Good afternoon, and welcome to M/A-COM Technology Solutions’ Fiscal First Quarter 2015 Financial Results Conference Call. At this time all participants are in a listen-only mode. At the conclusion of today’s conference call, instructions will be given for the question-and-answer session. As a reminder, this conference call is being recorded today, Monday, February 2, 2015. I’d now like to turn the call over to Leanne Sievers of Shelton Group, the Investor Relations agency for MACOM. Leanne, please go ahead.

Good afternoon, and welcome to MACOM Technology Solutions first quarter 2015 earnings conference call. I’m Leanne Sievers, Executive Vice President of Shelton Group, MACOM Investor Relations firm. With us today are MACOM’s President and Chief Executive Officer, John Croteau; and Senior Vice President and Chief Financial Officer, Bob McMullan. If you’ve not yet received a copy of the press release, you can obtain a copy on MACOM’s Web site at www.macom.com under the Investor Relations section. Before I turn the call over to Mr. Croteau, I’d like to remind our listeners that management’s prepared remarks and answers to your questions contain forward-looking statements which are subject to risks and uncertainties. Because actual results may differ materially from those discussed today MACOM claims the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and refers you to a more detailed discussion of risks and uncertainties that could result in those differences in MACOM’s filings with the Securities and Exchange Commission, including its Form 8-K and quarterly report on Form 10-Q filed today. Any projections as to the Company’s future performance represent management’s estimates as of today, February 2, 2015 and MACOM assumes no obligation to update these projections in the future. The Company’s press release and management’s statements during this conference call will include discussions of certain non-GAAP measures and financial information. These financial measures and a reconciliation of GAAP to non-GAAP results are provided in the Company’s press release and related current report on Form 8-K, which was filed with the SEC today and can be found at the Investor Relations section of MACOM’s Web site. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 30 days in the Investors Relations section of MACOM’s Web site. And now, I’d like turn the call over to MACOM’s President and CEO, John Croteau. John, please go ahead.

Thank you, Leanne. Welcome everyone and thanks for joining us today. I’ll begin today’s call with an overview of our first quarter results for fiscal 2015 and then turn the call over to Bob McMullan, our CFO, who will review our financial performance in further detail. I’ll then conclude today’s prepared comments by providing an overview of our execution during the quarter, followed by guidance for the fiscal second quarter of 2015. Straight to the results. Revenue for the first quarter was $114.9 million, which included $2.1 million of contribution from BinOptics during the two weeks stub quarter. Revenue excluding BinOptics would have been near the midpoint of our guidance. Non-GAAP gross margin was 53.7% with non-GAAP net income of 18.7 million or $0.38 earnings per diluted share. Similar to last quarter, non-GAAP gross margin and non-GAAP EPS benefited from a favorable mix in sales weighted towards higher margin products. During the quarter, similar to our peers, we saw broad based seasonal softness across many of our end markets. One notable exception was our 100G Optical business, which grew 35% sequentially excluding the contribution of BinOptics’ stub quarter. Demand in aerospace and defense was also up slightly. Multi market network saw a soft demand for our broad base of catalog products. Certain networks businesses notably wireless infrastructure were down due to what we believe was our customers’ year-end inventory management, specifically in Asia. Automotive was also down due to anticipated seasonality with Ford. Let me now turn it over to Bob to review our fiscal first quarter financials in further detail.

