10-Q
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
______________________________
(Mark One)
/x/
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 2015 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 No. 0-12695
INTEGRATED DEVICE TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
94-2669985
(I.R.S. Employer Identification No.)
6024 SILVER CREEK VALLEY ROAD, SAN JOSE, CALIFORNIA
(Address of Principal Executive Offices)
95138
(Zip Code)
Registrant's Telephone Number, Including Area Code: (408) 284-8200

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 ý No o 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý 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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
 ý  Large accelerated filer                           ¨   Accelerated filer                            ¨  Non-accelerated filer               ¨ Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No ý 
The number of outstanding shares of the registrant's Common Stock, $.001 par value, as of October 26, 2015 was approximately 146,725,251.



Table of Contents

INTEGRATED DEVICE TECHNOLOGY, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS

PART I-FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II-OTHER INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(Unaudited, in thousands)
September 27, 2015
 
March 29, 2015
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
91,557

 
$
116,945

Short-term investments
467,364

 
438,115

Accounts receivable, net of allowances of $4,333 and $4,664
63,373

 
63,618

Inventories
43,946

 
45,410

Income tax receivable
165

 
405

Prepayments and other current assets
14,930

 
15,636

Total current assets
681,335

 
680,129

Property, plant and equipment, net
64,890

 
65,508

Goodwill
135,644

 
135,644

Other intangible assets, net
12,983

 
5,535

Deferred non-current tax assets
643

 
735

Other assets
24,844

 
26,108

Total assets
$
920,339

 
$
913,659

Liabilities and stockholders' equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
31,730

 
$
28,006

Accrued compensation and related expenses
27,492

 
43,649

Deferred income on shipments to distributors
11,476

 
15,694

Deferred tax liabilities
1,629

 
1,401

Other accrued liabilities
11,305

 
17,582

Total current liabilities
83,632

 
106,332

Deferred tax liabilities
1,135

 
1,121

Long-term income tax payable
226

 
347

Other long-term liabilities
19,619

 
17,605

Total liabilities
104,612

 
125,405

Commitments and contingencies (Note 13)


 


Stockholders' equity:
 

 
 

Preferred stock: $0.001 par value: 10,000 shares authorized; no shares issued

 

Common stock: $0.001 par value: 350,000 shares authorized; 146,673 and 148,414 shares outstanding at September 27, 2015 and March 29, 2015, respectively
147

 
148

Additional paid-in capital
2,537,080

 
2,510,868

Treasury stock at cost: 103,686 shares at September 27, 2015 and 99,849 shares at March 29, 2015, respectively
(1,177,572
)
 
(1,100,546
)
Accumulated deficit
(539,454
)
 
(620,035
)
Accumulated other comprehensive loss
(4,474
)
 
(2,181
)
Total stockholders' equity
815,727

 
788,254

Total liabilities and stockholders' equity
$
920,339

 
$
913,659


The accompanying notes are an integral part of these condensed consolidated financial statements.

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Table of Contents


INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
Three Months Ended
 
Six Months Ended
 
(Unaudited, in thousands, except per share data)
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
Revenues
$
169,498

 
$
137,093

 
$
330,405

 
$
263,395

Cost of revenues
62,952

 
55,217

 
124,625

 
107,510

Gross profit
106,546

 
81,876

 
205,780

 
155,885

Operating expenses:
 

 
 

 
 
 
 
Research and development
35,301

 
30,742

 
69,055

 
62,792

Selling, general and administrative
29,227

 
26,795

 
57,370

 
52,254

Total operating expenses
64,528

 
57,537

 
126,425

 
115,046

Operating income
42,018

 
24,339

 
79,355

 
40,839

Interest income and other, net
1,016

 
405

 
2,834

 
1,267

Income before income taxes from continuing operations
43,034

 
24,744

 
82,189

 
42,106

Income tax provision
611

 
498

 
1,046

 
749

Net income from continuing operations
42,423

 
24,246

 
$
81,143

 
$
41,357

 
 
 
 
 
 
 
 
Discontinued operations:
 
 
 
 
 
 
 
   Gain from divestiture before income taxes

 

 

 
16,840

Loss from discontinued operations before income taxes

 
(9,747
)
 
(547
)
 
(21,900
)
   Income tax provision

 
57

 
15

 
12

Net loss from discontinued operations

 
(9,804
)
 
(562
)
 
(5,072
)
 
 
 
 
 
 
 
 
Net income
$
42,423

 
$
14,442

 
$
80,581

 
$
36,285

 
 
 
 
 
 
 
 
Basic net income per share - continuing operations
$
0.29

 
$
0.16

 
$
0.55

 
$
0.28

Basic net loss per share - discontinued operations

 
(0.06
)
 
$

 
$
(0.04
)
Basic net income per share
$
0.29

 
$
0.10

 
$
0.55

 
$
0.24

 
 
 
 
 
 
 
 
Diluted net income per share - continuing operations
$
0.28

 
$
0.16

 
$
0.53

 
$
0.27

Diluted net loss per share - discontinued operations

 
(0.07
)
 
$

 
$
(0.03
)
Diluted net income per share
$
0.28

 
$
0.09

 
$
0.53

 
$
0.24

 
 
 
 
 
 
 
 
Weighted average shares:
 

 
 

 
 

 
 

Basic
147,724

 
148,683

 
148,058

 
148,983

Diluted
152,152

 
153,784

 
152,997

 
153,816


The accompanying notes are an integral part of these condensed consolidated financial statements.

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INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
Three Months Ended
 
Six Months Ended
 
(Unaudited, in thousands)
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
 
 
 
 
 
 
 
 
Net income
$
42,423

 
$
14,442

 
$
80,581

 
$
36,285

Other comprehensive income (loss), net of taxes:
 
 
 
 
 
 
 
Currency translation adjustments, net of tax
(1,814
)
 
(1,585
)
 
(1,004
)
 
(1,255
)
Change in net unrealized gain (loss) on investments, net of tax
232

 
(448
)
 
(678
)
 
(16
)
Actuarial loss on post-employment and post-retirement benefit plans, net of tax
(465
)
 
(2
)
 
(611
)
 
(5
)
Total other comprehensive loss
(2,047
)
 
(2,035
)
 
(2,293
)
 
(1,276
)
Comprehensive income
$
40,376

 
$
12,407

 
$
78,288

 
$
35,009


The accompanying notes are an integral part of these condensed consolidated financial statements.


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INTEGRATED DEVICE TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Six Months Ended
 
(Unaudited, in thousands)
September 27,
2015
 
September 28,
2014
Cash flows from operating activities:
 
 
 
Net income
$
80,581

 
$
36,285

Adjustments:
 

 
 

Depreciation
8,648

 
10,364

Amortization of intangible assets
2,451

 
4,225

Impairment of assets held for sale

 
8,471

Gain from divestiture

 
(16,840
)
Gain on sale of property, plant and equipment
(325
)
 

Stock-based compensation expense, net of amounts capitalized in inventory
16,416

 
10,665

Deferred tax provision
334

 
94

Tax benefit from share-based payment arrangements
(115
)
 

Changes in assets and liabilities:
 

 
 

   Accounts receivable, net
245

 
(8,533
)
   Inventories
1,400

 
12,158

   Prepayments and other assets
2,353

 
1,701

   Accounts payable
3,525

 
1,180

   Accrued compensation and related expenses
(16,156
)
 
4,113

   Deferred income on shipments to distributors
(4,218
)
 
1,491

   Income taxes payable and receivable
179

 
(109
)
   Other accrued liabilities and long-term liabilities
(4,833
)
 
4,467

   Net cash provided by operating activities
90,485

 
69,732

Cash flows from investing activities:
 

 
 

Cash in escrow related to acquisitions

 
1,026

Proceeds from divestitures

 
15,300

Purchases of property, plant and equipment, net
(8,090
)
 
(8,748
)
Purchases of intangible assets
(9,900
)
 

Purchases of short-term investments
(189,213
)
 
(111,100
)
Proceeds from sales of short-term investments
109,885

 
56,883

Proceeds from maturities of short-term investments
48,774

 
32,295

 Net cash used in investing activities
(48,544
)
 
(14,344
)
Cash flows from financing activities:
 

 
 

Proceeds from issuance of common stock
9,744

 
10,432

Repurchase of common stock
(77,025
)
 
(49,152
)
Payment of acquisition related contingent consideration

 
(1,600
)
Excess tax benefit from share-based payment arrangements
115

 

 Net cash used in financing activities
(67,166
)
 
(40,320
)
Effect of exchange rates on cash and cash equivalents 
(163
)
 
(1,259
)
Net (decrease) increase in cash and cash equivalents
(25,388
)
 
13,809

Cash and cash equivalents at beginning of period
116,945

 
91,211

Cash and cash equivalents at end of period
$
91,557

 
$
105,020


The accompanying notes are an integral part of these condensed consolidated financial statements.

