed’s historical
non-GAAP information presented. Our fiscal year end is the Friday
closest to September 30th. Fiscal year 2014 will be a 53-week year and the first quarter of fiscal year
2014 will have 14 weeks. |
 3
Tender Offer Information
This
communication
is
for
informational
purposes
only
and
is
not
an
offer
to
purchase
any
shares
of Mindspeed or a solicitation of an offer to sell securities. MACOM and Micro
Merger Sub, Inc. have
filed
a
tender
offer
statement
on
Schedule
TO,
including
an
offer
to
purchase,
a
letter
of
transmittal and related documents, with the United States Securities and Exchange
Commission (the “SEC”) and Mindspeed has filed a
solicitation/recommendation statement on Schedule 14D-9 with the SEC.
The tender offer statement (including an offer to purchase, a related letter of
transmittal and other offer documents) and the solicitation/recommendation
statement contains important information that should be read carefully
before any decision is made with respect to the tender offer. Such
materials are available to Mindspeed stockholders at no expense to them
by
written
request
to
Georgeson
Inc.,
480
Washington
Blvd.,
26th
Floor,
Jersey
City,
NJ
07310
or
by calling (866) 295-3782 (toll-free). In addition, such materials (and
all other offer documents filed
with
the
SEC)
are
available
at
no
charge
on
the
SEC’s
website
at
www.sec.gov. |
 4
MACOM is a leading supplier of high performance RF, µW, and mmW products
Company Snapshot
Strong catalog business with 2,700+ products
Advanced RF design capabilities solving difficult
and complex challenges
Established customer base of 6,000+ customers
$319mm of FY13 revenue
Advanced
RF Design
Diverse
Customer
Base
Financial
Scale and
Stability
Strong
Product
Portfolio
Broad end-
Markets /
Applications
Global
Presence
RF, µ
W and mmW franchise built on 60+ years of innovation |
 5
Leader in high performance RF, µW and mmW analog semiconductors
Broad catalog business of long lifecycle products serving large and diverse end
markets Focused R&D investments in high-growth, high-margin
applications Growth
and
richer
product
mix
driving
gross
and
operating
margin
expansion
Scalable “fab-lite”
manufacturing model with differentiated domestic manufacturing
Strong balance sheet, cash flow and return on capital
Announced definitive agreement to acquire Mindspeed Technologies, Inc. (NASDAQ:
MSPD), with an anticipated closing in December, 2013
Company Highlights |
 6
Leader in High Performance RF, µW and mmW
Source: MACOM estimates based on internal and external (WSTS, ABI Research,
Strategy Analytics, Engalco, Ovum, Infonetics, EJL, NSR, Yole) sources Broad
catalog portfolio and breadth of channel |
 7
Broad Catalog of Specialized Products
Integrated
Circuits
Power Pallets
& Transistors
Passive
Components
Diodes, Switch
Limiters, Switches
Active
Components
Multi-Chip
Modules
1 MHz
Radio Frequency
6 GHz
Microwave
20 GHz
110 GHz
Millimeter Wave
Industrial
Broad-
band
Wireless Data,
Toll Tags
GPS,
Avionic,
Radar
Cellular
DVB,
Satellite
Radio
WiMAX, WLAN,
Access Points
Test
Equipment
Microwave
Radio Links
DBS,
Industrial
Imaging
Satellite Payload
Communications
Industrial
VSAT
Millimeter
Wave Radio
Links
UAV
Datalink
SATCOM
Terminal
Communication
Tracking and
Jamming
Adaptive
Cruise
Control
Scientific
Imaging and
Measurement
Radar
Communications
Broadcast
•
Sticky, value-added technologies
•
Advanced RF, µW and mmW engineering competencies
•
Long product lifecycles
Diverse
Array
of
Products
and
Form
Factors
Serving
a
Broad
Frequency
Spectrum |
 8
Blended Organic Growth Model Targets 2-3x Market CAGR
Source: MACOM estimates based on internal and external (WSTS, ABI Research,
Strategy Analytics, Engalco, Ovum, Infonetics, EJL, NSR, Yole, Moody’s, Dell ‘Oro) sources |
 9
Investment
Focused
on
High
Growth,
High
Margin
(1)
Products
R&D focused on high growth
opportunities with disruptive
technologies
M&A delivering high growth
opportunities based on SiGe
and GaN technologies
New
products
targeting
GM
ranging from low 60% to mid
80% –
many exceed 70%
New products target 70+% gross margins
Focused on Selected High-Growth Opportunities
Deep Commitment to Technology Leadership
Source: MACOM estimates based on internal and external (ABI Research, Strategy
Analytics, Engalco, NSR, Dell’Oro) sources (1) Gross margin is on
non-GAAP basis. |
   10
Large and Diverse End Markets
Note: Percentage of revenue for FY Q4’13.
