Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically 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 (§ 232.405 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 x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of Common Stock held by non-affiliates of the registrant (based upon the closing sale price per share of Common Stock on the NASDAQ Global Select Market on June 30, 2014) was $99,393,782. Shares held by each executive officer, director and by each person that owns 10% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, as of January 31, 2015 was 24,303,267.

This Transition Report on Form 10-K (“Transition Report”) contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they prove incorrect or never materialize, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The forward-looking statements are contained principally in Item 1—“Business,” Item 1A—“Risk Factors” and Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but may also appear in other areas of this Transition Report. Such forward-looking statements include any expectation of earnings, revenues or other financial items; any statements regarding the use of working capital, anticipated growth strategies and the development of and applications for new technology; factors that may affect our operating results; statements concerning our customers and diversification of our products or customer base; statements concerning new products or services; statements related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. These statements are often identified by the use of words such as “anticipate,” “believe,” “should,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” or “plan,” and similar expressions or variations. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed under Part I, Item 1.A. “Risk Factors” in this Transition Report, and such forward looking statements are qualified in their entirety by reference to such risk factors. Furthermore, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. New factors emerge from time to time, and their emergence is impossible for us to predict. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

On August 4, 2014, our Board of Directors approved a change in our fiscal year end from September 30 to December 31. As a result of this change, we are filing this Transition Report on Form 10-K for the three-month transition period ended December 31, 2014. References to any of our fiscal years mean the fiscal year ending September 30 of that calendar year.

We are one of the world’s largest producers of flexible printed circuits and flexible circuit assemblies. With facilities in Irvine, California; Suzhou, China; Korea; Taiwan; and Singapore, we offer a global service and support base for the sale, design and manufacture of flexible interconnect solutions.

We are a global provider of high-quality, technologically advanced flexible printed circuits and value-added component assembly solutions to the electronics industry. We believe that we are one of a limited number of manufacturers that provide a seamless, integrated flexible printed circuit and assembly solution from design and application engineering and prototyping through high-volume fabrication, component assembly and testing. We currently target our solutions within the electronics market and, in particular, our solutions enable our customers to achieve a desired size, shape, weight or functionality of the device. Current examples of applications for our products include smartphones, tablets, computer/data storage, portable bar code scanners, personal computers, wearables and other consumer electronic devices. We provide our solutions to original equipment manufacturers (“OEMs”) such as Apple, Inc. and to electronic manufacturing services (“EMS”) providers such as Foxconn Electronics, Inc., Protek (Shanghai) Limited and Flextronics International Ltd. Our business model, and the way we approach the markets which we serve, is based on value added engineering and providing technology solutions to our customers facilitating the miniaturization of portable electronics. We currently rely on a core mobility end-market for nearly all of our revenue. We believe this dynamic market offers fewer, but larger, opportunities than other electronic markets do, and changes in market leadership can occur with little to no warning. Through early supplier involvement with customers, we look to assist in the development of new designs and processes for the manufacturing of their products and, through value added component assembly of components on flex, we seek to provide a higher level of product within their supply chain structure. This approach may or may not always fit with the operating practices of all OEMs. Our ability to add to our customer base may have a direct impact on the relative percentage of each customer’s revenue to total revenues during any reporting period.

We are party to several contracts with our customers. These contracts generally provide that we will manufacture products for the customers against purchase orders delivered by the customers or their subcontractors. The contracts provide for no minimum purchase obligations, but do generally contain terms regarding timing of payment, product delivery, product quality controls, confidentiality, ownership of intellectual property and indemnification. Additional terms may also be included in specific purchase orders. Some of these contracts also contain provisions that require us to pay substantial damages if we fail to perform our obligations under the contracts.

We typically have numerous programs in production at any particular time, the life cycle for which is typically around one year. The programs’ prices are subject to intense negotiation and are determined on a program by program basis, dependent on a wide variety of factors, including without limitation, competitor pricing, expected volumes, assumed yields, material costs, and the amount of third party components within the program. Our profitability is dependent upon how we perform against our targets and the assumptions on which we base our prices for each particular program. In addition, the price on a particular program typically decreases as the program matures. Our volumes, margins and yields also vary from program to program and, given various factors and assumptions on which we base our prices, are not necessarily indicative of our profitability. In fact, some lower-priced programs have higher margins while other higher-priced programs have lower margins. Given that the programs in production vary from period to period and the pricing and margins between programs vary widely, volumes, while important for overhead absorption, are not necessarily indicative of our performance. For example, we could experience an increase in volumes for a particular program during a particular period, but depending on that program’s margins and yields and the other programs in production during that period, those higher volumes may or may not result in an increase in overall profitability. In the mobility market, the first few months of production are the most critical in terms of growth and profitability opportunities.

Our historical growth has been due, in part, to our early supplier involvement allowing our engineers to gain an understanding of the application and use of the customers’ circuits. This knowledge allows our engineers to utilize their expertise in flex circuit design and assist in the selection of materials and technologies to provide a high quality and cost effective product. Vertically integrated flex circuit manufacturing, assembly and tooling operations have allowed us to offer superior lead time support to facilitate customer requirements. We believe the early involvement and knowledge of the specific customer flexible assemblies and designs of these assemblies allows us to ramp production at a very fast pace, creating a competitive advantage. The speed and certainty of the production ramp is critical to our customers who view time to market as a key success factor.

We were incorporated as Multi-Fineline Electronix, Inc. in California in October 1984. In connection with our initial public offering, we reincorporated as Multi-Fineline Electronix, Inc. in Delaware on June 4, 2004. References in this Transition Report to “we,” “our,” “us,” the “Company” and “MFLEX” refer to Multi-Fineline Electronix, Inc. and our consolidated subsidiaries: three located in the People’s Republic of China: MFLEX Suzhou Co., Ltd. (“MFC”), formerly known as Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd. (“MFC2”) and into which Multi-Fineline Electronix (Suzhou) Co., Ltd (“MFC1” which we are in the process of de-registering) was merged in fiscal 2010, and MFLEX Chengdu Co., Ltd. (“MFLEX Chengdu”); one located in the Cayman Islands: M-Flex Cayman Islands, Inc. (“MFCI”); one located in Singapore: Multi-Fineline Electronix Singapore Pte. Ltd. (“MFLEX Singapore”); one located in Malaysia: Multi-Fineline Electronix Malaysia Sdn. Bhd. (“MFM”); one located in Arizona: Aurora Optical, Inc. (“Aurora Optical”), which was dissolved in September 2012; one located in Cambridge, England: MFLEX UK Limited (“MFE”); one located in Korea: MFLEX Korea, Ltd. (“MKR”); and one located in the Netherlands: MFLEX B.V. (“MNE”); except where it is made clear that the term means only the parent company.

We believe that the global market for flexible printed circuits (“FPCs”) will continue to grow over the coming years as consumers continue to demand smaller, more functional, portable devices. Given their inherent design and cost advantages, flexible printed circuits will remain a favored solution for electronics OEMs that strive to increase the features and functionality of electronic devices while optimizing the size, shape and weight of such devices.

Historically, electronics manufacturers have relied upon rigid printed circuit boards (“PCBs”) to provide the electrical interconnections between the components in electronics devices. A PCB consists of an array of copper wires sandwiched between layers of fiberglass that then has multiple microprocessors, transistors and other components attached to its surface. Much like PCBs, a flexible printed circuit assembly (“FPCA”) is a similarly-produced array of copper wires with the same types of components mounted to its surface. However, FPCAs contain thinner, more flexible and lighter, polymer-based materials in place of the bulkier fiberglass, epoxy-based material in a PCB.

PCBs are inherently thick and cannot bend or twist and they are relatively heavy. In contrast, a thinner, lighter FPC can bend, fold over itself and twist to better fit microprocessors and other electrical components such as connectors, switches, resistors, capacitors and light-emitting devices into smaller, non-linear spaces. In the past, FPC technologies and material sets were reserved for specialty uses, as they were difficult and costly to produce. Today, they are used in devices where size and form factor are important considerations, such as smartphones and tablets.

Having found innovative ways to produce a wide range of FPCs in mass volumes at increasingly affordable prices, companies began offering consumer electronics manufacturers new FPC and FPCA based materials and technologies that enabled design engineers to innovate interconnect and packaging solutions for increasingly portable and stylish electronic devices.

In addition to these functional advantages, we provide engineering and manufacturing support for assembling components onto flexible circuits to enable OEMs to design and construct modular components that can be incorporated into the final product. The integration of the circuit fabrication and component assembly “under one roof” reduces the complexity of the assembly of the final product, simplifies the supply chain for procuring FPCAs and reduces the overall manufacturing costs to produce a device.

Looking forward, we believe that the overall market for FPCs and FPCAs is poised for substantial growth over the next several years as a result of favorable technological and market developments, including:

We are a leading global provider of high-quality, technologically advanced flexible printed circuit and component assembly solutions to the electronics industry. We believe the competitive strengths that differentiate us from other contract manufacturers that might compete with us include:

Our objective is to continue to expand our customer base and product offerings by using our core technologies of high-quality, technologically advanced flexible printed circuits and assemblies. In order to maintain an optimum profitability, we strive to utilize our capacity with the most attractive customer orders available to us. To achieve our objective, we intend to continue our pursuit of the following strategies:

Our design and application engineering expertise enables us to offer flexible printed circuit and value-added component assembly and module assembly solutions for a wide range of electronic applications. We offer products in a broad range of sectors, including smartphones, tablets, computer/data storage, portable bar code scanners, personal computers, wearables and other consumer electronic devices.

Flexible Printed Circuits. Flexible printed circuits, which consist of copper conductive patterns that have been etched or printed while affixed to flexible substrate materials such as polyimide or polyester, are used to provide connections between electronic components and as a substrate to support these electronic devices. The circuits are manufactured by subjecting the base materials to multiple processes, such as drilling, screening, photo imaging, etching, plating and finishing. We produce a wide range of flexible printed circuits, including single-sided, double-sided multi-layer (with and without gaps between layers) and rigid-flex. Single-sided flexible printed circuits, which have an etched conductive pattern on one side of the substrate, are normally less costly and more flexible than double-sided flexible printed circuits because their construction consists of a single patterned conductor layer. Double-sided flexible printed circuits, which have conductive patterns or materials on both sides of the substrate that are interconnected by a drilled and copper-plated hole, can provide either more functionality than a single-sided flexible printed circuit by containing conductive patterns on both sides, or greater shielding of components against electromagnetic interference than a single-sided flexible printed circuit by covering one side of the circuit with a shielding material rather than a circuit pattern. Multi-layer and rigid-flex printed circuits, which consist of layers of circuitry that are stacked and then laminated, are used where the complexity of the design demands multiple layers of flexible printed circuitry. If some of the layers of circuitry are rigid printed circuit material, the product is known as a rigid-flex printed circuit. Gapped flexible printed circuits, which consist of layers of circuitry that are stacked and separated in some parts of the circuit, and laminated in other parts of the circuit, are used where the complexity of the design demands multiple layers of flexible printed circuitry but the flexibility of a single-sided flexible printed circuit in some parts of the circuit.

Flexible Printed Circuit Assemblies. Flexible printed circuits can be enhanced by attaching electronic components, such as connectors, switches, resistors, capacitors, light emitting devices, integrated circuits, cameras, optical sensors and other microelectronic mechanical sensor (“MEMS”) devices to the circuit. The reliability of flexible printed circuit component assemblies is dependent upon proper assembly design and the use of appropriate fixtures. Connector selection is also important in determining the signal integrity of the overall assembly, a factor which is very important to devices that rely upon high system speed to function properly. We are one of the pioneers in attaching connectors and components to flexible printed circuits and have developed the expertise and technology to mount a full range of electronic devices, from ordinary passive components to advanced and sophisticated surface mount components.

Mechanical Integration of Flexible Printed Circuit Assemblies. Three dimensional packaging solutions for smartphones, tablets and other consumer electronic devices can be enhanced by integrating mechanical components (metal and plastic chassis using mechanical joining techniques compared to electronic assembly) onto flexible printed circuit assemblies.

Our customers include leading OEMs and EMS providers in a variety of sectors of the electronics industry. These sectors include smartphones, tablets, computer/data storage, portable bar code scanners, personal computers, wearables and other consumer electronic devices, and are primarily in what we refer to as the mobility market. Our expertise in flexible printed circuit design and component assembly enables us to assist our customers in resolving their design challenges through our design and assembly techniques, which can enhance the likelihood of us becoming the main provider for flexible printed circuits and component assembly included in that product. Achieving status as a main provider to an OEM for a high-volume program can enable us to build strong customer relationships with respect to existing products and any future product that requires the use of flexible printed circuits and component assemblies.

We sell our products by first working with OEMs in the design of their programs. Assuming we get a “design win,” the OEM then informs us of the percentage of the program it intends to buy from us (our “allocation”), and instructs the EMS providers to purchase products from us based on this allocation to be incorporated into the OEM’s program. We then “tool-up” (design or buy equipment, materials and components) for the program based on a forecast from the OEM, and build the product based the OEM’s forecast. Once the product is built, we typically ship it to hubs, where the EMS companies then pull the product when they need it to build for the OEM. Our relationships with EMS providers normally are directed by the OEMs. Therefore, it is typically the OEMs that negotiate product pricing and volumes directly with us, even though the purchase orders come from the EMS providers. Our obligation is typically to keep a certain amount of product, based on the OEM’s forecast, in the hub.

Although our product is built to the OEMs’ specifications and quality requirements, the EMS companies actually determine when to pull our product from the hubs, and also determine whether to pull our product, or the product of one of our competitors. If the EMS provider decides not to pull our product, which could happen for any number of reasons, including a change by the EMS provider in the quality criteria of the product, we could be left with excess or obsolete inventory in the hubs. Some examples of EMS providers we sell to include Foxconn Electronics, Inc., Protek (Shanghai) Limited and Flextronics International Ltd.

For the past several years, a substantial portion of our net sales has been derived from products that are incorporated into products manufactured by or on behalf of a limited number of key customers and their subcontractors. For the three months ended December 31, 2014 and 2013, approximately 93% and 89%of our net sales were to three customers in the aggregate, respectively. For the fiscal year ended September 30, 2014, approximately 83% of our net sales were to three customers in the aggregate. In addition,

approximately 76% and 71% of our net sales were to Apple, Inc., inclusive of net sales made to its designated subcontractors, 0% and 1% of our net sales were to BlackBerry Limited, inclusive of net sales made to its designated subcontractors, and 12% and 10% of our net sales were to Beijing Xiaomi Technology Co., Ltd., inclusive of net sales made to its designated subcontractors, in each of the three months ended December 31, 2014 and 2013, respectively. Furthermore, approximately 57%, 75% and 74% of our net sales were to Apple, Inc., inclusive of net sales made to its designated subcontractors, 1%, 11% and 15% of our net sales were to BlackBerry Limited, inclusive of net sales made to its designated subcontractors, and 17%, 3% and 4% of our net sales were to Beijing Xiaomi Technology Co., Ltd., inclusive of net sales made to its designated subcontractors, in each of the fiscal years ended September 30, 2014, 2013 and 2012, respectively.

Our results are highly dependent upon the success of our customers in the marketplace and our success in maintaining or growing our market share with them and new customers. Refer to Item 1A, “Risk Factors,” and in particular, the “Risks Related to Our Business” for more information about our reliance on our customers.

Our net sales fluctuate from quarter to quarter as a result of changes in demand for our products from our customer base. Over recent years, we have experienced a strong September through December quarter, followed by reduced net sales in the first calendar quarter, as a result of partial seasonality of our major customers and the markets that we serve. This pattern may change depending upon market reception and sales volumes for any large OEM program, as at any given time, one OEM program can represent a significant part of our sales within a particular quarter. Our major customers provide consumer-related products that historically have experienced their highest sales activity during the calendar year-end holiday season. As a result, we typically experience a decline in our second fiscal quarter sales as the holiday period ends. Our net sales and operating results have fluctuated significantly from period-to-period in the past and are likely to do so in the future.

Our facilities enable us to manufacture products for shipment anywhere in the world. Information regarding net sales by geographic area is summarized below:

During the three months ended December 31, 2014, the shift in the net sales by geographic area was primarily due to a change in the billing location of one of our large customers.

We sell our products primarily through our global sales and program management organizations who meet regularly with our customers and potential customers. The program management organizations provide electronic packaging solutions related to our products and enabling technologies that create customer differentiation and market advantage. Our market and product teams have successfully expanded our market penetration in each sector of the electronics industry that we targeted by leveraging our design and application engineers within each of these teams. We then design and manufacture our products to agreed-upon customer specifications.

Throughout 2014, we engaged the services of non-exclusive sales representatives located throughout North America and Asia to provide customer contacts and market our products directly to our global customer base. We rely on these sales representatives to create, build and maintain our customer relationships.

As of December 31, 2014, our backlog, which constitutes customer orders placed with us but that have not yet shipped, was $200.6 million, which we expect to ship within the next 12 months. We cannot guarantee that our customers will not cancel any or all of the orders in our backlog and, in addition, our current backlog is not indicative of our future operating results.

We are a global provider of single, double-sided, multi-layer and air-gapped flexible and rigid-flex printed circuit and component assemblies. We use proprietary processes and chemical recipes, which coupled with our innovative application

engineering, design expertise and manufacturing experience, enables us to deliver high-unit volumes of complex flexible printed circuits and component assemblies at cost-effective yields.

Design Technology. The flexible printed circuits we manufacture are designed specifically for each application, frequently requiring significant joint design activities with the customer at the start of a project. We have developed design methodologies that solve difficult interconnection problems and save our customers time and money. We design and mass produce flexible printed circuits that range from single-sided circuits to more complex double-sided and multi-layer (with and without gaps between layers). We continually are investing in and improving our computer-based design tools to more quickly design new flexible printed circuits, enhance cooperative design and communication with our customers and more closely integrate design and application engineering to our prototyping and manufacturing process.