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INTEGRATED DEVICE TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Nature of Business.  Integrated Device Technology, Inc. (IDT or the Company) designs, develops, manufactures and markets a broad range of integrated circuits for the advanced communications, computing and consumer industries.
Basis of Presentation.  The Company's fiscal year is the 52 or 53 week period ending on the Sunday closest to March 31. In a 52 week year, each fiscal quarter consists of 13 weeks. In a 53 week year, the additional week is usually added to the third quarter, making such quarter consist of 14 weeks. The first and second quarters of fiscal 2016 and fiscal 2015 were 13 week periods.
Principles of Consolidation.  The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated.
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Significant Accounting Policies. For a description of significant accounting policies, see Note 1, Summary of Significant Accounting Policies to the consolidated financial statements included in the Company's annual report on Form 10-K for the fiscal year ended March 29, 2015. There have been no material changes to the Company's significant accounting policies since the filing of the annual report on Form 10-K.
In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair presentation of the condensed consolidated financial statements, for the interim period.
Recent Accounting Pronouncements
Accounting Pronouncements Not Yet Effective for Fiscal 2016
In July 2015, the Financial Accounting Standards Board (FASB) issued guidance applying to inventory measured using any other method other than last-in, last-out method. Under this guidance, inventory is measured at the lower of cost and net realizable value. The net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is applied prospectively and is effective for the Company in its first quarter of fiscal 2018. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This standard sets forth management’s responsibility to evaluate, each reporting period, whether there is substantial doubt about an entity’s ability to continue as a going concern, and if so, to provide related footnote disclosures. The standard is effective for annual reporting periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The Company does not believe that the adoption of this guidance will have any material impact on its financial position or results of operations.

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB decided to delay the effective date by one year to December 15, 2017 for annual periods beginning after that date. The FASB also decided to allow early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
Note 2. Net Income Per Share
Basic net income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common and dilutive potential common shares outstanding during the period. Potential common shares include employee stock options and restricted stock units. For purposes of computing diluted net income per share, weighted average potential common shares do not include potential common shares that are anti-dilutive under the treasury stock method.

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Table of Contents

The following table sets forth the computation of basic and diluted net income per share from continuing operations: 
 
Three Months Ended
 
Six Months Ended
 
(in thousands, except per share amounts)
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
Numerator (basic and diluted):
 
 
 
 
 
 
 
Net income from continuing operations
$
42,423

 
$
24,246

 
$
81,143

 
$
41,357

 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
147,724

 
148,683

 
148,058

 
148,983

Dilutive effect of employee stock options and restricted stock units
4,428

 
5,101

 
4,939

 
4,833

Weighted average common shares outstanding, diluted
152,152

 
153,784

 
152,997

 
153,816

 
 
 
 
 
 
 
 
Basic net income per share from continuing operations
$
0.29

 
$
0.16

 
$
0.55

 
$
0.28

Diluted net income per share from continuing operations
$
0.28

 
$
0.16

 
$
0.53

 
$
0.27


Potential dilutive common shares of 0.7 million and 9 thousand pertaining to employee stock options and restricted stock units were excluded from the calculation of diluted earnings per share for the three months ended September 27, 2015 and September 28, 2014, respectively, because the effect would have been anti-dilutive. Potential dilutive common shares of 0.5 million and 0.7 million pertaining to employee stock options and restricted stock units were excluded from the calculation of diluted earnings per share for the six months ended September 27, 2015 and September 28, 2014, respectively, because the effect would have been anti-dilutive.

Note 3. Discontinued Operations
High-Speed Converter (“HSC”) Business
In fiscal 2014, the Company initiated a project to divest its HSC business and has classified the related assets, as held for sale. The HSC business included the assets of NXP B.V.’s Data Converter Business and Alvand Technologies, Inc., which were acquired in fiscal 2013.
On May 30, 2014, the Company completed the sale of certain assets related to the Alvand portion of the HSC business to a buyer pursuant to an Asset Purchase Agreement. Upon the closing of the transaction, the buyer paid the Company $18.0 million in cash consideration, of which $2.7 million is held in an escrow account for a period of 18 months. The Company recorded a gain of $16.8 million in discontinued operations related to this divestiture during the first quarter of fiscal 2015. The following table summarizes the components of the gain (in thousands):
 
Amount
Cash proceeds from sale (including amounts held in escrow)
$
18,000

Less book value of assets sold and direct costs related to the sale:
 
Intangible assets
(990
)
Transaction and other costs
(170
)
Gain on divestiture
$
16,840


Following the sale of assets related to the Alvand portion of the HSC business, the business had remaining long-lived assets classified as held for sale amounting to $8.5 million, which consisted of $2.9 million in fixed assets and $5.6 million in intangible assets. The Company evaluated the carrying value of the disposal group and determined that it exceeded its estimated fair value based on estimated selling price less cost to sell. Accordingly, total impairment charge of $8.5 million was recorded as loss from discontinued operations in the Condensed Consolidated Statement of Operations in the first quarter of fiscal 2015.
As of March 29, 2015, all long-lived assets related to the HSC business were fully impaired.
On April 27, 2015, the Company completed the sale of the remaining HSC business to eSilicon Corporation (“eSilicon”), for $1.5 million which will be paid on or before April 27, 2017. In connection with the sale, the Company entered into an Exclusive

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Intellectual Property License Agreement with eSilicon, whereby the Company provided an exclusive license to eSilicon to develop, manufacture, sell and maintain HSC products. In connection with the sale, the Company and eSilicon also entered into a Transition Services Agreement, whereby the Company will provide certain transition services over a specific period from the effective date of the sale. The transition services do not represent significant continuing involvement of the Company in the HSC business.
As of September 27, 2015, the Company had a receivable of $1.5 million representing uncollected proceeds from the sale that was included under Other Assets on the Condensed Consolidated Balance Sheet. Given the term of the sale, the Company deferred the gain from this divestiture and will recognize it into discontinued operations when collectibility becomes certain. The following table summarizes the components of the deferred gain which was included under Other Long-term Liabilities on the Condensed Consolidated Balance Sheet as of September 27, 2015:
(in thousands)
Amount
Sale price
$
1,500

Less book value of assets sold
(115
)
Deferred gain on divestiture
$
1,385


The HSC business was included in the Company’s Communications reportable segment. For financial statements purposes, the results of operations for the HSC business have been segregated from those of the continuing operations and are presented in the Company's condensed consolidated financial statements as discontinued operations.
The results of the HSC business for the three and six months ended September 27, 2015 and September 28, 2014 were as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
September 27, 2015
 
September 28, 2014
 
September 27, 2015
 
September 28, 2014
Revenues
 
$

 
$
1,332

 
$
176

 
$
2,338

Cost of revenues
 

 
(413
)
 
(477
)
 
(1,018
)
Long-lived assets impairment
 

 

 

 
(8,471
)
Restructuring costs (see Note 12)
 

 
(6,775
)
 

 
(6,775
)
Operating expenses
 

 
(3,891
)
 
(246
)
 
(7,974
)
Gain on divestiture
 

 

 

 
16,840

Income tax provision
 

 
(57
)
 
(15
)
 
(12
)
Net loss from discontinued operations
 
$

 
$
(9,804
)
 
$
(562
)
 
$
(5,072
)

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Note 4. Fair Value Measurement
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 27, 2015:
 
Fair Value at Reporting Date Using
(in thousands)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Total
Cash Equivalents and Short-Term Investments:
 
 
 
 
 
 
 
US government treasuries and agencies securities
$
144,368

 
$

 
$

 
$
144,368

Money market funds
37,139

 

 

 
37,139

Asset-backed securities

 
39,656

 

 
39,656

Corporate bonds

 
261,023

 

 
261,023

International government bonds

 
1,004

 

 
1,004

Corporate commercial paper

 
8,546

 

 
8,546

Bank deposits

 
14,803

 

 
14,803

Repurchase agreement

 
128

 

 
128

Municipal bonds

 
6,011

 

 
6,011

Total assets measured at fair value
$
181,507

 
$
331,171

 
$

 
$
512,678


The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 29, 2015:
 
Fair Value at Reporting Date Using
 
 
 
(in thousands)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Total
Cash Equivalents and Short-Term Investments:
 
 
 
 
 
 
 
US government treasuries and agencies securities
$
135,945

 
$

 
$

 
$
135,945

Money market funds
55,578

 

 

 
55,578

Asset-backed securities

 
31,830

 

 
31,830

Corporate bonds

 
245,675

 

 
245,675

International government bonds

 
1,006

 

 
1,006

Corporate commercial paper

 
4,999

 

 
4,999

Bank deposits

 
16,915

 

 
16,915

Repurchase agreements

 
191

 

 
191

Municipal bonds

 
6,044

 

 
6,044

Total assets measured at fair value
$
191,523

 
$
306,660

 
$

 
$
498,183


U.S. government treasuries and U.S. government agency securities as of September 27, 2015 and March 29, 2015 do not include any U.S. government guaranteed bank issued paper.
The securities in Level 1 are highly liquid and actively traded in exchange markets or over-the-counter markets. Level 2 fixed income securities are priced using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data.


