MTSI MACOM Technology Solutions Holdings Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 17, 2015

 

 

M/A-COM Technology Solutions Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-35451		27-0306875
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

100 Chelmsford Street Lowell, Massachusetts		01851
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (978) 656-2500

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.01

Completion of Acquisition or Disposition of Assets.

On August 17, 2015, M/A-COM Technology Solutions Holdings, Inc. (the “Company”) completed its previously announced divestiture of its automotive module business (the “Auto Business”) pursuant to the Stock Purchase Agreement (the “Purchase Agreement”) among the Company, Autoliv ASP Inc. (“Autoliv”), M/A-COM Technology Solutions Inc., a wholly-owned subsidiary of the Company (“MACOM Solutions”), and RoadScape Automotive, Inc., formerly known as M/A-COM Auto Solutions Inc., a wholly-owned subsidiary of MACOM Solutions (“RoadScape”). Pursuant to the Purchase Agreement, the Company sold all of the issued and outstanding shares of capital stock of RoadScape to Autoliv for $100 million in cash, subject to customary working capital and other adjustments, plus up to an additional $30 million in cash in the form of an earn-out payment based on the achievement of certain revenue and customer order-based targets through September 30, 2019.

The foregoing summary of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement filed as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on July 17, 2015.

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective as of August 17, 2015, Najabat Hasnain Bajwa, the Company’s Senior Vice President and General Manager, High-Performance Analog, will be leaving the Company. Subject to the execution of a standard release of claims and the other conditions set forth therein, Mr. Bajwa will be entitled to certain related payments and benefits under his employment agreement with the Company.

 

Item 8.01

Regulation FD Disclosure.

On August 17, 2015, the Company issued a press release announcing the completion of the Auto Business divestiture and updating its previously issued guidance for the Company’s fiscal fourth quarter. A copy of the press release is furnished as Exhibit 99.1.

 

Item 9.01

Financial Statements and Exhibits.

 

(b)	Pro Forma Financial Information.

The unaudited pro forma condensed consolidated financial information required by Item 9.01(b) of Form 8-K is included as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference.

 

(d)

Exhibits

 

Exhibit Number		Description
99.1		Press Release of the Company, dated August 17, 2015, announcing the Auto Business divestiture.
99.2		Unaudited pro forma condensed consolidated financial statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
Dated: 8/20/2015				By:		/s/ Robert J. McMullan
						Robert J. McMullan
						Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press Release of the Company, dated August 17, 2015, announcing the Auto Business divestiture.
99.2		Unaudited pro forma condensed consolidated financial statements.

Exhibit 99.1

MACOM Completes Divestiture of Automotive Business

Guidance for Fiscal Fourth Quarter 2015

LOWELL, Mass., August 17, 2015 - M/A-COM Technology Solutions Holdings, Inc. (NASDAQ: MTSI) (MACOM), a leading supplier of high-performance RF, microwave, millimeterwave and photonic semiconductor products, today announced it has completed the previously announced divestiture of its Automotive business to Autoliv ASP Inc. (Autoliv) for approximately $100 million in cash, plus the opportunity to receive up to an additional $30 million in cash based on the achievement of revenue-and customer order based earn-out targets through 2019.

In conjunction with closing the divestiture, MACOM announced financial guidance for its fiscal fourth quarter ending October 2, 2015, excluding the Automotive business which is now classified as discontinued operations. MACOM expects revenue to be in the range of $110 to $114 million, or an increase of 1.0 percent to 4.5 percent, compared to the fiscal third quarter 2015 without Automotive. Non-GAAP gross margin is expected to be between 56 percent and 59 percent, and non-GAAP earnings per diluted share between $0.32 and $0.34 on an anticipated 55.5 million shares outstanding.

Commenting on the closing, John Croteau, President and Chief Executive Officer stated, “We are pleased to complete the divestiture of our Automotive business, which we believe represents a key step towards realizing our full potential as a pure play high-performance analog semiconductor company. Since announcing the transaction, we have become increasingly confident in the accelerated growth of our business, which we now expect to replace the pre-divestiture earnings contribution from the Auto business within a few quarters. With our remaining business well aligned with our high-growth, high margin model, we expect to achieve our target of 60 percent non-GAAP gross margin in the first half of fiscal 2016 and 30 percent non-GAAP operating margin as we exit fiscal 2016. This exceptional financial profile will position MACOM in the highest performing segment of our industry and serve as a key differentiator with both customers and investors alike.”