Circuit Fabrication Technology. We have extensive experience producing fine-line flexible printed circuits and have developed manufacturing processes that are designed to deliver high-unit volumes at cost-effective yields. In the flexible printed circuit industry, fine-line flexible printed circuits are easier to construct as the thickness of the copper decreases. However, as the thickness of the copper or insulation layers decrease, the cost of fabrication increases. We have developed a manufacturing process to plate in selective regions of the circuitry pattern, such as around the holes used to connect the two sides of a flexible printed circuit. In addition, the normal manufacturing technology, by itself, has been improved with new equipment which enables thicker, less expensive copper to be etched down precisely enough to form fine-line circuitry. A portion of the new equipment includes roll-to-roll capabilities that allow the handling of materials in a continuous web. The combination of these processes allows us to achieve finer patterns without a substantial increase in costs and with generally acceptable yields. We continually invest in computerization and automation of our circuit fabrication technology to enhance our performance and better track production costs, product yields and process times.

In addition to fine-line techniques, we have developed a proprietary process using lasers to drill very small diameter holes, known as micro-vias, for the connection of circuits on the reverse side of the substrate. The combination of multi-layer flexible circuits with fine-lines and micro-vias are part of the new High-Density Interconnect (“HDI”) technology that is one of our competitive strengths.

Component Assembly and Test Technology. Our component assembly and test technology involve the arrangement of the circuits on a panel to minimize material waste and facilitate requirements for component assembly, such as placing tooling holes, optical locators for vision-based machines, test points and pre-cut zones to allow part removal without compromising the integrity of the components. We assemble passive electrical and various mechanical components, including capacitors, resistors, integrated circuits, connectors, diodes and other devices to flexible printed circuits. We also perform advanced assembly of integrated circuit devices, as well as the functional testing of these flexible printed circuit component assemblies. Assembling these components directly onto the flexible printed circuit may enhance performance and reduce space, weight and cost. We continually invest in computerization and automation of our component assembly and test technology to enhance our performance and better track production costs, product yields and process times.

Our success will depend in part on our ability to protect our intellectual property. Our intellectual property relates to proprietary processes and know-how covering methods of designing and manufacturing flexible printed circuits, attaching components, process technology for circuit manufacturing, and embedded magnetics. We regularly require our employees to enter into confidentiality agreements and assignment of invention agreements to protect our intellectual property. In addition, we consider filing patents on our inventions that are significant to our business, although none of our existing patents or patent applications pertain to inventions that are significant to our current business. We also pursue trademarks where applicable and appropriate.

In the future, we may encounter disputes over rights and obligations concerning intellectual property and we cannot provide assurance that we will prevail in any such intellectual property dispute.

Generally we do not maintain a large surplus stock of raw materials or components for our products because the specific assemblies are uniquely applicable to the products we produce for our customers; therefore, we rely on third-party suppliers to provide these raw materials and components in a timely fashion and on commercially reasonable terms. We purchase raw circuit materials, process chemicals and various components from a limited number of outside sources. For components, we normally make short-term purchasing commitments to key suppliers for specific customer programs. These commitments are usually made for three to 12-month periods. These suppliers agree to cooperate with us in engineering activities, as required, and in some cases maintain a local inventory to provide shorter lead times and reduced inventory levels for us. In most cases, suppliers are approved and often dictated by our customers. For process chemicals, certain copper and polyimide laminate materials and certain specialty chemicals used in our manufacturing process, we rely on a limited number of key suppliers. Alternate chemical products are available from other sources, but process chemical changes often require approval by our customers and requalification of the processes, which could take weeks or months to complete. We seek to mitigate these risks by identifying stable companies with leading technology and delivery capabilities and by attempting to qualify at least two suppliers for all critical raw materials and components.

We, or our customers, may not be able to obtain the components or flex materials that are required for our customers’ programs, which in turn could forestall, delay, or halt our production or our customers’ programs. We expect that delays may occur in future periods for a variety of reasons, including, but not limited to, natural disasters and the effect of conflict minerals regulations and customer requirements. Furthermore, the supply of certain precious metals required for our products is limited, and our suppliers could lose their export or import licenses on materials we require, any of which could limit or halt our ability to manufacture our products. We may not be successful in managing any shortage of raw materials or components that we may experience in the future, which could adversely affect our relationships with our customers and result in a decrease in our net sales. Component shortages could also increase our cost of goods sold because we may be required to pay higher prices for components in short supply. In addition, suppliers could go out of business, discontinue the supply of key materials, or consider us too small of a customer to sell to directly, and could require us to buy through distributors, increasing the cost of such components to us. There are certain chemical materials used in our processes that are under review by regulatory authorities of various countries for their use in the fabrication processes for FPCs or FPCAs. If such materials are banned, or if we are prohibited from importing such materials into the countries in which we operate, we will be forced to find alternatives, which may or may not exist, or may not be acceptable for use by our customers.

Furthermore, we are increasingly being required to purchase materials and components before our customers are contractually committed to an order. Refer to the risk factor entitled “Our customers have in the past and likely will continue to cancel their orders, change production quantities, delay production or qualify additional vendors, any of which could reduce our net sales, increase our expenses and/or cause us to write down inventory” in Item 1A, “Risk Factors” for more information.

The flexible printed circuit market is extremely competitive, with a variety of large and small companies offering design and manufacturing services. The flexible printed circuit market is differentiated by customers, applications and geography, with each niche requiring specific combinations of complex packaging and interconnection. We believe that our ability to offer an integrated, end-to-end flexible printed circuit solution has enabled us to compete favorably with respect to design capabilities; product performance, reliability and consistency; customer and application support; and resources, equipment and expertise in component assembly and integration of mechanical components including MEMS devices on flexible printed circuits.

We compete on a global level with a number of leading Asian providers, such as Nippon Mektron Ltd., Flextronics International Ltd., Interflex Co. Ltd., Zhen Ding Technology Holding Ltd., HI-P (Shanghai) Technology Co. Ltd., Career Technology (MFG) Co. Ltd., Flexium Interconnect, Inc., Sumitomo Electric Industries Ltd., and Fujikura Ltd. We expect others to enter the market in the Asian region because of government subsidies and lower labor rates available there.

We believe that our technology leadership and capabilities in designing and manufacturing flexible printed circuits component assemblies and module assemblies have enabled us to build strong partnerships and customer relationships with many companies. We also believe that customers typically rely upon a limited number of vendors’ designs for the life of specific applications and, to the extent possible, subsequent generations of similar applications. Accordingly, it is difficult to achieve significant sales to a particular customer for any application once a different vendor has been selected to design and manufacture a specific flexible printed circuit. Any expansion of existing products or services could expose us to new competition. In addition, our competitors may devote significantly greater amounts of their financial, technical and other resources to market, develop and adopt competitive products, and those efforts may materially and adversely affect our market position. Moreover, competitors may offer more attractive product pricing or financing terms than we do as a means of gaining access to the markets in which we compete.

As of December 31, 2014, we employed approximately 6,290 full-time employees, of which approximately 45 were in the United States, approximately 6,220 were in China and approximately 25 were in other locations. We also employed approximately 2,850 contract employees in China although not all of these contract employees work a full-time work schedule.

We do not have employment agreements with any of our executive officers; however, we have entered into employment agreements with all of our employees in China. In general, these employment agreements provide for a three-year term and can be renewed for a one, two or three-year term. Starting in 2008, the employment agreements for employees in China are non-terminable by us once they are renewed for the third time. In addition, we have entered into employment agreements for a non-specified term with all of our employees in Korea.

A trade union was established at MFC on November 10, 2011. On that same day, an employee union charter was unanimously passed, a union committee and audit committee were elected by the employee representatives and an election of union officials was held. The tenure of union officials and committee members is three years. We consider our relationship with the trade union to be good.

Flexible printed circuit manufacturing requires the use of chemicals. As a result, we are subject to a variety of environmental laws relating to the storage, discharge, handling, emission, generation, manufacture, use and disposal of chemicals, solid and hazardous waste and other toxic and hazardous materials used to manufacture our products in China. Given the extensive regulatory environment surrounding the use of hazardous materials and the uncertainties associated with any occurrence of environmental contamination, there can be no assurance that the costs of compliance or any alleged violations of applicable regulatory requirement, as well as any required remediation in the event of an environmental contamination, will not harm our business, financial condition or results of operations.

We believe we are operating our facilities in material compliance with existing environmental laws and regulations. However, we cannot predict the nature, scope or effect of legislation or regulatory requirements that could be imposed or how existing or future laws or regulations will be administered or interpreted. Compliance with more stringent laws or regulations, more vigorous enforcement policies of regulatory agencies, or significant penalties could require substantial expenditures by us, cause us to lose manufacturing capacity (which could cause us to be unable to meet our customers’ demand), or could otherwise harm our business, results of operations and financial condition. However, at this time, we do not anticipate any material amount of environmental-related capital expenditures through the end of 2015.

The following table sets forth information about our executive officers as of January 31, 2015:

Reza Meshgin joined us in June 1989, assumed his current position as our President and Chief Executive Officer in March 2008 and was elected to the Board of Directors in April 2008. Prior to his current role, Mr. Meshgin served as our President and Chief Operating Officer from January 2003 through February 2008, was Vice President and General Manager from May 2002 through December 2003, and prior to that time was our Engineering Supervisor, Application Engineering Manager, and Director of Engineering and Telecommunications Division Manager. Mr. Meshgin holds a B.S. in Electrical Engineering from Wichita State University and an M.B.A. from University of California at Irvine. Mr. Meshgin holds the following positions at our wholly owned subsidiaries: (a) Chairman of the board of directors for MFCI, MFLEX Singapore, and MFM, (b) director for MFLEX, MNE, MFC and MFLEX Chengdu, (c) chief executive officer and president at MFCI, MFLEX Singapore, MFC, MFLEX Chengdu, MKR, MFE and MFM, (d) executive chairman at MFE and (e) representative director for MKR.

Thomas Liguori joined us as Chief Financial Officer and Executive Vice President in February 2008. Prior to joining us, Mr. Liguori served as Chief Financial Officer at Hypercom, Inc. from November 2005 to February 2008, where he designed and built the global finance and administration functions. From February 2005 to November 2005, Mr. Liguori served as Vice President, Finance and Chief Financial Officer at Iomega Corporation, a publicly traded provider of storage and network security solutions, and

from April 2000 to February 2005, as Chief Financial Officer at Channell Commercial Corporation, a publicly traded provider of designer and manufacturer of telecommunications equipment. Prior to that time, Mr. Liguori served as Chief Financial Officer of Dole Europe for Dole Food Company, serving as the top-ranking financial and IT executive in Dole’s operations in Europe, Africa and the Middle East, and as Vice President of Finance at Teledyne. Mr. Liguori holds a Bachelor’s in Business Administration, Summa Cum Laude, from Boston University and completed a Master’s in Business Administration in Finance, Summa Cum Laude, from Arizona State University. He is a Certified Management Accountant and a Certified Financial Manager. Mr. Liguori holds the following positions at our wholly owned subsidiaries: (a) director for MFCI, MFLEX Singapore, MFC, MFLEX Chengdu, MFM, MKR, MNE and MFE, (b) chief financial officer at MFCI, MFLEX Singapore, MFM, MKR and MFE, (c) executive vice president of MFE and (d) legal representative for MFLEX Singapore in China for our two Chinese subsidiaries.

Thomas Lee joined us in October 1986 as our Supervisor of Photo Department and subsequently served as our Manufacturing Manager and Director of Operations from May 1995 to May 2002. Mr. Lee served as our Executive Vice President of Global Operations from May 2002 until March 2011, and as our Executive Vice President of Operations—Program Management from March 2011 until November 2012, when he transitioned to the position of Executive Vice President of Operations. In June 2014, Mr. Lee transitioned to the role of Executive Vice President, Business Development. Prior to joining us, Mr. Lee served as a Mechanical Engineer at the Agricultural Corporation in Burma. Mr. Lee holds a B.E. in Mechanical Engineering from the Rangoon Institute of Technology in Burma. Mr. Lee also holds the following positions at our wholly owned subsidiaries: (a) executive vice president at MFLEX Singapore and (b) executive vice president at MKR and MFE.

Christine Besnard joined us as General Counsel in August 2004, assumed the role of Secretary in March 2005, was named Vice President in March 2006 and Executive Vice President in March 2011. Prior to joining us, Ms. Besnard was senior corporate counsel at Sage Software, Inc., from August 2000 to July 2004, and a corporate securities associate at Pillsbury, Madison & Sutro LLP. Ms. Besnard holds a bachelor’s degree in political science from San Diego State University and a juris doctor from the University of Southern California Law Center. She was admitted to the California State Bar in 1997. Ms. Besnard holds the following positions at our wholly owned subsidiaries: (a) director for MFCI, MFC, MFLEX Chengdu, MFM, MKR and MFE and (b) secretary at MFCI.

Lance Jin joined us in May 1995 and since that time has held a variety of positions, including director of business development, telecommunications division manager, program manager and application engineer. Mr. Jin was appointed as our Vice President and Managing Director, Operations in October 2008, as our Executive Vice President and Managing Director of MFLEX China in March 2011 and he transitioned to Executive Vice President of Business Development in October 2012. In June 2014, Mr. Jin transitioned back to the role of Executive Vice President and Managing Director of China Operations. Prior to joining MFLEX, Mr. Jin was responsible for business development at the China National Import/Export Corporation. Mr. Jin holds a bachelor’s degree in optical engineering from ZheJiang University in China and a Master’s of Science in Optics and Fine Mechanics from the China Academy of Science. Mr. Jin has also received a Master’s Degree in Business Administration from National University in San Diego. Mr. Jin also holds the following positions at our wholly owned subsidiaries: (a) executive vice president of MSG and MFE, (b) legal representative and general manager for MFC and MFLEX Chengdu and (c) Chairman of the board of directors for MFC and MFLEX Chengdu.

Information regarding financial information about segments and financial data by geographic area is set forth in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 6 “Segment Information and Geographic Data.”

We file reports with the Securities and Exchange Commission (“SEC”). We make available on our website under “Investor Relations,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such materials with or furnish them to the SEC. Our website address is www.mflex.com. Our website address is provided as an inactive textual reference only, and the contents of that website are not incorporated in or otherwise to be regarded as part of this report. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may also obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

Our business, financial condition, operating results and cash flows can be impacted by a number of factors, including, but not limited to those set forth below, any of which could cause our results to be adversely impacted and could result in a decline in the value or loss of an investment in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

We have experienced a decline in revenue over the last four fiscal years, as well incurred net losses in the last two fiscal years, and we may continue to incur net losses in future periods.

From fiscal year 2011 to fiscal year 2014, we experienced a decline in revenue from $831.6 million in 2011, to $818.9 million in 2012, to $787.6 million in 2013, to $633.2 million in 2014, resulting from a decline in sales to certain of our key customers. We believe this resulted from decline of business from one of our key customers, which has been undergoing a business transition, as well as loss of market share from another key customer. Although we are undertaking efforts to diversify our customer base and increase our sales, including to new customers, there can be no assurance that we will be successful in offsetting these losses with sales to other customers.

In addition, in fiscal years 2013 and 2014, we incurred a net loss of $65.5 million and $84.5 million, respectively, on a full year basis. These losses, among other things, adversely affect our stockholders’ equity and working capital. Although we have undergone strategic restructuring efforts and returned to profitability in the fourth quarter of fiscal 2014, we cannot be certain that this return to profitability will be sustained, and our profitability may fluctuate from quarter to quarter based on a variety of factors, including capacity utilization, overhead absorption, yields and product mix.

We are, and have historically been, heavily dependent upon the smartphone, tablet and consumer electronics industries, and any downturn in these sectors may reduce our net sales.

For the fiscal years ended September 30, 2014, 2013 and 2012, approximately 71%, 71% and 69%, respectively, of our net sales were derived from sales to companies for products or services into our smartphone sector; approximately 16%, 21% and 27%, respectively, of our net sales derived from sales were to companies for products or services into our tablet sector; and approximately 7%, 7% and 2%, respectively, of our net sales were derived from sales to companies for products or services into our consumer electronics sector. In general, these sectors are subject to economic cycles, changes in customer order patterns and periods of slowdown. Intense competition, relatively short product life cycles and significant fluctuations in product demand characterize these sectors, and these sectors are also generally subject to rapid technological change and product obsolescence. Fluctuations in demand for our products as a result of periods of slowdown in these markets (including the current economic downturn) or discontinuation of products or modifications developed in connection with next generation products could reduce our net sales.

We depend on a very limited number of key customers, and a limited number of programs from those customers, for significant portions of our net sales and if we lose business with any of these customers or if the products we are in are not commercially successful, our net sales could decline substantially, which could result in a net loss for us.

For the past several years, a substantial portion of our net sales has been derived from products that are incorporated into programs manufactured by or on behalf of a very limited number of key customers and their subcontractors, including Apple Inc. In addition, a substantial portion of our sales to each customer is often tied to only one program or a small number of programs. In the fiscal years ended September 30, 2014, 2013 and 2012, approximately 57%, 75% and 74%, respectively, of our net sales were to the same one customer. Furthermore, in the fiscal years ended September 30, 2014, 2013 and 2012, approximately 58%, 86% and 90% of our net sales were to the same two customers, and approximately 64%, 90% and 94%, respectively, of our net sales were to only three customers in the aggregate. Our significant customer concentration increases the risk that our business terms with those customers may not be as favorable to us as those we might receive in a more competitive environment. The loss of a major customer or a significant reduction in sales to a major customer, including due to a penalty imposed by a customer, the loss of market share with the customers, the lack of commercial success by such customer or one or more of its products, a product failure of a customer’s program or limited flex content in a program, would seriously harm our business. Although we are continuing our efforts to reduce dependence on a limited number of customers, we may not be successful in such efforts. In addition, during the previous year, we experienced a decline in sales to certain of our key customers and net sales attributable to a limited number of customers and their subcontractors are expected to continue to represent a substantial portion of our business for the foreseeable future.