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All of the Company’s available-for-sale investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. The Company did not record any impairment charges related to its available-for-sale investments in the three and six months ended September 27, 2015 and September 28, 2014.

Note 5. Investments
Available-for-Sale Securities
Available-for-sale investments at September 27, 2015 were as follows:
 
(in thousands)
Cost
 
Gross
Unrealized
 Gains
 
Gross
Unrealized
 Losses
 
Estimated Fair
 Value
U.S. government treasuries and agencies securities
$
144,033

 
$
353

 
$
(18
)
 
$
144,368

Money market funds
37,139

 

 

 
37,139

Asset-backed securities
39,656

 
17

 
(17
)
 
39,656

Corporate bonds
261,206

 
184

 
(367
)
 
261,023

International government bonds
1,007

 

 
(3
)
 
1,004

Corporate commercial paper
8,546

 

 

 
8,546

Bank deposits
14,803

 

 

 
14,803

Repurchase agreements
128

 

 

 
128

Municipal bonds
5,978

 
35

 
(2
)
 
6,011

Total available-for-sale investments
512,496

 
589

 
(407
)
 
512,678

Less amounts classified as cash equivalents
(45,314
)
 

 

 
(45,314
)
Short-term investments
$
467,182

 
$
589

 
$
(407
)
 
$
467,364


Available-for-sale investments at March 29, 2015 were as follows:
 
(in thousands)
Cost
 
Gross
Unrealized
 Gains
 
Gross
Unrealized
 Losses
 
Estimated Fair
 Value
U.S. government treasuries and agencies securities
$
135,570

 
$
398

 
$
(23
)
 
$
135,945

Money market funds
55,578

 

 

 
55,578

Asset-backed securities
31,830

 
9

 
(9
)
 
31,830

Corporate bonds
245,229

 
567

 
(121
)
 
245,675

International government bonds
1,010

 

 
(4
)
 
1,006

Corporate commercial paper
4,999

 

 

 
4,999

Bank deposits
16,915

 

 

 
16,915

Repurchase agreements
191

 

 

 
191

Municipal bonds
6,001

 
45

 
(2
)
 
6,044

Total available-for-sale investments
497,323

 
1,019

 
(159
)
 
498,183

Less amounts classified as cash equivalents
(60,068
)
 

 

 
(60,068
)
Short-term investments
$
437,255

 
$
1,019

 
$
(159
)
 
$
438,115



11

Table of Contents

The cost and estimated fair value of available-for-sale securities at September 27, 2015, by contractual maturity, were as follows:
(in thousands)
Amortized
Cost
 
Estimated Fair
Value
Due in 1 year or less
$
130,921

 
$
130,974

Due in 1-2 years
142,268

 
142,417

Due in 2-5 years
239,299

 
239,287

Total investments in available-for-sale securities
$
512,488

 
$
512,678


The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses as of September 27, 2015, aggregated by investment category and length of time that individual securities have been in a continuous loss position.
 
Less Than 12 Months
 
12 Months or Greater
 
Total
(in thousands)
Fair
Value
 
Unrealized
 Loss
 
Fair
 Value
 
Unrealized
 Loss
 
Fair
Value
 
Unrealized
 Loss
Corporate bonds
$
151,943

 
$
(366
)
 
$

 
$

 
$
151,943

 
$
(366
)
Asset-backed securities
17,306

 
(17
)
 

 

 
17,306

 
(17
)
U.S. government treasuries and agencies securities
38,447

 
(18
)
 

 

 
38,447

 
(18
)
Municipal bonds
2,003

 
(3
)
 

 

 
2,003

 
(3
)
International government bonds
1,004

 
(3
)
 

 

 
1,004

 
(3
)
Total
$
210,703

 
$
(407
)
 
$

 
$

 
$
210,703

 
$
(407
)

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses, as of March 29, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.
 
Less Than 12 Months
 
12 Months or Greater
 
Total
 
(in thousands)
Fair
 Value
 
Unrealized
 Loss
 
Fair
 Value
 
Unrealized
 Loss
 
Fair
 Value
 
Unrealized
 Loss
Corporate bonds
$
67,367

 
$
(121
)
 
$

 
$

 
$
67,367

 
$
(121
)
Asset-backed securities
17,736

 
(9
)
 

 

 
17,736

 
(9
)
U.S. government treasuries and agencies securities
18,478

 
(23
)
 

 

 
18,478

 
(23
)
Municipal bonds
1,001

 
(2
)
 

 

 
1,001

 
(2
)
International government bonds
1,006

 
(4
)
 

 

 
1,006

 
(4
)
Total
$
105,588

 
$
(159
)
 
$

 
$

 
$
105,588

 
$
(159
)

Currently, a significant portion of the Company’s available-for-sale investments that it holds are high grade instruments.  As of September 27, 2015, the unrealized losses on the Company’s available-for-sale investments represented an insignificant amount in relation to its total available-for-sale portfolio. Substantially all of the Company’s unrealized losses on its available-for-sale marketable debt instruments can be attributed to fair value fluctuations in an unstable credit environment that resulted in a decrease in the market liquidity for debt instruments.  Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company did not consider these investments to be other-than-temporarily impaired at September 27, 2015 and March 29, 2015.
Non-marketable Equity Securities
In the quarter ended December 28, 2014, the Company purchased common stock of a privately-held company for $4 million. This investment (included under Other Assets on the Condensed Consolidated Balance Sheets) is accounted for as a cost-method investment, as the Company owns less than 20% of the voting securities and does not have the ability to exercise significant influence over operating and financial policies of the entity. The Company did not record any impairment charge for this investment during the three and six months ended September 27, 2015

12

Table of Contents

Note 6. Stock-Based Employee Compensation
Equity Incentive Programs
The Company currently issues awards under two equity-based plans in order to provide additional incentive and retention to directors and employees who are considered to be essential to the long-range success of the Company. These plans are further described below.
2004 Equity Plan (2004 Plan)
Options granted by the Company under the 2004 Plan generally expire seven years from the date of grant and generally vest over a four-year period from the date of grant, with one-quarter of the shares of common stock vesting on the 1 year anniversary of the grant date and the remaining shares vesting monthly for the 36 months thereafter. The exercise price of the options granted by the Company under the 2004 Plan shall not be less than 100% of the fair market value for a common share subject to such option on the date the option is granted. Full value awards made under the 2004 Plan shall become vested over a period of not less than 3 years (or, if vesting is performance-based, over a period of not less than one year) following the date such award is made; provided, however, that full value awards that result in the issuance of an aggregate of up to 5% of common stock available under the 2004 Plan may be granted to any one or more participants without respect to such minimum vesting provisions. As of September 27, 2015, there were 8.3 million shares available for future grant under the 2004 Plan.
Compensation Expense
The following table summarizes stock-based compensation expense by line items appearing in the Company’s Condensed Consolidated Statement of Operations:
 
Three Months Ended
 
Six Months Ended
(in thousands)
September 27,
2015

September 28,
2014
 
September 27,
2015
 
September 28,
2014
Cost of revenue
$
645

 
$
439

 
$
1,327

 
$
755

Research and development
3,543

 
2,465

 
7,175

 
4,986

Selling, general and administrative
4,393

 
3,029

 
7,946

 
5,151

Discontinued operations

 
(281
)
 
(32
)
 
(227
)
Total stock-based compensation expense
$
8,581

 
$
5,652

 
$
16,416

 
$
10,665

The amount of stock-based compensation expense that was capitalized during the periods presented above was not material.
Stock Options
The following is a summary of the Company's stock option activity and related weighted average exercise prices for each category:
 
Six Months Ended September 27, 2015
(shares in thousands)
Shares
 
Price
Beginning stock options outstanding
3,680

 
$
7.71

Granted
420

 
21.85

Exercised (1)
(574
)
 
6.98

Canceled
(39
)
 
6.99

Ending stock options outstanding
3,487

 
$
9.55

Ending stock options exercisable
2,227

 
$
7.23

(1)
Upon exercise, the Company issues new shares of common stock.
As of September 27, 2015, the unrecognized compensation cost related to nonvested stock options, net of estimated forfeitures, was $2.6 million and will be recognized over a weighted-average period of 1.23 years.
As of September 27, 2015, stock options vested and expected to vest totaled approximately 3.3 million with a weighted-average exercise price of $9.10 and a weighted-average remaining contractual life of 3.41 years. The aggregate intrinsic value was approximately $35.6 million.

