10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2019

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File Number: 001-35451

MACOM Technology Solutions Holdings, Inc.

(Exact name of registrant as specified in its charter) 

Delaware	27-0306875
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 Chelmsford Street

Lowell, MA 01851

(Address of principal executive offices and zip code)

(978) 656-2500

(Registrant’s telephone number, including area code)

Indicate 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 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate 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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 filer	x	Accelerated 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 financial accounting 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  ¨    No  x

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $0.001 per share	MTSI	Nasdaq Global Select Market

As of May 3, 2019, there were 65,700,409 shares of the registrant’s common stock outstanding.

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

FORM 10-Q

TABLE OF CONTENTS

			Page No.
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)		1
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Comprehensive Loss	3
		Condensed Consolidated Statements of Stockholders’ Equity	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 4.	Controls and Procedures		29
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings		30
Item1A.	Risk Factors		30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		33
Item 6.	Exhibits		34
Signatures			35

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 29, 2019			September 28, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	92,677		$	94,676
Short-term investments	99,708			98,221
Accounts receivable (less allowances of $5,912 and $6,795, respectively)	87,386			97,375
Inventories	119,940			122,837
Income tax receivable	15,765			17,601
Assets held for sale	—			4,840
Prepaid and other current assets	29,783			23,311
Total current assets	$	445,259		$	458,861
Property and equipment, net	149,952			149,923
Goodwill	314,361			314,076
Intangible assets, net	472,570			512,785
Deferred income taxes	2,298			2,272
Other investments	22,123			31,094
Other long-term assets	13,383			13,484
TOTAL ASSETS	$	1,419,946		$	1,482,495
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of lease payable	$	1,194		$	467
Current portion of long-term debt	6,885			6,885
Accounts payable	35,080			41,951
Accrued liabilities	45,430			49,945
Deferred revenue	215			7,757
Total current liabilities	$	88,804		$	107,005
Lease payable, less current portion	29,147			29,023
Long-term debt, less current portion	656,821			658,372
Warrant liability	9,268			13,129
Deferred income taxes	452			389
Other long-term liabilities	18,429			5,902
Total liabilities	$	802,921		$	813,820
Stockholders’ equity:
Common stock	66			65
Treasury stock, at cost	(330		)	(330		)
Accumulated other comprehensive income	3,798			2,188
Additional paid-in capital	1,091,067			1,074,728
Accumulated deficit	(477,576		)	(407,976		)
Total stockholders’ equity	$	617,025		$	668,675
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,419,946		$	1,482,495

See notes to condensed consolidated financial statements.

1

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

	Three Months Ended						Six Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Revenue	$	128,465		$	150,414		$	279,154		$	281,338
Cost of revenue	71,135			84,813			145,199			154,784
Gross profit	57,330			65,601			133,955			126,554
Operating expenses:
Research and development	42,361			41,596			85,885			83,246
Selling, general and administrative	41,998			39,287			84,518			76,922
Impairment charges	—			6,575			—			6,575
Restructuring charges	3,182			1,539			8,160			6,200
Total operating expenses	87,541			88,997			178,563			172,943
Loss from operations	(30,211		)	(23,396		)	(44,608		)	(46,389		)
Other (expense) income
Warrant liability (expense) gain	(1,607		)	17,015			3,862			31,624
Interest expense, net	(9,402		)	(7,970		)	(18,175		)	(15,209		)
Other expense	(4,440		)	(4,139		)	(9,010		)	(4,133		)
Total other (expense) income, net	(15,449		)	4,906			(23,323		)	12,282
Loss before income taxes	(45,660		)	(18,490		)	(67,931		)	(34,107		)
Income tax expense (benefit)	544			(3,024		)	1,669			(1,671		)
Loss from continuing operations	(46,204		)	(15,466		)	(69,600		)	(32,436		)
Loss from discontinued operations	—			(18		)	—			(5,617		)
Net loss	$	(46,204	)	$	(15,484	)	$	(69,600	)	$	(38,053	)
Net loss per share:
Basic loss per share:
Loss from continuing operations	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.50	)
Loss from discontinued operations	—			—			—			(0.09		)
Loss per share - basic	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.59	)
Diluted loss per share:
Loss from continuing operations	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(0.98	)
Loss from discontinued operations	—			—			—			(0.09		)
Loss per share - diluted	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(1.07	)
Shares used:
Basic	65,531			64,549			65,404			64,437
Diluted	65,531			65,132			65,610			65,120

See notes to condensed consolidated financial statements.

2

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Net loss	$	(46,204	)	$	(15,484	)	$	(69,600	)	$	(38,053	)
Unrealized gain (loss) on short-term investments, net of tax	606			(247		)	350			(514		)
Foreign currency translation gain, net of tax	351			4,421			1,260			4,710
Other comprehensive income, net of tax	957			4,174			1,610			4,196
Total comprehensive loss	$	(45,247	)	$	(11,310	)	$	(67,990	)	$	(33,857	)

See notes to condensed consolidated financial statements.

3

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Three Months Ended
										Accumulated Other Comprehensive Income		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Common Stock				Treasury Stock
	Shares		Amount		Shares		Amount
Balance at December 28, 2018	65,395		$	65	(23	)	$	(330	)	$	2,841	$	1,086,052		$	(431,372	)	$	657,256
Stock options exercises	12		—		—		—			—		24			—			24
Vesting of restricted common stock and units	490		1		—		—			—		—			—			1
Shares repurchased for stock withholdings on restricted stock awards	(174	)	—		—		—			—		(3,085		)	—			(3,085		)
Share-based compensation	—		—		—		—			—		8,076			—			8,076
Other comprehensive income, net of tax	—		—		—		—			957		—			—			957
Net loss	—		—		—		—			—		—			(46,204		)	(46,204		)
Balance at March 29, 2019	65,723		$	66	(23	)	$	(330	)	$	3,798	$	1,091,067		$	(477,576	)	$	617,025

	Six Months Ended
										Accumulated Other Comprehensive Income		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Common Stock				Treasury Stock
	Shares		Amount		Shares		Amount
Balance at September 28, 2018	65,202		$	65	(23	)	$	(330	)	$	2,188	$	1,074,728		$	(407,976	)	$	668,675
Stock options exercises	12		—		—		—			—		24			—			24
Vesting of restricted common stock and units	545		1		—		—			—		—			—			1
Issuance of common stock pursuant to employee stock purchase plan	156		—		—		—			—		2,392			—			2,392
Shares repurchased for stock withholdings on restricted stock awards	(192	)	—		—		—			—		(3,426		)	—			(3,426		)
Share-based compensation	—		—		—		—			—		17,349			—			17,349
Other comprehensive income, net of tax	—		—		—		—			1,610		—			—			1,610
Net loss	—		—		—		—			—		—			(69,600		)	(69,600		)
Balance at March 29, 2019	65,723		$	66	(23	)	$	(330	)	$	3,798	$	1,091,067		$	(477,576	)	$	617,025

See notes to condensed consolidated financial statements.

4

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	March 29, 2019			March 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(69,600	)	$	(38,053	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and intangibles amortization	55,478			54,439
Share-based compensation	17,349			15,342
Warrant liability gain	(3,862		)	(31,624		)
Acquired inventory step-up amortization	—			224
Deferred financing cost amortization	2,031			2,536
Deferred income taxes	46			(573		)
Restructuring and impairment related charges	4,696			9,143
Loss on minority equity investment	8,971			4,085
Changes in assets held for sale from discontinued operations	—			(6,237		)
Other adjustments, net	377			841
Change in operating assets and liabilities:
Accounts receivable	9,989			28,992
Inventories	2,904			(9,240		)
Prepaid expenses and other assets	(1,256		)	749
Accounts payable	(4,103		)	(11,438		)
Accrued and other liabilities	1,407			(4,115		)
Income taxes	2,411			(3,915		)
Net cash provided by operating activities	26,838			11,156
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net	(375		)	—
Purchases of property and equipment	(22,600		)	(26,580		)
Proceeds from sales and maturities of short-term investments	86,447			77,853
Purchases of short-term investments	(86,951		)	(21,612		)
Purchases of other investments	—			(5,000		)
Proceeds associated with discontinued operations	—			(263		)
Net cash (used in) provided by investing activities	(23,479		)	24,398
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises and employee stock purchases	2,416			3,252
Payments on notes payable	(3,442		)	(3,442		)
Payments of capital leases and assumed debt	(518		)	(405		)
Repurchase of common stock	(3,426		)	(3,846		)
Proceeds from corporate facility financing obligation	—			1,081
Payments of contingent consideration and other	(577		)	—
Net cash used in financing activities	(5,547		)	(3,360		)
Foreign currency effect on cash	189			397
NET CHANGE IN CASH AND CASH EQUIVALENTS	(1,999		)	32,591
CASH AND CASH EQUIVALENTS — Beginning of period	$	94,676		$	130,104
CASH AND CASH EQUIVALENTS — End of period	$	92,677		$	162,695

See notes to condensed consolidated financial statements.

5

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Information—The accompanying unaudited, condensed consolidated financial statements have been prepared according to the rules and regulations of the United States (the “U.S.”) Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statement of comprehensive loss, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows of MACOM Technology Solutions Holdings, Inc. (“MACOM”, the “Company”, “us”, “we” or “our”) for the periods presented. We prepare our interim financial information using the same accounting principles we use for our annual audited consolidated financial statements. Certain information and note disclosures normally included in the annual audited consolidated financial statements have been condensed or omitted in accordance with prescribed SEC rules. We believe that the disclosures made in our condensed consolidated financial statements and the accompanying notes are adequate to make the information presented not misleading.

The consolidated balance sheet at September 28, 2018 is as reported in our audited consolidated financial statements as of that date. Our accounting policies are described in the notes to our September 28, 2018 consolidated financial statements, which were included in our Annual Report on Form 10-K for our fiscal year ended September 28, 2018 filed with the SEC on November 16, 2018. We recommend that the financial statements included in this Quarterly Report on Form 10-Q be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for our fiscal year ended September 28, 2018.

Principles of Consolidation—We have one reportable segment, semiconductors and modules. The accompanying consolidated financial statements include our accounts and the accounts of our majority-owned subsidiaries. All intercompany balances and transactions 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 and 2018 include 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we typically include the extra week arising in such fiscal years in the first quarter.

Use of Estimates—The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the U.S. ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities during the reporting periods, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, we base estimates and assumptions on historical experience, currently available information and various other factors that management believes to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.

Revenue Recognition—Substantially all of our revenue is derived from sales of high-performance radio frequency ("RF"), microwave, millimeterwave and lightwave semiconductor solutions into three primary markets: Telecom, Data Centers and Industrial and Defense ("I&D"). Revenue is recognized when a customer obtains control of products or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, 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 the contract; and (5) recognize revenue when (or as) we satisfy performance obligations. Sales, value add and other taxes collected on behalf of third parties are excluded 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 products potentially 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 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. Certain contracts may contain multiple performance obligations for which we allocate revenue to each performance obligation on a relative stand-alone selling price.

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 the contractual shipping terms of a contract. Non-product revenue is generally recognized overtime. For each contract, the promise to transfer the control of the products or services, each of which is individually distinct, is considered to be the identified performance obligation. We provide an assurance type warranty which is not sold separately and does not

6

represent a separate performance obligation. Therefore, we account for such warranties under ASC 460, Guarantees, and the 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 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 in written agreements, which require us to assess the potential revenue effects of this variable consideration utilizing the expected value method. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. As such, revenue on sales to customers that include rights of return and pricing programs are recorded net of estimated variable consideration, utilizing the expected value method based on historical sales data. We believe that the judgments and estimates we utilize are reasonable based upon current facts and circumstances, 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 obligations that 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 which revenue 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 of transaction 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 expected to be longer than one year. Capitalizable contract costs were not significant both at the date of adoption and as of March 29, 2019.

We account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the 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 costs to fulfill the promise and not as a separate performance obligation. Shipping and handling costs associated with the distribution of products to customers are recorded in costs of revenue generally when the related product is shipped to the customer.

Recent Accounting Pronouncements—Our Recent Accounting Pronouncements are described in the notes to our September 28, 2018 consolidated financial statements, which were included in our Annual Report on Form 10-K for our fiscal year ended September 28, 2018.

Pronouncements Adopted in Fiscal Year 2019

We adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, on September 29, 2018. The 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 ASC 606 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 initial application. 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 of the 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 were prepared 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 the FASB issued further amendments to this guidance. This update made amendments to the guidance in GAAP on the classification and measurement of financial instruments. The new standard significantly revised an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amended certain disclosure requirements associated with the fair value of financial instruments. 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 or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective 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 securitization transactions and separately identifiable cash flows and application of the predominance principle. The adoption of this update did not have a material impact on our 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 amended the guidance on recognizing the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendment eliminated the exception for an intra entity transfer of an asset other than

7

inventory. The adoption of this updated standard did not have a material impact on our consolidated financial statements and related disclosures.

Pronouncements for Adoption in Subsequent Periods

In February 2016, the FASB issued ASU 2016-02, Leases ("Topic 842"). In September 2017, January, July and December 2018 and March 2019, the FASB issued additional guidance related to Topic 842. The new standard increases transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under Topic 842, leases are classified as either operating or finance, based on criteria similar to current lease accounting, but without explicit bright lines. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. We are evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures and we anticipate that this new guidance will have a material impact on our financial statements as we have a significant number of operating leases.

2. REVENUE

Disaggregation of Revenue

We disaggregate revenue from contracts with customers by markets and geography, as we believe it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The following tables presents our revenue disaggregated by markets and geography (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019	March 30, 2018
Revenue by Market:
Industrial & Defense	$	50,471	$	43,882	107,754	84,596
Data Center	30,657		42,597		73,904	77,358
Telecom	47,337		63,935		97,496	119,384
Total	$	128,465	$	150,414	279,154	281,338

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Revenue by Geographic Region:
United States	$	64,714	$	74,323	$	132,832	$	129,679
China	32,419		38,364		77,041		76,052
Asia Pacific, excluding China (1)	20,598		23,347		44,013		46,232
Other Countries (2)	10,734		14,380		25,268		29,375
Total	$	128,465	$	150,414	$	279,154	$	281,338

(1) Asia Pacific represents Taiwan, Japan, Singapore, India, Thailand, South Korea, Australia, Malaysia, New Zealand, the Philippines and Vietnam.

(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 region as presented above.

Contract Balances

We 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 control to the customer, and therefore revenue is recognized upon delivery of products and services.

The following table presents the changes in contract liabilities during the six months ended March 29, 2019 (in thousands):

	March 29, 2019		September 28, 2018		$ Change		% Change
Contract liabilities	$	8,915	$	7,757	$	1,158	15	%

As of March 29, 2019, approximately $8.7 million of our contract liabilities were recorded as other long-term liabilities on

8

our balance sheet with the remainder recorded as deferred revenue. The increase in contract liabilities during the six months ended March 29, 2019 was primarily from the deferral of revenue for funds received prior to when the customer obtains control of the product or services, partially offset by the recognition of $7.0 million associated with licensing.

During the three and six months ended March 29, 2019, we recognized the following net sales as a result of changes in the contract liabilities balance (in thousands):

	Three Months Ended		Six Months Ended
	March 29, 2019		March 29, 2019
Net revenue recognized in the period from:
Amounts included in contract liabilities at the beginning of the period	$	7,338	$	7,612

3. DIVESTED BUSINESS AND DISCONTINUED OPERATIONS

Divested Business

On May 10, 2018, we completed the sale and transfer of certain assets associated with our Japan-based long-range optical subassembly business (the “LR4 Business”), pursuant to an Asset Purchase and Intellectual Property License Agreement, dated April 30, 2018 (the “LR4 Agreement”). The LR4 Agreement provided 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 with the opportunity to supply components, and would pay us further amounts to be determined for inventory and fixed assets within 60 days of receipt of required government approvals. As of March 29, 2019, we have received $5.0 million of consideration and expect additional consideration before the end of fiscal 2019 of $12.2 million, net of tax, which has been recorded as other current assets. As of September 28, 2018, $7.4 million had been recorded as other current assets and $4.8 million had been recorded as 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 the LR4 Business as other expense, comprised of expected proceeds of $17.2 million, subject to receipt of required government approvals, less the carrying value of assets sold, primarily including 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. The transaction did not meet the criteria of discontinued operations. We also entered into a transition services agreement (the "LR4 TSA") with the buyer, pursuant to which 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 the closing of the transaction. During the three and six months ended March 29, 2019, we have incurred no expenses associated with the LR4 TSA.

Discontinued Operations

On 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, a privately held limited liability company ("Compute"), valued at approximately $36.5 million, and representing less than 20.0% of Compute's total outstanding equity. The operations of the Compute business were accounted for as discontinued operations through the date of divestiture.

We also entered into a transition services agreement (the "Compute TSA"), pursuant to which we agreed to perform certain primarily general and administrative functions on Compute's behalf during a migration period and for which we are reimbursed for costs incurred. During the three months ended March 29, 2019, we received no reimbursements under the Compute TSA. During the six months ended March 29, 2019, we received $0.1 million of reimbursements under the Compute TSA, which was recorded as a reduction of our general and administrative expenses. During the three and six months ended March 30, 2018, we received $1.5 million and $2.5 million, respectively, of reimbursements under the Compute TSA.

9

The accompanying consolidated statements of operations include the following operating results related to these discontinued operations (in thousands):

	Three Months Ended			Six Months Ended
	March 30, 2018			March 30, 2018
Revenue	$	2		$	—
Cost of revenue	(56		)	(596		)
Gross profit	58			596
Operating expenses:
Research and development	(12		)	4,698
Selling, general and administrative	88			1,515
Total operating expenses	76			6,213
Loss from operations	(18		)	(5,617		)
Loss before income taxes	(18		)	(5,617		)
Income tax provision	—			—
Loss from discontinued operations	$	(18	)	$	(5,617	)
Cash flow from operating activities	(18		)	(10,327		)

4. INVESTMENTS

Our short-term investments are invested in corporate bonds and commercial paper, and are classified as available-for-sale. The amortized cost, gross unrealized holding gains or losses, and fair value of our investments by major investment type as of March 29, 2019 and September 28, 2018 are summarized in the tables below (in thousands):

	March 29, 2019
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Corporate bonds	$	28,949	$	97	$	(211	)	$	28,835
Commercial paper	70,885		1		(13		)	70,873
Total short-term investments	$	99,834	$	98	$	(224	)	$	99,708

	September 28, 2018
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Corporate bonds	$	28,731	$	—	$	(460	)	$	28,271
Commercial paper	69,966		—		(16		)	69,950
Total short-term investments	$	98,697	$	—	$	(476	)	$	98,221

The contractual maturities of available-for-sale investments were as follows (in thousands):

 

	March 29, 2019		September 28, 2018
Less than 1 year	$	71,679	$	70,200
Over 1 year	28,029		28,021
Total short-term investments	$	99,708	$	98,221

Available-for-sale investments are reported at fair value and as such, their associated unrealized gains and losses are reported as a separate component of stockholders’ equity within accumulated other comprehensive income.

10

Other Investments— As of March 29, 2019, we held two non-marketable equity investments classified as other long-term investments.

One of these is an investment in a Series B preferred stock ownership of a privately held manufacturing corporation with preferred liquidation rights over other equity shares. As the equity securities do not have a readily determinable fair value and do not qualify for the practical expedient under ASC 820 we have elected to hold this investment at cost less any impairment. As of March 29, 2019, the cost of this investment was $5.0 million. We evaluate this investment for impairment at each balance sheet date, and through March 29, 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 Compute that was acquired in conjunction with the divestiture of the Compute business during the fiscal quarter ended December 29, 2017 and had an initial value of $36.5 million. We have no obligation to provide further funding to Compute. This was a non-cash transaction as we contributed net assets valued at approximately $36.5 million in exchange for this equity interest. This investment value is updated quarterly based on our proportionate share of the losses or earnings of Compute utilizing the equity method. During the three and six months ended March 29, 2019 we recorded losses of $4.4 million and $9.0 million, respectively, associated with this investment as other expense in our consolidated statements of operations. During the three and six months ended March 30, 2018, we recorded losses of $4.1 million associated with this investment. As of March 29, 2019 and September 28, 2018, the carrying value of this investment was $17.1 million and $26.1 million, respectively.

5. FAIR VALUE

We 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 liabilities are 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 with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable 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, including assumptions and judgments made by us.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

We measure certain assets and liabilities at fair value on a recurring basis such as our financial instruments and derivatives. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the three and six months ended March 29, 2019.

Assets and liabilities measured at fair value on a recurring basis consist of the following (in thousands):

	March 29, 2019
	Fair Value		Active Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Money market funds	$	252	$	252	$	—	$	—
Commercial paper	70,873		—		70,873		—
Corporate bonds	28,835		—		28,835		—
Total assets measured at fair value	$	99,960	$	252	$	99,708	$	—
Liabilities
Common stock warrant liability	9,268		—		—		9,268
Total liabilities measured at fair value	$	9,268	$	—	$	—	$	9,268

11

	September 28, 2018
	Fair Value		Active Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Money market funds	$	253	$	253	$	—	$	—
Commercial paper	69,950		—		69,950		—
Corporate bonds	28,271		—		28,271		—
Total assets measured at fair value	$	98,474	$	253	$	98,221	$	—
Liabilities
Contingent consideration	$	585	$	—	$	—	$	585
Common stock warrant liability	13,129		—		—		13,129
Total liabilities measured at fair value	$	13,714	$	—	$	—	$	13,714

As of March 29, 2019 and September 28, 2018, the fair value of the common stock warrants has been estimated using a Black-Scholes option pricing model.

The fair value of the contingent consideration liability was estimated based upon a risk-adjusted present value of the probability-weighted expected payments 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 quantitative information utilized in the fair value calculation of our Level 3 liabilities is as follows:

			Inputs
Liabilities	Valuation Technique	Unobservable Input	March 29, 2019	September 28, 2018
Contingent consideration	Discounted cash flow	Discount rate	N/A	9.2%
		Probability of achievement	N/A	90%
		Timing of cash flows	N/A	1 month
Warrant liability	Black-Scholes model	Volatility	71.9%	60.7%
		Discount rate	2.30%	2.81%
		Expected life	1.7 years	2.2 years
		Exercise price	$14.05	$14.05
		Stock price	$16.71	$20.60
		Dividend rate	—%	—%

The changes in liabilities with inputs classified within Level 3 of the fair value hierarchy consist of the following (in thousands):

	September 28, 2018		Net Realized/Unrealized Losses (Gains) Included in Earnings			Purchases and Issuances		Sales and Settlements			March 29, 2019
Contingent consideration	$	585	$	65		$	—	$	(650	)	$	—
Common stock warrant liability	$	13,129	$	(3,861	)	$	—	$	—		$	9,268

	September 29, 2017		Net Realized/Unrealized Gains Included in Earnings			Purchases and Issuances		Sales and Settlements		March 30, 2018
Contingent consideration	$	1,679	$	(549	)	$	—	$	—	$	1,130
Common stock warrant liability	$	40,775	$	(31,624	)	$	—	$	—	$	9,151

12

6. INVENTORIES

Inventories, net of reserves, consist of the following (in thousands):

	March 29, 2019		September 28, 2018
Raw materials	$	64,530	$	71,408
Work-in-process	13,094		13,466
Finished goods	42,316		37,963
Total inventory, net	$	119,940	$	122,837

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands):

	March 29, 2019			September 28, 2018
Construction in process	$	25,851		$	49,661
Machinery and equipment	181,034			174,638
Leasehold improvements	14,226			14,984
Furniture and fixtures	3,699			2,306
Computer equipment and software	18,372			17,317
Capital lease assets	47,353			19,380
Total property and equipment	$	290,535		$	278,286
Less accumulated depreciation and amortization	(140,583		)	(128,363		)
Property and equipment, net	$	149,952		$	149,923

Depreciation and amortization expense related to property, plant and equipment for the three and six months ended March 29, 2019 was $7.6 million and $15.2 million, respectively. Depreciation and amortization expense related to property, plant and equipment for the three and six months ended March 30, 2018 was $7.6 million and $15.4 million, respectively. Accumulated depreciation on capital lease assets as of March 29, 2019 and September 28, 2018 was $4.2 million and $3.2 million, respectively.