MACOM expects by the end of this week to file a Current Report on Form 8-K with the Securities and Exchange Commission (SEC), including pro forma financial statements for its last three fiscal years and the nine months ended July 3, 2015, adjusted to reflect the Automotive business divestiture, and also to post to the investor page of MACOM’s website (http://www.macom.com/) certain comparative non-GAAP information along with a reconciliation to GAAP.

About MACOM

MACOM (http://www.macom.com/) is a leading supplier of high-performance analog RF, microwave, millimeterwave and photonic semiconductor products that enable next-generation Internet and modern battlefield applications. Recognized for its broad catalog portfolio of technologies and products, MACOM serves diverse markets, including high speed optical, satellite, radar, wired and wireless networks, automotive, industrial, medical, and mobile devices. A pillar of the semiconductor industry, we thrive on more than 60 years of solving our customers’ most complex problems, serving as a true partner for applications ranging from RF to Light.

Headquartered in Lowell, Massachusetts, MACOM is certified to the ISO9001 international quality standard and ISO14001 environmental management standard. MACOM has design centers and sales offices throughout North America, Europe, Asia and Australia.

MACOM, M/A-COM, M/A-COM Technology Solutions, M/A-COM Tech, Partners in RF & Microwave, Partners from RF to Light, The First Name in Microwave and related logos are trademarks of MACOM. All other trademarks are the property of their respective owners.

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Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements based on MACOM management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among others, information concerning our stated business outlook and future results of operations, the impact of our divestment of our Automotive business, future activities or trends, business strategies, competitive position, industry conditions, acquisitions and market opportunities. Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements contained in this press release reflect MACOM’s current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause those events or our actual activities or results to differ materially from those expressed in any forward-looking statement. Although MACOM believes that the expectations reflected in the forward-looking statements are reasonable, it cannot and does not guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including greater than expected dilutive effect on earnings of our equity issuances, outstanding indebtedness and related interest expense and other costs, the potential that the expected rollout of fiber-to-the-home network technology or other new network technology deployments in China and other geographies fails to occur, occurs more slowly than we expect or does not result in the amount or type of new business we anticipate, lower than expected demand in any or all of our primary end markets or from any of our large OEM customers based on seasonal effects, macro-economic weakness or otherwise, indemnity claims related to or failure to realize the projected benefits of our Automotive business divestment, our failure to realize the expected economies of scale, lowered production cost and other anticipated benefits of our previously announced GaN intellectual property licensing program or InP laser production capacity expansion program, the potential for defense spending cuts, program delays, cancellations or sequestration, failures or delays by any customer in winning business or to make purchases from us in support of such business, lack of adoption or delayed adoption by customers and industries we serve of GaN, InP lasers or other solutions offered by us, failures or delays in porting and qualifying GaN or InP process technology to our Lowell, MA fabrication facility or third party facilities, lower than expected utilization and absorption in our manufacturing facilities, lack of success or slower than expected success in our new product development efforts, loss of business due to competitive factors, product or technology obsolescence, customer program shifts or otherwise, lower than anticipated or slower than expected customer acceptance of our new product introductions, the potential for a shift in the mix of products sold in any period toward lower-margin products or a shift in the geographical mix of our revenues, the potential for increased pricing pressure based on competitive factors, technology shifts or otherwise, the impact of any executed or abandoned acquisition, divestiture, joint venture, financing or restructuring activity, the impact of supply shortages or other disruptions in our internal or outsourced supply chain, the impact of changes in export, environmental or other laws applicable to us, the relative success of our cost-savings initiatives, the potential for inventory obsolescence and related write-offs, the expense, business disruption or other impact of any current or future investigations, administrative actions, litigation or enforcement proceedings we may be involved in, the potential loss of access to any in-licensed intellectual property or inability to license technology we may require on reasonable terms, the impact of any claims of intellectual property infringement or misappropriation, which could require us to pay substantial damages for infringement, expend significant resources in prosecuting or defending such matters or developing non-infringing technology, incur material liability for royalty or license payments, or prevent us from selling certain of our products, and any failure in the effectiveness of our internal control over financial reporting or disclosure controls and procedures, as well as those factors described in “Risk Factors” in MACOM’s filings with the SEC, including its Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2015 as filed with the SEC on August 12, 2015. MACOM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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Company Contact:

M/A-COM Technology Solutions Holdings, Inc.