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Table of Contents

As of September 27, 2015, fully vested stock options totaled approximately 2.2 million with a weighted-average exercise price of $7.23 and a weighted-average remaining contractual life of 2.68 years. The aggregate intrinsic value was approximately $28.1 million.
Restricted Stock Units
Restricted stock units granted by the Company under the 2004 Plan generally vest over at least a three year period from the grant date with one-third of restricted stock units vesting on each one-year anniversary. As of September 27, 2015, 3.7 million restricted stock unit awards were outstanding under the 2004 Plan.
The following table summarizes the Company's restricted stock unit activity and related weighted-average exercise prices for each category for the six months ended September 27, 2015:
 
Six Months Ended September 27, 2015
(shares in thousands)
Shares
 
Weighted-average grant date fair value per share
Beginning RSUs outstanding
3,457

 
$
10.58

Granted
1,529

 
21.73

Released
(1,023
)
 
9.71

Forfeited
(277
)
 
12.37

Ending RSUs outstanding
3,686

 
$
15.31

As of September 27, 2015, restricted stock units vested and expected to vest totaled approximately 3.0 million with a weighted-average remaining contract life of 1.59 years. The aggregate intrinsic value was approximately $59.2 million.
As of September 27, 2015, the unrecognized compensation cost related to restricted stock units granted under the Company’s equity incentive plan was approximately $28.9 million, net of estimated forfeitures, and is expected to be recognized over a weighted-average period of 1.72 years.
Performance-Based Stock Units
Under the 2004 Plan, the Company has granted performance-based stock units which vest and convert into shares of the Company's common stock based on the level of achievement of pre-established performance goals relating to Company's performance relative to a group of peer companies and to cumulative revenue targets for a specific product group, during a specified performance period. The performance period for the Company's performance-based stock units is generally 1 to 3 years. Management evaluates, on a quarterly basis, the likelihood of the Company meeting its performance metrics in determining stock-based compensation expense.
The following table summarizes the Company's performance stock unit activity and related weighted-average exercise prices for each category for the six months ended September 27, 2015:
 
Six Months Ended September 27, 2015
(shares in thousands)
Shares

Weighted-average grant date fair value per share
Beginning PSUs outstanding
517


$
8.06

Granted
58


8.50

Released
(157
)

8.11

Forfeited
(143
)

8.63

Ending PSUs outstanding
275


$
7.82

As of September 27, 2015, performance stock units vested and expected to vest totaled approximately 0.2 million with a weighted-average remaining contract life of 0.68 year. The aggregate intrinsic value was approximately $4.2 million.
As of September 27, 2015, the unrecognized compensation cost related to performance stock units granted under the Company’s equity incentive plan was approximately $5.3 million, net of estimated forfeitures, and is expected to be recognized over a weighted-average period of 0.68 year.
Market-Based Stock Units

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Table of Contents

In June 2015, under the 2004 Plan, the Company granted approximately 0.2 million shares of restricted stock units with a market-based condition to a group of executive-level employees. These equity awards vest and convert into shares of the Company’s common stock based on the achievement of the Company’s relative total shareholder return over the performance period of 2 years. The earned market-based stock units will vest in two equal installments, with the first installment of vesting to occur on June 15, 2017, and the second on June 15, 2018.
In June 2014, under the 2004 Plan, the Company granted approximately 0.5 million shares of restricted stock units with a market-based condition to a group of executive-level employees. These equity awards vest and convert into shares of the Company’s common stock based on the achievement of the Company’s relative total shareholder return over the performance period of 2 years. The earned market-based stock units will vest in two equal installments, with the first installment of vesting to occur on June 15, 2016, and the second on June 15, 2017.
The fair value of each market-based stock unit award was estimated on the date of grant using a Monte Carlo simulation model that uses the assumptions noted in the table below. The Company uses historical data to estimate employee termination within the valuation model. The expected term of 1.80 years was derived from the output of the valuation model and represents the period of time that restricted stock units granted are expected to be outstanding.
The following weighted average assumptions were used to calculate the fair value of the market-based equity award using a Monte Carlo simulation model:
 
June 15, 2015
June 15, 2014
Estimated fair value
$
33.08

$
21.00

Expected volatility
41.22
%
34.60
%
Expected term (in years)
1.80

1.80

Risk-free interest rate
0.65
%
0.38
%
Dividend yield
%
%
As of September 27, 2015, the total market-based stock units outstanding were approximately 0.8 million.
As of September 27, 2015, market-based stock units vested and expected to vest totaled approximately 0.6 million with a weighted-average remaining contract life of 1.46 years. The aggregate intrinsic value was approximately $12.7 million.
As of September 27, 2015, the unrecognized compensation cost related to market-based stock units granted under the Company’s equity incentive plans was approximately $9.6 million, net of estimated forfeitures, and is expected to be recognized over a weighted-average period of 1.52 years.
2009 Employee Stock Purchase Plan (2009 ESPP)
On June 18, 2009, the Board approved implementation of the 2009 Employee Stock Purchase Plan (2009 ESPP) and authorized the reservation and issuance of up to 9.0 million shares of the Company's common stock, subject to stockholder approval. On September 17, 2009, the Company's stockholders approved the plan at the 2009 Annual Meeting of Stockholders. The 2009 ESPP is intended to be implemented in successive quarterly purchase periods commencing on the first day of each fiscal quarter of the Company. In order to maintain its qualified status under Section 423 of the Internal Revenue Code, the 2009 ESPP imposes certain restrictions, including the limitation that no employee is permitted to participate in the 2009 ESPP if the rights of such employee to purchase common stock of the Company under the 2009 ESPP and all similar purchase plans of the Company or its subsidiaries would accrue at a rate which exceeds $25,000 of the fair market value of such stock (determined at the time the right is granted) for each calendar year. At the 2012 annual meeting of stockholders on September 13, 2012, the Company's stockholders approved an additional 5.0 million. The number of shares of common stock reserved for issuance thereunder increased from 9.0 million shares to 14.0 million shares.
Activity under the Company's ESPP for the six months ended September 27, 2015 is summarized in the following table:
(in thousands, except per share amounts)
 
Number of shares issued
341

Average issuance price
$
16.84

Number of shares available at September 27, 2015
4,038



15

Table of Contents

Note 7. Stockholders' Equity
Stock Repurchase Program. In April 2015, the Company's Board of Directors approved a new share repurchase program authorization for $300 million. In the three and six months ended September 27, 2015, the Company repurchased 2.4 million shares for $46.4 million and 3.8 million shares for $77.0 million, respectively. Of the total repurchases for the six months ended September 27, 2015, $69.1 million was from the new authorization. As of September 27, 2015, approximately $230.9 million was available for future purchase under the new share repurchase program. In October 2015, the Company's Board of Directors approved an increase in the share repurchase authorization by another $300 million.

Note 8. Balance Sheet Detail
(in thousands)
September 27,
2015
 
March 29,
2015
Inventories, net
 
 
 
Raw materials
$
4,546

 
$
4,709

Work-in-process
21,810

 
18,377

Finished goods
17,590

 
22,324

Total inventories, net
$
43,946

 
$
45,410

 
 
 
 
Property, plant and equipment, net
 

 
 

Land
$
11,508

 
$
11,578

Machinery and equipment
252,612

 
292,180

Building and leasehold improvements
48,080

 
48,031

  Total property, plant and equipment, gross
312,200

 
351,789

Less: accumulated depreciation
(247,310
)
 
(286,281
)
Total property, plant and equipment, net
$
64,890

 
$
65,508

Other accrued liabilities
 
 
 
Accrued restructuring costs (1)
$
4,191

 
$
10,512

Other (2)
7,114

 
7,070

Total other accrued liabilities
$
11,305

 
$
17,582

Other long-term obligations
 
 
 
Deferred compensation related liabilities
$
13,645

 
$
13,143

Other
5,974

 
4,462

Total other long-term liabilities
$
19,619

 
$
17,605


(1) Includes accrued severance costs related to the HSC business of $2.2 million and $10.2 million as of September 27, 2015 and March 29, 2015, respectively.
(2) Other current liabilities consist primarily of accrued royalties and outside commissions, short-term portion of supplier obligations and other accrued unbilled expenses.