Servicing transition
from GaAs to GaN
technologies
Demand for improved
situational awareness
on the modern
battlefield
A&D –
28%
Multi-market –
21%
Advanced driver
assistance for
navigation, fuel
efficiency and
reduced emissions
Automotive –
25%
Driven by cloud
computing,
streaming video
and mobile Internet
devices
Networks –
26% |
        11
Mindspeed Acquisition: Strategic Rationale
Aligns with core growth strategy in networking and
100G optical markets
Aligns with core growth strategy in networking and
100G optical markets
Consistent with MACOM’s high performance analog
business model –
high margins, long lifecycles and
sticky customer relationships
Consistent with MACOM’s high performance analog
business model –
high margins, long lifecycles and
sticky customer relationships
Complements MACOM’s strong US presence by adding
a broad customer footprint and sales channel in Asia
Pacific
Complements MACOM’s strong US presence by adding
a broad customer footprint and sales channel in Asia
Pacific
Expands addressable market with high-growth, high-
margin SiGe products and technology
Expands addressable market with high-growth, high-
margin SiGe products and technology
1
2
3
4
Expected to be immediately accretive to gross margin
and EPS with strong operational synergies
Expected to be immediately accretive to gross margin
and EPS with strong operational synergies
5
+ |
   12
Proposed Mindspeed Acquisition Will Add Enterprise
Demand for low
latency and high
bandwidth for
eCommerce and the
Internet of Things
Enterprise |
 13
Enterprise –
100G Optical
PRODUCTS & TECHNOLOGY
KEY CUSTOMERS
APPLICATIONS
100G IN THE NETWORK
Source: MACOM estimates based on internal and external (Infonetics, Dell’Oro)
sources |
 14
100G Optical –
10 Year Cycle of Innovation
Products
Device Technology
Applications
Optomai and Mindspeed acquisitions deliver 30-year heritage of innovation
|
 15
Mindspeed’s SiGe Will Expand MACOM Technology Base |
 16
0
2,000
3,000
$3,600M
2012
GaAs
GaN
LDMOS
SOI
SiGe
SiGe Mindspeed
2017
GaAs
GaN
LDMOS
SOI
SiGe
SiGe Mindspeed
The SiGe Opportunity Space
Served Available Market by Technology
Mindspeed will deliver technology leadership
Will expand SAM in core RF and µw markets
SiGe expands SAM in two directions
Source: MACOM estimates based on internal & external (ABI Research,
Strategy Analytics) sources
SiGe RF IC
~850 transistors (octal)
GaAs MMIC
~60 transistors
Crosspoint switches
2x2 to 288x288
3.2 Gbps to 12.8+ Gbps |
 17
GaN as a Market Dislocator
Gallium Nitride is a wide bandgap semiconductor whose critical electric field is 10x
that of GaAs and 20x that of Silicon enabling unprecedented power and
bandwidth capability |
   18
The GaN Dislocation
0
2,000
2,500
$3,500M
2012
GaAs
GaN
LDMOS
SiGe
SOI
2017
GaAs
GaN
LDMOS
SiGe
SOI
High Performance RF / µW Market by Technology
Copy Exact
0.5µ
0.25µ
0.15µ
90W power transistor in
3x6mm plastic package
MACOM drives GaN innovation
Industry's First Dual Source Supply Chain
GaN growing almost 5x faster than the market
Source: MACOM estimates based on internal & external (ABI Research, Strategy
Analytics) sources |
 19
Aerospace & Defense –
AESA Radar
MMICs
MPAR Module and Board
Transistors
Diodes
Components
X-band AESA RADAR
PRODUCTS & TECHNOLOGY
KEY CUSTOMERS
APPLICATIONS
Source:
MACOM
estimates
based
on
internal
and
external
(Engalco)
sources |
 20
AESA Radar –
20 Year Cycle of Innovation
Products
Device Technology
Applications
60-year heritage of radar innovation |
 21
Aerospace & Defense –
mmW Satellite Link
PRODUCTS & TECHNOLOGY
KEY CUSTOMERS
APPLICATIONS
mmW SATCOM GROWTH
Single Chip T/R Module
GaN Transistor
MELF Diodes
Filters
Source: MACOM estimates based on internal and external (Engalco,NSR) sources
|
 22
mmW Satellite Link –
10 Year Cycle of Innovation
Products
Device Technology
Applications
40-year heritage of satellite link innovation |
 23
Scalable, Fab-lite Manufacturing Strategy |
 24
Mindspeed Will Strengthen our Global Position
Note: Geographic revenue based on the quarter ended June 28, 2013 for MACOM
and Mindspeed. Mindspeed revenue excludes non-recurring revenue related to sales of intellectual property. |
 25
Experienced and Proven Management Team |
 FINANCIAL OVERVIEW |
 27
High-performance analog semiconductor business model
•
Proprietary products
•
Long lifecycles
•
Established customer relationships
Strong and cash generative broad catalog business
Focused R&D investment in new high-growth, high margin (70+%)
products
Strong balance sheet, cash flow and return on capital
Key Financial Highlights
(1) Gross margin is on non-GAAP basis
(1) |
 28
1.