8. DEBT

As of March 29, 2019, we are party to a credit agreement dated as of May 8, 2014 with a syndicate of lenders and Goldman Sachs Bank USA ("Goldman Sachs"), 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 “Credit Agreement”).

As of March 29, 2019, the Credit Agreement consisted of term loans with an aggregate principal amount of $700.0 million (“Term Loans”) and a revolving credit facility with an aggregate borrowing capacity of $160.0 million (the "Revolving Facility"). The Revolving Facility will mature in November 2021 and the 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 determined by 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 in the print edition of 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 period plus 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 March 29, 2019, for the Credit Agreement were as follows (in thousands, except rate data):

	Principal Outstanding	LIBOR Rate	Margin	Effective Interest Rate
Term loans	$676,414	2.49%	2.25%	4.74%

As of March 29, 2019, approximately $9.4 million of deferred financing costs remain unamortized, of which $8.7 million is related to the Term Loans and is recorded as a direct reduction of the recognized debt liabilities in our accompanying consolidated balance sheet, and $0.7 million is related to the Revolving 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 certain financial and non-financial covenants.

13

The Term Loans are payable in quarterly principal installments of approximately $1.7 million on the last business day of each calendar quarter, with the remainder 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 certain exceptions, 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 months of 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 months following our receipt of the proceeds and 6 months following the date of such agreement to complete the reinvestment.

As of March 29, 2019, we had $160.0 million of borrowing capacity under our Revolving Facility.

As of March 29, 2019, the following remained outstanding on the Term Loans (in thousands):

Principal balance	$	676,414
Unamortized discount	(4,020		)
Unamortized deferred financing costs	(8,688		)
Total term loans	$	663,706
Current portion	6,885
Long-term, less current portion	$	656,821

As of March 29, 2019, the minimum principal payments under the Term Loans in future fiscal years were as follows (in thousands):

2019 (remainder of fiscal year)	$	3,443
2020	6,885
2021	6,885
2022	6,885
2023	6,885
Thereafter	645,431
Total	$	676,414

The fair value of the Term Loans was estimated to be approximately $647.7 million as of March 29, 2019, and was determined using Level 2 inputs, including a quoted rate from a bank.

9. CAPITAL LEASE AND FINANCING OBLIGATIONS

Corporate Facility Financing Obligation

On December 28, 2016, we entered into three lease agreements including a 20 year leaseback of a facility located at 100 Chelmsford Street, a 20 year build-to-suit lease arrangement for the construction and subsequent lease back, which commenced on October 1, 2018, of a new facility located at 144 Chelmsford Street, and a 14 year building lease renewal of an adjacent facility at 121 Hale Street, collectively the “Lowell Leases.”

We account for the Lowell Leases as a single unit of accounting under the financing method.

As of October 1, 2018, the construction of the facility at 144 Chelmsford Street was completed, the building was placed in service and the associated lease term commenced.

We calculated a lease obligation based on the future minimum lease payments discounted at 7.2% as of October 1, 2018. The discount rate represents the estimated incremental borrowing 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 the lease obligation. The real property assets in the transaction remain on the consolidated balance sheets and continue to be depreciated over the remaining useful lives. As of March 29, 2019 and September 28, 2018, the outstanding lease obligations associated with the Lowell Leases included in leases payable in the consolidated balance sheets, were approximately $28.4 million and $28.3 million, respectively.

Additionally, we have certain capital equipment lease obligations, of which approximately $2.1 million and $1.2 million was outstanding as of March 29, 2019 and September 28, 2018, respectively.

14

As of March 29, 2019, future minimum payments under capital lease obligations were as follows (in thousands):

Fiscal year ending:	Amount
2019 (remainder of fiscal year)	$	1,691
2020	3,375
2021	3,298
2022	2,660
2023	2,563
Thereafter	42,247
Total minimum capital lease payments	55,834
Less amount representing interest	(26,989		)
Present value of net minimum capital lease payments	$	28,845

10. INTANGIBLE ASSETS

Amortization expense related to intangible assets is as follows (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Cost of revenue	$	7,883	$	8,172	$	15,935	$	16,319
Selling, general and administrative	11,873		11,753		24,392		22,746
Total	$	19,756	$	19,925	$	40,327	$	39,065

Intangible assets consist of the following (in thousands):

	March 29, 2019			September 28, 2018
Acquired technology	$	251,783		$	251,673
Customer relationships	518,234			518,234
Trade name	3,400			3,400
Total	$	773,417		$	773,307
Less accumulated amortization	(300,847		)	(260,522		)
Intangible assets — net	$	472,570		$	512,785

Our trade name is an indefinite-lived intangible asset. A summary of the activity in intangible assets and goodwill follows (in thousands):

	Intangible Assets
	Total Intangible Assets		Acquired Technology		Customer Relationships		Trade Name		Goodwill
Balance at September 28, 2018	$	773,307	$	251,673	$	518,234	$	3,400	$	314,076
Currency translation adjustment	110		110		—		—		285
Balance at March 29, 2019	$	773,417	$	251,783	$	518,234	$	3,400	$	314,361

As of March 29, 2019, our estimated amortization of our intangible assets in future fiscal years was as follows (in thousands):

	2019 Remaining		2020	2021	2022	2023	Thereafter	Total
Amortization expense	$	43,454	81,701	74,086	61,848	51,471	156,610	$	469,170

Accumulated amortization for acquired technology and customer relationships were $156.0 million and $144.9 million, respectively, as of March 29, 2019, and $140.0 million and $120.5 million, respectively, as of September 28, 2018.

15

11. STOCKHOLDERS' EQUITY

We 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 March 29, 2019 and September 28, 2018.

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 expire December 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 capital stock or other equity securities, including by merger, consolidation, recapitalization or similar transactions. We do not currently have sufficient registered and available shares to immediately satisfy a request for registration, if such a request were made. As of March 29, 2019, no exercise of the warrants had occurred, and no request had been made to register the warrants or any underlying securities for resale by the holders.

We are recording the estimated fair values of the warrants as a long-term liability in the accompanying consolidated financial statements with changes in the estimated fair value being recorded in the accompanying statements of operations. See Note 5 - Fair Value for additional information related to the fair value of our warrant liability.

12. EARNINGS (LOSS) PER SHARE

The following table sets forth the computation for basic and diluted net loss per share of common stock (in thousands, except per share data):

	Three Months Ended						Six Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Numerator:
Loss from continuing operations	$	(46,204	)	$	(15,466	)	$	(69,600	)	$	(32,436	)
Loss from discontinued operations	—			(18		)	—			(5,617		)
Net loss	$	(46,204	)	$	(15,484	)	$	(69,600	)	$	(38,053	)
Warrant liability gain	—			(17,015		)	(3,862		)	(31,624		)
Net loss attributable to common stockholders	$	(46,204	)	$	(32,499	)	$	(73,462	)	$	(69,677	)
Denominator:
Weighted average common shares outstanding-basic	65,531			64,549			65,404			64,437
Dilutive effect of warrants	—			583			206			683
Weighted average common shares outstanding-diluted	65,531			$	65,132		$	65,610		$	65,120
Loss per share-basic:
Continuing operations	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.50	)
Discontinued operations	0.00			0.00			0.00			(0.09		)
Net loss to common stock holders per share-basic	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.59	)
Loss per share-diluted:
Continuing operations	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(0.98	)
Discontinued operations	0.00			0.00			0.00			(0.09		)
Net loss to common stock holders per share-diluted	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(1.07	)

As of March 29, 2019, we had warrants outstanding which were reported as a liability on the consolidated balance sheet. During the six months ended March 29, 2019 and the three and six months ended March 30, 2018, we recorded $3.9 million, $17.0 million and $31.6 million of warrant gains, respectively, associated with adjusting the fair value of the warrants in the consolidated statements of operations primarily as a result of changes in our stock price. When calculating earnings per share we are required to adjust for the dilutive effect of outstanding common stock equivalents, including adjustment to the numerator for the dilutive effect of contracts that must be settled in stock. During the six months ended March 29, 2019 and the three and six months ended March 30, 2018 we adjusted the numerator by the warrant gains of $3.9 million, $17.0 million and $31.6 million, respectively, and the denominator by the incremental shares of 206,104, 582,889 and 683,198, respectively, under the treasury stock method. The table above excludes the effects of 425,202 and 154,377 for the three and six months ended March 29, 2019 and 477,212 and 488,521 shares for the three and six months ended March 30, 2018 respectively, of potential shares of common stock issuable upon exercise of stock options, warrants, and restricted stock and restricted stock units, as applicable, as the inclusion would be antidilutive.

16

13. COMMITMENTS AND CONTINGENCIES

From time to time, we may be subject to commercial disputes, employment issues, claims by other companies in the industry that we have infringed their intellectual property rights and other similar claims and litigations. Any such claims may lead to future litigation and material damages and defense costs. We were not involved in any material pending legal proceedings during the fiscal quarter ended March 29, 2019.

14. RESTRUCTURINGS

We have periodically implemented restructuring actions in connection with broader plans to reduce staffing, reduce our internal manufacturing footprint and generally reduce operating costs. The restructuring expenses are primarily comprised of direct and incremental costs related to headcount reductions including severance and outplacement fees for the terminated employees, as well as facility closure costs.

During the fiscal quarter ended December 29, 2017, we initiated plans to restructure and close our facility in Long Beach, California and to close our facilities in Belfast, United Kingdom and Sydney, Australia. The operations from the Long Beach facility were consolidated into our other California locations in order to achieve operational synergies. The Belfast and Sydney facilities were closed as we discontinued certain product development activities that were performed in those locations.

During the fiscal quarter ended September 28, 2018, we initiated a plan to exit certain production and product lines, primarily including certain production facilities located in Ithaca, New York. We incurred restructuring charges of $0.4 million and $5.4 million in the three and six months ended March 29, 2019, respectively, for these facilities, and we expect to incur restructuring costs of approximately $0.2 million to $0.3 million during the remainder of fiscal year 2019 as we complete these restructuring actions.

During the fiscal quarter ended March 29, 2019, we committed to a plan to exit certain design facilities and activities. We incurred restructuring charges of $2.8 million in the three months ended March 29, 2019 under this plan. We expect to incur restructuring costs of approximately $0.3 million to $0.4 million during the remainder of fiscal year 2019 as we complete these restructuring action.

The following is a summary of the restructuring charges incurred for the three and six months ended March 29, 2019 and March 30, 2018 under these restructuring plans (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Employee related expenses	$	465	$	221	$	1,618	$	2,792
Facility related expenses	2,717		1,318		6,542		3,408
Total restructuring charges	$	3,182	$	1,539	$	8,160	$	6,200

The following is a summary of the costs incurred for the six months ended March 29, 2019 and the remaining balance included in Accrued liabilities and Other long-term liabilities at March 29, 2019 (in thousands):

Balance as of September 28, 2018	$	89
Current period expense	8,160
Charges paid/settled	(6,162		)
Balance as of March 29, 2019	$	2,087

The balance as of March 29, 2019 includes $0.6 million classified as long-term liabilities.

17

15. SHARE-BASED COMPENSATION

Stock Plans

As of March 29, 2019, we had 14.8 million shares available for issuance under our 2012 Omnibus Incentive Plan (as Amended and Restated) (the “2012 Plan”) and 3.6 million shares available for issuance under our Employee Stock Purchase Plan. Under the 2012 Plan, we have the ability to issue incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), performance based non-statutory stock options, stock appreciation rights, restricted stock (“RSAs”), restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), performance shares and other equity-based awards to employees, directors and outside consultants. The ISOs and NSOs must be granted at a price per share not less than the fair value of our common stock on the date of grant. Options granted to date primarily vest based on certain market-based and performance-based criteria. Options granted generally have a term of four years to seven years. Certain of the share-based awards granted and outstanding as of March 29, 2019 are subject to accelerated vesting upon a change in control.

Share-Based Compensation

The following table shows a summary of share-based compensation expense included in the Condensed Consolidated Statements of Operations for the three and six months ended March 29, 2019 and March 30, 2018 (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Cost of revenue	$	841	$	917	$	1,514	$	1,862
Research and development	1,200		2,976		4,022		6,637
Selling, general and administrative	6,035		1,457		11,813		6,843
Total share-based compensation expense	$	8,076	$	5,350	$	17,349	$	15,342

As of March 29, 2019, the total unrecognized compensation costs related to outstanding stock options, restricted stock awards and units including awards with time-based and performance-based vesting was $91.5 million, which we expect to recognize over a weighted-average period of 2.7 years. As of March 29, 2019, total unrecognized compensation cost related to our Employee Stock Purchase Plan was $0.4 million.

Stock Options

A summary of stock option activity for the six months ended March 29, 2019 is as follows (in thousands, except per share amounts and contractual term):

	Number of Shares		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Options outstanding - September 28, 2018	1,408		$	32.05
Granted	395		16.06
Exercised	(12	)	2.00
Forfeited, canceled or expired	(1,192	)	35.63
Options outstanding - March 29, 2019	599		$	14.97	5.60	$	1,206
Options vested and expected to vest - March 29, 2019	599		14.97		5.60	1,206
Options exercisable - March 29, 2019	204		$	12.86	3.66	$	950

Aggregate intrinsic value represents the difference between our closing stock price on March 29, 2019 and the exercise price of outstanding, in-the-money options. During the six months ended March 29, 2019, there were 12,000 options exercised. The total intrinsic value of options exercised was $0.2 million and $0.2 million for the three and six months ended March 29, 2019 and $0.2 million and $0.7 million for the three and six months ended March 30, 2018.

Stock Options with Market-based Vesting Criteria

We grant non-qualified stock options that are subject to vesting only upon the market price of our underlying public stock closing above a certain price target within seven years of the date of grant. Share-based compensation expense is recognized regardless of the number of awards that are earned based on the market condition and is recognized on a straight-line basis over the estimated service period. If the required service period is not met for these options, then the share-based compensation

18

expense would be reversed. In the event that our common stock achieves the target price per share based on a 30-day trailing average prior to the end of the estimated service period, any remaining unamortized compensation cost will be recognized.

We granted 395,000 market-based stock options during the six months ended March 29, 2019, at a weighted average grant date fair value of $7.17 per share, or $2.8 million. These options have a weighted average exercise price of $16.06.

These non-qualified stock options with market based vesting conditions were valued using a Monte Carlo simulation model. The weighted average Monte Carlo input assumptions used for calculating the fair value of these market-based stock options are as follows:

	Six Months Ended
	March 29, 2019
Risk-free interest rate	3.1	%
Expected term (years)	3.8
Expected volatility rate	51.4	%
Target price	$61.32

During the six months ended March 29, 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 will be recognized as share-based compensation expense over the requisite service period of the new PRSU awards.

Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units

A summary of RSAs, RSUs and PRSUs activity for the six months ended March 29, 2019, is as follows (in thousands, except per share data):

	Number of RSAs, RSUs and PRSUs		Weighted- Average Grate Date Fair Value		Aggregate Intrinsic Value (in thousands)
Balance at September 28, 2018	1,872		$	34.15	$	38,452
Granted	2,425		18.64
Vested and released	(545	)	35.63
Forfeited, canceled or expired	(194	)	35.64
Balance at March 29, 2019	3,558		$	23.27	$	59,459

RSAs, RSUs and PRSUs that vested during the six months ended March 29, 2019 and March 30, 2018 had fair value of $9.6 million and $10.4 million, respectively, as of the vesting date.

16. INCOME TAXES

We are subject to income tax in the U.S. as well as other tax jurisdictions in which we conduct business. Earnings from non-U.S. activities are subject to local country income tax and may also be subject to current U.S. income tax. For interim periods, we record a tax provision or benefit based upon the estimated effective tax rate expected for the full fiscal year, adjusted for material discrete taxation matters arising during the interim periods.

Income tax expense was $1.7 million for the six months ended March 29, 2019, compared to a benefit of $1.7 million for the six months ended March 30, 2018. The difference between the U.S. federal statutory income tax rate of 21% for the three and six months ended March 29, 2019 was primarily driven by the continuation of a full valuation allowance against any benefit associated with U.S. losses and income taxed in foreign jurisdictions at generally lower tax rates. The difference between the blended U.S. federal statutory income tax rate of 24.5% for the three and six months ended months ended March 30, 2018 and our effective income tax rate was primarily driven by the continuation of a full valuation allowance against any benefit associated with U.S. losses and income taxed in foreign jurisdictions at generally lower tax rates.

We 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, we consider available positive and negative evidence and factors that may impact the valuation of our deferred tax asset including results of recent operations, future reversals of existing taxable temporary differences, projected future taxable income, and tax-planning strategies. A significant piece of objective negative evidence evaluated was the cumulative U.S. loss initially incurred over the three-year period ended March 31, 2017, which we believe limited our ability to consider other subjective evidence, such as our projections for future growth. Significant negative objective evidence in the form of adjusted cumulative losses in the U.S. over the three-year period ended March 29, 2019 resulted in our continued determination that there

19

was not sufficient objectively verifiable positive evidence to offset this negative objective evidence and we concluded that a full valuation allowance was still appropriate for our U.S. deferred tax assets.

All earnings of foreign subsidiaries, other than our M/A-COM Technology Solutions International Limited Cayman Islands subsidiary (“Cayman Islands subsidiary”), are considered indefinitely reinvested for the periods presented. During the three months ended March 29, 2019, we changed our position for our Cayman Islands subsidiary to no longer have its earnings permanently reinvested. During the fiscal quarter ended December 28, 2018, we finalized our calculation of the one-time deemed repatriation of gross foreign earnings and profits, totaling $155.6 million, which will result in approximately $86.3 million in U.S. taxable income for the year ended September 28, 2018. As we have recorded a full valuation allowance for this period, the adjusted one-time deemed repatriation will continue to have no impact on our tax expense. We also continue to expect that our tax loss for the year ended September 28, 2018 along with any net operating loss ("NOL") carryforwards will fully offset this one-time deemed repatriation of taxable income resulting in no additional cash tax payments.

The balance of the unrecognized tax benefits as of March 29, 2019 and September 28, 2018 was $1.0 million and $0.3 million, respectively. The increase of $0.7 million in unrecognized tax benefits during the six months ended March 29, 2019 was all recognized during the fiscal quarter ended December 28, 2018 and resulted from finalizing the transition tax impact relating to the one-time deemed repatriation of gross foreign earnings and profits for the year ended September 28, 2018. In finalizing the transition tax, we identified certain tax accounting method changes that were required to compute the correct transition tax, yet the tax law prohibited adopting these methods without filing for and receiving Internal Revenue Service ("IRS") permission to change our method. The increase in transition tax related to these non-automatic method changes requiring IRS approval was $0.7 million and represents the increase in our FIN 48 reserve balance to $1.0 million as of December 28, 2018 and March 29, 2019. Out of the total reserve balance of $1.0 million, $0.3 million, if recognized, will reduce income tax expense.

It is also our policy to recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the fiscal quarters ended March 29, 2019 and September 28, 2018, we did not make any accrual or payment of interest and penalties due to our NOL carryforward position within the U.S.

On December 22, 2017, the U.S. Congress enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act enacted a wide range of changes to the U.S. corporate income tax system, many of which differ significantly from the provisions of the previous U.S. tax law. The Tax Act also transitions international taxation from a worldwide system with deferral to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low-taxed income. These changes became effective in our fiscal year beginning September 29, 2018.

17. RELATED PARTY TRANSACTIONS

Cadence Design Systems, Inc. ("Cadence") provides us with certain engineering licenses on an ongoing basis. Geoffrey Ribar, who joined our board of directors 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 the three and six months ended March 30, 2018 we made payments of $2.3 million and $4.1 million, respectively, subsequent to Mr. Ribar joining our board of directors.

18. SUPPLEMENTAL CASH FLOW INFORMATION

As of March 29, 2019 and March 30, 2018, we had $2.7 million and $1.5 million, respectively, in unpaid amounts related to purchases of property and equipment included in accounts payable and accrued liabilities during each period. These amounts have been excluded from the payments for purchases of property and equipment in the accompanying condensed consolidated statements of cash flows until paid.

During the six months ended March 29, 2019 and March 30, 2018, we capitalized $1.5 million and $9.2 million, respectively, of net construction costs relating to the 144 Chelmsford Street facility, of which $0.3 million and $7.1 million, respectively, were accounted for as a non-cash transaction as the costs were paid by the developer.

During the six months ended March 29, 2019, we capitalized an additional $1.5 million of equipment under capital leases, which were accounted for as non-cash transactions. During the six months ended March 30, 2018, no additional capital leases were recorded.

The following is supplemental cash flow information regarding non-cash investing and financing activities (in thousands):

	Six Months Ended
	March 29, 2019			March 30, 2018
Cash paid for interest	$	17,041		$	14,094
Cash (refunded) paid for income taxes	$	(1,606	)	$	4,065

20

19. GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION

We have one reportable operating segment that designs, develops, manufactures and markets semiconductors and modules. The determination of the number of reportable operating segments is based on the chief operating decision maker’s use of financial information for the purposes of assessing performance and making operating decisions. In evaluating financial performance and making operating decisions, the chief operating decision maker primarily uses consolidated revenue, gross profit and operating loss.

For information about our revenue in different geographic regions, based upon customer locations, see Note 2 - Revenue. Information about our long-lived assets in different geographic regions is presented below (in thousands):

	As of
Long-Lived Assets by Geographic Region	March 29, 2019		September 28, 2018
United States	$	121,823	$	122,888
Asia Pacific (1)	22,385		24,702
Other Countries (2)	5,744		2,333
Total	$	149,952	$	149,923

(1) Asia Pacific represents Taiwan, India, Japan, Thailand, South Korea, Singapore, 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 as presented above.