Thank you, John, and good afternoon, everyone. During the course of my comments, as well as those made by John, all income statement amounts and percentages will be discussed on a non-GAAP basis and are provided to enhance the understanding of our core operating performance. A reconciliation of each figure to the most comparable GAAP measure is included in today’s earnings press release. Revenue was $114.9 million representing a sequential increase of 0.5% compared to the reported revenues of $114.3 million in the prior quarter and an increase of 37.6% compared to $83.5 million in the fiscal first quarter of 2014. The last action of integrating our recent acquisitions was to harmonize the revenue recognition practices to be consistent across the Company. As is standard practice, this change in estimate is being implemented in our first fiscal quarter. Certain agreements with distribution customers provided for right to return and price protection until such time as the Company’s products are sold by distributors to their customers and until the quarter ended January 2, 2015 for some distributors we recognized revenues from sales under such agreements when the distributor resold the product -- to its end customers, the sell-through basis of revenue recognition. Over a period of eight months and during the first quarter ended 2015, we completed evaluation of revenue recognition methodologies relating to all distributors and concluded that it was more appropriate to recognize revenue on sales to distributors at the time of shipments to the distributor, the sell in basis of revenue recognition. Prior to the recent acquisitions, we had concluded that we had insufficient information as well as limited experience in estimating the effect of the right of distributors to return product and price protection and accordingly used the sell-through method of revenue recognition. We have recently concluded…

Thanks, Bob. I’d like to begin by providing an update on our recent acquisition of BinOptics. On December 15, 2014 we successfully completed the acquisition of BinOptics Corporation and kicked off integration. We remain laser focused on integrating the two teams in businesses, so far with no major surprises. This will be a transitional quarter for MACOM as we continue to rationalize the sales channel, scale manufacturing and consolidate management teams operations and forecast systems. After the announcements of our definitive agreement to acquire BinOptics, it became clear literally overnight that the strategic upside of the transaction would exceed our expectations. Having the right products at the right time to address a serious bottleneck and pain point in our customer’ supply chains in 2015, BinOptics has emerged as a potential catalyst for our networks business overall, vaulting MACOM to strategic vendor status in some of the largest telecommunications OEMs worldwide. Since closing the deal on December 15, we’ve been in discussions with strategic customers regarding expanded relationships and cross selling opportunities across all networks product lines. We expect to see meaningful benefits from those negotiations as early as our third fiscal quarter this year. At the same time, we remain cautious for the first quarter result combined operations with BinOptics as they transition from a privately owned, less mature hyper growth company to a more large scale operation within MACOM. We need to jump horses mid gallop in the midst of ramping capacity to harmonize MRP production systems, forecasting and general operations on SAP. We expect revenue growth for this new laser business to remain supply limited through the remainder of fiscal 2015. Moving on, behind-the-scenes we’ve made great strides in realizing the vision of our GaN strategy. As we described at our Analyst Day, last May, we believe that…

[Operator Instructions] And our first question comes from the line of Blayne Curtis with Barclays. Your line is now open. Please proceed with your question.

Hey, guys. Thanks for taking my question. Maybe just first John, you saw a big uptick in aerospace and defense in December. Was that what you were expecting and kind of what drove that? And then, when you look at going forward in your guidance for growth, obviously BinOptics layers in, but what other segments are you seeing a rebound after the seasonal adjustments?

Sure. Well on the A&D side, if you remember, that’s a business that tends to bounce around quarter-to-quarter and in many cases surprises us on the downside as well as upside. It tends to be lumpy because we’ve these radar programs and you will get a -- depending on the timing of -- in order they comes in for a particular radar deployment, they can exceed or miss expectations. So I think that bounce is within those normal conditions. The other part of your question was other than that...

As you look into March, obviously you get a full contribution from BinOptics. By segment are you seeing -- what other segments are you seeing up or down?

So the Ford business is going to come back very strong. It was something that we had been anticipating seasonal weakness with the F-150 platform transition last quarter. That is coming back next quarter. The other area is multi-market and then modest recovery on the network side, although continued growth on the 100 gig optical part of that.

Great. And then, just one following one for Bob, just on the change in sales recognition I think the Q said $15.1 million over several periods. How much of an impact does that have for you in December?