Bob McMullan, 978-656-2753

Chief Financial Officer

bob.mcmullan@macom.com

Investor Relations Contact:

Shelton Group

Leanne K. Sievers, EVP

P: 949-224-3874

Brett L. Perry, Managing Director

P: 214-272-0070

E: sheltonir@sheltongroup.com

# # #

Exhibit 99.2

 

M/A-COM Technology Solutions Holdings, Inc.

Introduction to the Pro Forma Condensed Combined Consolidated Financial Statements

(Unaudited)

On August 17, 2015, M/A-COM Technology Solutions Holdings, Inc. (the “Company”) completed its previously announced divestiture of its automotive module business (the “Auto Business”) pursuant to the Stock Purchase Agreement (the “Purchase Agreement”) among the Company, Autoliv ASP Inc. (“Autoliv”), M/A-COM Technology Solutions Inc., a wholly-owned subsidiary of the Company (“MACOM Solutions”), and RoadScape Automotive, Inc., formerly known as M/A-COM Auto Solutions Inc., a wholly-owned subsidiary of MACOM Solutions (“RoadScape”). Pursuant to the Purchase Agreement, the Company sold all of the issued and outstanding shares of capital stock of RoadScape to Autoliv for $100 million in cash, subject to customary working capital and other adjustments, plus up to an additional $30 million in cash in the form of an earn-out payment based on the achievement of certain revenue- and customer order-based targets through September 30, 2019.

The accompanying unaudited pro forma consolidated statement of operations and comprehensive income (loss) for nine months ended July 3, 2015, and the years ended October 3, 2014, September 27, 2013, and September 28, 2012 give effect to the disposition of certain assets and liabilities of the automotive business of the Company as if the sale had been consummated at the beginning of each period presented. The accompanying unaudited pro forma condensed consolidated balance sheet as of July 3, 2015 gives effect to the disposition of certain assets and liabilities of the Company as if it had been consummated as of July 3, 2015.

The historical financial information on which the pro forma financial statements are based is included in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 12, 2015 and the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 9, 2014. The pro forma consolidated financial statements and the notes thereto should be read in conjunction with these historical consolidated financial statements.

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are subject to a number of assumptions that may not be indicative of the results of operations that would have occurred had the disposition been completed at the dates indicated or what the results will be for any future periods. The unaudited pro forma consolidated statements of operations and comprehensive income (loss) do not include transaction costs or the gain that the Company expects to recognize on the sale of certain assets and liabilities. The pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analysis are performed, and have been made solely for the purpose of providing unaudited pro forma condensed financial statements. Differences between these preliminary estimates and the final divestiture accounting may occur and these differences could have a material effect on the accompanying unaudited pro forma condensed financial statements and the Company’s future financial position and results of operations.

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M/A-COM Technology Solutions Holdings, Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of July 3, 2015

(in thousands)

 

		As Reported				Pro Forma Adjustments				Notes		Pro Forma as Adjusted
ASSETS
Current assets
Cash and cash equivalents		$	80,687			$	79,692			(A)		$	160,379
Accounts receivable, net			89,714				(12,646	)		(C)			77,068
Inventories			84,373				(2,216	)		(C)			82,157
Prepaid expenses and other			18,423				—						18,423
Deferred income taxes			35,957				—						35,957
Total current assets			309,154				64,830						373,984
Property, plant and equipment, net			80,167				(141	)		(C)			80,026
Goodwill			98,799				—						98,799
Intangible assets, net			252,496				—						252,496
Deferred income taxes			49,851				—						49,851
Assets held for sale			—				—						—
Other assets			16,247				17,250			(B)			33,497
Total assets		$	806,714			$	81,939					$	888,653
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of lease		$	554			$	—					$	554
Current portion of long-term debt			3,500				—						3,500
Accounts payable			27,594				(5,442	)		(C)			22,152
Accrued liabilities			32,498				(660	)		(C)			31,838
Deferred revenue			336				—						336
Income taxes payable			1,172				31,959			(D)			33,131
Total current liabilities			65,654				25,857						91,511
Lease payable, less current portion			608				—						608
Long-term debt			340,813				—						340,813
Warrant liability			31,472				—						31,472
Deferred income taxes			—				—						—
Other long-term liabilities			7,365				—						7,365
Total liabilities			445,912				25,857						471,769
Stockholders’ equity:
Common stock			53				—						53
Additional paid-in capital			516,597				—						516,597
Treasury stock			(330	)			—						(330	)
Accumulated deficit			(153,328	)			56,082			(E)			(97,246	)
Accumulated other comprehensive loss			(2,190	)									(2,190	)
Total stockholders’ equity			360,802				56,082						416,884
Total liabilities and stockholders’ equity		$	806,714			$	81,939					$	888,653