The following is a summary of customer concentrations as a percentage of revenue and accounts receivable as of and for the periods presented:

	Three Months Ended				Six Months Ended
Revenue	March 29, 2019		March 30, 2018		March 29, 2019	March 30, 2018
Customer A	14	%	12	%	15%	11%
Customer B	4	%	11	%	4%	9%

Accounts Receivable	March 29, 2019		September 28, 2018
Customer A	19	%	19	%
Customer C	10	%	26	%

No other customer represented more than 10% of revenue or accounts receivable in the periods presented in the accompanying consolidated financial statements. For the three and six months ended March 29, 2019, our top ten customers represented 55% and 56%, respectively, of total revenue, and for the three and six months ended March 30, 2018, our top ten customers represented 58% and 54% of total revenue, respectively.

20. SUBSEQUENT EVENTS

On April 24, 2019, the Company, and its wholly-owned indirect subsidiaries, MACOM Wireless Cayman Limited (“MACOM Cayman”) and MACOM Wireless (HK) Limited (the “MACOM HK”), entered into a share purchase agreement (the “Share Purchase Agreement”) with Goertek (HongKong) Co., Limited (“Goertek”), pursuant to which MACOM Cayman and Goertek will form, upon closing of the Transaction (as defined below), a joint venture for purposes of supplying, marketing and distributing Gallium-Nitride-on-Silicon-based RF Power components into China’s 5G basestation market. Upon the terms and subject to the conditions set forth in the Share Purchase Agreement, MACOM Cayman will sell to Goertek 51% of the issued ordinary shares of MACOM HK owned by MACOM Cayman in exchange for total consideration of up to $134.6 million, including $30.0 million at closing and up to $95.0 million in potential milestone payments plus accrued interest thereon (the “Transaction”). At and following the closing of the Transaction, MACOM Cayman will retain a 49% equity interest in MACOM HK. We expect the Transaction to close in the second half of calendar 2019, subject to certain closing conditions, including the receipt of anti-trust approval from China’s State Administration for Market Regulation. For additional information, see our Current Report on Form 8-K filed with the SEC on April 24, 2019.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

21

The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended September 28, 2018 filed with the United States Securities and Exchange Commission ("SEC") on November 16, 2018.

In this document, the words “Company,” “we,” “our,” “us,” and similar terms refer only to MACOM Technology Solutions Holdings, Inc. and its 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 of MACOM Technology Solutions Holdings, Inc. All other brands and names listed are trademarks of their respective owners.

Cautionary Note Regarding Forward-Looking Statements

This Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements as to industry trends and our future expectations and other matters that do not relate strictly to historical facts. These statements are often identified by the use of words such as “anticipates,” “believes,” “could,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” “would” and similar expressions or variations. These statements are based on management's beliefs and assumptions as of the date of this Quarterly Report on Form 10-Q, based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the fiscal quarter ended December 28, 2018 filed with the SEC on February 6, 2019 and our Annual Report on Form 10-K for the fiscal year ended September 28, 2018 filed with the SEC on November 16, 2018. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a leading provider of high-performance analog semiconductor solutions that enable next-generation communications infrastructure build-outs across a broad array of customers and applications, spanning radio frequency ("RF"), microwave, millimeterwave frequencies and lightwave spectrum-from “RF to light.” We help our customers, including some of the world’s leading communications infrastructure and aerospace and defense companies, solve complex challenges in areas including network capacity, signal coverage, energy efficiency and field reliability, utilizing our best-in-class team and broad portfolio of analog RF, microwave, millimeterwave and lightwave semiconductor solutions.

We design, develop and manufacture differentiated, high-value products for customers who demand high performance, quality and reliability. We offer a broad portfolio of over 5,000 standard and custom devices, which include integrated circuits ("IC"), multi-chip modules ("MCM"), power pallets and transistors, diodes, amplifiers, switches and switch limiters, passive and active components and complete subsystems, across more than 60 product lines serving over 7,000 end customers in three primary markets. Our semiconductor products are electronic components that our customers incorporate into their larger electronic systems, such as, wireless basestations, high capacity optical networks, active antenna arrays, radar, magnetic resonance imaging systems ("MRI") and test and measurement. Our primary markets are: (1) Telecom, which includes carrier infrastructure like long-haul/metro, 5G and FTTx/PON; (2) Data Centers, enabled by our broad portfolio of photonic solutions and fiber optic applications; and (3) Industrial and Defense ("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 and measurement and scientific applications.

Description of Our Revenue

Revenue. Substantially all of our revenue is derived from sales of high-performance RF, microwave, millimeterwave and lightwave semiconductor solutions. We design, integrate, manufacture and package differentiated product solutions that we sell to customers through our direct sales organization, our network of independent sales representatives and our distributors.

Periodically, we enter into non-product development and license contracts with certain customers. We generally recognize revenue from these contracts as services are provided based on the terms of the contract. Revenue is deferred for amounts billed

22

or received prior to delivery of the services. Certain contracts may contain multiple performance obligations for which we allocate revenue to each performance obligation on a relative stand-alone selling price.

We believe the primary drivers of our future revenue growth will include:

• engaging early with our lead customers to develop products and solutions that can be driven across multiple growth markets;

• leveraging our core strength and leadership position in standard, catalog products that service all of our end applications;

• increasing content of our semiconductor solutions in our customers’ systems through cross-selling of our more than 60 product lines;

• introducing new products through internal development and acquisitions with market reception that command higher prices based on the application of advanced technologies, added features, higher levels of integration and improved performance; and

• continued growth in the market for high-performance analog and optical semiconductors in our three primary markets in particular.

Our core strategy is to develop and innovate high-performance products that address our customers’ most difficult 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 to benefit from our strength in these markets.

We expect our revenue in the Telecom market to be primarily driven by 5G, with continued upgrades and expansion of communications equipment to support the proliferation of mobile computing devices such as smartphones and tablets, increasing adoption of bandwidth rich services such as video on demand and cloud computing.

We expect our Data Center market to be driven by the rapid adoption of cloud-based services and the migration to an application centric architecture, which we expect 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 by the upgrading of radar and security systems and modern battlefield communications equipment and networks designed to improve situational awareness. Growth in this market is subject to changes in governmental programs and budget funding, which is difficult to predict. We expect revenue in this market to be further supported by growth in applications for our multi-purpose catalog products.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements. The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and could 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, the results 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. Actual results could differ from those estimates and material effects on our operating results and financial position may result. The accounting policies which our management believes involve the most significant application of judgment or involve complex estimation, are inventories and associated reserves; goodwill and intangibles asset valuations and associated impairment assessments; revenue reserves; warranty reserves; and share-based compensation valuations.

For additional information related to these and other accounting policies refer to Note 2 - Summary of Significant Accounting Policies to our Consolidated Financial Statements included in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2018 Annual Report on Form 10-K for the fiscal year ended September 28, 2018 and Note 1 - Summary of Significant Accounting Policies to our Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

23

Results of Operations

The following table sets forth, for the periods indicated, our statements of operations data (in thousands):

	Three Months Ended						Six Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Revenue	$	128,465		$	150,414		$	279,154		$	281,338
Cost of revenue (1)	71,135			84,813			145,199			154,784
Gross profit	$	57,330		$	65,601		$	133,955		$	126,554
Operating expenses:
Research and development (1)	42,361			41,596			85,885			83,246
Selling, general and administrative (1) (2)	41,998			39,287			84,518			76,922
Impairment charges (8)	—			6,575			—			6,575
Restructuring charges	3,182			1,539			8,160			6,200
Total operating expenses	$	87,541		$	88,997		$	178,563		$	172,943
Loss from operations	$	(30,211	)	$	(23,396	)	$	(44,608	)	$	(46,389	)
Other (expense) income
Warrant liability (expense) gain (3)	(1,607		)	17,015			3,862			31,624
Interest expense	(9,402		)	(7,970		)	(18,175		)	(15,209		)
Other expense (4)	(4,440		)	(4,139		)	(9,010		)	(4,133		)
Total other (expense) income, net	$	(15,449	)	$	4,906		$	(23,323	)	$	12,282
Loss before income taxes	(45,660		)	(18,490		)	(67,931		)	(34,107		)
Income tax expense (benefit)	544			(3,024		)	1,669			(1,671		)
Loss from continuing operations	$	(46,204	)	$	(15,466	)	$	(69,600	)	$	(32,436	)
Loss from discontinued operations (5)	—			(18		)	—			(5,617		)
Net loss	$	(46,204	)	$	(15,484	)	$	(69,600	)	$	(38,053	)

(1) Includes (a) Amortization expense related to intangible assets arising from acquisitions and (b) Share-based compensation expense included in our consolidated statements of operations as set forth below (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
(a) Intangible amortization expense:
Cost of revenue	$	7,883	$	8,172	$	15,935	$	16,319
Selling, general and administrative	11,873		11,753		24,392		22,746
(b) Share-based compensation expense:
Cost of revenue	$	841	$	917	$	1,514	$	1,862
Research and development	1,200		2,976		4,022		6,637
Selling, general and administrative	6,035		1,457		11,813		6,843

(2) Includes specific litigation costs of $0.2 million incurred in the six months ended March 29, 2019, and $0.8 million and $1.5 million incurred in the three and six months ended March 30, 2018, respectively, primarily related to the GaN lawsuit against Infineon. See Note 13 - Commitments and Contingencies to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended September 28, 2018 for additional information.

(3) Represents changes in the fair value of common stock warrants recorded as liabilities and adjusted each reporting period to fair value.

(4) Includes $4.4 million and $9.0 million of losses for the three and six months ended March 29, 2019, respectively, and $4.1 million of losses for both the three and six months ended March 30, 2018, associated with our equity method investment based on our proportionate share of the losses of Compute. See Note 4 - Investments to our Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

(5) See Note 3 - Divested Business and Discontinued Operations to our Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

24

The following table sets forth, for the periods indicated, our statements of operations data expressed as a percentage of our revenue: 

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	55.4		56.4		52.0		55.0
Gross profit	44.6		43.6		48.0		45.0
Operating expenses:
Research and development	33.0		27.7		30.8		29.6
Selling, general and administrative	32.7		26.1		30.3		27.3
Impairment charges	—		4.4		—		2.3
Restructuring charges	2.5		1.0		2.9		2.2
Total operating expenses	68.1		59.2		64.0		61.5
Loss from operations	(23.5	)	(15.6	)	(16.0	)	(16.5	)
Other (expense) income
Warrant liability (expense) gain	(1.3	)	11.3		1.4		11.2
Interest expense	(7.3	)	(5.3	)	(6.5	)	(5.4	)
Other expense	(3.5	)	(2.8	)	(3.2	)	(1.5	)
Total other (expense) income, net	(12.0	)	3.3		(8.4	)	4.4
Loss before income taxes	(35.5	)	(12.3	)	(24.3	)	(12.1	)
Income tax expense (benefit)	0.4		(2.0	)	0.6		(0.6	)
Loss from continuing operations	(36.0	)	(10.3	)	(24.9	)	(11.5	)
Loss from discontinued operations	—		—		—		(2.0	)
Net loss	(36.0	)%	(10.3	)%	(24.9	)%	(13.5	)%

Comparison of the Three and Six Months Ended March 29, 2019 to the Three and Six Months Ended March 30, 2018

Revenue. Our revenue decreased by $21.9 million, or 14.6%, to $128.5 million for the three months ended March 29, 2019, from $150.4 million for the three months ended March 30, 2018. The decrease in revenue in the three and six months ended March 29, 2019 is further described by end market in the following paragraphs.

Revenue from our primary markets, the percentage of change between the periods presented, and revenue by primary markets expressed as a percentage of total revenue in the periods presented were (in thousands, except percentages):

		Three Months Ended								Six Months Ended
		March 29, 2019			March 30, 2018		% Change			March 29, 2019			March 30, 2018		% Change
Telecom	$	47,337		$	63,935		(26.0	)%	$	97,496		$	119,384		(18.3	)%
Data Center		30,657			42,597		(28.0	)%		73,904			77,358		(4.5	)%
Industrial & Defense		50,471			43,882		15.0	%		107,754			84,596		27.4	%
Total	$	128,465		$	150,414		(14.6	)%	$	279,154		$	281,338		(0.8	)%
Telecom		36.8	%		42.5	%				34.9	%		42.4	%
Data Center		23.9	%		28.3	%				26.5	%		27.5	%
Industrial & Defense		39.3	%		29.2	%				38.6	%		30.1	%
Total		100.0	%		100.0	%				100.0	%		100.0	%

In the three and six months ended March 29, 2019, our Telecom revenues decreased by $16.6 million, or 26.0%, and $21.9 million, or 18.3%, respectively, compared to the three and six months ended March 30, 2018. The decrease was primarily due to the May 2018 sale of our Japan-based long-range optical subassembly business (the "LR4 Business"), lower sales of carrier-based optical semiconductor products to our Asia customer base and lower sales of products targeting fiber to the home applications.

25

In the three and six months ended March 29, 2019, our Data Center market revenue decreased by $11.9 million, or 28.0%, and $3.5 million, or 4.5%, respectively, compared to the three and six months ended March 30, 2018. The decrease in the three and six months ended March 29, 2019 was primarily due to decreased revenue from sales of legacy optical products and lasers, partially offset by the recognition of $7.0 million associated with licensing.

In the three and six months ended March 29, 2019, our I&D market revenue increased by $6.6 million, or 15.0%, and $23.2 million, or 27.4%, compared to the three months ended March 30, 2018. The increase in the three and six months ended March 29, 2019 was primarily related to higher revenue from sales across the product portfolio.

Gross profit. Gross margin was 44.6% and 48.0% for the three and six months ended March 29, 2019, respectively, and 43.6% and 45.0% for the three and six months ended March 30, 2018, respectively. Gross profit was $57.3 million and $134.0 million for the three and six months ended March 29, 2019, respectively, and $65.6 million and $126.6 million for the three and six months ended March 30, 2018, respectively. Gross profit during the three and six months ended March 29, 2019 was primarily impacted by lower revenue, lower gross profit as a result of the May 2018 sale of our LR4 Business and higher inventory reserves associated with Data Center products, partially offset by the recognition of $7.0 million associated with licensing.

Research and development. Research and development expense increased by $0.8 million, or 1.8%, to $42.4 million, or 33.0% of our revenue, for the three months ended March 29, 2019, compared with $41.6 million, or 27.7% of our revenue, for the three months ended March 30, 2018. Research and development expense increased by $2.6 million, or 3.2%, to $85.9 million, or 30.8% of our revenue, for the six months ended March 29, 2019, compared with $83.2 million, or 29.6% of our revenue, for the six months ended March 30, 2018. Research and development expense has increased in the fiscal 2019 period primarily as a result of higher compensation-related costs and depreciation, as well as increased costs associated with Data Center-related initiatives.

Selling, general and administrative. Selling, general and administrative expense increased by $2.7 million, or 6.9%, to $42.0 million, or 32.7% of our revenue, for the three months ended March 29, 2019, compared with $39.3 million, or 26.1%, of our revenue, for the three months ended March 30, 2018. Selling, general and administrative expense increased by $7.6 million, or 9.9%, to $84.5 million, or 30.3%, of our revenue, for the six months ended March 29, 2019, compared with $76.9 million, or 27.3% of our revenue, for the six months ended March 30, 2018. Selling, general and administrative expense increased in the fiscal 2019 period primarily due to higher compensation-related costs and acquisition-related amortization and depreciation, partially offset by the sale of the LR4 Business.

Restructuring charges. Restructuring charges totaled $3.2 million and $1.5 million for the three months ended March 29, 2019 and March 30, 2018, respectively, and $8.2 million and $6.2 million for the six months ended March 29, 2019 and March 30, 2018, respectively. The restructuring charges during the three and six months ended March 29, 2019 are primarily related to employee-related and facility-related costs for the restructuring of our production facility in Ithaca, New York, as well as certain design facilities and activities. We expect to incur additional restructuring costs of approximately $0.5 million to $0.7 million during the remainder of fiscal year 2019 as we complete these restructuring actions. Restructuring charges during the three and six months ended March 30, 2018 were primarily related to our exit of facilities in Long Beach, California, Belfast, the United Kingdom and Sydney, Australia.

Warrant liability. Our warrant liability resulted in an expense of $1.6 million and a gain of $3.9 million for the three and six months ended March 29, 2019, respectively, compared to a gain of $17.0 million and $31.6 million for the three and six months ended March 30, 2018, respectively. The differences between periods were primarily driven by changes in the estimated fair value of common stock warrants we issued in December 2010, driven by the change in the underlying price of our common stock, which is recorded as a liability at fair value.

Provision for income taxes. Income tax expense was $0.5 million for the three months ended March 29, 2019, compared to a benefit of $3.0 million for the three months ended March 30, 2018. Income tax expense was $1.7 million for the six months ended March 29, 2019, compared to a benefit of $1.7 million for the six months ended March 30, 2018. The income tax expense for the three and six months ended March 29, 2019 resulted primarily from income subject to tax in foreign jurisdictions. The income tax benefit for the three and six months ended March 30, 2018 resulted primarily from the partial release of our unrecognized tax benefits and discrete adjustments to our U.S. deferred tax liability.

The difference between the U.S. federal statutory income tax rate of 21% and our effective income tax rate for the three and six months ended March 29, 2019, was primarily impacted by the continuation of a full valuation allowance against our U.S. deferred tax assets and income taxed in foreign jurisdictions at generally lower tax rates. The difference between the blended U.S. federal statutory tax rate of 24.5% and our effective tax rate for the three and six months ended March 30, 2018 was also primarily impacted by the continuation of a full valuation allowance against our U.S. deferred tax assets and income taxed in foreign jurisdictions at generally lower tax rates. For additional information refer to Note 16 - Income Taxes in this Quarterly Report on Form 10-Q.

26

Liquidity and Capital Resources

The following table summarizes our cash flow activities for the six months ended March 29, 2019 and March 30, 2018, respectively (in thousands):

	March 29, 2019			March 30, 2018
Cash and cash equivalents, beginning of period	$	94,676		$	130,104
Net cash provided by operating activities	26,838			11,156
Net cash (used in) provided by investing activities	(23,479		)	24,398
Net cash used in financing activities	(5,547		)	(3,360		)
Foreign currency effect on cash	189			397
Cash and cash equivalents, end of period	$	92,677		$	162,695

Cash Flow from Operating Activities

Our cash flow from operating activities for the six months ended March 29, 2019 of $26.8 million consisted of a net loss of $69.6 million, plus cash provided by operating assets and liabilities of $11.4 million, plus adjustments to reconcile our net loss to cash provided by operating activities of $85.1 million. Adjustments to reconcile our net loss to cash provided by operating activities primarily included depreciation and intangible amortization expense of $55.5 million, share-based compensation expense of $17.3 million, loss on minority equity investments of $9.0 million and restructuring and impairment-related charges of $4.7 million, partially offset by a warrant liability gain of $3.9 million. In addition, cash provided by operating assets and liabilities was $11.4 million for the six months ended March 29, 2019, primarily driven by a decrease in accounts receivable of $10.0 million, an increase in accrued and other liabilities of $1.4 million and a decrease in inventories of $2.9 million, partially offset by a decrease in accounts payable of $4.1 million.

Our cash flow from operating activities for the six months ended March 30, 2018 of $11.2 million consisted of a net loss of $38.1 million, plus adjustments to reconcile our net loss to cash provided by operating activities of $48.2 million and changes in operating assets and liabilities of $1.0 million. Adjustments to reconcile our net loss to cash provided by operating activities of $48.2 million primarily included depreciation and intangible amortization expense of $54.4 million, share-based compensation expense of $15.3 million and impairment charges of $9.1 million, partially offset by a warrant liability gain of $31.6 million and a change in the net value of assets and liabilities held for sale of $6.2 million. In addition, cash provided by operating assets and liabilities was $1.0 million for the six months ended March 30, 2018, primarily driven by a decrease in accounts receivable of $29.0 million, partially offset by decreases in accounts payable of $11.4 million, increases in inventory of $9.2 million, and decreases in accrued and other liabilities of $4.1 million.

Cash Flow from Investing Activities

Our cash flow used in investing activities for the six months ended March 29, 2019 consisted primarily of purchases of $87.0 million of short-term investments and capital expenditures of $22.6 million, partially offset by proceeds of $86.4 million related to the sale of short-term investments.

Our cash flow from investing activities for the six months ended March 30, 2018 consisted primarily of proceeds of $77.9 million related to the sale of short term investments, partially offset by capital expenditures of $26.6 million, purchases of $21.6 million of short-term investments and a $5.0 million investment in a privately held company.

Cash Flow from Financing Activities

During the six months ended March 29, 2019, our cash used in financing activities of $5.5 million was primarily related to $3.4 million of payments on notes payable and $3.4 million in purchases of stock associated with employee tax withholdings, partially offset by $2.4 million of proceeds from stock option exercises and employee stock purchases.

During the six months ended March 30, 2018, our cash used by financing activities of $3.4 million was primarily related to $3.4 million of payments on notes payable and $3.8 million in purchases of stock associated with employee stock withholdings, partially offset by $3.3 million of proceeds from stock option exercises and employee stock purchases and $1.1 million of proceeds from the sale of our corporate headquarters facility.

27

Liquidity

As of March 29, 2019, we held $92.7 million of cash and cash equivalents, primarily deposited with financial institutions. Other than the undistributed earnings of our M/A-COM Technology Solutions International Limited Cayman Islands subsidiary, the undistributed earnings of our other foreign subsidiaries are indefinitely reinvested and we do not intend to repatriate such earnings. We believe the decision to reinvest these earnings will not have a significant impact on our liquidity. As of March 29, 2019, cash held by our indefinitely reinvested foreign subsidiaries was $28.7 million, which, along with cash generated from foreign operations, is expected to be used in the support of international growth and working capital requirements as well as the repayment of certain intercompany loans. As of March 29, 2019, we also held $99.7 million of liquid short-term investments, and had $160.0 million in borrowing capacity under our revolving credit facility (the "Revolving Facility").

We plan to use our remaining available cash and cash equivalents, short-term investments, and as deemed appropriate our borrowing capacity under our Revolving 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 under the Revolving Facility will be sufficient to meet our working capital requirements for at least the next 12 months. We may need to raise additional capital from time to time through the issuance and sale of equity or debt securities, and there is no assurance that we will be able do so on favorable terms or at all.

For additional information related to our Liquidity and Capital Resources, see Note 8 - Debt to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

See Note 1 - Summary of Significant Accounting Policies to our Consolidated Financial Statements in this Quarterly Report on Form 10-Q for information about recent accounting pronouncements.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 29, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in the ordinary course of business, which consists primarily of interest rate risk associated with our cash and cash 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 underlying price 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 of return. To minimize market risk, we maintain our portfolio in cash and diversified investments, which may consist of corporate and agency bonds, bank deposits, money market funds and commercial paper. Certain interest rates are variable and fluctuate with current market conditions. The risk associated with fluctuating interest rates is 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 of operations. 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 the Credit 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, in each case plus an applicable margin, which exposes us to market interest rate risk when we have outstanding borrowings under the Credit Agreement. As of March 29, 2019, we had $676.4 million of outstanding borrowings under the Credit Agreement. Assuming our outstanding debt remains constant under the Credit 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 $6.8 million.