16

Table of Contents

Note 9. Deferred Income on Shipments to Distributors
Included in the caption “Deferred income on shipments to distributors” on the Consolidated Condensed Balance Sheets are amounts related to shipments to certain distributors for which revenue is not recognized until the Company's product has been sold by the distributor to an end customer. The components of deferred income on shipments to distributors as of September 27, 2015 and March 29, 2015 are as follows:
(in thousands)
September 27,
2015
 
March 29,
2015
Gross deferred revenue
$
14,692

 
$
19,299

Gross deferred costs
(3,216
)
 
(3,605
)
Deferred income on shipments to distributors
$
11,476

 
$
15,694


The gross deferred revenue represents the gross value of shipments to distributors at the list price billed to the distributor less any price protection credits provided to them in connection with reductions in list price while the products remain in their inventory.  The amount ultimately recognized as revenue will be lower than this amount as a result of ship from stock pricing credits which are issued in connection with the sell through of the Company's products to end customers. Historically, this amount represents on average approximately 36% of the list price billed to the customer.  The gross deferred costs represent the standard costs (which approximate actual costs) of products the Company sells to the distributors.  Although the Company monitors the levels and quality of inventory in the distribution channel, the Company's experience is that products returned from these distributors may be sold to a different distributor or in a different region of the world.  As such, inventory write-downs for products in the distribution channel have not been significant.

Note 10. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component, net of tax, for the six months ended September 27, 2015 consisted of the following:
(in thousands)
Cumulative translation adjustments
 
Unrealized gain on available-for-sale investments
 
Pension adjustments
 
Total
Balance, March 29, 2015
$
(3,721
)
 
$
860

 
$
680

 
$
(2,181
)
Other comprehensive loss before reclassifications
(1,004
)
 
(903
)
 

 
(1,907
)
Amounts reclassified out of accumulated other comprehensive income (loss)

 
225

 
(611
)
 
(386
)
Net current-period other comprehensive loss
(1,004
)
 
(678
)
 
(611
)
 
(2,293
)
Balance as of September 27, 2015
$
(4,725
)
 
$
182

 
$
69

 
$
(4,474
)

Comprehensive income components consisted of:
(in thousands)
Six Months Ended September 27, 2015
 
Location
Unrealized holding gains on available-for-sale investments
$
225

 
interest and other, net
Amortization of pension benefits prior service costs
(611
)
 
operating expense
Total amounts reclassified out of accumulated other comprehensive loss
$
(386
)
 
 


17

Table of Contents

11. Goodwill and Intangible Assets, Net
Goodwill balances by reportable segment as of September 27, 2015 and March 29, 2015 are as follows:
Reportable Segment
(in thousands)
Communications
$
122,248

Computing and Consumer
13,396

Total
$
135,644

Goodwill balances as of September 27, 2015 and March 29, 2015 are net of $920.3 million and $922.5 million, respectively, in accumulated impairment losses.
Intangible asset balances as of September 27, 2015 and March 29, 2015 are summarized as follows:
 
September 27, 2015
(in thousands)
Gross Assets
 
Accumulated
Amortization
 
Net Assets
Purchased intangible assets:
 
 
 
 
 
Existing technology
$
203,914

 
$
(200,468
)
 
$
3,446

Trademarks
4,411

 
(4,100
)
 
311

Customer relationships
128,787

 
(128,591
)
 
196

Intellectual property licenses
9,900

 
(870
)
 
9,030

Total purchased intangible assets
$
347,012

 
$
(334,029
)
 
$
12,983


 
March 29, 2015
(in thousands)
Gross Assets
 
Accumulated
Amortization
 
Net Assets
Purchased intangible assets:
 
 
 
 
 
Existing technology
$
211,170

 
$
(206,491
)
 
$
4,679

Trademarks
4,411

 
(3,850
)
 
561

Customer relationships
131,045

 
(130,750
)
 
295

Total purchased intangible assets
$
346,626

 
$
(341,091
)
 
$
5,535


During the three months ended September 27, 2015, the Company individually purchased intangible assets with a total cost of $9.9 million and an average estimated useful life of 6.25 years These intangible assets are comprised of intellectual property licenses that are being used by the Company in the development, manufacture and sale of certain products.
Amortization expense for the three months ended September 27, 2015 and September 28, 2014 was $1.6 million and $1.7 million, respectively. Amortization expense for the six months ended September 27, 2015 and September 28, 2014 was 2.5 million and 4.2 million, respectively.
During the first quarter of fiscal 2015, the Company recorded an impairment charge relating to the HSC assets held for sale of $5.6 million, which consisted of existing technology of $4.6 million, customer relationships of $0.9 million and non-compete agreements of $0.1 million. Refer to Note 3 for additional information.
The intangible assets are being amortized over estimated useful lives of 3 to 7.5 years.

18

Table of Contents

Based on the intangible assets recorded at September 27, 2015, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated amortization expense is expected to be as follows (in thousands):
Fiscal Year
Amount
2016 (Remaining 6 months)
$
2,241

2017
3,666

2018
1,736

2019
1,490

2020 and there after
3,850

Total purchased intangible assets
$
12,983

Note 12. Restructuring
The following table shows the provision of the restructuring charges and the liability remaining as of September 27, 2015:
(in thousands)
HSC Business
Other
Total
Balance as of March 29, 2015
$
10,217

$
295

$
10,512

Provision

2,902

2,902

Payments and other adjustments
(7,994
)
(1,229
)
(9,223
)
Balance as of September 27, 2015
$
2,223

$
1,968

$
4,191

HSC Business
In fiscal 2015, the Company prepared a workforce-reduction plan (the Plan) with respect to employees of its HSC business in France and the Netherlands. The Plan sets forth the general parameters, terms and benefits for employee dismissals. The Plan was approved by the French Works Council and Labor Administrator and the related Plan details were communicated to the affected employees in France and the Netherlands. No works council consultation was required in the Netherlands. The Company has not historically offered similar termination benefits as defined in the Plan for these locations. The Plan identified the number of employees to be terminated, their job classification or function, their location and the date that the Plan was expected to be completed. The Plan also established the terms of the benefit arrangement in sufficient detail to enable the employees to determine the type and amount of benefits that they would receive if terminated. In addition, the actions required to complete the Plan indicated that it was unlikely that substantial changes to the Plan would be made after communication to the employees. Accordingly, the Company accrued restructuring charges in accordance with ASC 420, Exit or Disposal Cost Obligations. The restructuring charges recorded to discontinued operations in the Condensed Consolidated Statement of Operations were approximately $18.3 million for the fiscal year ended March 29, 2015, for a total of 53 employees in France and the Netherlands combined.
The Company expects payments to these termination benefits and to complete the restructuring action by December 2017.
Other
During the first quarter of fiscal 2016, the Company recorded other charges of $0.9 million and reduced headcount by 11 employees. During the second quarter of fiscal 2016, the Company recorded additional charges of $2.0 million and reduced headcount by 24 employees. During the six months ended September 27, 2015, the Company paid $0.9 million related to these actions. As of September 27, 2015, the total accrued balance for employee severance costs related to these actions was $2.0 million. The Company expects to complete these actions by the fourth quarter of fiscal 2016.
During fiscal 2015, the Company recorded other charges of $1.1 million and reduced headcount by 28 employees in multiple reductions in workforce actions. During fiscal 2015, the Company paid $0.8 million related to these actions. During first quarter of fiscal 2016, the Company paid $0.3 million related to these actions, which reduced the total accrual balance to zero.
Note 13. Commitments and Contingencies
Warranty
The Company maintains an accrual for obligations it incurs under its standard product warranty program and customer, part, or process specific matters. The Company’s standard warranty period is one year, however in certain instances the warranty period may be extended to as long as two years. Management estimates the fair value of the Company’s warranty liability based on actual past warranty claims experience, its policies regarding customer warranty returns and other estimates about the timing and disposition of product returned under the standard program. Customer, part, or process specific accruals are estimated using a