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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M/A-COM Technology Solutions Holdings, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Nine Months Ended July 3, 2015

(in thousands, except per share amounts)

 

		As Reported				Pro Forma Adjustments				Notes		Pro Forma as Adjusted
Revenue			370,412				(62,367	)		(F)			308,045
Cost of revenue			202,420				(41,004	)		(F)			161,416
Gross profit			167,992				(21,363	)					146,629
Operating expenses:
Research and development			62,146				(1,960	)		(F)			60,186
Selling, general and administrative			82,254				(2,187	)		(F)			80,067
Restructuring charges			971				—						971
Total operating expenses			145,371				(4,147	)					141,224
Income (loss) from operations			22,621				(17,216	)					5,405
Other income (expense):
Warrant liability expense			(15,671	)			—						(15,671	)
Interest expense			(13,951	)			—						(13,951	)
Other income			2,774				(4,000	)		(F)			(1,226	)
Total other expense			(26,848	)			(4,000	)					(30,848	)
Loss before income taxes			(4,227	)			(21,216	)					(25,443	)
Income tax provision (benefit)			1,589				(7,701	)		(F)			(6,112	)
Loss from continuing operations		$	(5,816	)		$	(13,515	)				$	(19,331	)
Loss from continuing operations - basic		$	(0.12	)		$	(0.27	)				$	(0.38	)
Loss from continuing operations - diluted		$	(0.12	)		$	(0.27	)				$	(0.38	)
Shares used:
Basic			50,433				50,433						50,433
Diluted			50,433				50,433						50,433

See accompanying notes to unaudited condensed consolidated financial statements.

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M/A-COM Technology Solutions Holdings, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Fiscal Year Ended October 3, 2014

(in thousands, except per share amounts)

 

		As Reported				Pro Forma Adjustments				Notes		Pro Forma as Adjusted
Revenue			418,662				(79,473	)		(F)			339,189
Cost of revenue			249,674				(51,425	)		(F)			198,249
Gross profit			168,988				(28,048	)					140,940
Operating expenses:
Research and development			73,685				(2,334	)		(F)			71,351
Selling, general and administrative			86,179				(3,586	)		(F)			82,593
Restructuring charges			14,823				—						14,823
Total operating expenses			174,687				(5,920	)					168,767
Loss from operations			(5,699	)			(22,128	)					(27,827	)
Other income (expense):
Warrant liability expense			(3,928	)			—						(3,928	)
Interest expense			(12,362	)			—						(12,362	)
Other income			3,217				—						3,217
Total other expense			(13,073	)			—						(13,073	)
Loss before income taxes			(18,772	)			(22,128	)					(40,900	)
Income tax benefit			(8,054	)			(8,032	)		(F)			(16,086	)
Loss from continuing operations		$	(10,718	)		$	(14,096	)				$	(24,814	)
Loss from continuing operations - basic		$	(0.23	)		$	(0.30	)				$	(0.53	)
Loss from continuing operations - diluted		$	(0.23	)		$	(0.30	)				$	(0.53	)
Shares used:
Basic			47,009				47,009						47,009
Diluted			47,009				47,009						47,009

See accompanying notes to unaudited condensed consolidated financial statements.

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M/A-COM Technology Solutions Holdings, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Fiscal Year Ended September 27, 2013

(in thousands, except per share amounts)

 

		As Reported				Pro Forma Adjustments				Notes		Pro Forma as Adjusted
Revenue			323,071				(80,368	)		(F)			242,703
Cost of revenue			186,658				(53,153	)		(F)			133,505
Gross profit			136,413				(27,215	)					109,198
Operating expenses:
Research and development			44,588				(2,083	)		(F)			42,505
Selling, general and administrative			52,004				(747	)		(F)			51,257
Litigation settlement			7,250				—						7,250
Contingent consideration			(577	)			—						(577	)
Restructuring charges			1,060				—						1,060
Total operating expenses			104,325				(2,830	)					101,495
Income (loss) from operations			32,088				(24,385	)					7,703
Other income (expense):
Warrant liability gain			(4,312	)			—						(4,312	)
Interest expense			(817	)			—						(817	)
Other income			372				—						372
Total other expense			(4,757	)			—						(4,757	)
Income (loss) before income taxes			27,331				(24,385	)					2,946
Income tax provision (benefit)			9,135				(8,852	)		(F)			283
Income (loss) from continuing operations		$	18,196			$	(15,533	)				$	2,663
Income (loss) from continuing operations - basic		$	0.40			$	(0.34	)				$	0.06
Income (loss) from continuing operations - diluted		$	0.39			$	(0.33	)				$	0.06
Shares used:
Basic			45,916				45,916						45,916
Diluted			47,137				47,137						47,137

See accompanying notes to unaudited condensed consolidated financial statements.