So the December impact is $15.1 million. And it’s a change of an estimate, because of the way we had to rework an estimate and get some historical trend information to be able to estimate potential returns and price adjustments. So that is a one-time change of estimate that goes through the P&L. The net $15 million disclosed is an amount that includes a portion less the reserve that was on the books -- the $70 million is on the books at the end of the fiscal 2014 period. And the additional amount to make $15 million is the current period addition. This is a one-time event that is no longer applicable. It's a GAAP transition, so all the disclosure around individual effect revolves around the necessary change and the required disclosure.

Okay. Thanks for that guys.

You’re welcome.

You’re welcome.

Our next question comes from the line of Harlan Sur with J.P. Morgan. Your line is now open. Please proceed with your question.

Good afternoon guys. Nice job on the quarterly execution. Just plainly what you guys baking into your revenue assumptions for the March quarter for BinOptics? I'm just trying to get a sense on how the underlying business is trending, if you could just give us some sense on the current gross margin profile for BinOptics as well?

Yes. So we don't -- as you know Harlan, we don’t disclose revenue by product line or business unit. Starting in the second fiscal quarter, they're fully integrated. If you look at the disclosures you can see the pro forma, trailing 12 months which was about [$50] [ph] million in revenue. So to the first approximation you can extrapolate that. The other thing I would say as I said in the prepared comments, we’re being a little cautious in these first quarters. We are ramping capacity for growth. Although they’ve only been integrated from an operational standpoint for about the past 30 days and we’re still within the production cycle one complete turn of production. So -- and the caution really comes from the fact that we’ve to transform a lot of their manufacturing systems frankly from things like using Excel for manufacturing controls over the professional [MRP] [ph] systems, have to get them on SAP and so on. So we want to be cautious especially what’s ahead of us this quarter so that we don’t get ahead of ourselves and disappoint.

Okay. Thanks for that. And then, Bob, we can probably back it out of the guidance, but given the three acquisitions and also the usage of the $100 million revolver, can you just give us a range for the OpEx that we should be expecting in the March quarter and the net interest expense you’re baking into the guidance from March as well?

Sure, can. So as you know interest expense will be reduced from the current level, because of the short repayment of debt in the period. But the interest drawn for the revolver was only three weeks in period of time. So if you were to look back to the previous quarter and when just the Term B was outstanding that would be represented above the range to expect going forward. When you look at the overall expense levels quarter-over-quarter we will see an increase in R&D and SG&A. But in line with sort of almost in line with what you saw last year, will have the full quarter from an R&D perspective and some SG&A for BinOptics, that is not fully reflected. So that’s showing an uptick in the R&D and operating expenses. And so from a range of where we were in Q1 to where we were in Q2, it's in the $1 million range plus or minus.

Okay. So up about a $1 million plus or minus?

Yes.

Okay, great. And then, just last question. Pre the closure of BinOptics, John, I think you said that this business was growing at 100% per year and that it could sustain 50% growth rates over the next few years. Post the closure and obviously after a more detailed scrubbing of their pipeline what's the confidence level around that 50% number?

Extremely high. What we had and again in the prepared comments, like I said that we’d end up supply limited through the rest of this year and frankly into next year. By that I mean, demand is such that our biggest problem frankly right now is harmonizing customer priorities. People are coming and looking for demand and looking to negotiate long-term supply agreements that are in excess, in some cases far in excess of our ability to deliver even with the aggressive capacity ramp. So certainly through the rest of this year, I would say every laser that we can produce will ship and doubling in six months and quadrupling in 12 months is -- you can get a sense of what that would produce. The one caution I’d say its six months from closing. So its six months from December and that’s when we would have that doubling in capacity and not the prior quarters. So where I would see the material jump in terms of the capacity expansion would actually be our fourth fiscal quarter. To some extent third, but especially the fourth and then 2016 off to the races.

Thanks, guys.

Welcome.

You’re welcome.

Our next question comes from the line of Quinn Bolton with Needham & Company. Your line is now open. Please proceed with your question.