We will have difficulty selling our products if customers do not design flexible printed circuits and assemblies into their product offerings or our customers’ product offerings are not commercially successful.

We sell our flexible printed circuits and assemblies directly or indirectly to OEMs, who include our flexible circuits and component assemblies in their product offerings. We must continue to design our products into our customers’ product offerings in order to remain competitive. However, our OEM customers may decide not to design flexible printed circuits into their product offerings (or may reduce the amount of flex in a product offering), or may procure flexible printed circuits from one of our competitors. If an OEM selects one of our competitors to provide a product instead of us or switches to alternative technologies developed or manufactured by one or more of our competitors, it becomes significantly more difficult for us to sell our products to that OEM because changing component providers after the initial production runs begin involves significant cost, time, effort and risk for the OEM. Even if an OEM designs one of our products into its product offering, the product may not be commercially successful or may experience product failures, we may not receive any orders from that manufacturer, the OEM may qualify additional vendors for the product or we could be undercut by a competitor’s pricing. Additionally, if an OEM selects one or more of our competitors, they may rely upon such competitors for the life of that specific offering and subsequent generations of similar offerings. Any of these events would result in fewer sales and reduced profits for us, and could adversely affect the accuracy of any forward-looking guidance we may give.

Changes in the products our customers buy from us can significantly affect our capacity, net sales and profitability.

We sell our flexible printed circuits and flex assemblies to a very limited number of customers, who typically purchase these products from us for numerous programs at any particular time. Customer programs differ in design and material content and our products’ prices and profitability are dependent on a wide variety of factors, including without limitation, expected volumes, assumed yields, material costs, actual yields and the amount of third-party components within the program. If we lose sales for a program that has higher material content, we may have to replace it with sales for a program that has lower material content, thus requiring additional capacity to generate the same amount of net sales. We may not have such capacity available (or it may not be economically advantageous to acquire such capacity), which could then result in lower net sales. Furthermore, if we were unable to increase our capacity to match our customers’ requests, we may lose existing business from such customer, in addition to losing future sales. In addition, if we were to utilize our capacity to increase sales of bare flex (flex without assembly), this could also generate lower net sales at potentially different (higher or lower) profitability levels.

Our customers have in the past and likely will continue to cancel their orders, change production quantities, delay production or qualify additional vendors, any of which could reduce our net sales, increase our expenses, affect our gross margin and/or cause us to write down inventory.

Substantially all of our sales are made on a purchase order basis, and we are not always able to predict with certainty the number of orders we will receive or the timing or magnitude of the orders. Our customers may cancel, change or delay product purchase orders with little or no advance notice to us, and we believe customers are doing so with increased frequency. These changes may be for a variety of reasons, including changes in their prospects, the perception of the quality of our products, as a penalty a customer decides to impose on us, the competitiveness of our pricing, the success of their products in the market, reliance on a new vendor and the overall economic forecast. In general, we do not have long-term contractual relationships with our customers that require them to order minimum quantities of our products, and our customers may decide to use another manufacturer or discontinue ordering from us in their discretion, potentially even after we have begun production on their program. In addition, many of our products are shipped to hubs, and we often have limited visibility and no control as to when our customers pull the inventory from the hub. We have recently seen an increase in the use of hubs by our customers, and our hub balances have been growing. We also have increased risks with respect to inventory control and potential inventory loss, and must rely on third parties for recordkeeping, when our products are shipped to a hub. In addition, whether products are pulled from our hub, or the hub of one of our competitors is not within our control, and the EMS companies who make such decisions may favor one of our competitors over us, particularly if such competitor is affiliated with the EMS company. As a result of these factors, we are not always able to forecast accurately the net sales that we will make in a given period, and our sales could drop precipitously at any time on little or no notice. Changes in orders can also result in layoffs and associated severance costs, which in any given financial period could materially adversely affect our financial results.

In addition, we are increasingly being required to purchase materials, components and equipment before a customer becomes contractually committed to an order so that we may timely deliver the expected order to the customer. We may increase our production capacity, working capital and overhead in expectation of orders that may never be placed, or, if placed, may be delayed, reduced or canceled. As a result, we may be unable to recover costs that we incur in anticipation of orders that are never placed or are cancelled without liability after placed, such as costs associated with purchased raw materials, components or equipment. Delayed, reduced or canceled orders could also result in write-offs of obsolete inventory. Although we estimate inventory reserve amounts, the amount reserved may not be sufficient for such write-offs. In addition, we may underutilize our manufacturing capacity if we decline other orders because we expect to use our capacity for orders that are later delayed, reduced or canceled.

Our industry is extremely competitive, and if we are unable to respond to competitive pressures we may lose sales and our market share could decline.

We compete primarily with large flexible printed circuit board manufacturers located throughout Asia, including Taiwan, China, Korea, Japan and Singapore. We believe that the number of companies producing flexible printed circuit boards has increased materially in recent years and may continue to increase. In addition, certain former competitors are in the process of re-instituting their flexible printed circuit production which will increase competition in our market. Certain EMS providers have developed or acquired their own flexible printed circuit manufacturing capabilities or have extensive experience in electronics assembly, and in the future may cease ordering products from us or even compete with us on OEM programs. In addition, the number of customers in the market has been decreasing through consolidation and otherwise and the smartphone and tablet markets continue to become more competitive in terms of pricing. Furthermore, many companies in our target customer base may move the design and manufacturing of their products to original design manufacturers in Asia. These factors, among others, make our industry extremely competitive. If we are not successful in addressing these competitive aspects of our business, we may not be able to grow or maintain our market share, net sales, or profitability.

Our products and their terms of sale are subject to various pressures from our customers, competitors and market forces, any of which could harm our gross profits.

Our selling prices are affected by changes in overall demand for our products, changes in the specific products our customers buy, pricing of competitors’ products, our manufacturing efficiency, our products’ life cycles and general economic conditions. In addition, from time to time we may elect to reduce the price of certain products we produce in order to gain additional orders, or not lose orders, on a particular program. A typical life cycle for one of our products has our selling price decrease as the program matures. To offset price decreases during a product’s life cycle, we rely primarily on higher sales volume and improving our manufacturing yield and productivity to reduce a product’s cost. If we cannot reduce our manufacturing costs as prices decline during a product’s life cycle, or if we are required to pay damages to a customer due to a breach of contract or other claim, including due to quality or delivery issues, our cost of sales as a percentage of net sales may increase, which would harm our profitability and could affect our working capital levels.

In addition, our key customers and their subcontractors are able to exert significant pricing pressure on us and often require us to renegotiate the terms of our arrangements with them, including increasing or removing liability and indemnification thresholds and increasing the length of payment terms, among other terms. Increases in our labor costs, especially in China where we may have little or no advance notice of such increases, changes in contract terms and regular price reductions have historically resulted in lower gross margins for us and may continue to do so in future periods. Furthermore, our competitive position is dependent upon the yields and quality we are able to achieve on our products and our level of automation as compared to our competitors. We believe our competitors have been rapidly investing in more efficient and higher capability processes and automation, and if we do not match such investments, this could negatively impact our ability to compete on price, technology and capability. These trends and factors may harm our business and make it more difficult to compete effectively, and grow or maintain our net sales and profitability.

Significant product failures or safety concerns about our or our customers’ products could harm our reputation and our business.

Continued improvement in manufacturing capabilities, quality control, material costs and successful product testing capabilities are critical to our growth. Our efforts to monitor, develop, modify and implement stringent testing and manufacturing processes for our products may not be sufficient. If any flaw in the design, production, assembly or testing of our or our customers’ products were to occur or if our, or our customers’ products were believed to be unsafe, it could result in significant delays in product shipments by, or cancellation of orders or, substantial penalties from, our customers and their customers, substantial refund, recall, repair or replacement costs, an increased return rate for our products, potential damage to our reputation, or potential lawsuits which could prove to be time consuming and costly. Pronouncements by the World Health Organization listing mobile phone use as possibly carcinogenic may affect our customers’ sales and in turn affect our sales to our customers. Because we normally provide a warranty for our products, a significant claim for damages related to a breach of warranty could materially affect our financial results.

Problems with manufacturing yields and/or our inability to ramp up production could impair our ability to meet customer demand for our products.

We could experience low manufacturing yields due to, among other things, design errors, manufacturing failures in new or existing products, the inexperience of new employees, component defects, or the learning curve experienced during the initial and ramp up stages of new product introduction. If we cannot achieve expected yields in the manufacture of our products, this could result in higher operating costs, which could result in higher per unit costs, reduced product availability and may subject us to substantial penalties by our customers. Reduced yields or an inability to successfully ramp up products can significantly harm our gross margins, resulting in lower profitability or even losses. In addition, if we were unable to ramp up our production in order to meet customer

demand, whether due to yield or other issues, it would impair our ability to meet customer demand for our products, which could cause us to lose an order for such product, or lose the customer altogether, and our net sales and profitability would be negatively affected.

We must invest in and develop or adopt new technology and update our manufacturing processes in order to remain an attractive supplier to our customers, and we may not be able to do so successfully.

Our long-term strategy relies in part on timely adopting, developing and manufacturing technological advances and new processes to meet our customers’ needs and to expand into new markets outside the mobility market. However, any new technology or process adopted or developed by us may not meet the expectations of our existing or potential customers, or customers outside the mobility market may not select either our current or new process capabilities for their offerings. Customers could decide to switch to alternative technologies or materials, adopt new or competing industry standards with which our products are incompatible or fail to adopt standards with which our products are compatible. If we are unable to obtain customer qualifications for new processes or product features, cannot qualify our processes for high-volume production quantities or do not execute our operational and strategic plans for new developments in advanced technologies in a timely manner, our net sales or profitability may decrease. In addition, we may incur higher manufacturing costs in connection with new technology, materials, products or product features, as we may be required to replace, modify, design, build and install equipment, all of which would require additional capital expenditures. Also, due to financial constraints, we may not be able to invest in such new technology advancements and as a result, could fall behind our competition and/or not be able to satisfy our customers’ requirements, which could result in loss of sales and profitability.

We must continue to be able to procure raw materials and components on commercially reasonable terms to manufacture our products profitably.

Generally we do not maintain a large surplus stock of raw materials or components for our products because the specific assemblies are uniquely applicable to the products we produce for our customers; therefore, we rely on third-party suppliers to provide these raw materials and components in a timely fashion and on commercially reasonable terms. In addition, we are often required by our customers to seek components from a limited number of suppliers that have been pre-qualified by the customer. We, or our customers, may not be able to obtain the components or flex materials that are required for our customers’ programs, which in turn could forestall, delay, or halt our production or our customers’ programs. We expect that delays may occur in future periods for a variety of reasons, including but not limited to, natural disasters. Furthermore, the supply of certain precious metals required for our products is limited, and our suppliers could lose their export or import licenses on materials we require, any of which could limit or halt our ability to manufacture our products. We may not be successful in managing any shortage of raw materials or components that we may experience in the future, which could adversely affect our relationships with our customers and result in a decrease in our net sales or litigation by our customers against us. Component shortages could also increase our cost of goods sold because we may be required to pay higher prices for components in short supply. In addition, suppliers could go out of business, discontinue the supply of key materials, or consider us too small of a customer to sell to directly, and could require us to buy through distributors, increasing the cost of such components to us.

Our manufacturing and shipping costs may also be impacted by fluctuations in the cost of oil and gas. Any fluctuations in the supply or prices of these commodities could have an adverse effect on our profit margins and financial condition.

If we are unable to attract or retain personnel necessary to operate our business, our ability to develop and market our products successfully could be harmed.

We believe that our success is highly dependent on our current executive officers and management team. We do not have an employment contract with Reza Meshgin, our president and chief executive officer, or any of our other key personnel, and their knowledge of our business and industry would be extremely difficult to replace. The loss of any key employee or the inability to attract or retain qualified personnel, including engineers, sales and marketing personnel, management or finance personnel could delay the development and introduction of our products, harm our reputation or otherwise damage our business.

Furthermore, we have experienced very high employee turnover in our facilities in China, and we are experiencing increased difficulty in recruiting employees for these facilities. In addition, we are noting the signs of wage inflation, labor unrest and increased unionization in China and new regulations regarding the usage of contract workers, and expect these to be ongoing trends for the foreseeable future, which could cause employee issues, including work stoppages, excessive wage increases and increased activity of labor unions, at our China facilities. A large number of our employees works in our facilities in China, and our costs associated with hiring and retaining these employees have increased over the past several years. The high turnover rate, increasing wages, new regulations regarding contract workers, our difficulty in recruiting and retaining qualified employees and the other labor trends we are noting in China have resulted in an increase in our employee expenses, and a continuation of any of these trends could result in even higher costs or production disruptions or delays or the inability to ramp up production to meet increased customer orders, resulting in

order cancellation, imposition of customer penalties if we were unable to timely deliver product or a negative impact on net sales and profits for us.

Our manufacturing capacity may be interrupted, limited or delayed if we cannot maintain sufficient utility sources in China.

The flexible printed circuit fabrication process requires a stable utility source. As our production capabilities increase in China and our business grows, our requirements for a stable source of electricity, gas and steam in China will grow substantially. We have periodically experienced and expect to continue to experience insufficient supplies of electrical power from time to time, especially during the warmer summer months in China. In addition, China has instituted energy conservation regulations which ration the amount of electricity that may be used by enterprises such as ours. Although we have purchased a few generators and could lease additional generators, such generators do not produce sufficient electricity supply to run our manufacturing facilities and they are costly to operate. Power or steam interruptions, electricity shortages, the cost of diesel fuel to run our back-up generators or government intervention, particularly in the form of rationing, are factors that could restrict our access to electricity at our Chinese manufacturing facilities. Any such insufficient access to electricity, gas, steam or other utility could affect our ability to manufacture and related costs. Any such shortages could result in delays in our shipments to our customers and, potentially, the loss of customer orders and penalties from such customers for the delay.

We have operations in a number of countries, including the United States, China, Korea, Taiwan, the United Kingdom and Singapore. Our global operations may be subject to risks that may limit our ability to operate our business. We manufacture the bulk of our products in China and sell our products globally, which exposes us to a number of risks that can arise from international trade transactions, local business practices and cultural considerations, including:

We also face risks associated with currency exchange and convertibility, inflation and repatriation of earnings as a result of our foreign operations. In some countries, economic, monetary and regulatory factors could affect our ability to convert funds to U.S.

dollars or move funds from accounts in these countries. We are also vulnerable to appreciation or depreciation of foreign currencies against the U.S. dollar. Although we have significant operations in Asia, a substantial portion of transactions are denominated in U.S. dollars, including approximately 90% of the total shipments made to foreign manufacturers during the fiscal year 2014. The remaining balance of our net sales is primarily denominated in Chinese Renminbi (“RMB”). As a result, as appreciation against the U.S. dollar increases, it will result in an increase in the cost of our business expenses in China. Further, downward fluctuations in the value of foreign currencies relative to the U.S. dollar may make our products less price competitive than local solutions. From time to time, we may engage in currency hedging activities, but such activities may not be able to limit the impact or risks of currency fluctuations.

In addition, our activities in China are subject to administrative review and approval by various national and local agencies of China’s government. Given the changes occurring in China’s legal and regulatory structure, we may not be able to secure required governmental approval for our activities or facilities, or the government may not apply real property or contract rights in the same manner as one may expect in other jurisdictions.

We recently restructured our business and rationalized our manufacturing operations, and we may not be able to sustain the cost reductions or other benefits we expect from such restructuring.

We recently completed a process of consolidating and reorganizing certain of our operations in an effort to realign our organization to more efficiently support customer demand while decreasing operating expenses. While we recognized certain cost savings and other benefits from these initiatives during the two most recent quarters, the sustainability of these cost savings is subject to many risks and uncertainties, which include, but are not limited to:

There can be no assurance that we will be successful in sustaining the recognized cost savings, and failure to do so could adversely impact our financial condition, results of operations, or cash flows, and may otherwise cause disruption to our business.

From time to time, we restructure our manufacturing capacity, and we may have difficulty managing these changes.

From time to time, we engage in a number of manufacturing expansion and contraction projects, based on the then-current and forecasted needs of our business. In addition, from time to time, we engage in international restructuring efforts in order to better align our business functions with our international operations and transition to other lower cost locations in continuation of our cost reduction efforts. These efforts can require significant investment by us, and have in the past and could continue to result in increased expenses, inefficiencies and reduced gross margins.

Our management team may have difficulty managing our manufacturing capacity and transition projects or otherwise managing any growth or downsizing in our business that we may experience. Risks associated with right-sizing our manufacturing capacity may include those related to:

Our management team may not be effective in restructuring our manufacturing facilities, and our systems, procedures and controls may not be adequate to support such changes in manufacturing capacity. Any inability to manage changes in our manufacturing capacity may harm our profitability and growth.

United Engineers Limited is deemed to have an indirect beneficial ownership in approximately 61% of our outstanding common stock and is able to exert influence over us and our major corporate decisions.

United Engineers Limited (“UEL”) through its subsidiaries (which include WBL Corporation Limited (“WBL”) as result of UEL’s stock acquisition of WBL in 2013) (collectively the “UE Group”) is deemed to indirectly beneficially own approximately 61% of our outstanding common stock. As a result, the UE Group has influence over the composition of our board of directors and our management, operations and potential significant corporate actions. The board or executive management composition of the UE Group could change, and such change could affect the strategic direction of the UE Group and the way the UE Group influences our corporate actions. For example, although we have put in place several measures designed to limit the amount of influence the UE Group has over us (including a staggered board of directors, not allowing action by written consent of our stockholders and not allowing stockholders to call a special meeting), for so long as the UE Group continues to control more than a majority of our outstanding common stock, it will have the ability to control who is elected to our board of directors each year, and ultimately can change out our entire board in three years. Furthermore, the strategic direction of the UE Group may influence how, when and if the WBL Entities (defined below) elect to sell its stock in us under the Registration Statement on Form S-3 that has been filed by the Company and declared effective by the SEC to cover such sales.