Revenue
for
FY13
for
MACOM
and
Mindspeed.
Mindspeed
revenue
excludes
wireless
business
and
non-recurring
revenue
related
to
sales
of
intellectual
property.
2.
Post
closing
model
is
based
on
MACOM’s
projections
and
assumes
restructuring
and
achievement
of
targeted
synergies.
3.
Amounts
shown
under
MACOM
and
Mindspeed
are
each
companies’
reported
FY
13
results.
Non-GAAP
margins.
4.
Non-GAAP
EPS
(fully
diluted).
Projected Financial Model Post Mindspeed Acquisition
(1)
($ in millions / % of revenue)
LTM Revenue
(3)
$319
$132
N/A
Gross Margin
(3)
45%
~63%
50% –
52%
Operating Margin
(3)
19%
~18%
23% –
25%
Post Closing
Model
(2)
EPS accretion expected to be between $0.15-$0.20 per share in FY 2014
and $0.25-$0.30 per share in FY 2015
(4) |
 29
($ in millions)
MACOM Fiscal 2013 Results & Q1 2014 Guidance
1.
Non-GAAP.
2.
Q2
actual
includes
$0.02
EPS
related
to
CY12
tax
credits.
3.
Guidance
is
as
of
November
5,
2013
and
not
reaffirmed
hereby
Incremental revenue model targets 60% gross margin(1)
contribution REVENUE
GROSS MARGIN
(1)
OPERATING MARGIN
(1)
EPS
(1) |
 30
Margin Expansion Through Growth, Mix Shift and
Acquisition(1) 70%+ GM
< 70% GM
Incremental revenue model targets 60% blended gross margin contribution
(1) Non-GAAP.
Mindspeed
information
excludes
wireless
and
communications
processors
businesses
and
non
recurring
sales
of
intellectual
property. |
 31
MACOM Growth vs. Industry and Peers FY2012 -
FY2013
High Performance RF and uW
Semiconductor Industry
High Performance Analog
Handset Suppliers
Source: Public filings and consensus estimates for FY13
|
 32
Strong Balance Sheet, Cash Flow and Return on Capital
$110
million
in
cash,
zero
debt
and
untapped
$300
million
credit
line
as
of
September
27,
2013
Cash Balance
(1)
Free Cash Flow
(2)
(% of Rev.)
Return on Capital Employed
(2)
($ in millions)
1.
Balances shown are as of the end of the periods presented,
2.
Free Cash Flow and Return on Capital Employed are non-GAAP measures and are
defined in the Appendix. |
 33
Capitalization
MACOM
(1)
Mindspeed
(1)
Post Close
Model
(2)
Cash and cash equivalents
$110.4
$35.0
$30.0
Outstanding debt
-
57.6
214.1
Net outstanding debt
NA
$22.6
$184.1
Leverage ratio (2)
2.1x
Net leverage ratio (2)
1.8x
Model with $214 Million in borrowings against $300 Million Revolver
1)
MACOM and Mindspeed amounts as of September 27, 2013.
2)
Leverage ratios are non-GAAP measures and defined in the Appendix
($ in millions) |
 34
Summary
Continued
revenue growth
through
market share gains
and strength of
catalog business
Accelerating growth
through
targeted acquisitions and
investments in high growth,
defensible markets
Margin expansion
through
acquisition,
high margin new
products
and richer product mix
Increasing profitability
supported
by strong balance sheet |
 APPENDIX |
 36
Unless
otherwise
disclosed,
non-GAAP
financial
information
excludes
amortization
of
intangibles,
share-based
and
other
non-cash
compensation
expense,
restructuring
charges,
certain
litigation
costs,
changes
in
the
carrying
values
of
liabilities
measured
at
fair
value,
contingent
consideration,
other
non-cash
expenses,
earn-out
costs,
exited
leased
facility
costs
and
certain
income
tax
and
other
items.