Hey, John, it sounds like if you got customers on the BinOptics side looking to negotiate long-term supply agreements to you. You're probably not too worried about double ordering, but can you give us any sense about whether or not you think any of these forecasts you're seeing from customers given the supply constraints might be leading to any type of double ordering here for BinOptics over the next several quarters?

There is no question that there is posturing for unfair allocations for increased market share gains by the customer itself. That is a concern, it’s not a concern for the next two or three quarters, because there is such a gap between aspiration for allocation versus reality. Secondly, I’d suggest its pretty clear to the customers and to ourselves that on a go forward basis from a laser supplier standpoint, you got a couple of guys that are effectively decommitted to the area where we’re strategically committing and entering. So I’m confident that as we ramp capacity and ramping capacity also has a secondary benefit of COGS reduction that we will be able to be able to continue taking share, to be able to keep up with our available capacity. So it's definitely a latent concern. It’s something we’ve an explicit discussions with our customers about. We have a two tier customer model, and you have the system OEMs and then the optical modules guys sitting in between and we discuss explicitly with both which products, how much of which product is going to which OEM. So it’s definitely a complex and an interesting challenge.

I appreciate the detail. And just a couple of follow-up questions. Just in the prepared comments you mentioned sort of seeing some broad based weakness in the December quarter. It sounds like a lot of that might have been inventory, certainly your automotive business and I think you said networks might have seen inventory. As we pass the New Year, can you talk about whether you’re seeing better order trends post December 31st and then just lastly on the radar business at Analyst Day, you talked about a lot of the active radar programs that are sort of off in the future. Can you give us some sense for those? Do you think you see revenue kicking in this fiscal year whereas the MPAR and AESA radar really more in fiscal ’16 revenue driver? Thank you.

Sure. Let me address the second part of the question first, while it’s on top of my mind. So the MPAR program and derivatives thereof is moving from the advanced development phases with that we did in conjunction with MIT Lincoln Labs into commercial deployments for both defense as well as civil use. These are real programs. The customers are actively bidding and the government is awarding. So we are going to see material revenue from those in the form of an early production orders and additional field trials in our third and fourth fiscal quarter this year. That’s already cook into our growth plan. Perhaps it’s as early as the fourth fiscal quarter, but absolutely 2016 that will turn an additional inflection point in our growth trajectory as those programs turn on again for both defense as well as civil use -- civil program. So that’s going to turn into a very exciting thing as we get the latter part of this calendar year. On the former part of your question about where we are seeing order patterns and so on. There is no question that there was true seasonality in the fourth calendar quarter or first fiscal quarter. One of the things we didn't fully appreciate was we saw something that I’ve seen in my previous lifetimes which is end of the calendar year inventory stick handling among Asian OEMs in the network segment and also seasonal weakness that others have reported in the broad based RF microwave segment as well. And we’re told by number one distributor in that space where we’ve a number one line that our POS actually held a better than their corporate average, which was encouraging, because it's all relative. But nonetheless the order patterns has picked up and fully supporting the outlook that we communicated in the guidance. So I think I'll consider second quarter very nice progression and then third and fourth shaping up to be very solid quarters.

Great. Thank you.

You’re welcome.

Our next question comes from the line of Mark Lipacis with Jefferies. Your line is now open. Please proceed with your question

Thanks for taking my question. First one on BinOptics. Can you give us a sense of how high is the intellectual property or patent barrier you have on the Etched Facet laser technology? Is this something that somebody else could comment and duplicate or do you think the mode is kind of high here? And on the same topic of BinOptics, could you help us understand what is the opportunity for bundling like the lasers with the amps or the CDRs in order to get more -- try to get leverage on the opportunity?