19

Table of Contents

specific identification method. Historical profit and loss impact related to warranty returns activity has been minimal. The total warranty accrual was $0.1 million as of September 27, 2015 and March 29, 2015.
Litigation
In January 2012, Maxim I Properties, a general partnership that had purchased a certain parcel of real property (the Property) in 2003, filed a complaint in the Northern District of California naming approximately 30 defendants, including the Company ("Defendants"), alleging various environmental violations of the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA), the California Hazardous Substance Account Act (HSAA), and other common law claims (the Complaint). The Complaint alleges that Defendants including the Company “…generated, transported, and/or arranged for the transport and/or disposal of hazardous waste to the Property.” The Complaint further alleges that Defendants are liable for the costs of investigation and remediation of the Property due to the release of hazardous substances, and that Defendants violated their duty to prevent the release of such hazardous substances. On August 15, 2012, the plaintiff voluntarily dismissed its Complaint against the Company without prejudice. However, Moyer Products, Inc., another defendant, counter-claimed against the plaintiff Maxim and cross-claimed against Defendants, including the Company, and thus the Company remains a cross-defendant in this action. In September 2012, the California Department of Toxic Substances Control (DTSC) notified the Company that it identified the Company, along with more than 50 other entities, as a respondent to DTSC's Enforcement Order, as “a generator of hazardous waste” that was sent to the Property. In April 2013, the Company, along with the other “respondent” parties, entered into a Corrective Action Consent Agreement (CACA) to conduct the Property investigation and corrective action selection. The CACA supersedes the Enforcement Order. In February 2013, the court stayed the Maxim/Moyer litigation pending the Property investigation under the CACA and DTSC's corrective action selection. On June 23, 2015, the Property investigation was deemed completed by DTSC. The DTSC continues to evaluate corrective action. The Company will continue to vigorously defend itself against the allegations in the Complaint and evaluate settlement options with Moyer upon notification from the DTSC of its corrective action selection. Because no specific corrective action has been selected yet, and thus no specific monetary demands have been made, it is not possible for the Company to estimate the potential loss or range of potential losses for these actions.
The Company is also party to various other legal proceedings and claims arising in the normal course of business. As of September 27, 2015, while the Company has accrued for specific amounts based on the probability of settlement in some of these matters, those amounts, both individually and in total, are not material to any aspect of business operations and to the consolidated financial statements. Further, with regard to these other matters, potential liability and probable losses or ranges of possible losses cannot be reasonably estimated at this time. Generally, litigation is subject to inherent uncertainties, and no assurance can be given that the Company will prevail in any particular lawsuit. Accordingly, pending lawsuits, as well as potential future litigation with other companies, could result in substantial costs and diversion of resources and could have a material adverse effect on the Company's financial condition, results of operations or cash flows.
Note 14. Employee Benefit Plans
401(k) Plan
The Company sponsors a 401(k) retirement matching plan for qualified domestic employees.  The Company recorded expenses of approximately $1.5 million and $1.3 million in matching contributions under the plan during the six months ended September 27, 2015 and September 28, 2014, respectively.
Deferred Compensation Plans
Effective November 1, 2000, the Company established an unfunded deferred compensation plan to provide benefits to executive officers and other key employees. Under the plan, participants can defer any portion of their salary and bonus compensation into the plan and may choose from a portfolio of funds from which earnings are measured. Participant balances are always 100% vested. As of September 27, 2015 and March 29, 2015, obligations under the plan totaled approximately $13.6 million and $13.1 million. Additionally, the Company has set aside assets in a separate trust that is invested in corporate owned life insurance intended to substantially fund the liability under the plan. As of September 27, 2015 and March 29, 2015, the deferred compensation plan assets were approximately $14.2 million and $16.5 million respectively.
During the first quarter of fiscal 2013, the Company assumed a deferred compensation plan associated with the acquisition of Fox. Under this plan, participants in retirement are entitled to receive a fixed amount from the Company on a monthly basis. The Company has purchased life insurance policies with the intention of funding the liability under this plan. As of September 27, 2015 and March 29, 2015, the deferred compensation plan assets under this plan were approximately $0.8 million. As of September 27, 2015 and March 29, 2015, the deferred compensation plan liabilities under this plan were approximately $1.8 million and $1.7 million, respectively.

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International Employee Benefit Plans
The Company sponsors defined-benefit pension plans, defined-contribution plans, multi-employer plans and other post-employment benefit plans covering employees in certain of the Company's international locations. As of September 27, 2015 and March 29, 2015, the net liability for all of these international benefit plans totaled $0.7 million and $1.0 million respectively.

Note 15. Income Taxes
During the three and six months ended September 27, 2015, the Company recorded an income tax expense from continuing operations of $0.6 million and 1.0 million, respectively. The income tax expense recorded in the three and six months ended September 27, 2015 was primarily due to taxes on earnings in foreign jurisdictions. The Company recorded an income tax expense from continuing operations of 0.5 million and 0.7 million in the three and six months ended September 28, 2014, respectively. The income tax expense recorded in the three and six months ended September 28, 2014 was primarily due to taxes on earnings in foreign jurisdictions.
As of September 27, 2015, the Company continued to maintain a valuation allowance against its net U.S. and foreign deferred tax assets, as the Company could not conclude that it was more likely than not that the Company would be able to realize its U.S. and foreign deferred tax assets. Given the continued improvement in the Company’s operations combined with certain tax strategies, it is reasonably possible that within the next 12 months, positive evidence will be sufficient to release a material amount of the Company’s valuation allowance. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is able to actually achieve. The Company will continue to evaluate the release of the valuation allowance on a quarterly basis.
After examination of the Company’s projected offshore cash flows, and global cash requirements, the Company determined that beginning in fiscal year 2016, the Company would no longer require 100% of its foreign generated cash to support its foreign operations. The Company plans to repatriate a portion of its current year offshore earnings to the U.S. for domestic operations, and has accrued for the related tax impacts accordingly. For earnings accumulated as of March 29, 2015, the Company continues to permanently reinvest such amounts in its foreign jurisdictions, except to the extent there is any previously taxed income which is expected to be repatriated. If circumstances change and it becomes apparent that some or all of those undistributed earnings of the Company's offshore subsidiary will be remitted in the foreseeable future but income taxes have not been recognized, the Company will accrue income taxes attributable to that remittance.
The Company benefits from tax incentives granted by local tax authorities in certain foreign jurisdictions. In the fourth quarter of fiscal 2011, the Company agreed with the Malaysia Industrial Development Board to enter into a new tax incentive agreement which is a full tax exemption on statutory income for a period of 10 years commencing April 4, 2011. This tax incentive agreement is subject to the Company meeting certain financial targets, investments, headcounts and activities in Malaysia.
During the quarter ended June 28, 2015, the Company reached an understanding regarding the terms for settling with the U.S. Internal Revenue Service ("IRS") and closed out all positions as part of the examination of the Company's income tax returns for the fiscal years 2010 through 2012. As a result, the Company remeasured its tax positions based on the facts, circumstances, and information available at the reporting date. The outcome did not have a material effect on the Company’s financial position, cash flows or results of operations due to its tax attributes, which are fully offset by a valuation allowance.
As of September 27, 2015, the Company was under examination in Singapore. The Company's fiscal years 2009 through 2012 are under audit by the Inland Revenue Authority of Singapore. Although the final outcome is uncertain, based on currently available information, the Company believes that the ultimate outcome will not have a material adverse effect on its financial position, cash flows or results of operations.
The Company's open years in the U.S. federal jurisdiction are fiscal 2013 and later years. In addition, the Company is effectively subject to federal tax examination adjustments for tax years ended on or after fiscal year 1999, in that the Company has tax attribute carryforwards from these years that could be subject to adjustments, if and when utilized. The Company's open years in various state and foreign jurisdictions are fiscal years 2008 and later.
The Company does not expect a material change in unrecognized tax benefits within the next twelve months.
On July 27, 2015, in Altera Corp. v. Commissioner, the U.S. Tax Court issued an opinion related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision has yet to be issued by the Tax Court due to other outstanding issues related to the case. At this time, the U.S. Department of the Treasury has not withdrawn the requirement to include stock-based compensation from its regulations. Due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits, and the risk of the Tax Court’s decision being overturned upon appeal, the Company has not recorded any benefit as of September 27, 2015. The Company will continue to monitor ongoing developments and potential impacts to our financial statements.

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Note 16. Segment Information
The Chief Operating Decision Maker is the Company’s President and Chief Executive Officer.
The Company's reportable segments include the following:
Communications segment: includes clock and timing solutions, flow-control management devices including Serial RapidIO® switching solutions, multi-port products, telecommunications products, high-speed static random access memory, first in and first out, digital logic, radio frequency, and frequency control solutions.
Computing and Consumer segment: includes clock generation and distribution products, high-performance server memory interfaces, PCI Express switching solutions, power management solutions and signal integrity products.
The tables below provide information about these segments:
 Revenues by segment
Three Months Ended
 
Six Months Ended
(in thousands)
September 27,
2015

September 28,
2014
 
September 27,
2015
 
September 28,
2014
Communications
$
72,271

 
$
79,771

 
$
137,164

 
$
160,757

Computing and Consumer
97,227

 
57,322

 
193,241

 
102,638

Total revenues
$
169,498

 
$
137,093

 
$
330,405

 
$
263,395


Income by segment from continuing operations
Three Months Ended
 
Six Months Ended
 
(in thousands)
September 27,
2015
 
September 28,
2014
 
September 27,
2015

September 28,
2014
Communications
$
27,401

 
$
30,436

 
$
50,351

 
$
59,548

Computing and Consumer
25,417

 
2,010

 
49,686

 
278

Unallocated expenses:
 
 
 
 
 
 
 
Amortization of intangible assets
(751
)
 
(1,676
)
 
(1,583
)
 
(4,225
)
Assets impairment and recoveries
28

 
(401
)
 
(119
)
 
(2,703
)
Stock-based compensation expense
(8,581
)
 
(5,933
)
 
(16,447
)
 
(10,895
)
Severance, retention and facility closure costs
(2,048
)
 
(339
)
 
(2,969
)
 
(912
)
Interest income and other, net
1,568

 
647

 
3,270

 
1,015

Income from continuing operations, before income taxes
$
43,034

 
$
24,744

 
$
82,189

 
$
42,106


The Company does not allocate goodwill and intangible assets impairment charge, severance and retention costs, acquisition-related costs, stock-based compensation, interest income and other, and interest expense to its segments. In addition, the Company does not allocate assets to its segments. The Company excludes these items consistent with the manner in which it internally evaluates its results of operations.