In addition, for so long as WBL or its subsidiaries (collectively, the “WBL Entities”) effectively own at least one-third of our voting stock, it has the ability, through a stockholders’ agreement with us, to approve the appointment of any chief executive officer or the issuance of securities that would reduce the WBL Entities’ effective ownership of us to a level that is below a majority of our outstanding shares of common stock, as determined on a fully diluted basis. As a result, UEL and/or WBL could preclude us from engaging in an acquisition or other strategic opportunity that we may want to pursue if such acquisition or opportunity require the issuance of our common stock. This concentration of ownership may also discourage, delay or prevent a change of control of our company, which could deprive our other stockholders of an opportunity to receive a premium for their stock as part of a sale of our company, could harm the market price of our common stock and could impede the growth of our company. The UE Group could also sell a controlling interest in us, or a portion of their interest, to a third party, including a participant in our industry, which could adversely affect our operations or our stock price.

The UE Group and its representatives on our board of directors may have interests that conflict with, or are different from, the interests of our other stockholders. These conflicts of interest could include potential competitive business activities, corporate opportunities, indemnity arrangements, debt covenants, sales or distributions by the UE Group of our common stock and the exercise by the UE Group of its ability to influence our management and affairs. In general, our certificate of incorporation does not contain any provision that is designed to facilitate resolution of actual or potential conflicts of interest. If any conflict of interest is not resolved in a manner favorable to our stockholders, it could adversely affect our operations and our stockholders’ interests may be substantially harmed.

UEL may be unable to vote its shares in us on certain matters that require stockholder approval without obtaining approval from the stockholders of UEL and/or regulatory approval and it is possible that such stockholders or the relevant regulators may not approve the proposed corporate action.

UEL’s ordinary shares are listed on the Singapore Securities Exchange Trading Limited (the “Singapore Exchange”). Under the rules of the Singapore Exchange, when we submit a matter for the approval of our stockholders, UEL may be required to obtain the approval of its own respective stockholders for such action before UEL can vote its shares with respect to our proposal or dispose of our shares of common stock. Examples of corporate actions we may seek to take that may require UEL to obtain its stockholders’ approval may include certain amendments of our certificate of incorporation, an acquisition or a sale of our assets the value of which exceeds certain prescribed thresholds under the rules of the Singapore Exchange, and certain issuances of our capital stock. In addition, we have been advised that UEL is currently in an “offer period” under the rules of the Singapore Exchange (relating to a potential offer by a third party for UEL’s and WBL’s outstanding shares) and during such offer period, UEL is prevented from doing anything that would constitute “frustration of the offer” without first obtaining (a) either the approval of its stockholders or the potential offeror and (b) the Singapore Securities Industry Council (the “SIC”). Any material acquisition by, or disposition of, one of

its subsidiaries, including us, could be considered to frustrate the offer, and thus, approval by UEL’s stockholders/potential offeror and the SIC may first be required for UEL.

To obtain stockholder approval, UEL must prepare a circular describing the proposal, submit it to the Singapore Exchange for review and send the circular to its stockholders, which may take several weeks or longer. In addition, UEL is required under its corporate rules to give its stockholders advance notice of the meeting. Consequently, if we need to obtain our stockholders’ approval for a matter which also requires the approval of the stockholders of UEL, the process of seeking stockholder approval from UEL may delay our proposed action and it is possible that the stockholders of UEL may not approve our proposed corporate action. It is also possible that we might not be able to establish a quorum at our stockholder meeting if UEL is unable to vote at the meeting if the approval of the stockholders of UEL is not obtained. The rules of the Singapore Exchange that govern WBL and UEL are subject to revision from time to time, and policy considerations may affect rule interpretation and application. It is possible that any change to or interpretation of existing or future rules may be more restrictive and complex than the existing rules and interpretations.

Our business requires significant investments in capital equipment, facilities and technological improvements, and we may not be able to obtain sufficient funds to make such capital expenditures.

To remain competitive we must continue to make significant investments in capital equipment, facilities and technological improvements. We expect that substantial capital may be required to expand our manufacturing capacity and fund working capital requirements in the future. In addition, we expect that new technology requirements may increase the capital intensity of our business. We may need to raise additional funds through further debt or equity financings in order to fund our anticipated growth and capital expenditures, and we may not be able to raise additional capital on reasonable terms, or at all, particularly given our recent financial performance. If we are unable to obtain sufficient capital in the future, we may have to curtail our capital expenditures. Any curtailment of our capital expenditures could result in a reduction in net sales, reduced quality of our products, increased manufacturing costs for our products, harm to our reputation, reduced manufacturing efficiencies or other harm to our business. Furthermore, our board has authorized a stock repurchase program, and may authorize additional stock repurchases in the future, and the funds we expend for any such repurchase may later be needed for the operation of our business.

In addition, under our stockholder agreement with the WBL Entities, approval from a “WBL Director” on our board (as defined in such agreement) is required for the issuance of securities that would reduce its effective ownership of us to below a majority of the outstanding shares of our common stock as determined on a fully diluted basis. If such approval is required for a proposed financing, it is possible that we may not be able to obtain the approval for the financing and we may not be able to complete the transaction, which could make it more difficult to obtain sufficient funds to operate and expand our business.

We are subject to covenants in our credit agreements and any failure to comply with such covenants could result in our being unable to borrow under the agreements and other negative consequences.

Our credit agreements contain customary covenants. There can be no assurance that we will be able to comply with any borrowing conditions or other covenants in our current or future credit agreements. Our failure to comply with these covenants could cause us to be unable to borrow under the agreements and may constitute an event of default which, if not cured or waived, could result in the acceleration of the maturity of any indebtedness then outstanding under that, or other, credit agreements, which would require us to pay all amounts outstanding. Due to our cash and cash equivalent position and the fact that we have no long-term borrowings currently outstanding under our lines, we do not currently anticipate that our failure to comply with any of the covenants under our credit lines would have a significant impact on our ability to meet our financial obligations in the near term. Termination of one of our credit lines because of a failure to comply with such covenants, however, would be a disclosable event and may be perceived negatively. Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future.

Tax positions we have taken may be challenged and we are subject to the risk of changing income tax rates and laws.

From time to time, we may be subject to various types of tax audits, during which tax positions we have taken may be challenged and overturned. If this were to occur, our tax rates could significantly increase and we may be required to pay significant back taxes, interests and/or penalties. The outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to adjust our provision for income tax in the period such resolution occurs. Any significant proposed adjustments could have a material adverse effect on our results of operations, cash flows and financial position if not resolved favorably.

In addition, a change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate. For example, there has been increased scrutiny by the U.S. government on tax positions taken, and during March 2014, the United States Department of the Treasury issued a high-level outline of proposed modifications to international tax laws for

fiscal year 2015. If any of these, or similar, proposals are passed, our statements of financial position and results of operations could be negatively impacted.

Also, a number of countries in which we are located allow for tax holidays or provide other tax incentives to attract and retain business. For example, we currently enjoy tax incentives and holidays for certain of our facilities in Asia. However, any tax holiday or incentive we have could be challenged, modified or even eliminated by taxing authorities or changes in law. In addition, the tax laws and rates in certain jurisdictions in which we operate (China, for example) can change with little or no notice, and any such change may even apply retroactively. Any of such changes could adversely affect our effective tax rate.

If we fail to secure or protect our intellectual property rights, competitors may be able to use our technologies, which could weaken our competitive position and harm our business.

We rely primarily on trade secrets and confidentiality procedures relating to our manufacturing processes to protect our proprietary rights. Despite our efforts, these measures can only provide limited protection. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. If we fail to protect our proprietary rights adequately, our competitors could offer similar products using processes or technologies developed by us, potentially harming our competitive position. In addition, other parties may independently develop similar or competing technologies.

We also rely on patent protection for some of our intellectual property. Our patents may be expensive to obtain and there is no guarantee that either our current or future patents will provide us with any competitive advantages. A third party may challenge the validity of our patents, or circumvent our patents by developing competing products based on technology that does not infringe our patents. Further, patent protection is not available at all in certain countries and some countries that do allow registration of patents do not provide meaningful redress for patent violations. As a result, protecting intellectual property in those countries is difficult, and competitors could sell products in those countries that have functions and features that would otherwise infringe on our intellectual property. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology and our business may be harmed.

We may be sued by third parties for alleged infringement of their proprietary rights.

From time to time, we have received, and expect to continue to receive, notices of claims of infringement, misappropriation or misuse of other parties’ proprietary rights. We could also be subject to claims arising from the allocation of intellectual property rights among us and our customers. Any claims brought against us or our customers, with or without merit, could be time-consuming and expensive to litigate or settle, and could divert management attention away from our business plan. Adverse determinations in litigation could subject us to significant liability and could result in the loss of our proprietary rights. A successful lawsuit against us could also force us to cease selling or require us to redesign any products or marks that incorporate the infringed intellectual property. In addition, we could be required to seek a license from the holder of the intellectual property to use the infringed technology, and it is possible that we may not be able to obtain a license on reasonable terms, or at all. If we fail to develop a non-infringing technology on a timely basis or to license the infringed technology on acceptable terms, our business, financial condition and results of operations could be harmed.

Complying with environmental laws and regulations or the environmental policies of our customers may increase our costs and reduce our profitability.

We are subject to a variety of environmental laws and regulations relating to the storage, discharge, handling, emission, generation, manufacture, use and disposal of chemicals, solid and hazardous waste and other toxic and hazardous materials used in the manufacture of flexible printed circuits and component assemblies in our facilities in the United States, Europe and Asia. In addition, certain of our customers have, or may in the future, have environmental policies with which we are required to comply that are more stringent than applicable laws and regulations. A significant portion of our manufacturing operations are located in China, where we are subject to constantly evolving environmental regulation. The costs of complying with any change in, or interpretation of, such regulations or customer policies and the costs of remedying potential violations or resolving enforcement actions that might be initiated by governmental entities could be substantial.

In the event of a violation, we may be required to halt one or more segments of our operations until such violation is cured or we may be fined by a customer. The costs of remedying violations or resolving enforcement actions that might be initiated by governmental authorities could be substantial. Any remediation of environmental contamination would involve substantial expense that could harm our results of operations. In addition, we cannot predict the nature, scope or effect of future regulatory or customer requirements to which our operations may be subject or the manner in which existing or future laws or customer policies will be administered or interpreted. Future regulations may be applied to materials, products or activities that have not been subject to regulation previously. The costs of complying with new or more stringent regulations or policies could be significant.

Compliance with regulations and customer demands regarding “conflict minerals” could significantly increase costs and affect the manufacturing and sale of our products.

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) required the SEC to establish disclosure and reporting requirements regarding specified minerals originating in the Democratic Republic of the Congo or an adjoining country that are necessary to the functionality or production of products manufactured by companies required to file reports with the SEC. The SEC adopted disclosure rules for companies that use conflict minerals in their products, with substantial supply chain verification requirements in the event that the materials come from, or could have come from such areas. These rules may affect sourcing at competitive prices and availability of sufficient quantities of minerals used in the manufacture of our products. In addition, there are costs associated with complying with the disclosure requirements, such as costs related to determining the source of such minerals used in our products. Also, because our supply chain is complex, we may face commercial challenges if we are unable to sufficiently verify the origins for all metals used in our products through the due diligence procedures that we implement. Moreover, we may encounter challenges to satisfy those customers who require that all of the components of our products be certified as conflict free which could place us at a competitive disadvantage if we are unable to do so.

Potential future acquisitions or strategic partnerships or business alliances could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our financial results.

As part of our business strategy, we intend to continue to consider acquisitions of, or partnerships or business alliances with, companies, technologies and products that we feel could enhance our capabilities, complement our current products or expand the breadth of our markets or customer base. We have limited experience in acquiring or partnering with other businesses and technologies. Potential and completed acquisitions and strategic alliances involve numerous risks, including:

Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could harm our financial results. In addition, if we finance acquisitions by issuing convertible debt or equity securities, our existing stockholders may be diluted, which could affect the market price of our stock. As a result, if we fail to properly evaluate acquisitions or partnerships, we may not achieve the anticipated benefits of any such acquisitions or partnerships, and we may incur costs in excess of what we anticipate.

We face potential risks associated with loss, theft or damage of our property or property of our customers.

Some of our customers have entrusted us with proprietary equipment or intellectual property to be used in the design, manufacture and testing of the products we make for them. In some instances, we face potentially millions of dollars in financial exposure to those customers if such equipment or intellectual property is lost, damaged or stolen. Although we take precautions against such loss, theft or damage and we may insure against a portion of these risks, such insurance is expensive, may not be applicable to any loss we may experience and, even if applicable, may not be sufficient to cover any such loss. Further, deductibles for such insurance may be substantial and may adversely affect our operations if we were to experience a loss, even if insured.

Litigation that may be brought by or against us could cause us to incur significant expenditures and distract our management from the operations and conduct of our business. Furthermore, there can be no assurance that we would prevail in such litigation or resolve such litigation on terms favorable to us, which may adversely affect our operations.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results.

Effective internal controls are necessary for us to provide reliable financial reports. This effort is made more challenging by our significant overseas operations. If we cannot provide reliable financial reports, our operating results could be misstated, current and

potential stockholders could lose confidence in our financial reporting and the trading price of our stock could be negatively affected. There can be no assurance that our internal controls over financial processes and reporting will be effective in the future.

Sales of our common stock by our majority stockholder could depress the price of our common stock or weaken market confidence in our prospects.

Pursuant to a Registration Rights Agreement between us and the WBL Entities, we have filed a Registration Statement on Form S-3, covering the re-sale of all 14,817,052 of our shares held by the WBL Entities. The WBL Entities may sell all or part of the shares of our common stock that it owns (or distribute those shares to its shareholders). A large influx of shares of our common stock into the market as a result of such sales, or the mere perception that these sales could occur, could cause the market price of our common stock to decline, perhaps substantially, and may weaken market confidence in us or our prospects, which could have an adverse effect on our financial condition, results of operation or stock price. If there is a disposal by the WBL Entities of their shares of our common stock with value that exceeds certain prescribed thresholds and constitutes a major transaction under the rules of the Singapore Exchange, then such disposal may require the approval of the stockholders of UEL. The WBL Entities may be able to sell part of their shares of our common stock without requiring such stockholders’ approval if such thresholds are not met; however, even such sale could impact the market price of our common stock. Further, these sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

The trading prices of the securities of technology companies, including the trading price of our common stock, have historically been highly volatile. During the 12-month period from January 1, 2014 to December 31, 2014, the high and low sales prices for our common stock were $15.30 and $8.11 per share, respectively. Factors that could affect the trading price of our common stock include, but are not limited to:

In addition, although we have approximately 24.3 million shares of common stock outstanding as of December 31, 2014, approximately 14.8 million of those shares are held by the WBL Entities. As a result, there is a limited public float in our common stock. If any of our significant stockholders were to decide to sell a substantial portion of its shares the trading price of our common stock could decline. See “Risk Factors—Sales of our common stock by our majority stockholder could depress the price of our common stock or weaken market confidence in our prospects” for more information.

If certain requirements are not met, the SEC could impose sanctions against China-based members of certain accounting firms’ networks, which could affect our ability to have those firms perform audits for us in the future.

From time-to-time, the SEC requests access to the audit documents of Chinese US-listed companies from their accountants. Many of the accounting firms, including the Chinese members of the so-called Big Four accounting firms’ networks, have historically refused to provide these records citing China’s state law which specifies that certain Chinese company records can be claimed as state secrets. In January of 2014, an SEC Administrative Law judge made an initial decision which determined that the Chinese members of the Big Four firms’ networks, including PricewaterhouseCoopers Zhong Tian LLP (“PwC China”), among others, should be suspended from practicing before the SEC for a period of six months, which includes, but is not limited to, performing audits of subsidiaries of companies that are registered with the SEC. This decision was stayed pending review, and in February 2015, the SEC announced that it had come to a settlement with the China-based firms associated with the Big Four firms, which settlement imposed sanctions against the firms and provides the SEC with authority to impose a variety of remedial measures on the firms if future document productions fail to meet specified criteria. Remedies for future non-compliance could include, as appropriate, an automatic six-month bar on a single firm’s performance of certain audit work.

We have substantial operations in China that are currently audited by PwC China, a member firm of the PwC network, of which our auditor, PricewaterhouseCoopers LLP, is also a member. If such a remedy was to be imposed on PwC China for failure to comply with the settlement, we could be unable to use PwC China, or any of the other affected accounting firms, to perform audits of our operations in China, and may have difficulty finding another firm with sufficient resources or experience to competently audit our

Chinese entities. This could cause us to not meet our financial reporting obligations, which could negatively influence investor perceptions and cause a decline in our stock price.

Delaware law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management including, among other things, provisions providing for a classified board of directors, authorizing the board of directors to issue preferred stock and the elimination of stockholder voting by written consent. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may discourage, delay or prevent certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These provisions in our charter, bylaws and under Delaware law could discourage delay or prevent potential takeover attempts that stockholders may consider favorable.

We believe our facilities are adequate for our current needs and that suitable additional or substitute space will be available to accommodate potential foreseeable expansion of our operations or to move our operations in the event one or more of our short-term leases can no longer be renewed on commercially reasonable terms at the expiration of its term.

From time to time, we may be party to lawsuits in the ordinary course of business. We are currently not a party to any material legal proceedings.

Our common stock, par value $0.0001, is traded on the NASDAQ Global Select Market (“Nasdaq”) under the symbol “MFLX.” The following table sets forth, for the periods indicated, the high and low sales prices for our common stock on Nasdaq, as reported in its consolidated transaction reporting system:

Stockholders of record on December 31, 2014 totaled approximately 17. Because many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners represented by these stockholders of record.

We have never declared or paid any cash dividend on our common stock, nor do we currently intend to pay any cash dividend on our common stock in the foreseeable future. We currently expect to retain our earnings for the growth and development of our business.