Yes. So I should point out to Alex Behfar, CEO of BinOptics who is staying on, hopefully in perpetuity. I think Alex would say that he is. Actually has a background in IT Management at IBM, so he is extremely adept. He built a very professional mind field of 35 patents and more importantly a whole bunch of intellectual property in the form of trade secrets. So the more as you described it, it's extremely deep and extremely wide, not that others couldn't attempt to do it, but it took BinOptics I think 14 years to get to the point where they’re. Others might be able to do it in a fraction of the time, if they’re more better resourced. But even then you're talking about years, years away. So we feel its very unique position and for the foreseeable future they have got an unequivocal lead and I should also point out they were in lean as a privately held company, venture capital funded. We are increasing the commitment to R&D to be able to distance their IP position, be able to drive the cost structure, to be able to support the economics as they move into data centers. I can’t remember if the last time we spoke, I got in a comment, but we had a major mega Chinese OEM that the VP of Global Procurement mentioned, unit demand in data centers, they expect will be 100 times, two orders of magnitude bigger than current demand in access. So I wouldn't pretend that the economics remain the same. So we want to make sure we get out in front a little while of aggressive innovation in the form of cost reduction to be able to support that as well as to be able to support very nice gross margin model on the business in perpetuity. In terms of your question about the bundling, I made the comments in prepared remarks about literally overnight what happened was after we announced the definitive agreement, while we're sleeping here while in the middle of business over in China, we had all the major OEMs and ODMs calling looking for executive meetings to open the dialogue and them proposing bundling. That's bundling indeed the CDRs and laser drivers and TIAs in the -- that application, but in the case the system OEMs they’re talking about broader agreements where we are negotiating greater share and things like wireless backhaul for that matter. GaN replacement [indiscernible] and 4G LTE base stations, and that’s the reason why I said a catalyst for our networks business overall. So it's, I mean, BinOptics is shaping up to be a goldmine.

Very helpful. Thanks. A follow-up if I may on the 100 gig optical components were up 35% sequentially. Is it fair to assume that that has nothing to do with BinOptics and can you give us a sense of the size of that business? Thank you.

Yes, I got to be careful. Again, our policy is not to break down our business quantitatively by product line. But it is absolutely getting to the material that maybe our largest in our networks business relative to what was previously cable and wireless infrastructure. So it’s not immaterial. And as you can imagine 35% growth is substantial. And actually I forget the first …

Exclusive [Indiscernible].

Oh yes, that had absolutely zero impact from BinOptics when they only came in the mid quarter or at the -- towards the end of the quarter and certainly no ability to negotiate bundles whatsoever. So, I mean, the way I put it is the business we had in 100 gig optical that even preceded Mindspeed is flying off to the races. Mindspeed accelerated that. They were succeeding. They met all of their growth targets coming into the company from a year-ago and now the BinOptics just puts it in to over drive. So everything standalone is pulling its own way, everything together looks even better.

Great. Thank you very much.

You're welcome.

Our next question comes from the line of Steven Smigie with Raymond James. Your line is now open. Please proceed with your question.

Great. Thanks a lot. I was hoping you guys could comment a little bit more on the Mindspeed business standalone. I think data center has been pretty strong. I was hoping you could provide more detailed CDR, is keeping up with the general trend?

Sure. So the high-performance analog the HPA team, that business unit which was previously known as Mindspeed, the artist previously known as Mindspeed delivered on their plan coming in I think was 13% growth year-on-year. The difference was the mix was more favorable. They had come in with a plan for some relatively consumer-ish type products. That demand did not materialize, but was instead replaced with upside and on the enterprise side. They’ve gotten a lot more traction quicker than what they anticipated across both data centers as well as the more [ph] broadcast video. They’ve got a great product position or lead position in that segment. So it's like looking all that. Did that answer the question?

Yes. And across -- on the legacy components business, is that primarily just used as cash cow at this point or what’s the total [ph] in that business?