Foreign currency risk. To date, our international customer agreements have been denominated primarily in U.S. dollars. Accordingly, we have limited exposure to foreign currency exchange rates. The foreign operations of one of our subsidiaries located in Japan have transactions which are predominately denominated in Japanese Yen. The functional currency of a majority of our foreign operations continues to be in U.S. dollars with the remaining operations being local currency. Increases in the value of the U.S. dollar relative to other currencies could make our products more expensive, which could negatively impact demand in certain regions. Conversely, decreases in the value of the U.S. dollar relative to other currencies could result in our products being more expensive to certain customers and could reduce 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 our operations 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 material impact on

28

our financial position or results of operations. In the future, we may enter into foreign currency exchange hedging contracts to reduce our exposure to changes in exchange rates.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of March 29, 2019.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

29

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 13 - Commitments and Contingencies to our Consolidated Financial Statements in this Quarterly Report on Form 10-Q for information about our legal proceedings.

ITEM 1A. RISK FACTORS

Our business involves a high degree of risk.  In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended December 28, 2018 filed with the SEC on February 6, 2019, and Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 28, 2018, which could materially affect our business, financial condition or future results. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes in any of the risk factors described in our Annual Report on Form 10-K for the fiscal year ended September 28, 2018, except as discussed in Part II, "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the fiscal quarter ended December 28, 2018, as filed with the SEC on February 6, 2019, or as noted below.

We are subject to risks from our international sales and operations.

We have an active corporate development program and routinely evaluate potential acquisitions, investments, joint ventures and strategic alliances involving complementary technologies, design teams, products and companies. We expect to pursue such transactions if appropriate opportunities arise. However, we may not be able to identify suitable transactions in the future or if we do identify such transactions, we may not be able to complete them on commercially acceptable terms or at all. We also face intense competition for acquisitions from other acquirers in our industry. These competing acquirers may have significantly greater financial and other resources than us, which may prevent us from successfully pursuing a transaction. In the event we pursue acquisitions, investments, joint ventures and strategic alliances, we will face numerous risks including:

•diversion of management’s attention from normal daily operations of our business;

•difficulties in entering markets where competitors have stronger market positions;

• difficulties in improving and integrating the financial reporting capabilities and operating systems of any acquired operations, particularly foreign and formerly private operations, as needed to maintain effective internal control over financial reporting and disclosure controls and procedures;

• loss of any key personnel of any acquired company as well as their know-how, relationships and expertise, which is common following an acquisition;

•maintaining customer, supplier or other favorable business relationships of acquired operations;

• generating insufficient revenue from completed acquisitions, investments, joint ventures and strategic alliances to offset increased expenses associated with any abandoned or completed transactions;

• acquiring material or unknown leasehold, environmental, regulatory, infringement, contractual or other liabilities associated with any acquired operations;

•litigation frequently associated with such transactions; and

•increasing expense associated with amortization or depreciation of intangible and tangible assets we acquire.

Our past transactions required or continue to require significant management time and attention relating to the transaction. Past transactions, whether completed or abandoned by us, have resulted, and in the future may result, in significant costs, expenses, liabilities and charges to earnings. The accounting treatment for any future transaction may result in significant amortizable intangible assets which, when amortized, will negatively affect our consolidated results of operations. 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 to our profitability, and the issuance of equity securities would be dilutive to our existing stockholders. Participation in joint ventures and strategic alliances may 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 with our transaction partners. Any or all of the above factors may differ from the investment community’s expectations in a given quarter, which could negatively affect our stock price. In addition, as a result of the foregoing, we may not be able to successfully execute transactions in the future to the same extent as we have the in the past, if at all.

In the event we make future investments, the investments may decline in value or fail to deliver any strategic benefits we anticipate from them and we may lose all or part of our investment. For example, in May 2015, we received notice that a private

30

company in which we held a minority equity investment was sold to a third party and that the proceeds we would receive at closing would be less than the carrying value previously reported in our consolidated financial statements. We wrote down the investment to the estimated net proceeds we would receive from the sale, and recorded a charge of $3.5 million to other income (expense) resulting in an increase of our previously reported net loss per diluted share for the three and six months ended April 3, 2015, respectively.

The success of our joint ventures and strategic alliances may be subject to significant uncertainty, and we may be substantially reliant upon our partner(s) for the commercial success of the opportunity.

The terms of any joint ventures or strategic alliances may subject us to significant uncertainty regarding the success of such transaction as we may be substantially reliant upon our partner(s) for the commercial success of the opportunity. In addition, any such transactions may also divert our financial resources and management’s attention from other important areas of our business. Furthermore, any failure of a transaction to satisfy customer expectations could adversely impact our own relationships with such customers and/or the reputation of our brand. If the transactions do not progress according to our expectations or anticipated timing, our business could be adversely affected and our investment in the transactions may not be successful. If the transactions are not successful, or not as successful as anticipated, we may also never realize the full, or any, benefit of royalty, milestone or other payment terms included in the transaction.

For example, in April 2019, we announced our entry into a share purchase agreement with Goertek (HongKong) Co., Limited (“Goertek”) in order to form, upon closing of the transaction, a joint venture for purposes of supplying, marketing and distributing Gallium-Nitride (“GaN”)-on-Silicon-based RF Power components into China’s 5G basestation market. We expect the transaction to close in the second half of calendar 2019, subject to certain closing conditions, some of which are beyond our control, including the receipt of anti-trust approval from China’s State Administration for Market Regulation. We cannot assure you that the conditions of the transaction will be satisfied or waived or that the transaction and the objectives thereof will be achieved on our anticipated timeframe or at all.

At closing, Goertek will acquire a controlling 51% interest in the joint venture, making us reliant on Goertek for the strategic decisions and operations of the joint venture. The viability and success of this joint venture is subject to significant uncertainty and can be adversely affected by many factors, including:

• our limited control over the operations of the joint venture;

• unforeseen changes in the business, macroeconomic, geopolitical or regulatory environment of the joint venture;

• difficulties and delays in ramping production at the joint venture;

• difficulties in transferring technology to the joint venture;

• inability of our partner to meet its commitments to us or the joint venture;

• failure to motivate and retain key employees of the joint venture;

• disputes, or strategic differences in philosophy, strategy or goals, between the joint venture partners;

• difficulties managing initial and ongoing governance and compliance activities of the joint venture; and

• challenges in growing the joint venture’s business in a manner acceptable to each of the joint venture parties.

We are subject to risks from our international sales and operations.

We have operations in Europe and Asia and customers around the world. Furthermore, in April 2019, we entered into a definitive agreement with Goertek in order to form, upon closing of the transaction, a joint venture for purposes of supplying, marketing and distributing GaN-on-Silicon-based RF Power components into China’s 5G basestation market.

As a result, we are subject to regulatory, geopolitical and other risks associated with doing business outside the U.S. Global operations involve inherent risks, including currency controls, currency exchange rate fluctuations, new or potential international 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 to manage effectively.

The legal system in many of the regions where we conduct business can lack transparency in certain respects relative to that of the U.S. and can accord local government authorities a higher degree of control and discretion over business than is customary in the U.S. This makes the process of obtaining necessary regulatory approvals and maintaining compliance inherently more difficult and unpredictable. In addition, the protection accorded to proprietary technology and know-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

31

advantages. The cost of doing business in European jurisdictions can also be higher than in the U.S. due to exchange rates, local collective bargaining regimes and local legal requirements and norms regarding employee benefits and employer-employee relations, in particular. We are also subject to U.S. legal requirements related to our foreign 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 year ended September 28, 2018.

Sales to customers located in the Asia Pacific region typically account for a substantial majority of our overall sales to customers located outside the U.S. We expect that revenue from international sales generally, and sales to the Asia Pacific region specifically, will continue to be a material part of our total revenue. Therefore, any financial crisis, trade war or dispute or other major event causing business disruption in international jurisdictions generally, and China and the Asia Pacific region in particular, could negatively affect our future revenues and results of operations. For example, in 2016 the U.S. Department of Commerce, Bureau of Industry and Security (BIS) temporarily blocked exports of U.S. products to Chinese telecommunications original equipment manufacturer (OEM) Zhongxing Telecommunications Equipment Corporation (ZTE), and issued an administrative subpoena to the largest such manufacturer, Huawei, which accounted for 15% of our revenue for fiscal year 2016, and which could possibly lead to similar restrictions in the future. In April 2018, the BIS again blocked exports of U.S. products to ZTE, which were lifted in July 2018, but the U.S. government continues to closely monitor ZTE's actions to ensure compliance. Also, in August 2018, the BIS blocked exports of U.S. products to certain Chinese aerospace customers. Most recently, in January 2019, the U.S. Department of Justice announced criminal charges against Huawei including, but not limited to, attempted theft of trade secrets, wire fraud and violations of U.S. sanctions related to Iran. A U.S. ban on exports to one or more large OEM customers could materially reduce our revenue and reduce the value of an investment in our common stock.

Because the majority of our foreign sales are denominated in U.S. dollars, our products become less price-competitive in countries with currencies that are low or are declining in value against the U.S. dollar. Also, we cannot be sure that 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 purchase orders 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 our rights under such agreements and to collect amounts owed to us.

The majority of our assembly, packaging and test vendors are located in Asia. We generally do business with our foreign assemblers in U.S. dollars. Our manufacturing costs could increase in countries with currencies that are increasing in value against the U.S. dollar. Also, our international manufacturing suppliers may 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. From time 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 and associated 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, enforcement actions against governments, governmental entities or private entities or political instability occurs in the U.S. or other locations, such events may disrupt our manufacturing, assembly, logistics, security and communications, and could also result in reduced demand for our products. We have in the past and, may again in the future, experience difficulties relating to employees traveling in and out of countries facing civil unrest or political instability and with obtaining travel visas for our employees. Major health pandemics could also adversely affect our business and our customer order patterns. We could also be affected if labor issues disrupt our transportation arrangements or those of our customers or suppliers. There can be no assurance that we can mitigate all identified risks with reasonable effort. The occurrence of any of these events could have a material adverse 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, such laws, 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 environmental laws 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 international export and import controls or trade policies, including recently-imposed tariffs affecting certain products exported by a number of U.S. trading partners, including China. In response, many of those trading partners, including China, have imposed or proposed new or higher tariffs on American products. It is unknown whether and 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 and customers. Any unfavorable government policies on international trade, such as export and import controls, capital

32

controls or tariffs, may affect the demand for our products and services, increase the cost of components, delay production, impact the competitive position of our products or prevent us from being able to sell products in certain countries. If any new export or import controls, tariffs, legislation and/or regulations are implemented or if existing trade agreements are renegotiated, such changes could have an adverse effect on our business, financial condition and results of operations. In addition, proceedings to enforce, or the enforcement 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 our business, financial condition and results of operations.

Furthermore, in our proposed joint venture with Goertek, following the closing of the transaction, we will license to the joint venture certain of our GaN-on-Silicon-based technologies, but only to the extent that the technology is freely exportable to China. Changes in export and import controls laws and regulations, or the interpretation or applicability thereof, may restrict our ability to license to the joint venture such technology, which could have an adverse effect on the business of the joint venture and materially reduce the anticipated value of our investment therein.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table presents information with respect to purchases of common stock we made during the fiscal quarter ended March 29, 2019. 

Period	Total Number of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
December 29, 2018—January 25, 2019	—	$	—	—	—
January 26, 2019—February 22, 2019	173,648	17.78		—	—
February 23, 2019—March 29, 2019	—	—		—	—
Total	173,648	$	17.78	—	—

(1) We employ “withhold to cover” as a tax payment method for vesting of restricted stock awards for our employees, pursuant to which, we withheld from employees the shares noted in the table above to cover tax withholding 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 for purposes of calculating the number of shares to be withheld.

33

ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Fifth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June 2, 2016).
3.2	Third Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on June 2, 2016).
31.1	Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
Dated: May 8, 2019	By:	/s/ John Croteau
		John Croteau
		President and Chief Executive Officer (Principal Executive Officer)
Dated: May 8, 2019	By:	/s/ Conor Hegarty
		Conor Hegarty
		Principal Financial Officer and Principal Accounting Officer

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE PRESIDENT AND CEO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Croteau, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 statements made, 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 financial condition, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 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 and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 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 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’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 reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 8, 2019
	/s/ John Croteau
	John Croteau
	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CFO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Conor Hegarty, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 statements made, 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 financial condition, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 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 and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 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 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’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 reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 8, 2019
	/s/ Conor Hegarty
	Conor Hegarty
	Principal Financial Officer and Principal Accounting Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MACOM Technology Solutions Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 29, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John Croteau, as President and Chief Executive Officer of the Company, and Conor Hegarty, as Principal Financial Officer and Principal Accounting Officer of the Company, 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 the period covered by the Report.

Date:	May 8, 2019
By:	/s/ John Croteau
	John Croteau
	President and Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Conor Hegarty
	Conor Hegarty
	Principal Financial Officer and Principal Accounting Officer
	(Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 29, 2019	May 03, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
Entity Central Index Key	0001493594
Document Type	10-Q
Document Period End Date	Mar. 29, 2019
Amendment Flag	false
Current Fiscal Year End Date	--09-27
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019
Entity Common Stock, Shares Outstanding		65,700,409

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Current assets:
Cash and cash equivalents	$ 92,677	$ 94,676
Short-term investments	99,708	98,221
Accounts receivable (less allowances of $5,912 and $6,795, respectively)	87,386	97,375
Inventories	119,940	122,837
Income tax receivable	15,765	17,601
Assets held for sale	0	4,840
Prepaid and other current assets	29,783	23,311
Total current assets	445,259	458,861
Property and equipment, net	149,952	149,923
Goodwill	314,361	314,076
Intangible assets, net	472,570	512,785
Deferred income taxes	2,298	2,272
Other investments	22,123	31,094
Other long-term assets	13,383	13,484
TOTAL ASSETS	1,419,946	1,482,495
Current liabilities:
Current portion of lease payable	1,194	467
Current portion of long-term debt	6,885	6,885
Accounts payable	35,080	41,951
Accrued liabilities	45,430	49,945
Contract liabilities	215	7,757
Total current liabilities	88,804	107,005
Lease payable, less current portion	29,147	29,023
Long-term debt, less current portion	656,821	658,372
Warrant liability	9,268	13,129
Deferred income taxes	452	389
Other long-term liabilities	18,429	5,902
Total liabilities	802,921	813,820
Stockholders’ equity:
Common stock	66	65
Treasury stock, at cost	(330)	(330)
Accumulated other comprehensive income	3,798	2,188
Additional paid-in capital	1,091,067	1,074,728
Accumulated deficit	(477,576)	(407,976)
Total stockholders’ equity	617,025	668,675
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,419,946	$ 1,482,495

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 5,912	$ 6,795

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Income Statement [Abstract]
Revenue	$ 128,465	$ 150,414	$ 279,154	$ 281,338
Cost of revenue	71,135	84,813	145,199	154,784
Gross profit	57,330	65,601	133,955	126,554
Operating expenses:
Research and development	42,361	41,596	85,885	83,246
Selling, general and administrative	41,998	39,287	84,518	76,922
Impairment charges	0	6,575	0	6,575
Restructuring charges	3,182	1,539	8,160	6,200
Total operating expenses	87,541	88,997	178,563	172,943
Loss from operations	(30,211)	(23,396)	(44,608)	(46,389)
Other (expense) income
Warrant liability (expense) gain	(1,607)	17,015	3,862	31,624
Interest expense, net	(9,402)	(7,970)	(18,175)	(15,209)
Other expense	(4,440)	(4,139)	(9,010)	(4,133)
Total other (expense) income, net	(15,449)	4,906	(23,323)	12,282
Loss before income taxes	(45,660)	(18,490)	(67,931)	(34,107)
Income tax expense (benefit)	544	(3,024)	1,669	(1,671)
Loss from continuing operations	(46,204)	(15,466)	(69,600)	(32,436)
Loss from discontinued operations	0	(18)	0	(5,617)
Net loss	$ (46,204)	$ (15,484)	$ (69,600)	$ (38,053)
Basic loss per share:
Loss from continuing operations	$ (0.71)	$ (0.24)	$ (1.06)	$ (0.50)
Loss from discontinued operations	0	0	0.00	(0.09)
Loss per share - basic	(0.71)	(0.24)	(1.06)	(0.59)
Diluted loss per share:
Loss from continuing operations	(0.71)	(0.50)	(1.12)	(0.98)
Loss from discontinued operations	0	0.00	0.00	(0.09)
Loss per share - diluted	$ (0.71)	$ (0.50)	$ (1.12)	$ (1.07)
Shares used:
Basic (in shares)	65,531	64,549	65,404	64,437
Diluted (in shares)	65,531	65,132	65,610	65,120

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Statement of Comprehensive Income [Abstract]
Net loss	$ (46,204)	$ (15,484)	$ (69,600)	$ (38,053)
Unrealized gain (loss) on short-term investments, net of tax	606	(247)	350	(514)
Foreign currency translation gain, net of tax	351	4,421	1,260	4,710
Other comprehensive income, net of tax	957	4,174	1,610	4,196
Total comprehensive loss	$ (45,247)	$ (11,310)	$ (67,990)	$ (33,857)

XML

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]
Treasury Stock, Shares			(23)
Balance at beginning of period (in shares) at Sep. 28, 2018		65,202
Balance at beginning of period at Sep. 28, 2018	$ 668,675	$ 65	$ (330)	$ 2,188	$ 1,074,728	$ (407,976)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock option exercises (in shares)	12	12
Stock options exercises	$ 24				24
Vesting of restricted common stock and units (in shares)		545
Vesting of restricted common stock and units	1	$ 1
Issuance of common stock pursuant to employee stock purchase plan (in shares)		156
Issuance of common stock pursuant to employee stock purchase plan	2,392				2,392
Shares repurchased for stock withholdings on restricted stock awards (in shares)		(192)
Shares repurchased for stock withholdings on restricted stock awards	(3,426)				(3,426)
Share-based compensation	17,349				17,349
Other comprehensive income, net of tax	1,610			1,610
Net loss	(69,600)					(69,600)
Balance at end of period (in shares) at Mar. 29, 2019		65,723
Balance at end of period at Mar. 29, 2019	617,025	$ 66	$ (330)	3,798	1,091,067	(477,576)
Treasury Stock, Shares			(23)
Balance at beginning of period (in shares) at Dec. 28, 2018		65,395
Balance at beginning of period at Dec. 28, 2018	657,256	$ 65	$ (330)	2,841	1,086,052	(431,372)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock option exercises (in shares)		12
Stock options exercises	24				24
Vesting of restricted common stock and units (in shares)		490
Vesting of restricted common stock and units	1	$ 1
Shares repurchased for stock withholdings on restricted stock awards (in shares)		(174)
Shares repurchased for stock withholdings on restricted stock awards	(3,085)				(3,085)
Share-based compensation	8,076				8,076
Other comprehensive income, net of tax	957			957
Net loss	(46,204)					(46,204)
Balance at end of period (in shares) at Mar. 29, 2019		65,723
Balance at end of period at Mar. 29, 2019	$ 617,025	$ 66	$ (330)	$ 3,798	$ 1,091,067	$ (477,576)
Treasury Stock, Shares			(23)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (69,600)	$ (38,053)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and intangibles amortization	55,478	54,439
Share-based compensation	17,349	15,342
Warrant liability gain	(3,862)	(31,624)
Acquired inventory step-up amortization	0	224
Deferred financing cost amortization	2,031	2,536
Deferred income taxes	46	(573)
Restructuring and impairment related charges	4,696	9,143
Loss on minority equity investment	8,971	4,085
Changes in assets held for sale from discontinued operations	0	(6,237)
Other adjustments, net	377	841
Change in operating assets and liabilities:
Accounts receivable	9,989	28,992
Inventories	2,904	(9,240)
Prepaid expenses and other assets	(1,256)	749
Accounts payable	(4,103)	(11,438)
Accrued and other liabilities	1,407	(4,115)
Income taxes	2,411	(3,915)
Net cash provided by operating activities	26,838	11,156
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net	(375)	0
Purchases of property and equipment	(22,600)	(26,580)
Proceeds from sales and maturities of short-term investments	86,447	77,853
Purchases of short-term investments	(86,951)	(21,612)
Purchases of other investments	0	(5,000)
Proceeds associated with discontinued operations	0	(263)
Net cash (used in) provided by investing activities	(23,479)	24,398
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises and employee stock purchases	2,416	3,252
Payments on notes payable	(3,442)	(3,442)
Payments of capital leases and assumed debt	(518)	(405)
Repurchase of common stock	(3,426)	(3,846)
Proceeds from corporate facility financing obligation	0	1,081
Payments of contingent consideration and other	577	0
Net cash used in financing activities	(5,547)	(3,360)
Foreign currency effect on cash	189	397
NET CHANGE IN CASH AND CASH EQUIVALENTS	(1,999)	32,591
CASH AND CASH EQUIVALENTS — Beginning of period	94,676	130,104
CASH AND CASH EQUIVALENTS — End of period	$ 92,677	$ 162,695

XML

Summary of Significant Accounting Policies

6 Months Ended

Mar. 29, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Information—The accompanying unaudited, condensed consolidated financial statements have been prepared according to the rules and regulations of the United States (the “U.S.”) Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statement of comprehensive loss, condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows of MACOM Technology Solutions Holdings, Inc. (“MACOM”, the “Company”, “us”, “we” or “our”) for the periods presented. We prepare our interim financial information using the same accounting principles we use for our annual audited consolidated financial statements. Certain information and note disclosures normally included in the annual audited consolidated financial statements have been condensed or omitted in accordance with prescribed SEC rules. We believe that the disclosures made in our condensed consolidated financial statements and the accompanying notes are adequate to make the information presented not misleading.

The consolidated balance sheet at September 28, 2018 is as reported in our audited consolidated financial statements as of that date. Our accounting policies are described in the notes to our September 28, 2018 consolidated financial statements, which were included in our Annual Report on Form 10-K for our fiscal year ended September 28, 2018 filed with the SEC on November 16, 2018. We recommend that the financial statements included in this Quarterly Report on Form 10-Q be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for our fiscal year ended September 28, 2018.

Principles of Consolidation—We have one reportable segment, semiconductors and modules. The accompanying consolidated financial statements include our accounts and the accounts of our majority-owned subsidiaries. All intercompany balances and transactions 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 and 2018 include 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we typically include the extra week arising in such fiscal years in the first quarter.

Use of Estimates—The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the U.S. ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities during the reporting periods, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, we base estimates and assumptions on historical experience, currently available information and various other factors that management believes to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.

Revenue Recognition—Substantially all of our revenue is derived from sales of high-performance radio frequency ("RF"), microwave, millimeterwave and lightwave semiconductor solutions into three primary markets: Telecom, Data Centers and Industrial and Defense ("I&D"). Revenue is recognized when a customer obtains control of products or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, 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 the contract; and (5) recognize revenue when (or as) we satisfy performance obligations. Sales, value add and other taxes collected on behalf of third parties are excluded 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 products potentially 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 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. Certain contracts may contain multiple performance obligations for which we allocate revenue to each performance obligation on a relative stand-alone selling price.