The following graph shows the cumulative total stockholder return (change in stock price plus reinvested dividends) assuming the investment of $100 on December 31, 2009 in each of our common stock, the NASDAQ Index and the NASDAQ Electrical Components Index. The comparisons in the table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. This Stock Price Performance Graph is not deemed to be “soliciting material” or “filed” with the SEC under the Securities Exchange Act of 1934, and is not incorporated by reference in any past or future filing by us under the Securities Exchange Act of 1934 or the Securities Act of 1933, unless it is specifically referenced.

Information regarding the securities authorized for issuance under our equity compensation plans can be found under Item 12 of this Transition Report.

The following tables include selected summary financial data for the three months ended December 31, 2014 and 2013 and each of the last five fiscal years ended September 30. The data below is qualified by reference to, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Transition Report and the Consolidated Financial Statements and related notes included in Part II, Item 8 of this Transition Report. Our historical results are not necessarily indicative of our future results.

	Three Months Ended December 31,						Fiscal Years Ended September 30,
	2014			2013			2014			2013			2012			2011			2010
				(unaudited)
	(in thousands, except shares, per share data and ratios)
Consolidated Statements of Income Data:
Net sales	$	210,003		$	211,672		$	633,153		$	787,644		$	818,932		$	831,561		$	791,339
Cost of sales		179,516			209,176			633,304			788,774			736,241			726,850			678,294
Gross profit (loss)		30,487			2,496			(151	)		(1,130	)		82,691			104,711			113,045
Operating expenses:
Research and development		1,397			1,455			5,941			7,776			7,615			10,485			14,455
Sales and marketing		4,819			5,908			19,015			22,720			24,457			25,189			24,086
General and administrative		4,675			3,343			15,421			17,118			19,839			18,788			21,625
Stock-based compensation expense resulting from change in control		—			—			—			9,582			—			—			—
Impairment and restructuring (recoveries) expenses		(396	)		—			33,939			7,537			(2,468	)		4,186			11,376
Total operating expenses		10,495			10,706			74,316			64,733			49,443			58,648			71,542
Operating income (loss)		19,992			(8,210	)		(74,467	)		(65,863	)		33,248			46,063			41,503
Other income (expense), net:
Interest income		239			209			1,025			727			1,352			875			535
Interest expense		(71	)		(122	)		(497	)		(487	)		(555	)		(472	)		(782	)
Other income (expense), net		199			296			1,498			1,002			1,656			564			472
Income (loss) before income taxes		20,359			(7,827	)		(72,441	)		(64,621	)		35,701			47,030			41,728
Provision for income taxes		(4,384	)		(1,452	)		(12,091	)		(910	)		(6,216	)		(9,157	)		(11,953	)
Net income (loss)	$	15,975		$	(9,279	)	$	(84,532	)	$	(65,531	)	$	29,485		$	37,873		$	29,775
Net income (loss) per share:
Basic	$	0.66		$	(0.39	)	$	(3.50	)	$	(2.74	)	$	1.24		$	1.58		$	1.18
Diluted	$	0.65		$	(0.39	)	$	(3.50	)	$	(2.74	)	$	1.22		$	1.56		$	1.16
Shares used in computing net income (loss) per share:
Basic		24,267,567			24,083,932			24,122,843			23,897,651			23,782,540			24,027,179			25,203,445
Diluted		24,624,368			24,083,932			24,122,843			23,897,651			24,077,479			24,335,819			25,607,249
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	132,382		$	111,887		$	98,667		$	105,150		$	82,322		$	97,890		$	99,875
Working capital	$	162,611		$	147,149		$	143,752		$	142,555		$	155,869		$	159,065		$	166,021
Total assets	$	527,387		$	619,227		$	519,449		$	610,214		$	696,410		$	625,745		$	562,321
Current ratio		1.9			1.7			1.8			1.7			1.7			1.8			1.9
Long-term debt	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Stockholders’ equity	$	328,460		$	385,769		$	310,325		$	392,191		$	441,989		$	416,083		$	361,532

You should read this discussion together with the financial statements, related notes and other financial information included in this Transition Report. The following discussion may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under Part I, Item 1A—“Risk Factors” and elsewhere in this Transition Report. These risks could cause our actual results to differ materially from any future performance suggested below.

We are a global provider of high-quality, technologically advanced flexible printed circuits and value-added component assembly solutions to the electronics industry. We believe that we are one of a limited number of manufacturers that provide a seamless, integrated flexible printed circuit and assembly solution from design and application engineering and prototyping through high-volume fabrication, component assembly and testing. We target our solutions within the electronics market and, in particular, our solutions enable our customers to achieve a desired size, shape, weight or functionality of the device. Current examples of applications for our products include smartphones, tablets, computer/data storage, portable bar code scanners, personal computers, wearables, and other consumer electronic devices. We provide our solutions to original equipment manufacturers (“OEMs”) such as Apple, Inc., and to electronic manufacturing services (“EMS”) providers such as Foxconn Electronics, Inc., Protek (Shanghai) Limited and Flextronics International Ltd. Our business model, and the way we approach the markets which we serve, is based on value added engineering and providing technology solutions to our customers facilitating the miniaturization of portable electronics. We currently rely on a core mobility end-market for nearly all of our revenue. We believe this dynamic market offers fewer, but larger, opportunities than other electronic markets do, and changes in market leadership can occur with little to no warning. Through early supplier involvement with customers, we look to assist in the development of new designs and processes for the manufacturing of their products and, through value added component assembly of components on flex, seek to provide a higher level of product within their supply chain structure. This approach may or may not always fit with the operating practices of all OEMs. Our ability to add to our customer base may have a direct impact on the relative percentage of each customer’s revenue to total revenues during any reporting period.

We typically have numerous programs in production at any particular time, the life cycle for which is typically around one year. The programs’ prices are subject to intense negotiation and are determined on a program by program basis, dependent on a wide variety of factors, including without limitation, expected volumes, assumed yields, material costs, actual yields, and the amount of third party components within the program. Our profitability is dependent upon how we perform against our targets and the assumptions on which we base our prices for each particular program. In addition, the price on a particular program typically decreases as the program matures. Our volumes, margins and yields also vary from program to program and, given various factors and assumptions on which we base our prices, are not necessarily indicative of our profitability. In fact, some lower-priced programs have higher margins while other higher-priced programs have lower margins. Given that the programs in production vary from period to period and the pricing and margins between programs vary widely, volumes are not necessarily indicative of our performance. For example, we could experience an increase in volumes for a particular program during a particular period, but depending on that program’s margins and yields and the other programs in production during that period, those higher volumes may or may not result in an increase in overall profitability.

From our inception in 1984 until 1989, we were engaged primarily in the manufacturing of flexible printed circuits for military and aerospace applications. In early 1990, we began to develop the concept of attaching components on flexible printed circuits for Motorola. Through these early efforts, we developed the concept of the value-added approach with respect to integrating our design engineering expertise with our component assembly capabilities. This strategy has enabled us to capitalize on two trends over the course of the 1990s, the outsourcing by OEMs of their manufacturing needs and the shift of manufacturing facilities outside of the United States. In 1994, we formed a wholly owned Chinese subsidiary to better serve customers that have production facilities in Asia and provide a cost-effective, high-volume production platform for the manufacture of our products. In fiscal 2002, we formed a second wholly owned subsidiary in China to further expand our flexible printed circuit manufacturing and assembly capacity, and we merged these two subsidiaries into one in fiscal 2010. In addition, we formed another wholly owned subsidiary in Chengdu, China, and in fiscal 2011, completed construction on our third and fourth manufacturing facilities in China as part of a capacity expansion initiative. Our Chinese subsidiaries provide a complete range of capabilities and services to support our global customer base, including design engineering and high-volume production of single-sided, double-sided and multi-layer flexible printed circuits and component assemblies. In 2014, following a full review of our manufacturing footprint and in an effort to realign our manufacturing capacity and costs with expected net sales, we initiated a plan to consolidate our production facilities to reduce the total manufacturing floor space by approximately one-third (the “Restructuring”). As part of the Restructuring, MFLEX Chengdu, along with two satellite manufacturing facilities in Suzhou, China, have been consolidated into our two main manufacturing plants under MFC in Suzhou. In addition, we closed MFE, which had been located in Cambridge, United Kingdom, and we have reduced headcount at other locations. The Restructuring was complete as of December 31, 2014.

We design and manufacture our products to customer specifications. Throughout 2014, we engaged the services of certain non-exclusive sales representatives located throughout North America and Asia to provide customer contacts and market our products directly to our global customer base. The varieties of products our customers manufacture are referred to as programs. The majority of our sales are made to customers outside of the United States, and therefore sales volumes may be impacted by customer program and product mix changes as well as delivery schedule changes imposed on us by our customers. All sales from our Irvine, California executive office, Singapore regional office and our United Kingdom facility are denominated in U.S. dollars. All sales from our China facilities are denominated in U.S. dollars for sales outside China or RMB for sales made in China.

Cost of sales consisted of four major categories: material, overhead, labor and purchased process services. Material cost relates primarily to the purchase of copper foil, gold, polyimide substrates and electronic components. Overhead costs included all materials and facility costs associated with manufacturing support, processing supplies and expenses, support personnel costs, stock-based compensation expense related to such personnel, utilities, amortization of facilities and equipment and other related costs. Labor cost included the cost of personnel related to the manufacture of the completed product. Purchased process services related to the subcontracting of specific manufacturing processes to outside contractors. Cost of sales may be impacted by timing of wage increases at our manufacturing facilities, capacity utilization, manufacturing yields, product mix and production efficiencies. Also, we may be subject to increased costs as a result of changing material prices because we do not have long-term fixed supply agreements, inflation may occur in countries in which we produce and market wage rate increases may also occur in these countries.

Research and development costs are incurred in the development of new products and processes, including significant improvements and refinements to existing products and processes and are expensed as incurred.

Sales and marketing expense included commissions paid to sales representatives, personnel-related and travel costs associated with sales and marketing, program management, corporate development and engineering support groups, sales support, trade shows, freight out, costs to warehouse and manage hub inventories positioned near our customers, market studies and promotional and marketing brochures.

General and administrative expense primarily included personnel-related and travel costs associated with finance/accounting, tax, internal audit, legal, human resources, information services and executive personnel along with other expenses related to external accounting, legal and professional expenses, business insurance, management information systems, investor relations, Board of Directors and other corporate office expenses.

Asset impairment is the difference between the fair market value, based on the estimated future cash flows of the underlying assets, and the carrying value, or net book value, of an asset group identified under accounting principles generally accepted in the United States of America (“U.S. GAAP”) to be impaired. Impairment occurs when the carrying value exceeds the fair market value of the underlying assets. Restructuring expense represents severance, relocation, and other costs and recoveries related to the closure or disposal of a business unit or location.

Interest income consisted primarily of interest income earned on cash and cash equivalents balances.

Interest expense consisted of expense incurred on unused line fees on our revolving facilities, interest on short-term borrowings under our line of credit agreements and interest related to our deferred financing costs.

Other income (expense), net, consisted primarily of the gain or loss on foreign currency exchange and the gain or loss on derivative financial instruments.

We record a provision for income taxes based on the statutory rates applicable in the countries in which we do business, subject to any tax holiday periods granted by the respective governmental authorities. We account for income taxes under the Financial Accounting Standards Board (“FASB”) authoritative guidance which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosures. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to inventories, income taxes, accounts receivable allowance and warranty. We base our estimates on historical experience, performance metrics and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results will differ from these estimates under different assumptions or conditions.

Critical accounting policies for us include revenue recognition, inventories and income taxes. Refer to Note 1 “Basis of Presentation and Significant Accounting Policies” in the Notes to Consolidated Financial Statements for a complete list of our significant accounting policies.

We operate within multiple domestic and foreign taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which may require an extended period of time for resolution. Although we believe that adequate consideration has been made for such issues, it is possible that the ultimate resolution of such issues could be significantly different than originally estimated.

The following table sets forth our consolidated statements of income data, expressed as a percentage of net sales for the periods indicated.

	Three Months Ended December 31,								Fiscal Years Ended September 30,
	2014				2013				2014				2013				2012
Net sales		100.0		%		100.0		%		100.0		%		100.0		%		100.0		%
Cost of sales		85.5				98.8				100.0				100.1				89.9
Gross profit (loss)		14.5				1.2				—				(0.1	)			10.1
Operating expenses:
Research and development		0.7				0.7				0.9				1.0				0.9
Sales and marketing		2.3				2.8				3.0				2.9				3.0
General and administrative		2.2				1.6				2.4				2.2				2.4
Stock-based compensation expense resulting from change in control		—				—				—				1.2				—
Impairment and restructuring (recoveries) expenses		(0.2	)			—				5.4				1.0				(0.3	)
Total operating expenses		5.0				5.1				11.7				8.3				6.0
Operating income (loss)		9.5				(3.9	)			(11.7	)			(8.4	)			4.1
Other income (expense), net:
Interest income		0.1				0.1				0.2				0.1				0.2
Interest expense		—				(0.1	)			(0.1	)			(0.1	)			(0.1	)
Other income (expense), net		0.1				0.1				0.2				0.1				0.2
Income (loss) before income taxes		9.7				(3.8	)			(11.4	)			(8.3	)			4.4
Provision for income taxes		(2.1	)			(0.7	)			(1.9	)			(0.1	)			(0.8	)
Net income (loss)		7.6		%		(4.5	)	%		(13.3	)	%		(8.4	)	%		3.6		%

Three Months Ended December 31, 2014 Compared to Three Months Ended December 31, 2013

Net Sales. Net sales decreased to $210.0 million for the three months ended December 31, 2014, from $211.7 million for the three months ended December 31, 2013. The decrease of $1.7 million, or 0.8%, was primarily due to slightly decreased sales into our smartphones and consumer electronics sectors, partially offset by slightly increased sales into our tablet sector, as further quantified below.

Net sales into our smartphones sector decreased to $152.1 million for the three months ended December 31, 2014, from $156.2 million for the three months ended December 31, 2013. The decrease of $4.1 million, or 2.6%, was primarily due to decreased sales volumes to one of our newer customers in this sector of 73.2% as a result of weaker demand for current programs and end of life of certain programs, partially offset by increased sales volumes to one of our larger customers of 15.0% as a result of increased demand for current programs for this customer. Newer customer sales into our smartphones sector decreased to $29.9 million for the three months ended December 31, 2014 from $42.5 million for the same period a year ago. For the three months ended December 31, 2014 and 2013, our smartphones sector accounted for approximately 72% and 74% of total net sales, respectively.

Net sales into our consumer electronics sector decreased to $13.2 million for the three months ended December 31, 2014, from $13.6 million for the three months ended December 31, 2013. The decrease was primarily due to decreased sales volumes of $2.4 million to one of our newer customers in this sector as a result of certain programs reaching the end of their life cycle. The decrease was partially offset by increased net sales volumes of $1.9 million to one of our major customers in this sector based on the timing of programs. Shipments into the consumer electronics sector accounted for approximately 6% of total net sales for the three months ended on each of December 31, 2014 and 2013.

Net sales into our tablets sector increased to $38.3 million for the three months ended December 31, 2014, from $36.5 million for the three months ended December 31, 2013. The increase of $1.8 million into this sector was primarily due to increased sales volumes to one of our newer customers in this sector of $10.2 million as a result of additional program wins, partially offset by decreased sales volumes to one of our major customers of $7.8 million primarily due to program mix. For the three months ended December 31, 2014, and 2013, the tablets sector accounted for approximately 18% and 17% of total net sales, respectively.

Cost of Sales and Gross Profit. Cost of sales as a percentage of net sales decreased to 85.5% for the three months ended December 31, 2014 versus 98.8% for the three months ended December 31, 2013. The decrease in cost of sales as a percentage of net

sales of 13.3% was impacted by cost reductions as a result of our recent restructuring (approximately 670 basis points), favorable product mix (approximately 580 basis points) and improved manufacturing efficiency and yields (approximately 80 basis points). As a percentage of net sales, gross profit increased to 14.5% for the three months ended December 31, 2014 from 1.2% for the three months ended December 31, 2013.

Research and Development. Research and development expense decreased by $0.1 million to $1.4 million for the three months ended December 31, 2014, from $1.5 million for the three months ended December 31, 2013. The decrease was primarily due to decreased variable spending. As a percentage of net sales, research and development expense remained consistent at 0.7% for the three months ended December 31, 2014 and 2013.

Sales and Marketing. Sales and marketing expense decreased by $1.1 million to $4.8 million for the three months ended December 31, 2014, from $5.9 million in the comparable period of the prior year. The decrease was primarily attributable to lower variable expenses due to sales mix. As a percentage of net sales, sales and marketing expense decreased to 2.3% versus 2.8% in the comparable period of the prior year.

General and Administrative. General and administrative expense increased by $1.4 million to $4.7 million for the three months ended December 31, 2014, from $3.3 million in the comparable period of the prior year, resulting in an increase of 42.4%. The increase was primarily due to a $1.1 million gain on disposal of equipment recognized in the comparable period of the prior year. As a percentage of net sales, general and administrative expense increased to 2.2% versus 1.6% in the comparable period of the prior year.

Impairment and Restructuring. During the three months ended December 31, 2014, we recorded impairment and restructuring recoveries of $0.4 million, primarily due to the net gain recorded on certain machinery and equipment that was previously classified as assets held for sale. Refer to Note 11 “Impairment and Restructuring” in the Notes to Consolidated Financial Statements for further details.

Income Taxes. The effective tax rate for three months ended December 31, 2014 and 2013 was 21.5% and (18.6)%, respectively. The change in our effective tax rate was primarily due to establishing a valuation allowance against deferred tax assets related to one of our entities as well as our income and tax expense distribution by region. We expect future tax rates to vary if current tax regulations change.

Net Sales and Operating Income. For the first quarter of calendar 2015, we expect net sales to be between $130 and $160 million and anticipate generating breakeven operating income at the midpoint of the net sales range.