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M/A-COM Technology Solutions Holdings, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Fiscal Year Ended September 28, 2012

(in thousands, except per share amounts)

 

		As Reported				Pro Forma Adjustments				Notes		Pro Forma as Adjusted
Revenue			303,336				(47,792	)		(F)			255,544
Cost of revenue			169,213				(34,387	)		(F)			134,826
Gross profit			134,123				(13,405	)					120,718
Operating expenses:
Research and development			36,752				(1,849	)		(F)			34,903
Selling, general and administrative			45,688				(531	)		(F)			45,157
Contingent consideration			(3,922	)			—						(3,922	)
Restructuring charges			1,862				—						1,862
Total operating expenses			80,380				(2,380	)					78,000
Income (loss) from operations			53,743				(11,025	)					42,718
Other income (expense):
Warrant liability (expense) gain			3,175				—						3,175
Class B conversion liability expense			(44,119	)			—						(44,119	)
Interest expense			(695	)			—						(695	)
Other income			185				—						185
Total other expense			(41,454	)			—						(41,454	)
Income (loss) before income taxes			12,289				(11,025	)					1,264
Income tax provision (benefit)			15,953				(4,123	)		(F)			11,830
Accretion to redemption value of redeemable preferred stock and participating stock dividends			(2,616	)			—						(2,616	)
Loss from continuing operations		$	(6,280	)		$	(6,902	)				$	(13,182	)
Loss from continuing operations - basic		$	(0.25	)		$	(0.28	)				$	(0.53	)
Loss from continuing operations - diluted		$	(0.25	)		$	(0.28	)				$	(0.53	)
Shares used:
Basic			24,758				24,758						24,758
Diluted			24,758				24,758						24,758

See accompanying notes to unaudited condensed consolidated financial statements.

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M/A-COM Technology Solutions Holdings, Inc.

Notes to the Pro Forma Condensed Consolidated Financial Statements

(Unaudited)

(Amounts in thousands)

1. Basis of Presentation

The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflect estimates and assumptions that the Company’s management believes to be reasonable. Actual results may differ from those estimates. Pro forma adjustments related to the unaudited pro forma financial information presented below assume the sale of the certain assets and liabilities of the Company’s automotive business was consummated on the date of the most recent period presented for the consolidated balance and at the beginning of the fiscal year presented for the consolidated statement of operations and comprehensive income (loss). The financial statements include adjustments which give effect to events that are (i) directly attributable to the sale, (ii) expected to have a continuing impact on the Company, and (iii) factually supportable. In addition, the consolidated balance sheet includes adjustments that are nonrecurring, such as transaction costs and the after-tax gain on the transaction.

The historical financial information on which the pro forma financial statements are based is included in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 12, 2015 and the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 9, 2014. The pro forma consolidated financial statements and the notes thereto should be read in conjunction with these historical consolidated financial statements.

2. Unaudited Pro Forma Condensed Consolidated Balance Sheet

The unaudited pro forma condensed consolidated balance sheet at July 3, 2015 reflects the following pro forma adjustments:

(A) Reflects the pro forma impact of the receipt of cash proceeds from the sale (net of the indemnification holdback) equal to $82,000 plus $64 related to the working capital adjustment less $2,372 of estimated selling and transaction expenses.

(B) Reflects the receivable for the $18,000 indemnification holdback, less $750 of other assets sold.

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(C) Adjustment to reflect the assets and liabilities sold.

(D) Represents the estimated income taxes payable assuming a combined federal/state income tax rate of 36.3%.

(E) Reflects the estimated after-tax impact of the above pro forma items.

3. Unaudited Pro Forma Condensed Consolidated Statements of Operations and Comprehensive Loss

The unaudited pro forma condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended July 3, 2015 and the years ended October 3, 2014, September 27, 2013, and September 28, 2012 reflect the following pro forma adjustments:

(F) Amount eliminates the revenues, cost of goods sold, operating expenses and income taxes related to the automotive business.