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 the contractual shipping terms of a contract. Non-product revenue is generally recognized overtime. For each contract, the promise to transfer the control of the products or services, each of which is individually distinct, is considered to be the identified performance obligation. We provide an assurance type warranty which is not sold separately and does not

represent a separate performance obligation. Therefore, we account for such warranties under ASC 460, Guarantees, and the 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 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 in written agreements, which require us to assess the potential revenue effects of this variable consideration utilizing the expected value method. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. As such, revenue on sales to customers that include rights of return and pricing programs are recorded net of estimated variable consideration, utilizing the expected value method based on historical sales data. We believe that the judgments and estimates we utilize are reasonable based upon current facts and circumstances, 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 obligations that 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 which revenue 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 of transaction 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 expected to be longer than one year. Capitalizable contract costs were not significant both at the date of adoption and as of March 29, 2019.

We account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the 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 costs to fulfill the promise and not as a separate performance obligation. Shipping and handling costs associated with the distribution of products to customers are recorded in costs of revenue generally when the related product is shipped to the customer.

Recent Accounting Pronouncements—Our Recent Accounting Pronouncements are described in the notes to our September 28, 2018 consolidated financial statements, which were included in our Annual Report on Form 10-K for our fiscal year ended September 28, 2018.

Pronouncements Adopted in Fiscal Year 2019

We adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, on September 29, 2018. The 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 ASC 606 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 initial application. 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 of the 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 were prepared 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 the FASB issued further amendments to this guidance. This update made amendments to the guidance in GAAP on the classification and measurement of financial instruments. The new standard significantly revised an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amended certain disclosure requirements associated with the fair value of financial instruments. 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 or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective 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 securitization transactions and separately identifiable cash flows and application of the predominance principle. The adoption of this update did not have a material impact on our 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 amended the guidance on recognizing the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendment eliminated the exception for an intra entity transfer of an asset other than

inventory. The adoption of this updated standard did not have a material impact on our consolidated financial statements and related disclosures.

Pronouncements for Adoption in Subsequent Periods

In February 2016, the FASB issued ASU 2016-02, Leases ("Topic 842"). In September 2017, January, July and December 2018 and March 2019, the FASB issued additional guidance related to Topic 842. The new standard increases transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under Topic 842, leases are classified as either operating or finance, based on criteria similar to current lease accounting, but without explicit bright lines. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. We are evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures and we anticipate that this new guidance will have a material impact on our financial statements as we have a significant number of operating leases.

XML

Revenue (Notes)

6 Months Ended

Mar. 29, 2019

Revenue [Abstract]

Revenue from Contract with Customer [Text Block]

2. REVENUE

Disaggregation of Revenue

We disaggregate revenue from contracts with customers by markets and geography, as we believe it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The following tables presents our revenue disaggregated by markets and geography (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019	March 30, 2018
Revenue by Market:
Industrial & Defense	$	50,471	$	43,882	107,754	84,596
Data Center	30,657		42,597		73,904	77,358
Telecom	47,337		63,935		97,496	119,384
Total	$	128,465	$	150,414	279,154	281,338

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Revenue by Geographic Region:
United States	$	64,714	$	74,323	$	132,832	$	129,679
China	32,419		38,364		77,041		76,052
Asia Pacific, excluding China (1)	20,598		23,347		44,013		46,232
Other Countries (2)	10,734		14,380		25,268		29,375
Total	$	128,465	$	150,414	$	279,154	$	281,338

(1) Asia Pacific represents Taiwan, Japan, Singapore, India, Thailand, South Korea, Australia, Malaysia, New Zealand, the Philippines and Vietnam.

(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 region as presented above.

Contract Balances

We 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 control to the customer, and therefore revenue is recognized upon delivery of products and services.

The following table presents the changes in contract liabilities during the six months ended March 29, 2019 (in thousands):

	March 29, 2019		September 28, 2018		$ Change		% Change
Contract liabilities	$	8,915	$	7,757	$	1,158	15	%

As of March 29, 2019, approximately $8.7 million of our contract liabilities were recorded as other long-term liabilities on

our balance sheet with the remainder recorded as deferred revenue. The increase in contract liabilities during the six months ended March 29, 2019 was primarily from the deferral of revenue for funds received prior to when the customer obtains control of the product or services, partially offset by the recognition of $7.0 million associated with licensing.

During the three and six months ended March 29, 2019, we recognized the following net sales as a result of changes in the contract liabilities balance (in thousands):

	Three Months Ended		Six Months Ended
	March 29, 2019		March 29, 2019
Net revenue recognized in the period from:
Amounts included in contract liabilities at the beginning of the period	$	7,338	$	7,612

XML

Discontinued Operations

6 Months Ended

Mar. 29, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

Divested Business

On May 10, 2018, we completed the sale and transfer of certain assets associated with our Japan-based long-range optical subassembly business (the “LR4 Business”), pursuant to an Asset Purchase and Intellectual Property License Agreement, dated April 30, 2018 (the “LR4 Agreement”). The LR4 Agreement provided 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 with the opportunity to supply components, and would pay us further amounts to be determined for inventory and fixed assets within 60 days of receipt of required government approvals. As of March 29, 2019, we have received $5.0 million of consideration and expect additional consideration before the end of fiscal 2019 of $12.2 million, net of tax, which has been recorded as other current assets. As of September 28, 2018, $7.4 million had been recorded as other current assets and $4.8 million had been recorded as 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 the LR4 Business as other expense, comprised of expected proceeds of $17.2 million, subject to receipt of required government approvals, less the carrying value of assets sold, primarily including 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. The transaction did not meet the criteria of discontinued operations. We also entered into a transition services agreement (the "LR4 TSA") with the buyer, pursuant to which 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 the closing of the transaction. During the three and six months ended March 29, 2019, we have incurred no expenses associated with the LR4 TSA.

Discontinued Operations

On 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, a privately held limited liability company ("Compute"), valued at approximately $36.5 million, and representing less than 20.0% of Compute's total outstanding equity. The operations of the Compute business were accounted for as discontinued operations through the date of divestiture.

We also entered into a transition services agreement (the "Compute TSA"), pursuant to which we agreed to perform certain primarily general and administrative functions on Compute's behalf during a migration period and for which we are reimbursed for costs incurred. During the three months ended March 29, 2019, we received no reimbursements under the Compute TSA. During the six months ended March 29, 2019, we received $0.1 million of reimbursements under the Compute TSA, which was recorded as a reduction of our general and administrative expenses. During the three and six months ended March 30, 2018, we received $1.5 million and $2.5 million, respectively, of reimbursements under the Compute TSA.

The accompanying consolidated statements of operations include the following operating results related to these discontinued operations (in thousands):

	Three Months Ended			Six Months Ended
	March 30, 2018			March 30, 2018
Revenue	$	2		$	—
Cost of revenue	(56		)	(596		)
Gross profit	58			596
Operating expenses:
Research and development	(12		)	4,698
Selling, general and administrative	88			1,515
Total operating expenses	76			6,213
Loss from operations	(18		)	(5,617		)
Loss before income taxes	(18		)	(5,617		)
Income tax provision	—			—
Loss from discontinued operations	$	(18	)	$	(5,617	)
Cash flow from operating activities	(18		)	(10,327		)

XML

Short Term Investments

6 Months Ended

Mar. 29, 2019

Investments, Debt and Equity Securities [Abstract]

Investments

INVESTMENTS

Our short-term investments are invested in corporate bonds and commercial paper, and are classified as available-for-sale. The amortized cost, gross unrealized holding gains or losses, and fair value of our investments by major investment type as of March 29, 2019 and September 28, 2018 are summarized in the tables below (in thousands):

	March 29, 2019
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Corporate bonds	$	28,949	$	97	$	(211	)	$	28,835
Commercial paper	70,885		1		(13		)	70,873
Total short-term investments	$	99,834	$	98	$	(224	)	$	99,708

	September 28, 2018
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Corporate bonds	$	28,731	$	—	$	(460	)	$	28,271
Commercial paper	69,966		—		(16		)	69,950
Total short-term investments	$	98,697	$	—	$	(476	)	$	98,221

The contractual maturities of available-for-sale investments were as follows (in thousands):

 

	March 29, 2019		September 28, 2018
Less than 1 year	$	71,679	$	70,200
Over 1 year	28,029		28,021
Total short-term investments	$	99,708	$	98,221

Available-for-sale investments are reported at fair value and as such, their associated unrealized gains and losses are reported as a separate component of stockholders’ equity within accumulated other comprehensive income.

Other Investments— As of March 29, 2019, we held two non-marketable equity investments classified as other long-term investments.

One of these is an investment in a Series B preferred stock ownership of a privately held manufacturing corporation with preferred liquidation rights over other equity shares. As the equity securities do not have a readily determinable fair value and do not qualify for the practical expedient under ASC 820 we have elected to hold this investment at cost less any impairment. As of March 29, 2019, the cost of this investment was $5.0 million. We evaluate this investment for impairment at each balance sheet date, and through March 29, 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 Compute that was acquired in conjunction with the divestiture of the Compute business during the fiscal quarter ended December 29, 2017 and had an initial value of $36.5 million. We have no obligation to provide further funding to Compute. This was a non-cash transaction as we contributed net assets valued at approximately $36.5 million in exchange for this equity interest. This investment value is updated quarterly based on our proportionate share of the losses or earnings of Compute utilizing the equity method. During the three and six months ended March 29, 2019 we recorded losses of $4.4 million and $9.0 million, respectively, associated with this investment as other expense in our consolidated statements of operations. During the three and six months ended March 30, 2018, we recorded losses of $4.1 million associated with this investment. As of March 29, 2019 and September 28, 2018, the carrying value of this investment was $17.1 million and $26.1 million, respectively.

XML

Fair Value

6 Months Ended

Mar. 29, 2019

Fair Value Disclosures [Abstract]

Fair Value

FAIR VALUE

We 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 liabilities are 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 with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable 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, including assumptions and judgments made by us.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

We measure certain assets and liabilities at fair value on a recurring basis such as our financial instruments and derivatives. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the three and six months ended March 29, 2019.

Assets and liabilities measured at fair value on a recurring basis consist of the following (in thousands):

	March 29, 2019
	Fair Value		Active Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Money market funds	$	252	$	252	$	—	$	—
Commercial paper	70,873		—		70,873		—
Corporate bonds	28,835		—		28,835		—
Total assets measured at fair value	$	99,960	$	252	$	99,708	$	—
Liabilities
Common stock warrant liability	9,268		—		—		9,268
Total liabilities measured at fair value	$	9,268	$	—	$	—	$	9,268

	September 28, 2018
	Fair Value		Active Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Money market funds	$	253	$	253	$	—	$	—
Commercial paper	69,950		—		69,950		—
Corporate bonds	28,271		—		28,271		—
Total assets measured at fair value	$	98,474	$	253	$	98,221	$	—
Liabilities
Contingent consideration	$	585	$	—	$	—	$	585
Common stock warrant liability	13,129		—		—		13,129
Total liabilities measured at fair value	$	13,714	$	—	$	—	$	13,714

As of March 29, 2019 and September 28, 2018, the fair value of the common stock warrants has been estimated using a Black-Scholes option pricing model.

The fair value of the contingent consideration liability was estimated based upon a risk-adjusted present value of the probability-weighted expected payments 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 quantitative information utilized in the fair value calculation of our Level 3 liabilities is as follows:

			Inputs
Liabilities	Valuation Technique	Unobservable Input	March 29, 2019	September 28, 2018
Contingent consideration	Discounted cash flow	Discount rate	N/A	9.2%
		Probability of achievement	N/A	90%
		Timing of cash flows	N/A	1 month
Warrant liability	Black-Scholes model	Volatility	71.9%	60.7%
		Discount rate	2.30%	2.81%
		Expected life	1.7 years	2.2 years
		Exercise price	$14.05	$14.05
		Stock price	$16.71	$20.60
		Dividend rate	—%	—%

The changes in liabilities with inputs classified within Level 3 of the fair value hierarchy consist of the following (in thousands):

	September 28, 2018		Net Realized/Unrealized Losses (Gains) Included in Earnings			Purchases and Issuances		Sales and Settlements			March 29, 2019
Contingent consideration	$	585	$	65		$	—	$	(650	)	$	—
Common stock warrant liability	$	13,129	$	(3,861	)	$	—	$	—		$	9,268

	September 29, 2017		Net Realized/Unrealized Gains Included in Earnings			Purchases and Issuances		Sales and Settlements		March 30, 2018
Contingent consideration	$	1,679	$	(549	)	$	—	$	—	$	1,130
Common stock warrant liability	$	40,775	$	(31,624	)	$	—	$	—	$	9,151

XML

Inventories

6 Months Ended

Mar. 29, 2019

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories, net of reserves, consist of the following (in thousands):

	March 29, 2019		September 28, 2018
Raw materials	$	64,530	$	71,408
Work-in-process	13,094		13,466
Finished goods	42,316		37,963
Total inventory, net	$	119,940	$	122,837

XML

Property, Plant and Equipment

6 Months Ended

Mar. 29, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands):

	March 29, 2019			September 28, 2018
Construction in process	$	25,851		$	49,661
Machinery and equipment	181,034			174,638
Leasehold improvements	14,226			14,984
Furniture and fixtures	3,699			2,306
Computer equipment and software	18,372			17,317
Capital lease assets	47,353			19,380
Total property and equipment	$	290,535		$	278,286
Less accumulated depreciation and amortization	(140,583		)	(128,363		)
Property and equipment, net	$	149,952		$	149,923

Depreciation and amortization expense related to property, plant and equipment for the three and six months ended March 29, 2019 was $7.6 million and $15.2 million, respectively. Depreciation and amortization expense related to property, plant and equipment for the three and six months ended March 30, 2018 was $7.6 million and $15.4 million, respectively. Accumulated depreciation on capital lease assets as of March 29, 2019 and September 28, 2018 was $4.2 million and $3.2 million, respectively.

XML

Debt

6 Months Ended

Mar. 29, 2019

Debt Disclosure [Abstract]

Debt

DEBT

As of March 29, 2019, we are party to a credit agreement dated as of May 8, 2014 with a syndicate of lenders and Goldman Sachs Bank USA ("Goldman Sachs"), 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 “Credit Agreement”).

As of March 29, 2019, the Credit Agreement consisted of term loans with an aggregate principal amount of $700.0 million (“Term Loans”) and a revolving credit facility with an aggregate borrowing capacity of $160.0 million (the "Revolving Facility"). The Revolving Facility will mature in November 2021 and the 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 determined by 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 in the print edition of 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 period plus 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 March 29, 2019, for the Credit Agreement were as follows (in thousands, except rate data):

	Principal Outstanding	LIBOR Rate	Margin	Effective Interest Rate
Term loans	$676,414	2.49%	2.25%	4.74%

As of March 29, 2019, approximately $9.4 million of deferred financing costs remain unamortized, of which $8.7 million is related to the Term Loans and is recorded as a direct reduction of the recognized debt liabilities in our accompanying consolidated balance sheet, and $0.7 million is related to the Revolving 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 certain financial 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 the remainder 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 certain exceptions, 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 months of 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 months following our receipt of the proceeds and 6 months following the date of such agreement to complete the reinvestment.

As of March 29, 2019, we had $160.0 million of borrowing capacity under our Revolving Facility.

As of March 29, 2019, the following remained outstanding on the Term Loans (in thousands):

Principal balance	$	676,414
Unamortized discount	(4,020		)
Unamortized deferred financing costs	(8,688		)
Total term loans	$	663,706
Current portion	6,885
Long-term, less current portion	$	656,821

As of March 29, 2019, the minimum principal payments under the Term Loans in future fiscal years were as follows (in thousands):

2019 (remainder of fiscal year)	$	3,443
2020	6,885
2021	6,885
2022	6,885
2023	6,885
Thereafter	645,431
Total	$	676,414

The fair value of the Term Loans was estimated to be approximately $647.7 million as of March 29, 2019, and was determined using Level 2 inputs, including a quoted rate from a bank.

XML

Capital Lease and Financing Obligations Capital Lease and Financing Obligations

6 Months Ended

Mar. 29, 2019

Leases [Abstract]

Capital Lease Obligations

. CAPITAL LEASE AND FINANCING OBLIGATIONS

Corporate Facility Financing Obligation

On December 28, 2016, we entered into three lease agreements including a 20 year leaseback of a facility located at 100 Chelmsford Street, a 20 year build-to-suit lease arrangement for the construction and subsequent lease back, which commenced on October 1, 2018, of a new facility located at 144 Chelmsford Street, and a 14 year building lease renewal of an adjacent facility at 121 Hale Street, collectively the “Lowell Leases.”

We account for the Lowell Leases as a single unit of accounting under the financing method.

As of October 1, 2018, the construction of the facility at 144 Chelmsford Street was completed, the building was placed in service and the associated lease term commenced.

We calculated a lease obligation based on the future minimum lease payments discounted at 7.2% as of October 1, 2018. The discount rate represents the estimated incremental borrowing 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 the lease obligation. The real property assets in the transaction remain on the consolidated balance sheets and continue to be depreciated over the remaining useful lives. As of March 29, 2019 and September 28, 2018, the outstanding lease obligations associated with the Lowell Leases included in leases payable in the consolidated balance sheets, were approximately $28.4 million and $28.3 million, respectively.

Additionally, we have certain capital equipment lease obligations, of which approximately $2.1 million and $1.2 million was outstanding as of March 29, 2019 and September 28, 2018, respectively.

As of March 29, 2019, future minimum payments under capital lease obligations were as follows (in thousands):

Fiscal year ending:	Amount
2019 (remainder of fiscal year)	$	1,691
2020	3,375
2021	3,298
2022	2,660
2023	2,563
Thereafter	42,247
Total minimum capital lease payments	55,834
Less amount representing interest	(26,989		)
Present value of net minimum capital lease payments	$	28,845

XML

Intangible Assets

6 Months Ended

Mar. 29, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

INTANGIBLE ASSETS

Amortization expense related to intangible assets is as follows (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Cost of revenue	$	7,883	$	8,172	$	15,935	$	16,319
Selling, general and administrative	11,873		11,753		24,392		22,746
Total	$	19,756	$	19,925	$	40,327	$	39,065

Intangible assets consist of the following (in thousands):

	March 29, 2019			September 28, 2018
Acquired technology	$	251,783		$	251,673
Customer relationships	518,234			518,234
Trade name	3,400			3,400
Total	$	773,417		$	773,307
Less accumulated amortization	(300,847		)	(260,522		)
Intangible assets — net	$	472,570		$	512,785

Our trade name is an indefinite-lived intangible asset. A summary of the activity in intangible assets and goodwill follows (in thousands):

	Intangible Assets
	Total Intangible Assets		Acquired Technology		Customer Relationships		Trade Name		Goodwill
Balance at September 28, 2018	$	773,307	$	251,673	$	518,234	$	3,400	$	314,076
Currency translation adjustment	110		110		—		—		285
Balance at March 29, 2019	$	773,417	$	251,783	$	518,234	$	3,400	$	314,361

As of March 29, 2019, our estimated amortization of our intangible assets in future fiscal years was as follows (in thousands):

	2019 Remaining		2020	2021	2022	2023	Thereafter	Total
Amortization expense	$	43,454	81,701	74,086	61,848	51,471	156,610	$	469,170

Accumulated amortization for acquired technology and customer relationships were $156.0 million and $144.9 million, respectively, as of March 29, 2019, and $140.0 million and $120.5 million, respectively, as of September 28, 2018.

XML

Stockholders' Equity

6 Months Ended

Mar. 29, 2019

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS' EQUITY

We 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 March 29, 2019 and September 28, 2018.

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 expire December 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 capital stock or other equity securities, including by merger, consolidation, recapitalization or similar transactions. We do not currently have sufficient registered and available shares to immediately satisfy a request for registration, if such a request were made. As of March 29, 2019, no exercise of the warrants had occurred, and no request had been made to register the warrants or any underlying securities for resale by the holders.

We are recording the estimated fair values of the warrants as a long-term liability in the accompanying consolidated financial statements with changes in the estimated fair value being recorded in the accompanying statements of operations. See Note 5 - Fair Value for additional information related to the fair value of our warrant liability.

XML

Earnings (Loss) Per Share

6 Months Ended

Mar. 29, 2019

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

EARNINGS (LOSS) PER SHARE

The following table sets forth the computation for basic and diluted net loss per share of common stock (in thousands, except per share data):

	Three Months Ended						Six Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Numerator:
Loss from continuing operations	$	(46,204	)	$	(15,466	)	$	(69,600	)	$	(32,436	)
Loss from discontinued operations	—			(18		)	—			(5,617		)
Net loss	$	(46,204	)	$	(15,484	)	$	(69,600	)	$	(38,053	)
Warrant liability gain	—			(17,015		)	(3,862		)	(31,624		)
Net loss attributable to common stockholders	$	(46,204	)	$	(32,499	)	$	(73,462	)	$	(69,677	)
Denominator:
Weighted average common shares outstanding-basic	65,531			64,549			65,404			64,437
Dilutive effect of warrants	—			583			206			683
Weighted average common shares outstanding-diluted	65,531			$	65,132		$	65,610		$	65,120
Loss per share-basic:
Continuing operations	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.50	)
Discontinued operations	0.00			0.00			0.00			(0.09		)
Net loss to common stock holders per share-basic	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.59	)
Loss per share-diluted:
Continuing operations	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(0.98	)
Discontinued operations	0.00			0.00			0.00			(0.09		)
Net loss to common stock holders per share-diluted	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(1.07	)

As of March 29, 2019, we had warrants outstanding which were reported as a liability on the consolidated balance sheet. During the six months ended March 29, 2019 and the three and six months ended March 30, 2018, we recorded $3.9 million, $17.0 million and $31.6 million of warrant gains, respectively, associated with adjusting the fair value of the warrants in the consolidated statements of operations primarily as a result of changes in our stock price. When calculating earnings per share we are required to adjust for the dilutive effect of outstanding common stock equivalents, including adjustment to the numerator for the dilutive effect of contracts that must be settled in stock. During the six months ended March 29, 2019 and the three and six months ended March 30, 2018 we adjusted the numerator by the warrant gains of $3.9 million, $17.0 million and $31.6 million, respectively, and the denominator by the incremental shares of 206,104, 582,889 and 683,198, respectively, under the treasury stock method. The table above excludes the effects of 425,202 and 154,377 for the three and six months ended March 29, 2019 and 477,212 and 488,521 shares for the three and six months ended March 30, 2018 respectively, of potential shares of common stock issuable upon exercise of stock options, warrants, and restricted stock and restricted stock units, as applicable, as the inclusion would be antidilutive.

XML

Commitments and Contingencies	6 Months Ended
	Mar. 29, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	COMMITMENTS AND CONTINGENCIESFrom time to time, we may be subject to commercial disputes, employment issues, claims by other companies in the industry that we have infringed their intellectual property rights and other similar claims and litigations. Any such claims may lead to future litigation and material damages and defense costs. We were not involved in any material pending legal proceedings during the fiscal quarter ended March 29, 2019.