Operating Expenses. We expect normal operating expenses to be approximately $10 million during the first quarter of calendar 2015.

Income Taxes. We expect the effective tax rate (excluding restructuring), on average, to be in the mid to upper teens for calendar 2015.

Capital Expenditures. For the first quarter of calendar 2015, we are anticipating capital expenditures to be between $5 and $8 million. We expect capital expenditures to be approximately $25 million in calendar 2015.

These projections are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.”

Fiscal Year Ended September 30, 2014 Compared to Fiscal Year Ended September 30, 2013

Net Sales. Net sales decreased to $633.2 million in the fiscal year ended September 30, 2014, from $787.6 million in the fiscal year ended September 30, 2013. The decrease of $154.4 million, or 19.6%, was primarily due to decreased net sales into our smartphone, tablet and consumer electronics sector, as further quantified below.

Net sales into our smartphones sector decreased to $447.9 million in the fiscal year ended September 30, 2014, from $561.7 million in the fiscal year ended September 30, 2013. The decrease of $113.8 million, or 20.3%, was primarily due to sales decreases to two large customers of $310.2 million in fiscal 2014 versus fiscal 2013. We have been increasing sales to a group of newer customers to diversify our revenue base. Sales to these newer customers increased $142.6 million to $223.3 million in fiscal 2014 from $80.7 million in fiscal 2013 in this sector. For the fiscal years ended September 30, 2014 and 2013, our smartphones sector accounted for approximately 71% and 71% of total net sales, respectively.

Net sales into our tablets sector decreased to $102.5 million in the fiscal year ended September 30, 2014, from $163.9 million in the fiscal year ended September 30, 2013. The decrease of $61.4 million, or 37.5%, was primarily due to reduced sales one large customer. For the fiscal years ended September 30, 2014 and 2013, our tablets sector accounted for approximately 16% and 21% of total net sales, respectively.

Net sales into our consumer electronics sector decreased to $44.6 million in the fiscal year ended September 30, 2014, from $51.4 million in the fiscal year ended September 30, 2013. The decrease of $6.8 million, or 13.2%, was primarily due to lower sales volumes for one of our customer’s programs in this sector of approximately $16.5 million, partially offset by higher sales volumes for another customer’s new products in this sector of approximately $10.1 million. For the fiscal years ended September 30, 2014 and 2013, our consumer electronics sector accounted for approximately 7% and 7% of total net sales, respectively.

Cost of Sales and Gross Loss. Cost of sales as a percentage of net sales was relatively flat at 100.0% in the fiscal year ended September 30, 2014, versus 100.1% in the fiscal year ended September 30, 2013.

Research and Development. Research and development expense decreased by $1.9 million to $5.9 million in the fiscal year ended September 30, 2013, from $7.8 million in the fiscal year ended September 30, 2013. The decrease was primarily due to reduced variable spending coupled with reduced headcount. As a percentage of net sales, research and development expense decreased to 0.9% in the fiscal year ended September 30, 2014, from 1.0% in the fiscal year ended September 30, 2013.

Sales and Marketing. Sales and marketing expense decreased by $3.7 million to $19.0 million in the fiscal year ended September 30, 2014, from $22.7 million in the fiscal year ended September 30, 2013. The decrease was primarily due to reduced commissions resulting from reduced net sales as well as reduced variable spending. As a percentage of net sales, sales and marketing expense increased to 3.0% in the fiscal year ended September 30, 2014, from 2.9% in the fiscal year ended September 30, 2013.

General and Administrative. General and administrative expense decreased by $1.7 million to $15.4 million in the fiscal year ended September 30, 2014, from $17.1 million in the fiscal year ended September 30, 2013. The decrease was attributable primarily to our efforts to reduce discretionary spending. As a percentage of net sales, general and administrative expense increased to 2.4% for the fiscal year ended September 30, 2014, from 2.2% in the fiscal year ended September 30, 2013.

Stock-based compensation expense resulting from change in control. Stock-based compensation expense resulting from change in control was $9.6 million for the fiscal year ended September 30, 2013. This expense is related to the accelerated vesting of outstanding serviced-based restricted stock units (“RSUs”) and stock appreciation rights, as well as the conversion of performance-based RSUs to service-based RSUs for awards outstanding as of May 23, 2013 as part of our change in control. Refer to Note 9 “Stock-Based Compensation” in the Notes to Consolidated Financial Statements for further details.

Impairment and Restructuring. During the fiscal year ended September 30, 2014, we recorded impairment and restructuring of $33.9 million, which consisted of $18.2 million of long-lived asset impairments relating to our held-for-sale properties and equipment in Chengdu and Suzhou, China, $9.7 million of one-time termination benefits charges and $6.0 million of other restructuring-related costs. During the fiscal year ended September 30, 2013, we recorded a goodwill impairment charge of $7.5 million. Refer to Note 11 “Impairment and Restructuring” in the Notes to Consolidated Financial Statements for further details.

Interest Income. Interest income increased to $1.0 million in the fiscal year ended September 30, 2014, from $0.7 million in the fiscal year ended September 30, 2013. The increase was primarily a result of increased interest rates on our cash held by foreign institutions.

Other Income (Expense), Net. Other income (expense), net increased to income of $1.5 million in the fiscal year ended September 30, 2014, from income of $1.0 million in the fiscal year ended September 30, 2013. The increase in income was primarily attributable to fluctuations from foreign exchange due to the movement of the U.S. dollar versus the RMB and other foreign currencies.

Income Taxes. The effective tax rate for the fiscal years ended September 30, 2014 and 2013 was (16.7)% and (1.4)%, respectively. The change in our effective tax rate was primarily due to additional tax provision recorded for certain uncertain tax positions, as well as establishing a valuation allowance against deferred tax assets.

Fiscal Year Ended September 30, 2013 Compared to Fiscal Year Ended September 30, 2012

Net Sales. Net sales decreased to $787.6 million in the fiscal year ended September 30, 2013, from $818.9 million in the fiscal year ended September 30, 2012. The decrease of $31.3 million, or 3.8%, was primarily due to decreased net sales into our smartphone and tablet sectors, partially offset by increased net sales into our consumer electronics sector, as further quantified below.

Net sales into our smartphones sector decreased to $561.7 million in the fiscal year ended September 30, 2013, from $564.5 million in the fiscal year ended September 30, 2012. The decrease of $2.8 million, or 0.5%, was primarily due to sales decreases to two large customers of $16.7 million in fiscal 2013 versus fiscal 2012. This was primarily due to lower volumes to one OEM that lost global market share. We have been adding customers to diversify our revenue base. Sales to these newer customers increased $18.0 million to $59.8 million in fiscal 2013 from $41.8 million in fiscal 2012 in this sector. For the fiscal years ended September 30, 2013 and 2012, our smartphones sector accounted for approximately 71% and 69% of total net sales, respectively.

Net sales into our tablets sector decreased to $163.9 million in the fiscal year ended September 30, 2013, from $219.6 million in fiscal 2012. The decrease of $55.7 million, or 25.4%, was primarily due to reduced pricing for products from one of our key customers in this sector. For the fiscal years ended September 30, 2013 and 2012, our tablets sector accounted for approximately 21% and 27% of total net sales, respectively.

Net sales into our consumer electronics sector increased to $51.4 million in the fiscal year ended September 30, 2013, from $15.2 million in the fiscal year ended September 30, 2012. The increase of $36.2 million, or 238.2%, was primarily due to higher sales volumes for one of our customer’s programs in this sector of approximately $24.1 million, coupled with expansion into new products, such as personal computers, in this sector of approximately $6.7 million. For the fiscal years ended September 30, 2013 and 2012, our consumer electronics sector accounted for approximately 7% and 2% of total net sales, respectively.

Cost of Sales and Gross (Loss) Profit. Cost of sales as a percentage of net sales increased to 100.1% in the fiscal year ended September 30, 2013, from 89.9% in the fiscal year ended September 30, 2012. The increase in cost of sales as a percentage of net sales of 10.2% was primarily attributable to lower plant capacity utilization as a result of our capacity expansion in fiscal 2012 (580 basis points), reduced pricing and changes in product mix toward lower margin programs (255 basis points) and non-recurring specific inventory write-downs (185 basis points). Gross loss was $1.1 million in the fiscal year ended September 30, 2013, compared to gross profit of $82.7 million in the fiscal year ended September 30, 2012. As a percentage of net sales, gross loss was 0.1% for the fiscal year ended September 30, 2013, compared to gross profit of 10.1% for the fiscal year ended September 30, 2012.

Research and Development. Research and development expense increased by $0.2 million to $7.8 million in the fiscal year ended September 30, 2013, from $7.6 million in the fiscal year ended September 30, 2012, an increase of 2.6%. As a percentage of net sales, research and development expense increased to 1.0% in the fiscal year ended September 30, 2013, from 0.9% in the fiscal year ended September 30, 2012.

Sales and Marketing. Sales and marketing expense decreased by $1.8 million to $22.7 million in the fiscal year ended September 30, 2013, from $24.5 million in the fiscal year ended September 30, 2012, a decrease of 7.3%. The decrease was primarily attributable to lower variable expenses due to sales mix. As a percentage of net sales, sales and marketing expense decreased to 2.9% in the fiscal year ended September 30, 2013, from 3.0% in the fiscal year ended September 30, 2012.

General and Administrative. General and administrative expense decreased by $2.7 million to $17.1 million in the fiscal year ended September 30, 2013, from $19.8 million in the fiscal year ended September 30, 2012, a decrease of 13.6%. The decrease was attributable primarily to our efforts to reduce discretionary spending. As a percentage of net sales, general and administrative expense decreased to 2.2% for the fiscal year ended September 30, 2013, from 2.4% in the fiscal year ended September 30, 2012.

Stock-based compensation expense resulting from change in control. Stock-based compensation expense resulting from change in control was $9.6 million for the fiscal year ended September 30, 2013. This expense is related to the accelerated vesting of outstanding serviced-based RSUs and stock appreciation rights, as well as the conversion of performance-based RSUs to service-based RSUs for awards outstanding as of May 23, 2013 as part of our Change in Control. Refer to Note 9 “Stock-Based Compensation” in the Notes to Consolidated Financial Statements for further details.

Impairment and Restructuring. A goodwill impairment charge of $7.5 million was recorded during the fiscal year ended September 30, 2013. Refer to Note 11 “Impairment and Restructuring” in the Notes to Consolidated Financial Statements for further details. Impairment and restructuring consisted of recoveries of $2.5 million for the fiscal year ended September 30, 2012, which was the result of a gain on sale of our former corporate headquarters building and our former property in Arizona. Our long-lived assets at our operating and production facilities are classified as held and used within MFLEX’s asset grouping and are evaluated for impairment using the held and used model.

Interest Income. Interest income decreased to $0.7 million in the fiscal year ended September 30, 2013, from $1.4 million in the fiscal year ended September 30, 2012, a decrease of $0.7 million. The decrease was primarily a result of decreased interest rates on our cash held by foreign institutions.

Other Income (Expense), Net. Other income (expense), net decreased to income of $1.0 million in the fiscal year ended September 30, 2013, from income of $1.7 million in the fiscal year ended September 30, 2012, a decrease of $0.7 million. The decrease in income was primarily attributable to fluctuations from foreign exchange due to the movement of the U.S. dollar versus the RMB and other foreign currencies.

Income Taxes. The effective tax rate for the fiscal years ended September 30, 2013 and 2012 was (1.4)% and 17.4%, respectively. The change in our effective tax rate was primarily due to establishing a valuation allowance against deferred tax assets related to one of our entities in fiscal 2013 as well as our income and tax expense distribution by region.

Our principal sources of liquidity have been cash provided by operations and our ability to borrow under our various credit facilities. Our principal uses of cash have been to finance working capital, facility expansions, stock repurchases and other capital expenditures. We anticipate these uses will continue to be our principal uses of cash in the future. Global financial and credit markets have been volatile in recent years, and future adverse conditions of these markets could negatively affect our ability to secure funds or raise capital at a reasonable cost, if needed.

Our cash balances are held in numerous locations throughout the world. As of December 31, 2014, our cash held outside of the United States totaled $103.9 million, a majority of which may be brought back to the United States without significant tax implications, if needed. We believe that funds generated from our operations and available from our borrowing facilities will be sufficient to fund current business operations as well as anticipated growth over at least the next fiscal year, without the need to repatriate earnings. Undistributed earnings of our foreign subsidiaries amounted to approximately $124.7 million, $104.0 million, $152.3 million and $217.3 million for the three months ended December 31, 2014 and fiscal years ended September 30, 2014, 2013 and 2012, respectively. Those earnings are considered to be permanently reinvested due to certain restrictions under local laws as well as our plans to reinvest such earnings for future expansion in certain foreign jurisdictions.

The following table sets forth, for the years indicated, our net cash flows provided by (used in) operating, investing and financing activities, our period-end cash and cash equivalents and certain other operating measures:

	Three Months Ended December 31,						Fiscal Years Ended September 30,
	2014			2013			2014			2013			2012
	(dollars in thousands)
Net cash provided by operating activities	$	35,001		$	8,279		$	4,273		$	73,370		$	68,283
Net cash used in investing activities	$	(844	)	$	(1,358	)	$	(10,748	)	$	(44,569	)	$	(74,606	)
Net cash (used in) provided by financing activities	$	(369	)	$	61		$	(80	)	$	(4,908	)	$	(9,630	)
Cash and cash equivalents at period end	$	132,382		$	111,887		$	98,667		$	105,150		$	82,322
Days sales outstanding		57.1			62.7			75.6			68.0			69.4
Days inventory outstanding		32.9			34.5			49.4			48.3			51.8
Days payable outstanding		71.7			75.3			91.9			83.6			88.6
Net working capital days		18.3			21.9			33.1			32.7			32.6

Changes in the principal components of operating cash flows during the three months ended December 31, 2014 were as follows:

Our principal investing and financing activities during the three months ended December 31, 2014 were as follows:

Changes in the principal components of operating cash flows in our fiscal year ended September 30, 2014 were as follows:

Our principal investing and financing activities in our fiscal year ended September 30, 2014 were as follows:

Changes in the principal components of operating cash flows in our fiscal year ended September 30, 2013 were as follows:

Our principal investing and financing activities in our fiscal year ended September 30, 2013 were as follows:

Changes in the principal components of operating cash flows in our fiscal year ended September 30, 2012 were as follows:

Our principal investing and financing activities in our fiscal year ended September 30, 2012 were as follows:

As of December 31, 2014, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of the SEC’s Regulation S-K. The following summarizes our contractual obligations, excluding amounts already recorded on the Consolidated Balance Sheets at December 31, 2014, and the effect those obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

As of December 31, 2014, we recorded $7.9 million in long-term liabilities related to uncertain tax positions. We are not able to reasonably estimate the timing of the long-term payments, or the amount by which our liability will increase or decrease over time; therefore, the liability on uncertain tax positions has not been included in the contractual obligations table.

Refer to Note 1 “Basis of Presentation and Significant Accounting Policies” in the Notes to Consolidated Financial Statements for further details.

Market risk represents the risk of loss arising from adverse changes in liquidity, market rates and foreign exchange rates. At December 31, 2014, no amounts were outstanding under our loan agreements with Bank of America, Bank of China Co., Ltd., Agricultural Bank of China or China Construction Bank. The amounts outstanding under these loan agreements at any time may fluctuate and we may, from time to time, be subject to refinancing risk. We do not believe that a change of 100 basis points in the interest rate would have a material effect on our results of operations or financial condition based on our current borrowing level.

We derive a substantial portion of our sales outside of the U.S. Approximately $202.3 million, or 96%, of total shipments to these foreign manufacturers during the three months ended December 31, 2014 were made in U.S. dollars with the majority of the remaining balance of our net sales denominated in RMB. We currently have a significant portion of our expenses, more specifically cost of sales, denominated in RMB, whereby a significant appreciation or depreciation in the RMB could materially affect our reported expenses in U.S. dollars. The exchange rate for the RMB to the U.S. dollar has been an average of 6.14 RMB per U.S. dollar for three months ended December 31, 2014. To date, we attempt to manage our working capital in a manner to minimize foreign currency exposure and from time to time, we may engage in currency hedging activities through use of forward contracts, but such activities may not be able to limit the risks of currency fluctuations and we continue to be vulnerable to appreciation or depreciation of foreign currencies against the U.S. dollar. The changes in fair value of the outstanding forward contracts are recognized in earnings during the period of change as other income (expense), net in the Consolidated Statements of Comprehensive Income. As of December 31, 2014, there were no outstanding foreign currency forward contracts.