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Revenues from unaffiliated customers by geographic area, based on the customers' shipment locations, were as follows:
 
Three Months Ended
 
Six Months Ended
(in thousands)
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
APAC
$
131,361

 
$
90,059

 
$
248,946

 
$
171,857

Americas (1)
16,950

 
19,753

 
38,695

 
36,761

Japan
7,525

 
10,447

 
16,745

 
20,689

Europe
13,662

 
16,834

 
26,019

 
34,088

Total revenues
$
169,498

 
$
137,093

 
$
330,405

 
$
263,395


(1)
The revenues from the customers in the U.S. were $15.6 million and $17.4 million in the three months ended September 27, 2015 and September 28, 2014, respectively. The revenues from the customers in the U.S. were $36.3 million and $32.5 million in the six months ended September 27, 2015 and September 28, 2014, respectively.
The Company utilizes global and regional distributors around the world, that buy product directly from the Company on behalf of their customers. Three distributors, Uniquest, SK Hynix and its affiliates, and Avnet and its affiliates accounted for 16%, 15%, and 12%, respectively, of the Company's revenues in the three months ended September 27, 2015. Three distributors, Uniquest, SK Hynix and its affiliates, and Avnet and its affiliates accounted for 19%, 13% and 12%, respectively, of the Company's revenues in the six months ended September 27, 2015. Two distributors, Uniquest and Avnet and its affiliates accounted for 13% and 12%, respectively, of the Company's revenues in the three months ended September 28, 2014. Two distributors, Avnet and its affiliates, and Uniquest accounted for 12% and 11%, respectively, of the Company's revenues in the six months ended September 28, 2014.
At September 27, 2015, two distributors represented approximately 15% and 12%, respectively, of the Company’s gross accounts receivable. At March 29, 2015, two distributors represented approximately 11% and 10%, respectively, of the Company’s gross accounts receivable.
The Company’s significant operations outside of the United States include a test facility in Malaysia, design centers in Canada and China, and sales subsidiaries in Japan, APAC and Europe. The Company's net property, plant and equipment, are summarized below by geographic area: 
 
(in thousands)
September 27,
2015
 
March 29,
2015
United States
$
38,151

 
$
38,879

Canada
3,745

 
3,997

Malaysia
21,474

 
21,244

All other countries
1,520

 
1,388

Total property, plant and equipment, net
$
64,890

 
$
65,508


Note 17. Derivative Financial Instruments
As of September 27, 2015 and March 29, 2015, the Company did not have any outstanding foreign currency contracts that were designated as hedges of forecasted cash flows or capital equipment purchases. The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company also has foreign exchange facilities used for hedging arrangements with banks that allow the Company to enter into foreign exchange contracts totaling approximately $20 million, all of which was available at September 27, 2015.

Note 18. Subsequent Events
Pending Acquisition of Zentrum Mikroelektonik Dresden AG
On October 23, 2015, the Company (the Buyer) and Global ASIC GmbH, ELBER GmBH and Freistaat Sachsen (collectively, the Sellers) entered into a Share Purchase and Transfer Agreement (the Purchase Agreement). The Purchase Agreement provides that, on and subject to the terms of the Purchase Agreement, the Company will purchase all of the outstanding no-par-value shares of Zentrum Mikroelektronik Dresden AG, a German stock corporation (ZMD) from the Sellers in exchange for an aggregate fixed cash purchase price of the Euro equivalent of $310 million (the Acquisition). ZMD delivers leadership products and technology in three major areas - automotive, analog signal processing, and power management.  Through this acquisition, the Company

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expects to gain immediate automotive sales channel leverage for new designs in wireless charging, power management, and timing and signal conditioning. 
The consummation of the Acquisition is subject to satisfaction of the condition precedent of WGZ Bank AG, Düsseldorf, Germany, having released its pledge over the shares of Global ASIC GmbH in ZMD and certain other security related to the shares held by Global ASIC GmbH. The closing of the Acquisition is expected to occur in December 2015, or such other date as may be agreed upon by the parties.
New Share Repurchase Authorization
In October 2015, the Company’s Board of Directors approved an increase in the Company’s share repurchase authorization by another $300 million. This is incremental to the prior authorization and to the remaining repurchase authorization balance as of September 27, 2015 of $230.9 million. The Company intends to fund this incremental $300 million through debt financing, subject to market conditions, and execute this portion of the Company’s buyback on an accelerated pace.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).  Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking. Forward-looking statements, which are generally identified by words such as “anticipates,” “expects,” “plans,” “intends,” “seeks,” “targets,” “believes,” “can,” “may,” “might,” “could,” “should,” “would,” “will” and similar terms, include statements related to, among others, revenues and gross profit, research and development activities, selling, general and administrative expenses, restructuring costs, intangible expenses, interest income and other, taxes, capital spending and financing transactions, as well as statements regarding successful development and market acceptance of new products, industry and overall economic conditions and demand, and capacity utilization. Forward-looking statements are based upon current expectations, estimates, forecasts and projections that involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to: global business and economic conditions; operating results; new product introductions and sales; competitive conditions; capital expenditures and resources; manufacturing capacity utilization; customer demand and inventory levels; product performance; intellectual property matters; mergers and acquisitions and integration activities; and the risk factors set forth in Part II, Item 1A, “Risk Factors” to this Quarterly Report on Form 10-Q.  As a result of these risks and uncertainties, actual results could differ significantly from those expressed or implied in the forward-looking statements.  Unless otherwise required by law, we undertake no obligation to publicly revise these statements for future events or new information after the date of this Quarterly Report on Form 10-Q.
This discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes included in this report and the Audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended March 29, 2015 filed with the SEC. Operating results for the three and six months ended September 27, 2015 are not necessarily indicative of operating results for an entire fiscal year.
Critical Accounting Policies
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.  The preparation of such statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities as of the date of the financial statements.  Our estimates and assumptions are based on historical experience and other factors that we consider to be appropriate in the circumstances.  However, actual future results may vary from our estimates and assumptions.
For a discussion of our critical accounting policies, see Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 29, 2015. We believe that these accounting policies are "critical," as defined by the SEC, in that they are both highly important to the portrayal of our financial condition and results, and they require difficult management judgments, estimates and assumptions about matters that are inherently uncertain. We believe that there have been no significant changes during the three and six months ended September 27, 2015 to the items that we disclosed as our critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended March 29, 2015.
Business Overview
We develop a broad range of low-power, high-performance mixed-signal semiconductor solutions that optimize our customers’ applications in key markets. In addition to our market-leading timing products, we offer semiconductors targeting communications infrastructure - both wired and wireless - high-performance computing and power management. These products are used for next-generation development in areas such as 4G infrastructure, network communications, cloud data centers and power management for computing and mobile devices.