Yes, so our base business we’ve got a great slide in our investor deck I’m referring to, which is a stacked bar chart that shows the breakout of our business over the past two years revenue by gross margin. We went from about 50% to about a third of our business now is the sub 50% business grew slightly. That’s really the old legacy stuff. It’s great cash cow business, it's something we don't want to see deteriorate. In fact, taking incremental share is great drop through. So that is absolutely cash cow. At the same time, a lot of our investments over the recent years and going forward are going to be refreshing our catalog. They’re refreshing our catalog and we’re building a new business built on top of that at the 70% gross margin level. That tends to take long time for instance. So it’s really a time to mention [indiscernible] I guess the way to put it.

Okay. If I could just slip one more quick one in. As you bring GaN-on-Silicon into the base station, can you talk about your dollar content opportunity there?

Yes. Well, it’s difficult. It depends upon the architecture of the PA and the system. So I -- this way I try to answer the question in spirit is it’s an $800 million market. The two primary players are NXP and Freescale. Infineon is a distant third. It’s probably 40, 45, 45, 10 in terms of market share. And you could argue about whether the macro [ph] installed base station is growing or declining in the future. It depends upon what crystal ball you want to look at. But 100% of that is actually a target for displacement with the GaN-on-Silicon. So for us it’s a big fat juicy target.

Okay. Thank you.

You’re welcome.

Our next question comes from the line of Tore Svanberg with Stifel. Your line is now open. Please proceed with your question.

Yes, thank you. So the first question is on gross margin. Gross margin was up about 700 basis points year-over-year. It looks like its going to take a little bit of breathe here because of the mix, maybe the automotive contribution taking a down little bit. But as we look beyond the March quarter, should we continue to expect pretty steady gross margin expansion over the quarter?

Yes, absolutely. What you're going to see is a lot of growth kicking in the second half of the year realizing our growth plans for the year. And these are relatively soft quarters, the first and second quarter. That growth that will be kicking in has very heavily skewed towards the high margin part of the portfolio of the products. So our usual mix story is there. The other thing that I will be interested to see how it materialize is as we increase capacity on the BinOptics portfolio, there is a lot of juice in there for gross margin improvement, because if you double your capacity of existing in terms of improving yields, it’s a direct COGS reduction or gross margin improvement. So I think we’ve got a pretty healthy roadmap especially depending on what the trajectory you assume to be for the BinOptics business that could be a real lift in terms of the gross margin through the second half of the year and into 2016.

Very good. And John, if I look at the optical revenue, it’s obviously becoming a bigger percentage of your revenue. And I suspect the moment there last year was primarily 100 gig in long haul. But as we look at calendar ’15, should we start to think about some other applications and markets contributing to the momentum there? I’m thinking maybe 100 gig penetrating the metro, obviously coherent continuing its momentum. Anything we can point to there to, to model that continuous momentum in optical?

Yes. So, I’d say first of all, data center is going to be a key driver in terms of growth. If you look at the BinOptics revenue, a lot of the growth last year and a lot of the growth this year will actually be fiber backhaul after a mobile infrastructure, all layering on top of the business of the day and the HPA guys have in access to Fiber-to-the Home. So that was a growth driver, but then it starts transitioning over to data center and that's where the upside really gets interesting. Not to think growth isn’t nice even before that. But the other number that I share is how optical business of all forms, all frequencies, all segments is approaching 30% of revenues. I think last quarter its 28% by calculation. So it's a material part of our business now and you can see -- you will be able to see that growth really materialize. So the growth on 30% is going to be a real kicker.

Just one last question, I know you haven't talked too much about your cable business, the last two years for obvious reasons, but there is an upgrade cycle coming in pretty soon which is DOCSIS 3.1. I'm just wondering if we should start to think about at infrastructure build out being a good growth opportunity for the cable business sometime soon.

So in terms of top line, both appears a growth business because it’s offsetting decline in set-top box consistent with the de-emphasis and low margin parts of our business. We did not follow the DOCSIS 3.1 set-top box requirements. That tends to be one of the drags on our gross margin historically and all of the investment emphasis went over to infrastructure. So DOCSIS 3.1 power amps and so on and line amps. So yes, there is growth in that part. But to offset at the top level, so our plan for cable is actually relatively flat. The material benefit will be a mix shift from low margin to high margin. So it will be -- that will be a -- still a driver in EPS in operating margins.