XML

Restructurings

6 Months Ended

Mar. 29, 2019

Restructuring and Related Activities [Abstract]

Restructurings

RESTRUCTURINGS

We have periodically implemented restructuring actions in connection with broader plans to reduce staffing, reduce our internal manufacturing footprint and generally reduce operating costs. The restructuring expenses are primarily comprised of direct and incremental costs related to headcount reductions including severance and outplacement fees for the terminated employees, as well as facility closure costs.

During the fiscal quarter ended December 29, 2017, we initiated plans to restructure and close our facility in Long Beach, California and to close our facilities in Belfast, United Kingdom and Sydney, Australia. The operations from the Long Beach facility were consolidated into our other California locations in order to achieve operational synergies. The Belfast and Sydney facilities were closed as we discontinued certain product development activities that were performed in those locations.

During the fiscal quarter ended September 28, 2018, we initiated a plan to exit certain production and product lines, primarily including certain production facilities located in Ithaca, New York. We incurred restructuring charges of $0.4 million and $5.4 million in the three and six months ended March 29, 2019, respectively, for these facilities, and we expect to incur restructuring costs of approximately $0.2 million to $0.3 million during the remainder of fiscal year 2019 as we complete these restructuring actions.

During the fiscal quarter ended March 29, 2019, we committed to a plan to exit certain design facilities and activities. We incurred restructuring charges of $2.8 million in the three months ended March 29, 2019 under this plan. We expect to incur restructuring costs of approximately $0.3 million to $0.4 million during the remainder of fiscal year 2019 as we complete these restructuring action.

The following is a summary of the restructuring charges incurred for the three and six months ended March 29, 2019 and March 30, 2018 under these restructuring plans (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Employee related expenses	$	465	$	221	$	1,618	$	2,792
Facility related expenses	2,717		1,318		6,542		3,408
Total restructuring charges	$	3,182	$	1,539	$	8,160	$	6,200

The following is a summary of the costs incurred for the six months ended March 29, 2019 and the remaining balance included in Accrued liabilities and Other long-term liabilities at March 29, 2019 (in thousands):

Balance as of September 28, 2018	$	89
Current period expense	8,160
Charges paid/settled	(6,162		)
Balance as of March 29, 2019	$	2,087

The balance as of March 29, 2019 includes $0.6 million classified as long-term liabilities.

XML

Share-Based Compensation

6 Months Ended

Mar. 29, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

Stock Plans

As of March 29, 2019, we had 14.8 million shares available for issuance under our 2012 Omnibus Incentive Plan (as Amended and Restated) (the “2012 Plan”) and 3.6 million shares available for issuance under our Employee Stock Purchase Plan. Under the 2012 Plan, we have the ability to issue incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), performance based non-statutory stock options, stock appreciation rights, restricted stock (“RSAs”), restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), performance shares and other equity-based awards to employees, directors and outside consultants. The ISOs and NSOs must be granted at a price per share not less than the fair value of our common stock on the date of grant. Options granted to date primarily vest based on certain market-based and performance-based criteria. Options granted generally have a term of four years to seven years. Certain of the share-based awards granted and outstanding as of March 29, 2019 are subject to accelerated vesting upon a change in control.

Share-Based Compensation

The following table shows a summary of share-based compensation expense included in the Condensed Consolidated Statements of Operations for the three and six months ended March 29, 2019 and March 30, 2018 (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Cost of revenue	$	841	$	917	$	1,514	$	1,862
Research and development	1,200		2,976		4,022		6,637
Selling, general and administrative	6,035		1,457		11,813		6,843
Total share-based compensation expense	$	8,076	$	5,350	$	17,349	$	15,342

As of March 29, 2019, the total unrecognized compensation costs related to outstanding stock options, restricted stock awards and units including awards with time-based and performance-based vesting was $91.5 million, which we expect to recognize over a weighted-average period of 2.7 years. As of March 29, 2019, total unrecognized compensation cost related to our Employee Stock Purchase Plan was $0.4 million.

Stock Options

A summary of stock option activity for the six months ended March 29, 2019 is as follows (in thousands, except per share amounts and contractual term):

	Number of Shares		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Options outstanding - September 28, 2018	1,408		$	32.05
Granted	395		16.06
Exercised	(12	)	2.00
Forfeited, canceled or expired	(1,192	)	35.63
Options outstanding - March 29, 2019	599		$	14.97	5.60	$	1,206
Options vested and expected to vest - March 29, 2019	599		14.97		5.60	1,206
Options exercisable - March 29, 2019	204		$	12.86	3.66	$	950

Aggregate intrinsic value represents the difference between our closing stock price on March 29, 2019 and the exercise price of outstanding, in-the-money options. During the six months ended March 29, 2019, there were 12,000 options exercised. The total intrinsic value of options exercised was $0.2 million and $0.2 million for the three and six months ended March 29, 2019 and $0.2 million and $0.7 million for the three and six months ended March 30, 2018.

Stock Options with Market-based Vesting Criteria

We grant non-qualified stock options that are subject to vesting only upon the market price of our underlying public stock closing above a certain price target within seven years of the date of grant. Share-based compensation expense is recognized regardless of the number of awards that are earned based on the market condition and is recognized on a straight-line basis over the estimated service period. If the required service period is not met for these options, then the 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 trailing average prior to the end of the estimated service period, any remaining unamortized compensation cost will be recognized.

We granted 395,000 market-based stock options during the six months ended March 29, 2019, at a weighted average grant date fair value of $7.17 per share, or $2.8 million. These options have a weighted average exercise price of $16.06.

These non-qualified stock options with market based vesting conditions were valued using a Monte Carlo simulation model. The weighted average Monte Carlo input assumptions used for calculating the fair value of these market-based stock options are as follows:

	Six Months Ended
	March 29, 2019
Risk-free interest rate	3.1	%
Expected term (years)	3.8
Expected volatility rate	51.4	%
Target price	$61.32

During the six months ended March 29, 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 will be recognized as share-based compensation expense over the requisite service period of the new PRSU awards.

Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units

A summary of RSAs, RSUs and PRSUs activity for the six months ended March 29, 2019, is as follows (in thousands, except per share data):

	Number of RSAs, RSUs and PRSUs		Weighted- Average Grate Date Fair Value		Aggregate Intrinsic Value (in thousands)
Balance at September 28, 2018	1,872		$	34.15	$	38,452
Granted	2,425		18.64
Vested and released	(545	)	35.63
Forfeited, canceled or expired	(194	)	35.64
Balance at March 29, 2019	3,558		$	23.27	$	59,459

RSAs, RSUs and PRSUs that vested during the six months ended March 29, 2019 and March 30, 2018 had fair value of $9.6 million and $10.4 million, respectively, as of the vesting date.

XML

Income Taxes

6 Months Ended

Mar. 29, 2019

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

We are subject to income tax in the U.S. as well as other tax jurisdictions in which we conduct business. Earnings from non-U.S. activities are subject to local country income tax and may also be subject to current U.S. income tax. For interim periods, we record a tax provision or benefit based upon the estimated effective tax rate expected for the full fiscal year, adjusted for material discrete taxation matters arising during the interim periods.

Income tax expense was $1.7 million for the six months ended March 29, 2019, compared to a benefit of $1.7 million for the six months ended March 30, 2018. The difference between the U.S. federal statutory income tax rate of 21% for the three and six months ended March 29, 2019 was primarily driven by the continuation of a full valuation allowance against any benefit associated with U.S. losses and income taxed in foreign jurisdictions at generally lower tax rates. The difference between the blended U.S. federal statutory income tax rate of 24.5% for the three and six months ended months ended March 30, 2018 and our effective income tax rate was primarily driven by the continuation of a full valuation allowance against any benefit associated with U.S. losses and income taxed in foreign jurisdictions at generally lower tax rates.

We 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, we consider available positive and negative evidence and factors that may impact the valuation of our deferred tax asset including results of recent operations, future reversals of existing taxable temporary differences, projected future taxable income, and tax-planning strategies. A significant piece of objective negative evidence evaluated was the cumulative U.S. loss initially incurred over the three-year period ended March 31, 2017, which we believe limited our ability to consider other subjective evidence, such as our projections for future growth. Significant negative objective evidence in the form of adjusted cumulative losses in the U.S. over the three-year period ended March 29, 2019 resulted in our continued determination that there

was not sufficient objectively verifiable positive evidence to offset this negative objective evidence and we concluded that a full valuation allowance was still appropriate for our U.S. deferred tax assets.

All earnings of foreign subsidiaries, other than our M/A-COM Technology Solutions International Limited Cayman Islands subsidiary (“Cayman Islands subsidiary”), are considered indefinitely reinvested for the periods presented. During the three months ended March 29, 2019, we changed our position for our Cayman Islands subsidiary to no longer have its earnings permanently reinvested. During the fiscal quarter ended December 28, 2018, we finalized our calculation of the one-time deemed repatriation of gross foreign earnings and profits, totaling $155.6 million, which will result in approximately $86.3 million in U.S. taxable income for the year ended September 28, 2018. As we have recorded a full valuation allowance for this period, the adjusted one-time deemed repatriation will continue to have no impact on our tax expense. We also continue to expect that our tax loss for the year ended September 28, 2018 along with any net operating loss ("NOL") carryforwards will fully offset this one-time deemed repatriation of taxable income resulting in no additional cash tax payments.

The balance of the unrecognized tax benefits as of March 29, 2019 and September 28, 2018 was $1.0 million and $0.3 million, respectively. The increase of $0.7 million in unrecognized tax benefits during the six months ended March 29, 2019 was all recognized during the fiscal quarter ended December 28, 2018 and resulted from finalizing the transition tax impact relating to the one-time deemed repatriation of gross foreign earnings and profits for the year ended September 28, 2018. In finalizing the transition tax, we identified certain tax accounting method changes that were required to compute the correct transition tax, yet the tax law prohibited adopting these methods without filing for and receiving Internal Revenue Service ("IRS") permission to change our method. The increase in transition tax related to these non-automatic method changes requiring IRS approval was $0.7 million and represents the increase in our FIN 48 reserve balance to $1.0 million as of December 28, 2018 and March 29, 2019. Out of the total reserve balance of $1.0 million, $0.3 million, if recognized, will reduce income tax expense.

It is also our policy to recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the fiscal quarters ended March 29, 2019 and September 28, 2018, we did not make any accrual or payment of interest and penalties due to our NOL carryforward position within the U.S.

On December 22, 2017, the U.S. Congress enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act enacted a wide range of changes to the U.S. corporate income tax system, many of which differ significantly from the provisions of the previous U.S. tax law. The Tax Act also transitions international taxation from a worldwide system with deferral to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low-taxed income. These changes became effective in our fiscal year beginning September 29, 2018.

XML

Related Party Transactions	6 Months Ended
	Mar. 29, 2019
Related Party Transactions [Abstract]
Related Party Transactions	RELATED PARTY TRANSACTIONSCadence Design Systems, Inc. ("Cadence") provides us with certain engineering licenses on an ongoing basis. Geoffrey Ribar, who joined our board of directors 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 the three and six months ended March 30, 2018 we made payments of $2.3 million and $4.1 million, respectively, subsequent to Mr. Ribar joining our board of directors.

XML

Supplemental Cash Flow Information

6 Months Ended

Mar. 29, 2019

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

SUPPLEMENTAL CASH FLOW INFORMATION

As of March 29, 2019 and March 30, 2018, we had $2.7 million and $1.5 million, respectively, in unpaid amounts related to purchases of property and equipment included in accounts payable and accrued liabilities during each period. These amounts have been excluded from the payments for purchases of property and equipment in the accompanying condensed consolidated statements of cash flows until paid.

During the six months ended March 29, 2019 and March 30, 2018, we capitalized $1.5 million and $9.2 million, respectively, of net construction costs relating to the 144 Chelmsford Street facility, of which $0.3 million and $7.1 million, respectively, were accounted for as a non-cash transaction as the costs were paid by the developer.

During the six months ended March 29, 2019, we capitalized an additional $1.5 million of equipment under capital leases, which were accounted for as non-cash transactions. During the six months ended March 30, 2018, no additional capital leases were recorded.

The following is supplemental cash flow information regarding non-cash investing and financing activities (in thousands):

	Six Months Ended
	March 29, 2019			March 30, 2018
Cash paid for interest	$	17,041		$	14,094
Cash (refunded) paid for income taxes	$	(1,606	)	$	4,065

XML

Geographic and Significant Customer Information

6 Months Ended

Mar. 29, 2019

Segment Reporting [Abstract]

Geographic and Significant Customer Information

GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION

We have one reportable operating segment that designs, develops, manufactures and markets semiconductors and modules. The determination of the number of reportable operating segments is based on the chief operating decision maker’s use of financial information for the purposes of assessing performance and making operating decisions. In evaluating financial performance and making operating decisions, the chief operating decision maker primarily uses consolidated revenue, gross profit and operating loss.

For information about our revenue in different geographic regions, based upon customer locations, see Note 2 - Revenue. Information about our long-lived assets in different geographic regions is presented below (in thousands):

	As of
Long-Lived Assets by Geographic Region	March 29, 2019		September 28, 2018
United States	$	121,823	$	122,888
Asia Pacific (1)	22,385		24,702
Other Countries (2)	5,744		2,333
Total	$	149,952	$	149,923

(1) Asia Pacific represents Taiwan, India, Japan, Thailand, South Korea, Singapore, 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 as presented above.

The following is a summary of customer concentrations as a percentage of revenue and accounts receivable as of and for the periods presented:

	Three Months Ended				Six Months Ended
Revenue	March 29, 2019		March 30, 2018		March 29, 2019	March 30, 2018
Customer A	14	%	12	%	15%	11%
Customer B	4	%	11	%	4%	9%

Accounts Receivable	March 29, 2019		September 28, 2018
Customer A	19	%	19	%
Customer C	10	%	26	%

No other customer represented more than 10% of revenue or accounts receivable in the periods presented in the accompanying consolidated financial statements. For the three and six months ended March 29, 2019, our top ten customers represented 55% and 56%, respectively, of total revenue, and for the three and six months ended March 30, 2018, our top ten customers represented 58% and 54% of total revenue, respectively.

XML

Subsequent Events Subsequent Events	6 Months Ended
	Mar. 29, 2019
Subsequent Events [Abstract]
Subsequent Events	20. SUBSEQUENT EVENTSOn April 24, 2019, the Company, and its wholly-owned indirect subsidiaries, MACOM Wireless Cayman Limited (“MACOM Cayman”) and MACOM Wireless (HK) Limited (the “MACOM HK”), entered into a share purchase agreement (the “Share Purchase Agreement”) with Goertek (HongKong) Co., Limited (“Goertek”), pursuant to which MACOM Cayman and Goertek will form, upon closing of the Transaction (as defined below), a joint venture for purposes of supplying, marketing and distributing Gallium-Nitride-on-Silicon-based RF Power components into China’s 5G basestation market. Upon the terms and subject to the conditions set forth in the Share Purchase Agreement, MACOM Cayman will sell to Goertek 51% of the issued ordinary shares of MACOM HK owned by MACOM Cayman in exchange for total consideration of up to $134.6 million, including $30.0 million at closing and up to $95.0 million in potential milestone payments plus accrued interest thereon (the “Transaction”). At and following the closing of the Transaction, MACOM Cayman will retain a 49% equity interest in MACOM HK. We expect the Transaction to close in the second half of calendar 2019, subject to certain closing conditions, including the receipt of anti-trust approval from China’s State Administration for Market Regulation. For additional information, see our Current Report on Form 8-K filed with the SEC on April 24, 2019.

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Mar. 29, 2019

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation—We have one reportable segment, semiconductors and modules. The accompanying consolidated financial statements include our accounts and the accounts of our majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Fiscal Period

We have a 52- or 53-week fiscal year ending on the Friday closest to the last day of September. The fiscal years 2019 and 2018 include 52 weeks. To offset the effect of holidays, for fiscal years in which there are 53 weeks, we typically include the extra week arising in such fiscal years in the first quarter.

Use of Estimates

Use of Estimates—The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the U.S. ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities during the reporting periods, the reported amounts of revenue and expenses during the reporting periods, and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, we base estimates and assumptions on historical experience, currently available information and various other factors that management believes to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition—Substantially all of our revenue is derived from sales of high-performance radio frequency ("RF"), microwave, millimeterwave and lightwave semiconductor solutions into three primary markets: Telecom, Data Centers and Industrial and Defense ("I&D"). Revenue is recognized when a customer obtains control of products or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, 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 the contract; and (5) recognize revenue when (or as) we satisfy performance obligations. Sales, value add and other taxes collected on behalf of third parties are excluded 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 products potentially 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 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. Certain contracts may contain multiple performance obligations for which we allocate revenue to each performance obligation on a relative stand-alone selling price.

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 the contractual shipping terms of a contract. Non-product revenue is generally recognized overtime. For each contract, the promise to transfer the control of the products or services, each of which is individually distinct, is considered to be the identified performance obligation. We provide an assurance type warranty which is not sold separately and does not

represent a separate performance obligation. Therefore, we account for such warranties under ASC 460, Guarantees, and the 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 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 in written agreements, which require us to assess the potential revenue effects of this variable consideration utilizing the expected value method. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. As such, revenue on sales to customers that include rights of return and pricing programs are recorded net of estimated variable consideration, utilizing the expected value method based on historical sales data. We believe that the judgments and estimates we utilize are reasonable based upon current facts and circumstances, 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 obligations that 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 which revenue 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 of transaction 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 expected to be longer than one year. Capitalizable contract costs were not significant both at the date of adoption and as of March 29, 2019.

We account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the 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 costs to fulfill the promise and not as a separate performance obligation. Shipping and handling costs associated with the distribution of products to customers are recorded in costs of revenue generally when the related product is shipped to the customer.

Recent Accounting Pronouncements

Recent Accounting Pronouncements—Our Recent Accounting Pronouncements are described in the notes to our September 28, 2018 consolidated financial statements, which were included in our Annual Report on Form 10-K for our fiscal year ended September 28, 2018.

Pronouncements Adopted in Fiscal Year 2019

We adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, on September 29, 2018. The 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 ASC 606 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 initial application. 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 of the 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 were prepared 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 the FASB issued further amendments to this guidance. This update made amendments to the guidance in GAAP on the classification and measurement of financial instruments. The new standard significantly revised an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amended certain disclosure requirements associated with the fair value of financial instruments. 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 or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective 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 securitization transactions and separately identifiable cash flows and application of the predominance principle. The adoption of this update did not have a material impact on our 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 amended the guidance on recognizing the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendment eliminated the exception for an intra entity transfer of an asset other than

inventory. The adoption of this updated standard did not have a material impact on our consolidated financial statements and related disclosures.

Pronouncements for Adoption in Subsequent Periods

In February 2016, the FASB issued ASU 2016-02, Leases ("Topic 842"). In September 2017, January, July and December 2018 and March 2019, the FASB issued additional guidance related to Topic 842. The new standard increases transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under Topic 842, leases are classified as either operating or finance, based on criteria similar to current lease accounting, but without explicit bright lines. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. We are evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures and we anticipate that this new guidance will have a material impact on our financial statements as we have a significant number of operating leases.

XML

Revenue (Tables)

6 Months Ended

Mar. 29, 2019

Revenue [Abstract]

Disaggregation of Revenue

The following tables presents our revenue disaggregated by markets and geography (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019	March 30, 2018
Revenue by Market:
Industrial & Defense	$	50,471	$	43,882	107,754	84,596
Data Center	30,657		42,597		73,904	77,358
Telecom	47,337		63,935		97,496	119,384
Total	$	128,465	$	150,414	279,154	281,338

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Revenue by Geographic Region:
United States	$	64,714	$	74,323	$	132,832	$	129,679
China	32,419		38,364		77,041		76,052
Asia Pacific, excluding China (1)	20,598		23,347		44,013		46,232
Other Countries (2)	10,734		14,380		25,268		29,375
Total	$	128,465	$	150,414	$	279,154	$	281,338

(1) Asia Pacific represents Taiwan, Japan, Singapore, India, Thailand, South Korea, Australia, Malaysia, New Zealand, the Philippines and Vietnam.

(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 region as presented above.