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Our top talent and technology paired with an innovative product-development philosophy allows us to solve complex customer problems when designing communications, computing and consumer applications. Through system-level analog and digital innovation, we consistently deliver extraordinary value to our customers.
For more information on our business, please see Part I, Item 1, “Business,” in our Annual Report on Form 10-K for the fiscal year ended March 29, 2015.
Recent developments
High-Speed Converter (“HSC”) Business
In fiscal 2014, we initiated a project to divest our HSC business and have classified the related assets, as held for sale. The HSC business included the assets of NXP B.V.’s Data Converter Business and Alvand Technologies, Inc., which were acquired in fiscal 2013.
On May 30, 2014, we completed the sale of certain assets related to the Alvand portion of the HSC business to a buyer pursuant to an Asset Purchase Agreement. Upon the closing of the transaction, the buyer paid us $18.0 million in cash consideration, of which $2.7 million has been held in an escrow account for a period of 18 months. We recorded a gain of $16.8 million in discontinued operations related to this divestiture during the first quarter of fiscal 2015.
Following the sale of assets related to the Alvand portion of the HSC business, the business had remaining long-lived assets classified as held for sale amounting to $8.5 million, which consisted of $2.9 million in fixed assets and $5.6 million in intangible assets. We evaluated the carrying value of the disposal group and determined that it exceeded its estimated fair value based on estimated selling price less cost to sell. Accordingly, total impairment charge of $8.5 million was recorded as loss from discontinued operations on the Condensed Consolidated Statement of Operations in the first quarter of fiscal 2015.
As of March 29, 2015, all long-lived assets related to the HSC business were fully impaired.
On April 27, 2015, we completed the sale of the remaining HSC business to eSilicon Corporation (“eSilicon”), for $1.5 million which will be paid on or before April 27, 2017. In connection with the sale, we entered into an Exclusive Intellectual Property License Agreement with eSilicon, whereby we provided an exclusive license to eSilicon to develop, manufacture, sell and maintain HSC products. In connection with the sale, the Company and eSilicon also entered into a Transition Services Agreement, whereby we will provide certain transition services over a specific period from the effective date of the sale. The transition services do not represent significant continuing involvement of the Company in the HSC business. Also, as part of the sale, we transferred to eSilicon certain equipment and inventory with net carrying value of $0.1 million.
As of September 27, 2015, we had a receivable of $1.5 million representing uncollected proceeds from the sale that was included under Other Assets on the Condensed Consolidated Balance Sheet. Given the term of the sale, we deferred the gain from this divestiture amounting to $1.4 million and will recognize it into discontinued operations when collectibility becomes certain.
The HSC business was included in the Communications reportable segment. For financial statements purposes, the results of operations for the HSC business have been segregated from those of the continuing operations and are presented in the condensed consolidated financial statements as discontinued operations.
Subsequent Events
Pending Acquisition of Zentrum Mikroelektonik Dresden AG
On October 23, 2015, we (the Buyer) and Global ASIC GmbH, ELBER GmBH and Freistaat Sachsen (collectively, the Sellers) entered into a Share Purchase and Transfer Agreement (the Purchase Agreement). The Purchase Agreement provides that, on and subject to the terms of the Purchase Agreement, we will purchase all of the outstanding no-par-value shares of Zentrum Mikroelektronik Dresden AG, a German stock corporation (ZMD) from the Sellers in exchange for an aggregate fixed cash purchase price of the Euro equivalent of $310 million (the Acquisition). ZMD delivers leadership products and technology in three major areas - automotive, analog signal processing, and power management.  Through this acquisition, we expect to gain immediate automotive sales channel leverage for new designs in wireless charging, power management, and timing and signal conditioning. 
The consummation of the Acquisition is subject to satisfaction of the condition precedent of WGZ Bank AG, Düsseldorf, Germany, having released its pledge over the shares of Global ASIC GmbH in ZMD and certain other security related to the shares held by Global ASIC GmbH. The closing of the Acquisition is expected to occur in December 2015, or such other date as may be agreed upon by the parties.
New Share Repurchase Authorization
In October 2015, our Board of Directors approved an increase in the share repurchase authorization by another $300 million. This is incremental to the prior authorization and to the remaining repurchase authorization balance as of September 27, 2015 of $230.9 million. We intend to fund this incremental $300 million through debt financing, subject to market conditions, and execute this portion of our buyback on an accelerated pace.

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Overview
The following table and discussion provides an overview of our operating results from continuing operations for the three and six months ended September 27, 2015 and September 28, 2014
 
Three Months Ended
 
Six Months Ended
 
(in thousands, except for percentage)
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
Revenues
$
169,498

 
$
137,093

 
$
330,405

 
$
263,395

Gross profit
$
106,546

 
$
81,876

 
$
205,780

 
$
155,885

As a % of revenues
63
%
 
60
%
 
62
%
 
59
%
Operating income
$
42,018

 
$
24,339

 
$
79,355

 
$
40,839

As a % of revenues
25
%
 
18
%
 
24
%
 
16
%
Net income from continuing operations
$
42,423

 
$
24,246

 
$
81,143

 
$
41,357

As a % of revenues
25
%
 
18
%
 
25
%
 
16
%

Our revenues increased by $32.4 million, or 24%, to $169.5 million in the quarter ended September 27, 2015 compared to the quarter ended September 28, 2014. The increase was primarily due to increased unit shipments in our Computing and Consumer segment as we continued to experience increased demand for our memory interface and wireless power products. Gross profit percentage improved for the three months ended September 27, 2015 compared to the same period in fiscal 2015 primarily due to reduced manufacturing costs and improved inventory management. Net income from continuing operations was $42.4 million in the second quarter of fiscal 2016, as compared to $24.2 million in the second quarter of fiscal 2015. The increase in net income was primarily due to increased revenues and gross margin.
Results of Continuing Operations
Revenues
Revenues by segment:
Three Months Ended

Six Months Ended
(in thousands)
September 27,
2015

September 28,
2014

September 27,
2015

September 28,
2014
Communications
$
72,271

 
$
79,771

 
$
137,164

 
$
160,757

Computing and Consumer
97,227

 
57,322

 
193,241

 
102,638

Total revenues
$
169,498

 
$
137,093

 
$
330,405

 
$
263,395


Product groups representing greater than 10% of net revenues:
Three Months Ended

Six Months Ended
As a percentage of net revenues
September 27,
2015

September 28,
2014

September 27,
2015

September 28,
2014
Communications:
 
 
 
 
 
 
 
Communications timing products
15
%

24
%
 
16
%
 
25
%
Serial RapidIO products
14
%

19
%
 
11
%
 
19
%
All others less than 10% individually
14
%

15
%
 
15
%
 
17
%
     Total communications
43
%

58
%
 
42
%
 
61
%
 
 
 
 
 
 
 
 
Computing and Consumer:
 
 
 
 
 
 
 
Consumer and computing timing products
9
%
 
16
%
 
10
%
 
16
%
Memory interface products
35
%
 
19
%
 
36
%
 
17
%
All others less than 10% individually
13
%
 
7
%
 
12
%
 
6
%
Total computing and consumer
57
%
 
42
%
 
58
%
 
39
%
 
 
 
 
 
 
 
 
Total
100
%
 
100
%
 
100
%
 
100
%


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Communications Segment
Revenues in our Communications segment decreased $7.5 million, or 9%, to $72.3 million in the quarter ended September 27, 2015 as compared to the quarter ended September 28, 2014. The decrease was primarily due to a $2.3 million decrease in shipments of our RapidIO switching solutions products as a result of lower demand combined with $4.5 million and $1.5 million decreases in networking and communications products and in legacy products, respectively.
Revenues in our Communications segment decreased $23.6 million, or 15%, to $137.2 million in the six months ended September 27, 2015 as compared to the six months ended September 28, 2014. The decrease was primarily due to a $14.5 million decrease in shipments of our RapidIO switching solutions products as a result of lower demand combined with $6.9 million and $3.6 million decreases in networking and communications products and in legacy products, respectively.
Computing and Consumer Segment
Revenues in our Computing and Consumer segment increased $39.9 million, or 70% to $97.2 million in the quarter ended September 27, 2015 as compared to the quarter ended September 28, 2014. The increase was primarily due to a $34.5 million increase in memory interface product revenues as a result of stronger demand combined with a $12.3 million increase in shipments of wireless power products as our wireless business continues to grow, offset in part by a $7.1 million decrease in timing products.
Revenues in our Computing and Consumer segment increased $90.6 million, or 88% to $193.2 million in the six months ended September 27, 2015 as compared to the six months ended September 28, 2014. The increase was primarily due to a $75.1 million increase in memory interface product revenues as a result of stronger demand combined with a $21.5 million increase in shipments of wireless power products as our wireless business continues to grow, offset in part by a $3.6 million decrease in timing products.
Revenues by Region
Revenues in the quarter ended September 27, 2015 increased primarily in APAC (Asia Pacific region excluding Japan) as compared to the quarter ended September 28, 2014. Revenues in APAC, the Americas, Japan and Europe accounted for 78%, 10%, 4% and 8%, respectively, of consolidated revenues in the quarter ended September 27, 2015 compared to 66%, 14%, 8% and 12% of our consolidated revenues in the quarter ended September 28, 2014. The APAC region continues to be our strongest region, as many of our largest customers utilize manufacturers in that region.
Revenues in the six months ended September 27, 2015 increased primarily in APAC (Asia Pacific region excluding Japan) as compared to the six months ended September 28, 2014. Revenues in APAC, the Americas, Japan and Europe accounted for 75%, 12%, 5% and 8%, respectively, of consolidated revenues in the six months ended September 27, 2015 compared to 65%, 14%, 8% and 13% of our consolidated revenues in the six months ended September 28, 2014. The APAC region continues to be our strongest region, as many of our largest customers utilize manufacturers in that region.

Gross Profit
 
Three Months Ended

Six Months Ended
 
September 27, 2015

September 28, 2014