Very helpful. Thank you, John.

You’re welcome.

Thank you. Our next question comes from the line of Mark Delaney with Goldman Sachs. Your line is now open. Please proceed with your question.

Yes, good afternoon, and thanks very much for taking the questions. I had a -- two clarification questions around BinOptics. First, when you talk about the production of BinOptics doubling in the -- roughly six months, maybe you just help us beyond that, how long it takes from production until you can start to generate revenue off of that increased capacity?

It’s instant. So as soon as you build, we can ship every product that we produce at least through this fiscal year. So the -- when we say doubling in six months, that is through yield improvements and debottlenecking the factory in [indiscernible] New York and some minor capital investment. So that will -- starting in six months be that step function. It’s difficult within the first three months and then the second thing that was operating in parallel is we’re replicating the production line Lowell in our factory in Massachusetts and that opens up a much broader capability for capacity. When we say doubling yet again, reality is we could probably increase it ten-fold and not run into any equipment issues.

Okay. That’s helpful. And then, for a second follow-up around BinOptics, you mentioned about 30% of sales now are coming from optical. Is that including the contribution from lasers or is that just the analog part?

Yes. That would be including lasers, including the Mindspeed contribution and the stuff that has -- that preexisted, Mindspeed, the 100 gig long haul moving to metro growth, which is now a very substantial piece of that as well.

Okay. That’s helpful. And then, I also wanted to just ask around the OpEx profile of the Company and capital requirements. I know you guys touched on this a little bit, but capacity doubles or quadruples at BinOptics, should we be thinking about some curious step function increase in either OpEx or are there any kinks we need to have in mind as we go forward or around the capital investment line is there any larger discrete capital investments you might need to make for example if you wanted to ramp up capacity at the low fab?

Mark, not that would be noticeable, because the additional depreciation cost for the new equipment when it comes on line, goes through cost of sales, and so that that is part of the cost of the incremental revenue. So that's all you will see increasing costs, but you will also see our margins in the range it [indiscernible]. So it’s not going to be a dilution effect of the increased expense. The other side of the coin is that we’ve some compatible equipment that is in place Lowell already. And so we can further utilize the equipment that we have, that generally will do the opposite in fact it will -- while it's not material overall to our overall P&L. It will improve the utilization we’ve of our fixed cost inside the fab.

That's helpful. And then, just a last question from me around the tax rate. I know it's coming down this fiscal year, I mean, is that already baking into full benefit from BinOptics or can we think about other ways for the tax rate to come down, maybe even beyond fiscal ’15, into fiscal ’16?

It's possible to go down and that will -- that is dependent upon the shift of the revenue. So more of the pure revenue that can be sourced externally actually outside of the USA can fall into our international tax gain that is focused on generating revenues in low or no -- low tax or no tax environments. I think there is room, but this drop this year from 23% to 18% as a result of our execution utilization of the Mindspeed NOLs to take what’s formally domestic subsidiary or domestic revenue and transfer to our international tax organization. And that's stepping down the overall tax rate, because it's had a lower rate.

Understood. Thank you very much.

Welcome.

You’re welcome. End of Q&A

Thank you. And with no further questions in the queue, I’ll like to turn the call over to John Croteau for any closing remarks.

Very good. Thank you, operator. Before closing out today’s call, please note that Bob and I will be on the road for the next three days in a number of the major financial centers in support of the primary offering that we announced today. Kindly direct any meeting and schedule inquiries to your Goldman Sachs sales representatives. Additionally, on February 10, Bob and I will be attending the Stifel conference in San Francisco. Thank you all for joining today's call. And I look forward to reporting our second quarter fiscal results and progress in the coming months. Operator, you may now disconnect the call.