Contract with Customer, Asset and Liability

The following table presents the changes in contract liabilities during the six months ended March 29, 2019 (in thousands):

	March 29, 2019		September 28, 2018		$ Change		% Change
Contract liabilities	$	8,915	$	7,757	$	1,158	15	%

During the three and six months ended March 29, 2019, we recognized the following net sales as a result of changes in the contract liabilities balance (in thousands):

	Three Months Ended		Six Months Ended
	March 29, 2019		March 29, 2019
Net revenue recognized in the period from:
Amounts included in contract liabilities at the beginning of the period	$	7,338	$	7,612

XML

Discontinued Operations (Tables)

6 Months Ended

Mar. 29, 2019

Discontinued Operations and Disposal Groups [Abstract]

Summary of Operating Results through Dates of Divestiture Related to Divested Businesses

The accompanying consolidated statements of operations include the following operating results related to these discontinued operations (in thousands):

	Three Months Ended			Six Months Ended
	March 30, 2018			March 30, 2018
Revenue	$	2		$	—
Cost of revenue	(56		)	(596		)
Gross profit	58			596
Operating expenses:
Research and development	(12		)	4,698
Selling, general and administrative	88			1,515
Total operating expenses	76			6,213
Loss from operations	(18		)	(5,617		)
Loss before income taxes	(18		)	(5,617		)
Income tax provision	—			—
Loss from discontinued operations	$	(18	)	$	(5,617	)
Cash flow from operating activities	(18		)	(10,327		)

XML

Short Term Investments (Tables)

6 Months Ended

Mar. 29, 2019

Investments, Debt and Equity Securities [Abstract]

Summary of Available for Sale Investments

The amortized cost, gross unrealized holding gains or losses, and fair value of our investments by major investment type as of March 29, 2019 and September 28, 2018 are summarized in the tables below (in thousands):

	March 29, 2019
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Corporate bonds	$	28,949	$	97	$	(211	)	$	28,835
Commercial paper	70,885		1		(13		)	70,873
Total short-term investments	$	99,834	$	98	$	(224	)	$	99,708

	September 28, 2018
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Corporate bonds	$	28,731	$	—	$	(460	)	$	28,271
Commercial paper	69,966		—		(16		)	69,950
Total short-term investments	$	98,697	$	—	$	(476	)	$	98,221

Summary of Contractual Maturities of Investments

The contractual maturities of available-for-sale investments were as follows (in thousands): 

	March 29, 2019		September 28, 2018
Less than 1 year	$	71,679	$	70,200
Over 1 year	28,029		28,021
Total short-term investments	$	99,708	$	98,221

XML

Fair Value (Tables)

6 Months Ended

Mar. 29, 2019

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis consist of the following (in thousands):

	March 29, 2019
	Fair Value		Active Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Money market funds	$	252	$	252	$	—	$	—
Commercial paper	70,873		—		70,873		—
Corporate bonds	28,835		—		28,835		—
Total assets measured at fair value	$	99,960	$	252	$	99,708	$	—
Liabilities
Common stock warrant liability	9,268		—		—		9,268
Total liabilities measured at fair value	$	9,268	$	—	$	—	$	9,268

	September 28, 2018
	Fair Value		Active Markets for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets
Money market funds	$	253	$	253	$	—	$	—
Commercial paper	69,950		—		69,950		—
Corporate bonds	28,271		—		28,271		—
Total assets measured at fair value	$	98,474	$	253	$	98,221	$	—
Liabilities
Contingent consideration	$	585	$	—	$	—	$	585
Common stock warrant liability	13,129		—		—		13,129
Total liabilities measured at fair value	$	13,714	$	—	$	—	$	13,714

Quantitative information Used in Fair Value Calculation of Level 3 Liabilities

The quantitative information utilized in the fair value calculation of our Level 3 liabilities is as follows:

			Inputs
Liabilities	Valuation Technique	Unobservable Input	March 29, 2019	September 28, 2018
Contingent consideration	Discounted cash flow	Discount rate	N/A	9.2%
		Probability of achievement	N/A	90%
		Timing of cash flows	N/A	1 month
Warrant liability	Black-Scholes model	Volatility	71.9%	60.7%
		Discount rate	2.30%	2.81%
		Expected life	1.7 years	2.2 years
		Exercise price	$14.05	$14.05
		Stock price	$16.71	$20.60
		Dividend rate	—%	—%

Changes in Liabilities with Inputs Classified within Level 3 of Fair Value

The changes in liabilities with inputs classified within Level 3 of the fair value hierarchy consist of the following (in thousands):

	September 28, 2018		Net Realized/Unrealized Losses (Gains) Included in Earnings			Purchases and Issuances		Sales and Settlements			March 29, 2019
Contingent consideration	$	585	$	65		$	—	$	(650	)	$	—
Common stock warrant liability	$	13,129	$	(3,861	)	$	—	$	—		$	9,268

	September 29, 2017		Net Realized/Unrealized Gains Included in Earnings			Purchases and Issuances		Sales and Settlements		March 30, 2018
Contingent consideration	$	1,679	$	(549	)	$	—	$	—	$	1,130
Common stock warrant liability	$	40,775	$	(31,624	)	$	—	$	—	$	9,151

Changes in Assets with Inputs Classified within Level 3 of Fair Value

The changes in liabilities with inputs classified within Level 3 of the fair value hierarchy consist of the following (in thousands):

	September 28, 2018		Net Realized/Unrealized Losses (Gains) Included in Earnings			Purchases and Issuances		Sales and Settlements			March 29, 2019
Contingent consideration	$	585	$	65		$	—	$	(650	)	$	—
Common stock warrant liability	$	13,129	$	(3,861	)	$	—	$	—		$	9,268

	September 29, 2017		Net Realized/Unrealized Gains Included in Earnings			Purchases and Issuances		Sales and Settlements		March 30, 2018
Contingent consideration	$	1,679	$	(549	)	$	—	$	—	$	1,130
Common stock warrant liability	$	40,775	$	(31,624	)	$	—	$	—	$	9,151

XML

Inventories (Tables)

6 Months Ended

Mar. 29, 2019

Inventory Disclosure [Abstract]

Components of Inventories

Inventories, net of reserves, consist of the following (in thousands):

	March 29, 2019		September 28, 2018
Raw materials	$	64,530	$	71,408
Work-in-process	13,094		13,466
Finished goods	42,316		37,963
Total inventory, net	$	119,940	$	122,837

XML

Property, Plant and Equipment (Tables)

6 Months Ended

Mar. 29, 2019

Property, Plant and Equipment [Abstract]

Components of Property, Plant and Equipment

Property, plant and equipment consists of the following (in thousands):

	March 29, 2019			September 28, 2018
Construction in process	$	25,851		$	49,661
Machinery and equipment	181,034			174,638
Leasehold improvements	14,226			14,984
Furniture and fixtures	3,699			2,306
Computer equipment and software	18,372			17,317
Capital lease assets	47,353			19,380
Total property and equipment	$	290,535		$	278,286
Less accumulated depreciation and amortization	(140,583		)	(128,363		)
Property and equipment, net	$	149,952		$	149,923

XML

Debt (Tables)

6 Months Ended

Mar. 29, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

All principal amounts outstanding and interest rate information as of March 29, 2019, for the Credit Agreement were as follows (in thousands, except rate data):

	Principal Outstanding	LIBOR Rate	Margin	Effective Interest Rate
Term loans	$676,414	2.49%	2.25%	4.74%

Schedule of Remained Outstanding on Term Loans

As of March 29, 2019, the following remained outstanding on the Term Loans (in thousands):

Principal balance	$	676,414
Unamortized discount	(4,020		)
Unamortized deferred financing costs	(8,688		)
Total term loans	$	663,706
Current portion	6,885
Long-term, less current portion	$	656,821

Schedule of Minimum Principal Payments under Term Loans

As of March 29, 2019, the minimum principal payments under the Term Loans in future fiscal years were as follows (in thousands):

2019 (remainder of fiscal year)	$	3,443
2020	6,885
2021	6,885
2022	6,885
2023	6,885
Thereafter	645,431
Total	$	676,414

XML

Capital Lease and Financing Obligations (Tables)

6 Months Ended

Mar. 29, 2019

Leases [Abstract]

Schedule of Future Minimum Lease Payments for Capital Leases

As of March 29, 2019, future minimum payments under capital lease obligations were as follows (in thousands):

Fiscal year ending:	Amount
2019 (remainder of fiscal year)	$	1,691
2020	3,375
2021	3,298
2022	2,660
2023	2,563
Thereafter	42,247
Total minimum capital lease payments	55,834
Less amount representing interest	(26,989		)
Present value of net minimum capital lease payments	$	28,845

XML

Intangible Assets (Tables)

6 Months Ended

Mar. 29, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Amortization Expense of Intangible Assets

Amortization expense related to intangible assets is as follows (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Cost of revenue	$	7,883	$	8,172	$	15,935	$	16,319
Selling, general and administrative	11,873		11,753		24,392		22,746
Total	$	19,756	$	19,925	$	40,327	$	39,065

Summary of Intangible Assets

Intangible assets consist of the following (in thousands):

	March 29, 2019			September 28, 2018
Acquired technology	$	251,783		$	251,673
Customer relationships	518,234			518,234
Trade name	3,400			3,400
Total	$	773,417		$	773,307
Less accumulated amortization	(300,847		)	(260,522		)
Intangible assets — net	$	472,570		$	512,785

Summary of Activity in Intangible Assets and Goodwill

A summary of the activity in intangible assets and goodwill follows (in thousands):

	Intangible Assets
	Total Intangible Assets		Acquired Technology		Customer Relationships		Trade Name		Goodwill
Balance at September 28, 2018	$	773,307	$	251,673	$	518,234	$	3,400	$	314,076
Currency translation adjustment	110		110		—		—		285
Balance at March 29, 2019	$	773,417	$	251,783	$	518,234	$	3,400	$	314,361

Summary of Estimated Amortization of Intangible Assets in Future Fiscal Years

As of March 29, 2019, our estimated amortization of our intangible assets in future fiscal years was as follows (in thousands):

	2019 Remaining		2020	2021	2022	2023	Thereafter	Total
Amortization expense	$	43,454	81,701	74,086	61,848	51,471	156,610	$	469,170

XML

Earnings (Loss) Per Share (Tables)

6 Months Ended

Mar. 29, 2019

Earnings Per Share [Abstract]

Computation for Basic and Diluted Net Loss Per Share of Common Stock

The following table sets forth the computation for basic and diluted net loss per share of common stock (in thousands, except per share data):

	Three Months Ended						Six Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Numerator:
Loss from continuing operations	$	(46,204	)	$	(15,466	)	$	(69,600	)	$	(32,436	)
Loss from discontinued operations	—			(18		)	—			(5,617		)
Net loss	$	(46,204	)	$	(15,484	)	$	(69,600	)	$	(38,053	)
Warrant liability gain	—			(17,015		)	(3,862		)	(31,624		)
Net loss attributable to common stockholders	$	(46,204	)	$	(32,499	)	$	(73,462	)	$	(69,677	)
Denominator:
Weighted average common shares outstanding-basic	65,531			64,549			65,404			64,437
Dilutive effect of warrants	—			583			206			683
Weighted average common shares outstanding-diluted	65,531			$	65,132		$	65,610		$	65,120
Loss per share-basic:
Continuing operations	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.50	)
Discontinued operations	0.00			0.00			0.00			(0.09		)
Net loss to common stock holders per share-basic	$	(0.71	)	$	(0.24	)	$	(1.06	)	$	(0.59	)
Loss per share-diluted:
Continuing operations	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(0.98	)
Discontinued operations	0.00			0.00			0.00			(0.09		)
Net loss to common stock holders per share-diluted	$	(0.71	)	$	(0.50	)	$	(1.12	)	$	(1.07	)

XML

Restructurings (Tables)

6 Months Ended

Mar. 29, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

RESTRUCTURINGS

We have periodically implemented restructuring actions in connection with broader plans to reduce staffing, reduce our internal manufacturing footprint and generally reduce operating costs. The restructuring expenses are primarily comprised of direct and incremental costs related to headcount reductions including severance and outplacement fees for the terminated employees, as well as facility closure costs.

During the fiscal quarter ended December 29, 2017, we initiated plans to restructure and close our facility in Long Beach, California and to close our facilities in Belfast, United Kingdom and Sydney, Australia. The operations from the Long Beach facility were consolidated into our other California locations in order to achieve operational synergies. The Belfast and Sydney facilities were closed as we discontinued certain product development activities that were performed in those locations.

During the fiscal quarter ended September 28, 2018, we initiated a plan to exit certain production and product lines, primarily including certain production facilities located in Ithaca, New York. We incurred restructuring charges of $0.4 million and $5.4 million in the three and six months ended March 29, 2019, respectively, for these facilities, and we expect to incur restructuring costs of approximately $0.2 million to $0.3 million during the remainder of fiscal year 2019 as we complete these restructuring actions.

During the fiscal quarter ended March 29, 2019, we committed to a plan to exit certain design facilities and activities. We incurred restructuring charges of $2.8 million in the three months ended March 29, 2019 under this plan. We expect to incur restructuring costs of approximately $0.3 million to $0.4 million during the remainder of fiscal year 2019 as we complete these restructuring action.

The following is a summary of the restructuring charges incurred for the three and six months ended March 29, 2019 and March 30, 2018 under these restructuring plans (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Employee related expenses	$	465	$	221	$	1,618	$	2,792
Facility related expenses	2,717		1,318		6,542		3,408
Total restructuring charges	$	3,182	$	1,539	$	8,160	$	6,200

The following is a summary of the costs incurred for the six months ended March 29, 2019 and the remaining balance included in Accrued liabilities and Other long-term liabilities at March 29, 2019 (in thousands):

Balance as of September 28, 2018	$	89
Current period expense	8,160
Charges paid/settled	(6,162		)
Balance as of March 29, 2019	$	2,087

The balance as of March 29, 2019 includes $0.6 million classified as long-term liabilities.

Restructuring and Related Costs [Table Text Block]

The following is a summary of the restructuring charges incurred for the three and six months ended March 29, 2019 and March 30, 2018 under these restructuring plans (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Employee related expenses	$	465	$	221	$	1,618	$	2,792
Facility related expenses	2,717		1,318		6,542		3,408
Total restructuring charges	$	3,182	$	1,539	$	8,160	$	6,200

Summary of Costs Incurred and Remaining Balances Included in Accrued Expenses

The following is a summary of the costs incurred for the six months ended March 29, 2019 and the remaining balance included in Accrued liabilities and Other long-term liabilities at March 29, 2019 (in thousands):

Balance as of September 28, 2018	$	89
Current period expense	8,160
Charges paid/settled	(6,162		)
Balance as of March 29, 2019	$	2,087

XML

Share-Based Compensation (Tables)

6 Months Ended

Mar. 29, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The weighted average Monte Carlo input assumptions used for calculating the fair value of these market-based stock options are as follows:

	Six Months Ended
	March 29, 2019
Risk-free interest rate	3.1	%
Expected term (years)	3.8
Expected volatility rate	51.4	%
Target price	$61.32

Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of stock option activity for the six months ended March 29, 2019 is as follows (in thousands, except per share amounts and contractual term):

	Number of Shares		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Options outstanding - September 28, 2018	1,408		$	32.05
Granted	395		16.06
Exercised	(12	)	2.00
Forfeited, canceled or expired	(1,192	)	35.63
Options outstanding - March 29, 2019	599		$	14.97	5.60	$	1,206
Options vested and expected to vest - March 29, 2019	599		14.97		5.60	1,206
Options exercisable - March 29, 2019	204		$	12.86	3.66	$	950

Effects of Stock-Based Compensation Expense Related to Stock-Based Awards to Employees and Nonemployees

The following table shows a summary of share-based compensation expense included in the Condensed Consolidated Statements of Operations for the three and six months ended March 29, 2019 and March 30, 2018 (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2019		March 30, 2018		March 29, 2019		March 30, 2018
Cost of revenue	$	841	$	917	$	1,514	$	1,862
Research and development	1,200		2,976		4,022		6,637
Selling, general and administrative	6,035		1,457		11,813		6,843
Total share-based compensation expense	$	8,076	$	5,350	$	17,349	$	15,342

Summary of Restricted Stock, Restricted Stock Unit and Performance-based Restricted Stock Unit Activity

A summary of RSAs, RSUs and PRSUs activity for the six months ended March 29, 2019, is as follows (in thousands, except per share data):

	Number of RSAs, RSUs and PRSUs		Weighted- Average Grate Date Fair Value		Aggregate Intrinsic Value (in thousands)
Balance at September 28, 2018	1,872		$	34.15	$	38,452
Granted	2,425		18.64
Vested and released	(545	)	35.63
Forfeited, canceled or expired	(194	)	35.64
Balance at March 29, 2019	3,558		$	23.27	$	59,459

XML

Supplemental Cash Flow Information (Tables)

6 Months Ended

Mar. 29, 2019

Supplemental Cash Flow Elements [Abstract]

Schedule of Supplemental Cash Flow Information Regarding Non-cash Investing and Financing Activities

The following is supplemental cash flow information regarding non-cash investing and financing activities (in thousands):

	Six Months Ended
	March 29, 2019			March 30, 2018
Cash paid for interest	$	17,041		$	14,094
Cash (refunded) paid for income taxes	$	(1,606	)	$	4,065

XML

Geographic and Significant Customer Information (Tables)

6 Months Ended

Mar. 29, 2019

Segment Reporting [Abstract]

Summary of Different Geographic Regions

Information about our long-lived assets in different geographic regions is presented below (in thousands):

	As of
Long-Lived Assets by Geographic Region	March 29, 2019		September 28, 2018
United States	$	121,823	$	122,888
Asia Pacific (1)	22,385		24,702
Other Countries (2)	5,744		2,333
Total	$	149,952	$	149,923

(1) Asia Pacific represents Taiwan, India, Japan, Thailand, South Korea, Singapore, 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 as presented above.

Summary of Customer Concentrations as Percentage of Revenue and Accounts Receivable

The following is a summary of customer concentrations as a percentage of revenue and accounts receivable as of and for the periods presented:

	Three Months Ended				Six Months Ended
Revenue	March 29, 2019		March 30, 2018		March 29, 2019	March 30, 2018
Customer A	14	%	12	%	15%	11%
Customer B	4	%	11	%	4%	9%

Accounts Receivable	March 29, 2019		September 28, 2018
Customer A	19	%	19	%
Customer C	10	%	26	%

XML

Summary of Significant Accounting Policies (Details)	6 Months Ended
	Mar. 29, 2019 segment
Accounting Policies [Abstract]
Number of reportable operating segment	1

XML

Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018	Sep. 28, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 128,465	$ 150,414	$ 279,154	$ 281,338
Contract liabilities	8,915		8,915
Contract liabilities	215		215		$ 7,757
Contract liability noncurrent	8,700		8,700
Amounts included in contract liabilities at the beginning of the period	7,338		7,612
Net change in contract liabilities			$ 1,158
Net change in contract liabilities (percentage)			15.00%
Industrial & Defense
Disaggregation of Revenue [Line Items]
Revenue	50,471	43,882
Data Center
Disaggregation of Revenue [Line Items]
Revenue	30,657	42,597
Telecom
Disaggregation of Revenue [Line Items]
Revenue	47,337	63,935
United States
Disaggregation of Revenue [Line Items]
Revenue	64,714	74,323	$ 132,832	129,679
China
Disaggregation of Revenue [Line Items]
Revenue	32,419	38,364	77,041	76,052
Asia Pacific, excluding China
Disaggregation of Revenue [Line Items]
Revenue	20,598	23,347	44,013	46,232
Other Countries
Disaggregation of Revenue [Line Items]
Revenue	$ 10,734	$ 14,380	25,268	29,375
Industrial & Defense
Disaggregation of Revenue [Line Items]
Revenue			107,754	84,596
Data Center
Disaggregation of Revenue [Line Items]
Revenue			73,904	77,358
Telecom
Disaggregation of Revenue [Line Items]
Revenue			$ 97,496	$ 119,384

XML

Discontinued Operations - Additional information (Details) - USD ($) $ in Millions			3 Months Ended		6 Months Ended		9 Months Ended
	Sep. 28, 2018	May 10, 2018	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018	Sep. 27, 2019
Equity Securities
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Noncontrolling interest ownership percentage			20.00%		20.00%
Compute | Equity Securities
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investment cost basis			$ 36.5		$ 36.5
Noncontrolling interest ownership percentage			20.00%		20.00%
Disposal Group, Not Discontinued Operations | LR4
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Payment received for sale of divested business		$ 5.0	$ 5.0
Loss on disposal			34.3
Inventory			13.7		$ 13.7
Fixed assets			7.6		7.6
Goodwill			2.6		2.6
Transition services expense			0.0		0.0
Disposal Group, Not Discontinued Operations | LR4 | Maximum
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Service agreement liability			2.0		2.0
Disposal Group, Not Discontinued Operations | Customer relationships | LR4
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Intangible assets			27.7		27.7
Selling, General and Administrative | Disposal Group, Not Discontinued Operations | Compute
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Transition services agreement reimbursements			$ 0.0	$ 1.5	$ 0.1	$ 2.5
Other Current Assets | Disposal Group, Not Discontinued Operations | LR4
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Additional consideration expected to be received	$ 7.4
Disposal Group, Including Discontinued Operation, Assets, Current | Disposal Group, Not Discontinued Operations | LR4
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Additional consideration expected to be received	$ 4.8
Scenario, Forecast | Disposal Group, Not Discontinued Operations | LR4
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash consideration on sale of business							$ 17.2
Scenario, Forecast | Other Current Assets | Disposal Group, Not Discontinued Operations | LR4
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Additional consideration expected to be received							$ 12.2

XML

Discontinued Operations - Summary of Operating Results through Dates of Divestiture Related to Divested Businesses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue		$ 2		$ 0
Cost of revenue		(56)		(596)
Gross profit		58		596
Operating expenses:
Research and development		(12)		4,698
Selling, general and administrative		88		1,515
Total operating expenses		76		6,213
Loss from operations		(18)		(5,617)
Loss before income taxes		(18)		(5,617)
Income tax provision		0		0
Loss from discontinued operations	$ 0	(18)	$ 0	(5,617)
Cash flow from operating activities		$ (18)		$ (10,327)

XML

Investments - Summary of Available for Sale Investments (Details) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 99,834	$ 98,697
Gross Unrealized Holding Gains	98	0
Gross Unrealized Holding Losses	(224)	(476)
Aggregate Fair Value	99,708	98,221
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	28,949	28,731
Gross Unrealized Holding Gains	97	0
Gross Unrealized Holding Losses	(211)	(460)
Aggregate Fair Value	28,835	28,271
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	70,885	69,966
Gross Unrealized Holding Gains	1	0
Gross Unrealized Holding Losses	(13)	(16)
Aggregate Fair Value	$ 70,873	$ 69,950

XML

Investments - Change in Available for Sale Investments (Details) $ in Thousands	Mar. 29, 2019 USD ($)
Movement in Available-for-sale Securities [Roll Forward]
Balance at beginning of period	$ 98,221
Balance at end of period	99,708
Corporate Debt Securities [Member]
Movement in Available-for-sale Securities [Roll Forward]
Balance at beginning of period	28,271
Balance at end of period	$ 28,835

XML

Investments - Summary of Contractual Maturities of Investments (Details) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Investments, Debt and Equity Securities [Abstract]
Less than 1 year	$ 71,679	$ 70,200
Over 1 year	28,029	28,021
Total short-term investments	$ 99,708	$ 98,221

XML

Investments - Other Investments (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019 USD ($) investment	Mar. 30, 2018 USD ($)	Mar. 29, 2019 USD ($) investment	Mar. 30, 2018 USD ($)	Sep. 28, 2018 USD ($)
Debt Securities, Available-for-sale [Line Items]
Number of equity investments | investment	2		2
Income (Loss) from Equity Method Investments			$ (8,971)	$ (4,085)
Equity Securities
Debt Securities, Available-for-sale [Line Items]
Noncontrolling interest ownership percentage	20.00%		20.00%
Equity Securities | Compute
Debt Securities, Available-for-sale [Line Items]
Investment cost basis	$ 36,500		$ 36,500
Noncontrolling interest ownership percentage	20.00%		20.00%
Equity Method Investment, Aggregate Cost	$ 36,500		$ 36,500
Income (Loss) from Equity Method Investments	(4,400)		(9,000)
Equity Method Investments	17,100		17,100		$ 26,100
Preferred Stock | Privately Held Manufacturing Company
Debt Securities, Available-for-sale [Line Items]
Investment cost basis	$ 5,000		5,000
Other than Temporary Impairment Losses, Investments			$ 0
Compute Business [Member]
Debt Securities, Available-for-sale [Line Items]
Cash consideration on sale of business		$ 36,500

XML

Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	$ 99,960	$ 98,474
Total liabilities measured at fair value	9,268	13,714
Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value		585
Common stock warrant liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	9,268	13,129
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	28,835	28,271
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	252	253
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	70,873	69,950
Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	252	253
Total liabilities measured at fair value	0	0
Active Markets for Identical Assets (Level 1) | Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value		0
Active Markets for Identical Assets (Level 1) | Common stock warrant liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	0	0
Active Markets for Identical Assets (Level 1) | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Active Markets for Identical Assets (Level 1) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	252	253
Active Markets for Identical Assets (Level 1) | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	99,708	98,221
Total liabilities measured at fair value	0	0
Observable Inputs (Level 2) | Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value		0
Observable Inputs (Level 2) | Common stock warrant liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	0	0
Observable Inputs (Level 2) | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	28,835	28,271
Observable Inputs (Level 2) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Observable Inputs (Level 2) | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	70,873	69,950
Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Total liabilities measured at fair value	9,268	13,714
Unobservable Inputs (Level 3) | Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value		585
Unobservable Inputs (Level 3) | Common stock warrant liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities measured at fair value	9,268	13,129
Unobservable Inputs (Level 3) | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Unobservable Inputs (Level 3) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0	0
Unobservable Inputs (Level 3) | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	$ 0	$ 0