Management
does
not
believe
that
the
excluded
items
are
reflective
of
underlying
performance.
The
exclusion
of
these
and
other
similar
items
from
the
non-GAAP
presentation
should
not
be
interpreted
as
implying
that
these
items
are
non-recurring,
infrequent
or
unusual.
“Free
Cash
Flow”
(FCF),
a
non-GAAP
financial
measure,
is
cash
flow
from
operations
reduced
by
purchases
of
property
and
equipment.
We
use
free
cash
flow,
and
ratios
based
on
it,
to
conduct
and
evaluate
our
business
because,
although
it
is
similar
to
cash
flow
from
operations,
we
believe
it
typically
will
present
a
more
conservative
measure
of
cash
flows
from
operations
since
purchases
of
property
and
equipment,
are
a
necessary
component
of
ongoing
operations.
Free
cash
flow
has
limitations
due
to
the
fact
that
it
does
not
represent
the
residual
cash
flow
available
for
discretionary
expenditures.
For
example,
free
cash
flow
does
not
incorporate
the
portion
of
payments
representing
principal
reductions
of
debt,
obligations
related
to
capital
leases
and
leases
accounted
for
as
financing
arrangements,
or
cash
payments
for
business
acquisitions.
Therefore,
we
believe
it
is
important
to
view
free
cash
flow
as
a
complement
to
our
entire
consolidated
statements
of
cash
flows.
“Return
on
Capital
Employed”
(ROCE),
also
a
non-GAAP
financial
measure,
is
non-GAAP
operating
income
after
tax
divided
by
the
sum
of
i)
total
assets
(excluding
cash
and
cash
equivalents)
minus
ii)
current
liabilities.
We
use
the
ROCE
financial
performance
ratio
in
order
to
assess
our
income
generation
from
the
point
of
view
of
our
shareholders
and
creditors,
who
provide
us
with
capital
in
the
forms
of
equity
and
debt.
We
believe
that
the
presentation
of
ROCE
and
the
various
supplemental
financial
measures
involved
in
its
calculation
provides
useful
information
to
investors
because
ROCE
can
be
used
to
determine
whether
capital
invested
in
the
Company
yields
competitive
returns.
As
with
free
cash
flow,
return
on
capital
employed
is
used
in
addition
to
and
in
conjunction
with
results
presented
in
accordance
with
GAAP
and
should
not
be
relied
upon
to
the
exclusion
of
GAAP
financial
measures.
Debt
“Leverage
Ratio”,
also
a
non-GAAP
financial
measure,
is
presented
as
outstanding
debt
divided
by
adjusted
earnings
before
interest,
taxes,
depreciation
and
amortization,
all
on
a
non-GAAP
basis
(EBITDA).
When
outstanding
debt
is
reduced
by
available
cash
and
cash
equivalents
in
the
calculation,
this
is
referred
to
as
“Net
Leverage
Ratio”.
Non-GAAP Financial Measures |
 37
($ in thousands)
2010
2011
2012
Fiscal Years
December 28, 2012
March 29, 2013
Three Months Ended
Note:
MTSI’s
fiscal
year
end
is
the
Friday
closest
to
September
30
.
Reconciliation of GAAP to Non-GAAP Results
th |
 38
Reconciliation of GAAP to Non-GAAP Results Continued
Free-Cash Flow (FCF)
($ in thousands)
Q3 FY12
Q4 FY12
Q1 FY13
Q2 FY13
Q3 FY13
Q4 FY13
Revenue
$77,125
$74,563
$75,014
$77,824
$82,225
$83,655
Net cash from operating activities
-
GAAP
8,121
9,075
9,042
12,995
13,447
1,317
Contingent consideration payment
-
-
5,328
-
-
-
Litigation settlement
-
-
-
-
-
7,250
Purchases of property and equipment
(3,846)
(2,168)
(1,580)
(3,117)
(1,969)
(5,103)
Free Cash Flow -
non-GAAP
$4,275
$6,907
$12,790
$9,878
$11,478
$3,464
FCF as % of Revenue using GAAP measures
5.5%
9.3%
9.9%
12.7%
14.0%
-4.5%
FCF as % of Revenue using non-GAAP measures
5.5%
9.3%
17.1%
12.7%
14.0%
4.1% |