We believe our anticipated cash flows from operations are sufficient to fund our operations, including capital expenditure requirements, through at least the next fiscal year. If there was a need for additional cash to fund our operations, we would access our global credit lines.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows present fairly, in all material respects, the financial position of Multi-Fineline Electronix, Inc. and its subsidiaries at December 31, 2014, September 30, 2014 and September 30, 2013 and the results of their operations and their cash flows for the three months ended December 31, 2014 and each of the three years in the period ended September 30, 2014 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index appearing under Item 15 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

	December 31,		September 30,
	2014		2014		2013
ASSETS
Cash and cash equivalents	$	132,382	$	98,667	$	105,150
Accounts receivable, net of allowances of $3,126, $3,983 and $4,281 at December 31, 2014, September 30, 2014 and 2013, respectively		133,151		133,748		132,247
Inventories		65,627		75,998		86,853
Deferred taxes		514		1,820		5,909
Income taxes receivable		265		3,396		2,535
Assets held for sale		11,387		12,219		—
Other current assets		7,034		5,757		8,821
Total current assets		350,360		331,605		341,515
Property, plant and equipment, net		164,345		175,888		244,056
Land use rights		3,108		3,091		7,703
Deferred taxes		9,120		8,270		11,685
Other assets		454		595		5,255
Total assets	$	527,387	$	519,449	$	610,214
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	143,032	$	156,793	$	166,474
Other current liabilities		42,697		30,040		31,459
Income taxes payable		2,020		1,020		1,027
Total current liabilities		187,749		187,853		198,960
Other long-term liabilities		11,178		21,271		19,063
Total liabilities		198,927		209,124		218,023
Commitments and contingencies (Note 8)
Stockholders’ equity
Preferred stock, $0.0001 par value, 5,000,000, 5,000,000 and 5,000,000 shares authorized at December 31, 2014, September 30, 2014 and 2013, respectively; 0, 0 and 0 shares issued and outstanding at December 31, 2014, September 30, 2014 and 2013, respectively		—		—		—
Common stock, $0.0001 par value; 100,000,000, 100,000,000 and 100,000,000 shares authorized at December 31, 2014, September 30, 2014 and 2013, respectively; 24,303,267, 24,230,281 and 24,082,802 shares issued and outstanding at December 31, 2014, September 30, 2014 and 2013, respectively		2		2		2
Additional paid-in capital		94,394		93,637		90,857
Retained earnings		184,099		168,124		252,656
Accumulated other comprehensive income		49,965		48,562		48,676
Total stockholders’ equity		328,460		310,325		392,191
Total liabilities and stockholders’ equity	$	527,387	$	519,449	$	610,214

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

	Three Months Ended December 31,						Fiscal Years Ended September 30,
	2014			2013			2014			2013			2012
				(unaudited)
Net sales	$	210,003		$	211,672		$	633,153		$	787,644		$	818,932
Cost of sales		179,516			209,176			633,304			788,774			736,241
Gross profit (loss)		30,487			2,496			(151	)		(1,130	)		82,691
Operating expenses:
Research and development		1,397			1,455			5,941			7,776			7,615
Sales and marketing		4,819			5,908			19,015			22,720			24,457
General and administrative		4,675			3,343			15,421			17,118			19,839
Stock-based compensation expense resulting from change in control		—			—			—			9,582			—
Impairment and restructuring (recoveries) expenses		(396	)		—			33,939			7,537			(2,468	)
Total operating expenses		10,495			10,706			74,316			64,733			49,443
Operating income (loss)		19,992			(8,210	)		(74,467	)		(65,863	)		33,248
Other income (expense), net:
Interest income		239			209			1,025			727			1,352
Interest expense		(71	)		(122	)		(497	)		(487	)		(555	)
Other income (expense), net		199			296			1,498			1,002			1,656
Income (loss) before income taxes		20,359			(7,827	)		(72,441	)		(64,621	)		35,701
Provision for income taxes		(4,384	)		(1,452	)		(12,091	)		(910	)		(6,216	)
Net income (loss)		15,975			(9,279	)		(84,532	)		(65,531	)		29,485
Other comprehensive income:
Foreign currency translation adjustment		1,403			2,183			(114	)		7,723			1,151
Total comprehensive income (loss)	$	17,378		$	(7,096	)	$	(84,646	)	$	(57,808	)	$	30,636
Net income (loss) per share:
Basic		0.66		$	(0.39	)		(3.50	)	$	(2.74	)	$	1.24
Diluted		0.65		$	(0.39	)		(3.50	)	$	(2.74	)	$	1.22
Shares used in computing net income (loss) per share:
Basic		24,267,567			24,083,932			24,122,843			23,897,651			23,782,540
Diluted		24,624,368			24,083,932			24,122,843			23,897,651			24,077,479

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

	Common Stock					Additional Paid-in			Treasury			Retained			Accumulated Other Comprehensive			Total Stockholders’
	Shares			Amount		Capital			Stock			Earnings			Income			Equity
Balance at September 30, 2011		24,049,780		$	2	$	87,577		$	—		$	288,702		$	39,802		$	416,083
Issuance of common stock for equity awards		211,742			—		168			—			—			—			168
Stock-based compensation expense		—			—		4,900			—			—			—			4,900
Tax benefits from settlements of stock-based equity awards		—			—		177			—			—			—			177
Net income		—			—		—			—			29,485			—			29,485
Translation adjustment		—			—		—			—			—			1,151			1,151
Tax withholdings for net share settlement of equity awards		(60,401	)		—		(1,131	)		—			—			—			(1,131	)
Repurchase of common stock		(438,400	)		—		—			(8,844	)		—			—			(8,844	)
Retirement of treasury shares		—			—		(8,844	)		8,844			—			—			—
Balance at September 30, 2012		23,762,721		$	2	$	82,847		$	—		$	318,187		$	40,953		$	441,989
Issuance of common stock for equity awards		655,373			—		607			—			—			—			607
Stock-based compensation expense		—			—		13,612			—			—			—			13,612
Tax shortfall from settlements of stock-based equity awards		—			—		(665	)		—			—			—			(665	)
Net loss		—			—		—			—			(65,531	)		—			(65,531	)
Translation adjustment		—			—		—			—			—			7,723			7,723
Tax withholdings for net share settlement of equity awards		(215,316	)		—		(3,454	)		—			—			—			(3,454	)
Repurchase of common stock		(119,976	)		—		—			(2,090	)		—			—			(2,090	)
Retirement of treasury shares		—			—		(2,090	)		2,090			—			—			—
Balance at September 30, 2013		24,082,802		$	2	$	90,857		$	—		$	252,656		$	48,676		$	392,191
Issuance of common stock for equity awards		201,295			—		848			—			—			—			848
Stock-based compensation expense		—			—		3,147			—			—			—			3,147
Tax shortfall from settlements of stock-based equity awards		—			—		(672	)		—			—			—			(672	)
Net loss		—			—		—			—			(84,532	)		—			(84,532	)
Translation adjustment		—			—		—			—			—			(114	)		(114	)
Tax withholdings for net share settlement of equity awards		(53,816	)		—		(543	)		—			—			—			(543	)
Balance at September 30, 2014		24,230,281		$	2	$	93,637		$	-		$	168,124		$	48,562		$	310,325
Issuance of common stock for equity awards		106,990			—		—			—			—			—			—
Stock-based compensation expense		—			—		1,126			—			—			—			1,126
Net income		—			—		—			—			15,975			—			15,975
Translation adjustment		—			—		—			—			—			1,403			1,403
Tax withholdings for net share settlement of equity awards		(34,004	)		—		(369	)		—			—			—			(369	)
Balance at December 31, 2014		24,303,267		$	2	$	94,394		$	—		$	184,099		$	49,965		$	328,460

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

	Three Months Ended December 31,						Fiscal Years Ended September 30,
	2014			2013			2014			2013			2012
				(unaudited)
Cash flows from operating activities
Net income (loss)	$	15,975		$	(9,279	)	$	(84,532	)	$	(65,531	)	$	29,485
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		14,741			12,821			51,380			58,154			53,082
Deferred taxes		508			(65	)		7,499			(2,523	)		(2,290	)
Stock-based compensation expense		1,126			621			3,147			13,612			4,900
Excess tax benefit related to stock option exercises		—			—			(57	)		(29	)		(177	)
Asset (recoveries) impairments		(1,816	)		—			18,241			7,537			(2,468	)
Gain on disposal of property, plant and equipment		(264	)		(1,058	)		(1,571	)		(1,702	)		(516	)
Changes in operating assets and liabilities:
Accounts receivable		819			(14,963	)		(1,623	)		33,478			(14,837	)
Inventories		11,693			8,417			10,624			44,216			(37,462	)
Other current assets		(1,473	)		(2,460	)		3,766			1,075			(4,527	)
Other assets		125			127			5,103			767			(585	)
Accounts payable		(12,954	)		12,220			(6,972	)		(9,459	)		31,349
Other current liabilities		12,500			958			(1,590	)		(5,334	)		8,046
Income taxes payable		4,130			938			(1,543	)		(1,789	)		1,236
Other liabilities		(10,109	)		2			2,401			898			3,047
Net cash provided by operating activities		35,001			8,279			4,273			73,370			68,283
Cash flows from investing activities
Purchases of property and equipment		(4,045	)		(6,563	)		(18,529	)		(47,333	)		(86,077	)
Proceeds from sale of equipment and assets held for sale		3,201			1,054			4,150			2,764			11,471
Change in restricted cash		—			—			(520	)		—			—
Government grants received		—			4,151			4,151			—			—
Net cash used in investing activities		(844	)		(1,358	)		(10,748	)		(44,569	)		(74,606	)
Cash flows from financing activities
Excess tax benefit related to stock option exercises		—			—			57			29			177
Tax withholdings for net share settlement of equity awards		(369	)		(5	)		(543	)		(3,454	)		(1,131	)
Proceeds from exercise of stock options					66			848			607			168
Debt issuance costs		—			—			(442	)		—			—
Repurchase of common stock		—			—			—			(2,090	)		(8,844	)
Net cash (used in) provided by financing activities		(369	)		61			(80	)		(4,908	)		(9,630	)
Effect of exchange rate changes on cash		(73	)		(245	)		72			(1,065	)		385
Net increase (decrease) in cash		33,715			6,737			(6,483	)		22,828			(15,568	)
Cash and cash equivalents at beginning of period		98,667			105,150			105,150			82,322			97,890
Cash and cash equivalents at end of period	$	132,382		$	111,887		$	98,667		$	105,150		$	82,322
Non-cash investing activities
Purchases of property and equipment	$	2,170		$	3,606		$	6,989		$	8,950		$	34,350
Supplemental disclosure
Cash paid for interest	$	49			—		$	174		$	533		$	528
Cash paid for income taxes	$	291		$	12		$	1,622		$	4,664		$	6,274

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

Multi-Fineline Electronix, Inc. (“MFLEX” or the “Company”) was incorporated in 1984 in the State of California and reincorporated in the State of Delaware in June 2004. The Company is primarily engaged in the engineering, design and manufacture of flexible printed circuit boards along with related component assemblies.

United Engineers Limited (“UEL”) and its wholly owned subsidiary, UE Centennial Venture Pte. Ltd (“UECV”, and together with UEL, “UE”), through its affiliates and subsidiaries, beneficially owned approximately 61%, 61% and 62% of the Company’s outstanding common stock as of December 31, 2014, September 30, 2014 and September 30, 2013, respectively. This beneficial ownership of the Company’s common stock by UE provides these entities with control over the outcome of stockholder votes at the Company, except with respect to certain related-party transactions with UE or its subsidiaries, including WBL Corporation Limited (“WBL”), which require a separate vote of the non-UE stockholders.

On August 4, 2014, the Board of Directors of the Company approved a change in the Company’s fiscal year end from September 30 to December 31. As a result of this change, the Company is filing a Transition Report on Form 10-K for the three-month transition period ended December 31, 2014. References to any of the Company’s fiscal years mean the fiscal year ending September 30 of that calendar year. Financial information in these notes with respect to the three months ended December 31, 2013 is unaudited.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company has three wholly owned subsidiaries located in China: MFLEX Suzhou Co., Ltd. (“MFC”), formerly known as Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd. (“MFC2”) and into which Multi-Fineline Electronix (Suzhou) Co., Ltd (“MFC1” which we are in the process of de-registering) was merged in fiscal 2010, and MFLEX Chengdu Co., Ltd. (“MFLEX Chengdu”); one located in the Cayman Islands: M-Flex Cayman Islands, Inc. (“MFCI”); one located in Singapore: Multi-Fineline Electronix Singapore Pte. Ltd. (“MFLEX Singapore”); one located in Malaysia: Multi-Fineline Electronix Malaysia Sdn. Bhd. (“MFM”); one located in Cambridge, England: MFLEX UK Limited (“MFE”); one located in Arizona: Aurora Optical, Inc. (“Aurora Optical”), which was dissolved in September 2012; one located in Korea: MFLEX Korea, Ltd. (“MKR”); and one located in the Netherlands: MFLEX B.V. (“MNE”). All significant intercompany transactions and balances have been eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used, including, but not limited to, those related to inventories, income taxes, accounts receivable allowance and warranty. Actual results could differ from those estimates.

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents consisted of money market funds as of December 31, 2014, September 30, 2014 and September 30, 2013.

Per Financial Accounting Standards Board (“FASB”) authoritative guidance, the Company classifies and discloses the fair value of certain of its assets and liabilities in one of the following three categories:

Level 1: quoted market prices in active markets for identical assets and liabilities

Level 2: observable market based inputs or unobservable inputs that are corroborated by market data

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated fair value due to their short maturities. For recognition purposes, on a recurring basis, the Company’s assets and liabilities related to money market funds and derivative financial instruments are measured at fair value at the end of each reporting period. The fair value of the Company’s money market funds were measured using Level 1 fair value inputs and the fair value of the Company’s derivative assets and liabilities were measured using Level 2 fair value inputs, which consisted of observable market-based inputs of foreign currency spot and forward rates quoted by major financial institutions.

The Company’s assets and liabilities measured at fair value on a recurring basis subject to the disclosure requirements as defined under the FASB authoritative accounting guidance were as follows:

As of December 31, 2014, assets held for sale were measured at fair value on a non-recurring basis. Based on the relevant FASB authoritative guidance, the carrying value of assets held for sale was written down to $11,387 as of December 31, 2014 (refer to Note 11). The fair value of the assets was determined using Level 3 unobservable inputs not corroborated by market data, consisting of third-party offers for assets held for sale. Below is a summary of the Company’s assets measured at fair value on a non-recurring basis as of December 31, 2014 and September 30, 2014:

No assets or liabilities were measured at fair value on a non-recurring basis as of September 30, 2013.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, to the extent balances exceeded limits that were insured by the Federal Deposit Insurance Corporation or the equivalent government body in other countries, and accounts receivable. Credit risk exists because the Company’s flexible printed circuit boards and related component assemblies were sold to a limited number of customers during the reporting periods herein (refer to Note 7).

The Company does not require collateral and maintains reserves for potential credit losses. Such losses have historically been immaterial and have been within management’s expectations.

The Company records revenues in accordance with the terms of the sale, which is generally at shipment. Accounts receivable are recorded at the invoiced amount, and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable, and the allowance is determined based on historical write-off experience as well as specific identification of credit issues with invoices. The Company reviews the allowance for doubtful accounts monthly (or more often, as necessary), and past due balances over a specified amount are reviewed individually for collectability. All other balances are reviewed on an aggregate basis. Account balances are charged against the allowance if and when the Company determines it is probable that the receivable will not be collected. The Company does not have any off-balance sheet credit exposure related to its customers.

Inventories are stated at the lower of cost or market, with cost being determined on a first-in, first-out basis. The Company records write-downs for excess and obsolete inventory based on historical usage and expected future product demand.

The Company held Chinese Renminbi (“RMB”) 3,200 as of December 31, 2014 and September 30, 2014, (which were approximately $523 and $520, respectively) of cash restricted due to customs deposit requirements in China, which was segregated from cash and cash equivalents and included within other current assets. The restriction is expected to cease within twelve months.

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows:

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows attributable to such assets, including any cash flows upon their eventual disposition, to their carrying value. If the carrying value of the assets exceeds the forecasted undiscounted cash flows, then the assets are written down to their fair value.

Land use rights include long-term leaseholds of land for the Company’s facilities located in China. The Company paid an upfront fee for use of the land use rights and amortizes the expense through expiration.

The Company tests its long-lived assets for impairment whenever circumstances or events may affect the recoverability of long-lived assets. To determine if an impairment exists, the Company first determines whether there has been a change in the use or circumstance related to the assets and whether a held and used or held for sale impairment model should be used to evaluate the assets or asset group for impairment.

If the assets are classified as held and used, the Company utilizes the forecasted undiscounted cash flows related to the asset group and compares the result to the carrying value. If the forecasted undiscounted cash flows exceed the carrying value, there is no impairment. To develop the forecasted undiscounted cash flows, the Company utilizes a number of estimates and assumptions including the internally developed business assumptions used to compute the forecasted cash flows and related terminal cash flows. If the assets meet the criteria for held for sale classification, the Company determines the estimated fair value for the assets less the applicable disposal costs and compares this value to the carrying value of the long-lived assets. If this value exceeds the carrying

value, there is no impairment. In determining these fair value estimates, the Company considers internally generated information and information obtained from discussions with market participants. The determination of fair value requires significant judgment both by the Company and outside experts engaged to assist in this process, if any. Refer to Note 11 for further details.

The Company records the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recorded as goodwill. Valuation of intangible assets entails significant estimates and assumptions including, but not limited to, determining the timing and expected costs to complete development projects, estimating future cash flows from product sales, developing appropriate discount rates, estimating probability rates for the successful completion of development projects, continuation of customer relationships and renewal of customer contracts, and approximating the useful lives of the intangible assets acquired.

The Company reviewed the recoverability of the carrying value of goodwill on an annual basis typically during its fourth fiscal quarter, or more frequently when an event occurred or circumstances changed to indicate that an impairment of goodwill had possibly occurred. At June 30, 2013, the Company performed an interim goodwill impairment test on its single reporting unit. Upon completion of the impairment test, the Company determined that its goodwill was impaired and recorded a charge of $7,537 during the fiscal third quarter of 2013 to fully impair its goodwill, resulting in a balance of $0 as of September 30, 2013. Refer to Note 11 for further details.

The Company’s revenues, which the Company refers to as net sales, net of accounts receivable allowance, refunds and credits, are generated primarily from the sale of flexible printed circuit boards and related component assemblies, which are sold to original equipment manufacturers and electronic manufacturing services providers to be included in other electronic products. The Company recognizes revenue when there is persuasive evidence of an arrangement with the customer that states a fixed or determinable sales price, when title and risk of loss transfers, when delivery of the product has occurred in accordance with the terms of the sale and collectability of the related accounts receivable is reasonably assured. The Company does not have any post-shipment obligations (e.g., installation or training) or multiple-element arrangements. The Company’s remaining obligation to its customer after delivery is limited to warranty on its product.

All non-income government-assessed taxes (sales and value added taxes) collected from customers and remitted to governmental agencies are recorded on a net basis (excluded from net sales) in the accompanying consolidated financial statements. Such taxes are recorded in accrued liabilities until they are remitted to the appropriate governmental agencies.