XML

Fair Value Fair Value - Quantitative Information Used in Fair Value Calculation of Level 3 Liabilities (Details)	12 Months Ended
	Sep. 28, 2018 $ / shares	Mar. 29, 2019 $ / shares
Contingent consideration | Discounted cash flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration timing of cash flows	1 month
Contingent consideration | Discounted cash flow | Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration measurement input	0.092
Contingent consideration | Discounted cash flow | Probability of achievement
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration measurement input	0.90
Common stock warrant liability | Black-Scholes model
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and rights outstanding term	2 years 2 months 12 days	1 year 8 months 12 days
Common stock warrant liability | Black-Scholes model | Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant liability measurement input	0.0281	0.0230
Common stock warrant liability | Black-Scholes model | Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant liability measurement input	0.607	0.719
Common stock warrant liability | Black-Scholes model | Exercise price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant liability measurement input	14.05	14.05
Common stock warrant liability | Black-Scholes model | Stock price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant liability measurement input	20.60	16.71
Common stock warrant liability | Black-Scholes model | Dividend rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrant liability measurement input	0	0

XML

Fair Value - Changes in Assets and Liabilities with Inputs Classified within Level 3 of Fair Value (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
Contingent consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period	$ 585	$ 1,679
Net Realized/Unrealized Losses (Gains) Included in Earnings	65	(549)
Purchases and Issuances	0	0
Sales and Settlements	650	0
Balance at end of period	0	1,130
Common stock warrant liability
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period	13,129	40,775
Net Realized/Unrealized Losses (Gains) Included in Earnings	(3,861)	(31,624)
Purchases and Issuances	0	0
Sales and Settlements	0	0
Balance at end of period	$ 9,268	$ 9,151

XML

Inventories (Details) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 64,530	$ 71,408
Work-in-process	13,094	13,466
Finished goods	42,316	37,963
Total inventory, net	$ 119,940	$ 122,837

XML

Property Plant and Equipment - Components of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 290,535	$ 278,286
Less accumulated depreciation and amortization	(140,583)	(128,363)
Property and equipment, net	149,952	149,923
Construction in process
Property, Plant and Equipment [Line Items]
Total property and equipment	25,851	49,661
Machinery and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	181,034	174,638
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	14,226	14,984
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment	3,699	2,306
Computer equipment and software
Property, Plant and Equipment [Line Items]
Total property and equipment	18,372	17,317
Capital lease assets
Property, Plant and Equipment [Line Items]
Total property and equipment	47,353	19,380
Less accumulated depreciation and amortization	$ (4,200)	$ (3,200)

XML

Property Plant and Equipment - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Sep. 28, 2018
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 7,600	$ 7,600
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	140,583		$ 128,363
Capital lease assets
Property, Plant and Equipment [Line Items]
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 4,200		$ 3,200

XML

Debt - Additional Information (Details)	6 Months Ended
	Mar. 29, 2019 USD ($)
Debt Instrument [Line Items]
Principle amount	$ 700,000,000.0
Unamortized deferred financing costs	9,400,000
Term Loans
Debt Instrument [Line Items]
Unamortized deferred financing costs	8,688,000
Debt Instrument, Periodic Payment	$ 1,700,000
Debt Instrument, Payment Terms, Reinvestment Of Divestiture of Business Proceeds, Period	18 months
Debt Instrument, Payment Terms, Reinvestment Of Divestiture Of Business Proceeds, Transaction Completion, Period	6 months
Amount drawn	$ 663,706,000
Effective interest rate	4.74%
Principal balance	$ 676,414,000
Estimated fair value of Term Loans	647,700,000
Revolving Credit Facility
Debt Instrument [Line Items]
Unamortized deferred financing costs	700,000
Credit Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility maximum borrowing capacity	160,000,000.0
Credit facility, remaining borrowing capacity	$ 160,000,000.0
Federal Funds Effective Swap Rate [Member] | Term Loans
Debt Instrument [Line Items]
Basis spread on variable rate	0.50%
One Month London Interbank Offered Rate (LIBOR) [Member] | Term Loans
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
LIBOR Rate | Term Loans
Debt Instrument [Line Items]
Basis spread on variable rate	2.25%
Minimum | LIBOR Rate | Term Loans
Debt Instrument [Line Items]
Basis spread on variable rate	1.25%

XML

Debt Debt - Schedule of Long-term Debt Instruments (Details) - Term Loans $ in Thousands	6 Months Ended
	Mar. 29, 2019 USD ($)
Debt Instrument [Line Items]
Principal balance	$ 676,414
Effective interest rate	4.74%
LIBOR Rate
Debt Instrument [Line Items]
Basis spread on variable rate	2.25%
Margin
Debt Instrument [Line Items]
Basis spread on variable rate	2.49%

XML

Debt - Schedule of Remained Outstanding on Term Loans (Details) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Debt Instrument [Line Items]
Unamortized deferred financing costs	$ (9,400)
Current portion	6,885	$ 6,885
Long-term, less current portion	656,821	$ 658,372
Term Loans
Debt Instrument [Line Items]
Principal balance	676,414
Unamortized discount	(4,020)
Unamortized deferred financing costs	(8,688)
Total term loans	663,706
Current portion	6,885
Long-term, less current portion	$ 656,821

XML

Debt - Schedule of Minimum Principal Payments under Term Loans (Details) - Term Loans $ in Thousands	Mar. 29, 2019 USD ($)
Debt Instrument [Line Items]
2019 (remainder of fiscal year)	$ 3,443
2020	6,885
2021	6,885
2022	6,885
2023	6,885
Thereafter	645,431
Total	$ 676,414

XML

Capital Lease and Financing Obligations Narrative (Details) $ in Millions	Dec. 28, 2016	Mar. 29, 2019 USD ($)	Sep. 28, 2018 USD ($)
100 Chelmsford Street
Capital Leased Assets [Line Items]
Lease term	20 years
144 Chelmsford Street Lease
Capital Leased Assets [Line Items]
Lease term	20 years
Corporate Facility Leases
Capital Leased Assets [Line Items]
Lease term	20 years
Financing obligations associated with leases		$ 28.4	$ 28.3
121 Hale Street
Capital Leased Assets [Line Items]
Lease term	14 years
Capital Lease Equipment [Member]
Capital Leased Assets [Line Items]
Financing obligations associated with leases		$ 2.1	$ 1.2
Discount rate
Capital Leased Assets [Line Items]
Discount rate		0.072

XML

Capital Lease and Financing Obligations FutureMinimumLeasePayments (Details) $ in Thousands	Mar. 29, 2019 USD ($)
Leases [Abstract]
2019 (rest of fiscal year)	$ 1,691
2020	3,375
2021	3,298
2022	2,660
2023	2,563
Thereafter	42,247
Total minimum capital lease payments	55,834
Less amount representing interest	(26,989)
Present value of net minimum capital lease payments	$ 28,845

XML

Intangible Assets - Summary of Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Total	$ 19,756	$ 19,925	$ 40,327	$ 39,065
Cost of Revenue
Finite-Lived Intangible Assets [Line Items]
Total	7,883	8,172	15,935	16,319
Selling, General and Administrative
Finite-Lived Intangible Assets [Line Items]
Total	$ 11,873	$ 11,753	$ 24,392	$ 22,746

XML

Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Finite-Lived Intangible Assets [Line Items]
Trade name	$ 3,400	$ 3,400
Total	773,417	773,307
Less accumulated amortization	(300,847)	(260,522)
Intangible assets — net	472,570	512,785
Developed technology
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets	251,783	251,673
Less accumulated amortization	(156,000)	(140,000)
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets	518,234	518,234
Less accumulated amortization	$ (144,900)	$ (120,500)

XML

Intangible Assets - Summary of Activity in Intangible Assets and Goodwill (Details) $ in Thousands	6 Months Ended
	Mar. 29, 2019 USD ($)
Goodwill and Intangible Assets [Roll Forward]
Beginning Balance	$ 773,307
Currency translation adjustment	110
Ending Balance	773,417
Goodwill [Roll Forward]
Balance at beginning of period	314,076
Currency translation adjustment	285
Balance at end of period	314,361
Trade Names
Indefinite Lived Intangible Assets Rollforward [Roll Forward]
Beginning Balance	3,400
Currency translation adjustment	0
Ending Balance	3,400
Developed technology
Finite-lived Intangible Assets [Roll Forward]
Beginning Balance	251,673
Currency translation adjustment	110
Ending Balance	251,783
Customer relationships
Finite-lived Intangible Assets [Roll Forward]
Beginning Balance	518,234
Currency translation adjustment	0
Ending Balance	$ 518,234

XML

Intangible Assets - Summary of Estimated Amortization of Intangible Assets (Details) $ in Thousands	Mar. 29, 2019 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2019 Remaining	$ 43,454
2019	81,701
2020	74,086
2021	61,848
2022	51,471
Thereafter	156,610
Total	$ 469,170

XML

Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	Mar. 29, 2019	Sep. 28, 2018
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ 300,847	$ 260,522
Developed technology
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	156,000	140,000
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ 144,900	$ 120,500

XML

Stockholders' Equity - Additional Information (Details) - $ / shares	Mar. 29, 2019	Sep. 28, 2018	Mar. 31, 2012
Equity [Abstract]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Class of Warrant or Right [Line Items]
Common stock warrants per share (in usd per share)			$ 14.05
Common Stock
Class of Warrant or Right [Line Items]
Common stock warrants (in shares)			1,281,358

XML

Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Numerator:
Loss from continuing operations	$ (46,204)	$ (15,466)	$ (69,600)	$ (32,436)
Loss from discontinued operations	0	(18)	0	(5,617)
Net loss	(46,204)	(15,484)	(69,600)	(38,053)
Warrant liability gain	0	(17,015)	(3,862)	(31,624)
Net loss attributable to common stockholders	$ (46,204)	$ (32,499)	$ (73,462)	$ (69,677)
Denominator:
Weighted average common shares outstanding-basic	65,531,000	64,549,000	65,404,000	64,437,000
Dilutive effect of options and warrants (in shares)	0	582,889	206,104	683,198
Weighted average common shares outstanding-diluted	65,531,000	65,132,000	65,610,000	65,120,000
Loss per share-basic:
Continuing operations (in usd per share)	$ (0.71)	$ (0.24)	$ (1.06)	$ (0.50)
Discontinued operations (in usd per share)	0	0	0.00	(0.09)
Loss per share - basic	(0.71)	(0.24)	(1.06)	(0.59)
Loss per share-diluted:
Continuing operations (in usd per share)	(0.71)	(0.50)	(1.12)	(0.98)
Discontinued operations (in usd per share)	0	0.00	0.00	(0.09)
Loss per share - diluted	$ (0.71)	$ (0.50)	$ (1.12)	$ (1.07)
Number of antidilutive shares of common stock excluded from the calculation (in shares)	425,202	477,212	154,377	488,521

XML

Restructurings Restructurings - Restructuring and Related Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	$ 3,182	$ 1,539	$ 8,160	$ 6,200
Employee related costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	465	221	1,618	2,792
Facility related expenses [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	2,717	$ 1,318	6,542	$ 3,408
Ithaca Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	400		5,400
Design Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	2,800
Maximum | Ithaca Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	300		300
Maximum | Design Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	400		400
Minimum | Ithaca Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	200		200
Minimum | Design Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	$ 300		$ 300

XML

Restructurings - Summary of Costs Incurred and Remaining Balances Included in Accrued Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Restructuring and Related Cost, Incurred Cost	$ 3,182	$ 1,539	$ 8,160	$ 6,200
Restructuring Reserve [Roll Forward]
Balance as of beginning of period			89
Current period expense	3,182	$ 1,539	8,160	$ 6,200
Charges paid/settled			(6,162)
Balance as of end of period	2,087		2,087
Ithaca Restructuring Plan [Member]
Restructuring and Related Cost, Incurred Cost	$ 400		$ 5,400

XML

Restructurings - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Noncurrent	$ 600		$ 600
Restructuring and Related Cost, Incurred Cost	3,182	$ 1,539	8,160	$ 6,200
Payments for Restructuring			6,162
Ithaca Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	400		5,400
Design Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	2,800
Minimum | Ithaca Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	200		200
Minimum | Design Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	300		300
Maximum | Ithaca Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	300		300
Maximum | Design Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Additional restructuring costs expected during the remainder of 2019	$ 400		$ 400

XML

Share-Based Compensation - Additional Information (Details)	3 Months Ended		6 Months Ended
	Mar. 29, 2019 USD ($) $ / shares shares	Mar. 30, 2018 USD ($)	Mar. 29, 2019 USD ($) employee $ / shares shares	Mar. 30, 2018 USD ($)	Sep. 28, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option exercises (in shares) | shares			12,000
Compensation cost expected to be recognized | $	$ 91,500,000		$ 91,500,000
Compensation cost expected to be recognized, weighted-average period			2 years 8 months 12 days
Stock options outstanding (in shares) | shares	599,000		599,000		1,408,000
Weighted-average exercise price per share (in usd per share) | $ / shares	$ 14.97		$ 14.97		$ 32.05
Weighted average remaining contractual term options outstanding			5 years 7 months 6 days
Aggregate intrinsic value stock options outstanding | $	$ 1,206		$ 1,206
Weighted average exercise price of options exercisable (in dollars per share) | $ / shares	$ 12.86		$ 12.86
Weighted-average remaining contractual term			3 years 7 months 28 days
Options exercisable intrinsic value | $	$ 950		$ 950
Options granted (in shares) | shares			395,000
Total intrinsic value of options exercised | $	$ 200,000	$ 200,000	$ 200,000	$ 700,000
Market Based Employee Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of options granted			7 years
Options granted (in shares) | shares			395,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares			$ 7.17
Aggregate grant date fair value | $			$ 2,800,000
Expected volatility rate			51.40%
Risk-free interest rate			3.10%
Exercise price | $ / shares	$ 16.06		$ 16.06
Expected term (years)			3 years 9 months 18 days
Target price | $ / shares			$ 61.32
Measurement period for target price			30 days
Performance Based Employee Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Other Share Increase (Decrease) | shares			1,122,500
Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | shares			748,328
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification, Number of Employees Affected | employee			13
Share-based Goods and Nonemployee Services Transaction, Modification of Terms, Incremental Compensation Cost | $			$ 8,200,000
Restricted Stock, Restricted Stock Units and Performance-based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted stock units vesting | $			$ 9,600,000	$ 10,400,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of options granted			4 years
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of options granted			7 years
2012 Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future grants | shares	14,800,000		14,800,000
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future grants | shares	3,600,000		3,600,000
Unrecognized compensation cost | $	$ 400,000		$ 400,000

XML

Share-Based Compensation - Effects of Stock-Based Compensation Expense Related to Stock-Based Awards to Employees and Non-Employees (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	$ 8,076	$ 5,350	$ 17,349	$ 15,342
Cost of Revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	841	917	1,514	1,862
Research and Development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	1,200	2,976	4,022	6,637
Selling, General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	$ 6,035	$ 1,457	$ 11,813	$ 6,843

XML

Share-Based Compensation - Summary of Restricted Stock, Restricted Stock Unit and Performance-based Restricted Stock Unit Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended
	Mar. 29, 2019	Sep. 28, 2018
Number of RSAs, RSUs and PRSUs
Balance at beginning of period (in shares)	1,872
Granted (in shares)	2,425
Vested and released (in shares)	(545)
Forfeited, canceled or expired (in shares)	(194)
Balance at end of period (in shares)	3,558
Weighted- Average Grate Date Fair Value
Balance at beginning of period (in usd per share)	$ 34.15
Granted (in usd per share)	18.64
Vested and released (in usd per share)	35.63
Forfeited, canceled or expired (in usd per share)	35.64
Balance at end of period (in usd per share)	$ 23.27
Aggregate Intrinsic Value (in thousands)	$ 59,459	$ 38,452

XML

Share-Based Compensation Share-Based Compensation Plans - Summary of Stock Option Activity (Details) - USD ($)

3 Months Ended

6 Months Ended

Mar. 29, 2019

Mar. 30, 2018

Mar. 29, 2019

Mar. 30, 2018

Sep. 28, 2018

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock options outstanding (in shares)

599,000

599,000

1,408,000

Weighted-average exercise price per share (in usd per share)

$ 14.97

$ 14.97

$ 32.05

Weighted average remaining contractual term options outstanding

5 years 7 months 6 days

Aggregate intrinsic value stock options outstanding

$ 1,206

$ 1,206

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross

395,000

Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price

$ 16.06

Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of stock option activity for the six months ended March 29, 2019 is as follows (in thousands, except per share amounts and contractual term):

	Number of Shares		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value
Options outstanding - September 28, 2018	1,408		$	32.05
Granted	395		16.06
Exercised	(12	)	2.00
Forfeited, canceled or expired	(1,192	)	35.63
Options outstanding - March 29, 2019	599		$	14.97	5.60	$	1,206
Options vested and expected to vest - March 29, 2019	599		14.97		5.60	1,206
Options exercisable - March 29, 2019	204		$	12.86	3.66	$	950

Stock option exercises (in shares)

(12,000)

Total intrinsic value of options exercised

$ 200,000

$ 200,000

$ 200,000

$ 700,000

Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price

$ 2.00

Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period

(1,192,000)

Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price

$ 35.63

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number

599,000

599,000

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price

$ 14.97

$ 14.97

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term

5 years 7 months 6 days

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value

$ 1,206

$ 1,206

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number

204,000

204,000

Weighted average exercise price of options exercisable (in dollars per share)

$ 12.86

$ 12.86

Weighted-average remaining contractual term

3 years 7 months 28 days

Options exercisable intrinsic value

$ 950

$ 950

Market Based Employee Stock Options [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Term of options granted

7 years

Measurement period for target price

30 days

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross

395,000

XML

Share-Based Compensation Share-Based Compensation Plans - Weighted Average Assumptions used for Calculating Fair Value of Stock Options Granted (Details) - Market Based Employee Stock Options [Member]	6 Months Ended
	Mar. 29, 2019 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target price	$ 61.32
Expected volatility rate	51.40%
Expected term (years)	3 years 9 months 18 days
Risk-free interest rate	3.10%

XML

Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018	Sep. 28, 2018
Investments, Owned, Federal Income Tax Note [Line Items]
Income tax expense (benefit)	$ 544,000	$ (3,024,000)	$ 1,669,000	$ (1,671,000)
Unrecognized tax benefit	1,000,000.0		1,000,000.0		$ 300,000
Unrecognized Tax Benefits, Decrease Resulting from Settlements with Taxing Authorities			700,000
Penalties and interest accrued	0		$ 0		$ 0
Penalties and interest expense	0	$ 0
Effective tax rate			21.00%	24.50%
Foreign earnings repatriated	155,600,000
Transition tax for accumulated foreign earnings	86,300,000
Unrecognized tax benefits that would impact income tax expense	$ 300,000		$ 300,000

XML

Related Party Transactions (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Mar. 30, 2018	Mar. 30, 2018
Cadence | Public Company
Related Party Transaction [Line Items]
Other expense - related party	$ 2.3	$ 4.1

XML

Supplemental Cash Flow Information - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 29, 2019	Mar. 29, 2019	Mar. 30, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (Loss) from Equity Method Investments		$ (8,971)	$ (4,085)
Unpaid amounts related to purchase of assets		2,700	1,500
Capitalized construction costs for capital leases		1,500	9,200
Compute | Equity Securities
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investment cost basis	$ 36,500	36,500
Income (Loss) from Equity Method Investments	$ (4,400)	(9,000)
Developer Funded [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Capitalized construction costs for capital leases		$ 300	$ 7,100

XML

Supplemental Cash Flow Information - Schedule of Supplemental Cash Flow Information Regarding Non-cash Investing and Financing Activities (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
Noncash or Part Noncash Acquisitions [Line Items]
Cash paid for interest	$ 17,041	$ 14,094
Cash (refunded) paid for income taxes	(1,606)	4,065
Capitalized construction costs for capital leases	1,500	9,200
Developer Funded [Member]
Noncash or Part Noncash Acquisitions [Line Items]
Capitalized construction costs for capital leases	$ 300	$ 7,100

XML

Geographic and Significant Customer Information - Additional Information (Details) - segment	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Segment Reporting [Abstract]
Number of reportable operating segment			1
Revenue | Customer Concentration Risk [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Concentration risk, percentage	55.00%	58.00%	56.00%	54.00%

XML

Geographic and Significant Customer Information - Summary of Different Geographic Regions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018	Sep. 28, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by Geographic Region	$ 128,465	$ 150,414	$ 279,154	$ 281,338
Long-Lived Assets by Geographic Region	149,952		149,952		$ 149,923
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by Geographic Region	64,714	74,323	132,832	129,679
Long-Lived Assets by Geographic Region	121,823		121,823		122,888
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by Geographic Region	32,419	38,364	77,041	76,052
Asia Pacific, excluding China
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by Geographic Region	20,598	23,347	44,013	46,232
Asia Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-Lived Assets by Geographic Region	22,385		22,385		24,702
Other Countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue by Geographic Region	10,734	$ 14,380	25,268	$ 29,375
Long-Lived Assets by Geographic Region	$ 5,744		$ 5,744		$ 2,333

XML

Geographic and Significant Customer Information - Summary of Customer Concentrations as Percentage of Revenue and Accounts Receivable (Details) - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Mar. 29, 2019	Mar. 30, 2018
Revenue
Revenue from External Customer [Line Items]
Concentration risk, percentage	55.00%	58.00%	56.00%	54.00%
Revenue | Customer A
Revenue from External Customer [Line Items]
Concentration risk, percentage	14.00%	12.00%
Revenue | Customer B
Revenue from External Customer [Line Items]
Concentration risk, percentage	4.00%	11.00%
Accounts Receivable [Member] | Customer A
Revenue from External Customer [Line Items]
Concentration risk, percentage			19.00%	19.00%
Accounts Receivable [Member] | Customer C
Revenue from External Customer [Line Items]
Concentration risk, percentage			10.00%	26.00%

XML

Subsequent Events (Details) - USD ($) $ in Thousands	6 Months Ended		8 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Dec. 31, 2019	Apr. 24, 2019	Sep. 28, 2018
Subsequent Event [Line Items]
Payments for Restructuring	$ 6,162
Restructuring and impairment related charges	4,696	$ 9,143
Property and equipment	$ 149,952				$ 149,923
Scenario, Forecast | Subsequent Event
Subsequent Event [Line Items]
Equity Method Investment, Ownership Percentage				49.00%
Proceeds from Sale of Equity Method Investments			$ 134,600
Proceeds from Sale of Equity Method Investments, Cash Received at Closing			30,000
Proceeds from Sale of Equity Method Investments, Cash Received at Milestone Completion			$ 95,000
Goertek [Member] | Scenario, Forecast | Subsequent Event
Subsequent Event [Line Items]
Equity Method Investment, Ownership Percentage				51.00%