The Company typically warrants its products for up to 36 months. The standard warranty requires the Company to replace defective products returned to the Company at no cost to the customer. The Company records an estimate for warranty related costs at the time revenue is recognized based on historical amounts incurred for warranty expense and historical warranty return rates as well as an evaluation of the expected future warranty return rates. If actual warranty return rates differ from the estimated trends based on our historical experience, the Company may adjust the warranty accrual to reflect the actual results. The warranty accrual is included in accrued liabilities in the accompanying Consolidated Balance Sheets.

Changes in the product warranty accrual for the three months ended December 31, 2014 and fiscal years ended September 30, 2014, 2013 and 2012, were as follows:

The Company recognizes restructuring charges related to plans to close or consolidate duplicate manufacturing and administrative facilities. In connection with these activities, the Company records restructuring charges for employee termination and relocation costs and other exit-related costs.

The recognition of restructuring charges requires making certain judgments and estimates regarding the nature, timing and amount of costs associated with the planned exit activity. To the extent that actual results differ from these estimates and assumptions, the Company may be required to revise the estimates of future liabilities, requiring the recognition of additional restructuring charges or the reduction of liabilities already recognized. Such changes to previously estimated amounts may be material to the consolidated financial statements. At the end of each reporting period, the Company evaluates the remaining accrued balances to ensure that no excess accruals are retained and the utilization of the provisions are for their intended purpose in accordance with developed exit plans. During the three months ended December 31, 2014, the Company recorded restructuring charges of $1,420. During the fiscal years ended September 30, 2014, 2013 and 2012, the Company recorded restructuring charges (recoveries) of $15,698, $0 and $(2,468), respectively. Refer to Note 11 for further details.

Income taxes are computed using the asset and liability method. Under this method, deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the tax bases and financial reporting amounts of existing assets and liabilities. Valuation allowances are established when it is more likely than not that such deferred tax assets will not be realized. The Company does not file a consolidated return with its foreign wholly owned subsidiaries.

The Company has a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefit in income tax expense.

The functional currency of the Company’s foreign subsidiaries is either the local currency or if the predominant transaction currency is the U.S. dollar, then the U.S. dollar will be the functional currency. Balances are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and an average exchange rate for each period for income statement amounts. Currency translation adjustments are recorded in accumulated other comprehensive income, a component of stockholders’ equity.

Foreign currency transactions occur primarily when there is a receivable or payable denominated in other than the respective entity’s functional currency. The Company records the changes in the exchange rate for these transactions in the Consolidated Statements of Comprehensive Income. For the three months ended December 31, 2014, foreign exchange transaction gains and losses were included in other income (expense), net and were net gains of $75. For the fiscal years ended September 30, 2014, 2013 and 2012, they were net gains (losses) of $605, $348 and $(69), respectively.

The Company’s derivative financial instruments are designated to economically hedge the exposure of future cash flows denominated in non-U.S. dollar currency. Derivative financial instruments are measured at fair value and are recorded in the Consolidated Balance Sheets as either assets or liabilities. Changes in the fair value of the derivative financial instruments are recorded each period in the Consolidated Statements of Comprehensive Income, depending on whether the derivative instruments are designated as part of the hedge transaction, and if so, the type of hedge transaction.

The Company evaluates its derivative financial instruments as either cash flow hedges (forecasted transactions), fair value hedges (changes in fair value related to recognized assets or liabilities) or derivative financial instruments that do not qualify for hedge accounting. To qualify for hedge accounting, a derivative financial instrument must be highly effective in mitigating the designated risk of the hedged item. For derivative financial instruments that do not qualify for hedge accounting, changes in the fair value are reported in current period earnings.

The Company designates its derivative financial instruments as non-hedge derivatives and records its foreign currency forward contracts as either assets or liabilities in the Consolidated Balance Sheets. Changes in the fair value of the derivative financial

instruments that arise due to fluctuations in the forward exchange rates are recognized in earnings each period as other income (expense), net in the Consolidated Statements of Comprehensive Income. Realized gains (losses) are recognized at maturity as other income (expense), net in the Consolidated Statements of Comprehensive Income. The cash flows from derivative financial instruments are classified as cash flows from operating activities in the Consolidated Statements of Cash Flows. Refer to Note 10 for further information on derivative financial instruments.

The Company recognizes stock-based compensation expense for all stock-based payment arrangements, net of an estimated forfeiture rate and generally recognizes expense for those shares expected to vest over the requisite service period of the award. For stock options and stock appreciation rights, the Company determines the grant date fair value using the Black-Scholes option-pricing model which requires the input of certain assumptions, including the expected life of the stock-based payment awards, stock price volatility and interest rates. For the service-based restricted stock units, the Company determines the fair value using the closing price of the Company’s common stock on the date of grant. For the performance-based restricted stock units, the Company determines the fair value using a Monte Carlo simulation model based on the underlying common stock closing price as of the grant performance date, the expected term, stock price volatility, and risk-free interest rates.

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities. The impact of potentially dilutive securities is determined using the treasury stock method.

During May 2014, the FASB issued revised authoritative guidance that requires a reporting entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The amendment is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the impact of its pending adoption of this guidance on its financial position, results of operations and cash flows.

During July 2013, the FASB issued revised authoritative guidance that requires the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the financial statements when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 (which was October 1, 2014 for the Company). The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

During February 2013, the FASB issued revised authoritative guidance that requires the presentation in a single location, either in a note or parenthetically on the face of the financial statements, of the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. This guidance is effective prospectively for annual periods beginning after December 15, 2012 (which was October 1, 2013 for the Company). The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

During July 2012, the FASB issued revised authoritative guidance that is intended to reduce the cost and complexity of the impairment test for indefinite-lived intangible assets by providing an entity with the option to first assess qualitatively whether it is necessary to perform the impairment test that is currently in place. An entity would not be required to quantitatively calculate the fair value of an indefinite-lived intangible asset unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for interim and annual periods beginning after September 15, 2012 (which was October 1, 2012 for the Company). The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

During December 2011, the FASB issued revised authoritative guidance that requires an entity to disclose information about offsetting and related arrangements on its financial position. This includes the effect or potential effect of rights of offset associated with an entity’s recognized assets and recognized liabilities and requires improved information about financial instruments and derivative instruments that are subject to an enforceable master netting arrangement or similar arrangement. During January 2013, the FASB issued an amendment to this guidance, which limits the scope to derivatives, repurchase agreements and securities lending transactions. The amendments are effective for annual periods beginning on or after January 1, 2013 (which was October 1, 2013 for the Company) and retrospective disclosure is required for all comparative periods presented. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

During June 2011, the FASB issued revised authoritative guidance that requires all non-owner changes in stockholder’s equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income and the total of comprehensive income. The amendments were effective for annual periods beginning after December 15, 2011 (which was October 1, 2012 for the Company) and were applied retrospectively. The guidance was adopted by the Company in fiscal 2012 and did not have a material impact on its consolidated financial position, results of operations or cash flows.

During May 2011, the FASB issued revised authoritative guidance that resulted in common principles and requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term “fair value” in accordance with U.S. GAAP and International Financial Reporting Standards (“IFRS”). The amendments were effective for interim and annual periods beginning after December 15, 2011 (which was January 1, 2012 for the Company) and were to be applied prospectively. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

During the fourth fiscal quarter of 2012, the Company effectively changed its accounting policy with regard to freight out costs. Freight out costs were previously classified as cost of sales but, going forward, are classified as sales and marketing. For the nine months ended June 30, 2012, freight out costs of $2,164 were included in cost of sales. For the three months ended September 30, 2012, freight out costs of $880 were included in sales and marketing. Given the immateriality of these costs, the Company prospectively began reflecting freight out costs in sales and marketing beginning July 1, 2012. The Company evaluated the materiality of such change from both a quantitative and qualitative basis and concluded that reclassification of such costs on a prior year basis was immaterial and, accordingly, did not reclassify such costs that were previously included in cost of sales for periods previously reported prior to the change. For the fiscal year ended September 30, 2013, freight out costs of $2,706 were included in sales and marketing.

Rent expense for the three months ended December 31, 2014 and fiscal years ended September 30, 2014, 2013 and 2012 included related-party payments to various WBL subsidiaries of $54, $224, $204 and $133, respectively. As of December 31, 2014, the Company leased approximately 12,000 square feet of office space from WBL related parties.

Depreciation expense for the three months ended December 31, 2014 and 2013, was $14,674 and $12,703, respectively. Depreciation expense for the fiscal years ended September 30, 2014, 2013 and 2012, was $50,933, $57,187 and $52,249, respectively.

	Three Months Ended			Fiscal Years Ended September 30,
	December 31, 2014			2014			2013			2012
Current:
Federal	$	406		$	(3,321	)	$	578		$	1,407
State		27			(676	)		18			391
Foreign		3,495			8,584			3,186			6,717
	$	3,928		$	4,587		$	3,782		$	8,515
Deferred:
Federal	$	(154	)	$	3,619		$	(1,855	)	$	400
State		(3	)		988			34			(59	)
Foreign		613			2,897			(1,051	)		(2,640	)
		456			7,504			(2,872	)		(2,299	)
	$	4,384		$	12,091		$	910		$	6,216

	December 31,			September 30,
	2014			2014			2013
Deferred tax assets:
Net operating loss	$	33,492		$	34,138		$	20,359
Inventories		322			251			520
Depreciation		9,832			8,783			5,985
Stock-based compensation		2,660			2,761			3,018
Asset impairment		16			393			137
Accrued expenses		1,675			2,373			6,337
Allowance for doubtful accounts		443			428			451
Warranty reserve		251			249			227
Capital loss carryforward		—			—			—
Investments		155			156			174
Foreign tax credits		567			1,494			902
Amortization		1,882			1,910			2,233
Other		35			32			—
Subtotal deferred tax assets		51,330			52,968			40,343
Valuation allowance		(41,394	)		(42,611	)		(22,536	)
Total deferred tax assets		9,936			10,357			17,807
Deferred tax liabilities:
Deferred revenue		302			267			170
Other		—			—			43
Total deferred tax liabilities		302			267			213
Net deferred tax assets	$	9,634		$	10,090		$	17,594

The Company’s valuation allowance amounted to $41,394, $42,611 and $22,536 as of December 31, 2014, September 30, 2014 and 2013, respectively. The valuation allowance is recorded against deferred tax assets and consisted of net operating loss carryforwards, fixed assets, tax credits, provisions and accrued expenses. The Company intends to maintain a valuation allowance on its deferred tax assets until sufficient positive evidence exists to support its reversal. Based on an evaluation of the positive and negative evidence, the Company concluded that no other valuation allowances were required on its other jurisdictions. The valuation allowance decreased by $1,217 due to releasing of valuation allowance from utilization of net operating loss and other deferred tax assets. There is uncertainty regarding the future realization of these deferred tax assets, and management has determined that more likely than not, it will not receive future tax benefits from these assets.

As of December 31, 2014, September 30, 2014 and 2013, the Company had net operating loss carryforwards for federal tax purposes of $24,007, $25,038 and $0, respectively. The Company had net operating loss carryforwards for state tax purposes of $9,403, $9,468 and $2,779, respectively. In addition, the Company had net operating loss carryforwards for foreign tax purposes of approximately $186,241, $192,606 and $114,077, respectively. The net operating loss carryforward will begin to expire in 2034 for federal tax purposes. The net operating loss carryforwards will begin to expire in 2030 for state and 2019 for foreign tax purposes. The foreign net operating loss includes pre-acquisition net operating loss from MFE in the amount of $23,479. Due to a change of

ownership of MFE, utilization of the pre-acquisition net operating loss may be limited if MFE experiences a change in the nature or conduct of the business. In addition, the Company had foreign tax credit carryforwards of $567, which will begin to expire in 2022.

The benefit from (provision for) income taxes differs from the amount obtained by applying the statutory tax rate as follows:

	Three Months Ended			Fiscal Years Ended September 30,
	December 31, 2014			2014			2013			2012
Provision for income taxes at statutory rate		34.0	%		34.0	%		34.0	%		35.0	%
Increase (decrease) in taxes resulting from:
State taxes, net of federal benefit		0.0			(0.9	)		—			0.3
Foreign rate variance		(24.6	)		(14.9	)		(18.0	)		(23.0	)
Nondeductible expenses		0.7			(0.6	)		(1.3	)		0.8
Nontaxable income		—			12.8			—			—
Return to provision adjustments		(0.5	)		(0.1	)		1.2			0.2
Tax contingency reserve		12.8			(7.9	)		(0.6	)		3.6
Valuation allowance		(2.4	)		(38.9	)		(16.3	)		0.2
Other		1.5			(0.2	)		(0.4	)		0.3
		21.5	%		(16.7	)%		(1.4	)%		17.4	%

The Company currently enjoys tax incentives for certain of its Asia operations. Certain Asia operations are subject to taxes at a rate lower than the statutory rates. However, these tax holidays and tax incentives may be challenged, modified or even eliminated by taxing authorities or due to changes in law. The tax incentives for the Company’s operations in Singapore expired on June 30, 2013.

Due to the valuation allowance against certain operating losses for the quarter ended December 31, 2014 and the fiscal years ended September 30, 2014 and 2013, the Company did not benefit from the tax incentives. Had the Company not received the tax incentive for its operations in Asia, net income for the fiscal year ended September 30, 2012 would have been decreased to the pro forma amounts as illustrated below:

Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $124,743 for the three months ended December 31, 2014. Undistributed earnings amounted to $104,022, $152,302 and $217,255 for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. Those earnings are considered to be permanently reinvested due to certain restrictions under local laws as well as the Company’s plans to reinvest such earnings for future expansion in certain foreign jurisdictions. Accordingly, no provision for U.S. federal and state taxes has been provided thereon. Upon repatriation of those earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes and withholding taxes payable to the foreign country. If such earnings were repatriated, the amount of unrecognized deferred tax liability is estimated to be approximately $18,500.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

As of December 31, 2014, the Company’s liability for income taxes associated with uncertain tax positions increased to $26,109 from $24,143 as of September 30, 2014. The liabilities that would favorably affect the Company’s effective tax rate were $17,510 and $15,187 at December 31, 2014 and September 30, 2014, respectively. As of December 31, 2014, the Company received new information not previously available associated with uncertain tax positions related to prior year intercompany transactions. After evaluation of such information, the Company changed its judgment on these uncertain tax positions and recorded additional liability in the amount of $1,966 as of December 31, 2014. The Company anticipates that there will be other changes to the unrecognized tax benefit associated with uncertain tax positions due to the expiration of statutes of limitation, payment of tax on amended returns, audit settlements and other changes in reserves. However, due to the uncertainty regarding the timing of these events, other than the statute of limitation expiration, a current estimate of the range of changes that may occur within the next 12 months cannot be made.

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued $309, $545 and $624 of net interest for the three months ended December 31, 2014 and the fiscal years ended September 30, 2014 and 2013, respectively. In total, the Company has recognized a liability of $2,746 and $2,437 for interest as of December 31, 2014 and September 30, 2014, respectively.

The Company and its subsidiaries conduct business globally and, as a result, it or one or more of its subsidiaries file income tax returns in the U.S. (both federal and in various states), local and foreign jurisdictions. With limited exceptions, the Company is no longer subject to U.S. federal tax examinations for years through fiscal 2010. With limited exceptions, the Company is no longer subject to state and foreign income tax examinations by taxing authorities for years through fiscal 2004.

The Chinese tax authority has concluded the field work associated with auditing the income tax returns of MFC and MFC1 for tax years 2005 through 2011 related to transfer pricing on tangible goods sold by the Company to related parties. As of December 31, 2014, the Chinese tax authority informed the Company of an assessment of $12,524, including interest. Management believes that an adequate provision has been made related to this audit. The Chinese tax authority issued the final notice of assessment, and the Company made the corresponding payment in February 2015. The Company may be seeking relief from double taxation through competent authority on this cross-border adjustment.

The Chinese tax authority is currently auditing the income tax returns of MCH for tax years 2011 through 2014. The Chinese tax authority raised questions related to transfer pricing on tangible goods sold by the Company to related parties. The questions primarily related to the transfer pricing methodology and the selection of comparable companies. Discussions with the Chinese tax authority surrounding this issue are ongoing. Management believes that an adequate provision has been made related to this audit.

The outcome of these tax audits cannot be predicted with certainty. If any issues raised in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, then the Company could be required to adjust its provision for income tax in the period such resolution occurs. Any significant adjustments from the tax authorities could have a material adverse effect on the Company’s results of operations, cash flows and financial position if not resolved favorably.

During August 2014, the Company, as guarantor, and MFLEX Singapore, as borrower, entered into a Loan and Security Agreement with certain financial institutions, as lenders, and Bank of America, N.A. (“BA”), as agent, providing for a senior revolving credit facility in an amount up to $30,000. The credit facility has a three-year term, and availability under the credit facility is calculated based on a formula which takes into account multiple factors, including the accounts receivable of borrower, the

geographic location of borrower’s customer, and whether the customer’s receivable is insured by a third party. Amounts outstanding will bear interest at either: (1) a rate equal to LIBOR or SIBOR, plus an applicable margin, which ranges from 125 to 275 basis points, or (2) a defined base rate plus an applicable margin ranging from 75 to 275 basis points. In either case, the applicable margin is based on the fixed charge coverage ratio of the Company and its subsidiaries, measured on a consolidated basis.

During July 2013, MFC entered into a Line of General Credit Agreement (the “MFC Credit Line”) with Agricultural Bank of China, Suzhou Wuzhong Sub-branch (“ABC”), providing for a line of credit to MFC in an amount of 200,000 RMB ($32,685 at December 31, 2014). The MFC Credit Line became effective on July 31, 2013 and will mature on July 30, 2016. In addition, MFC and ABC entered into a Facility Offer Letter dated as of July 1, 2013, which sets forth the loan pricing. The loan interest rate for the U.S. dollar borrowing under the MFC Credit Line will be negotiated by the parties based on the lending cost in the Chinese market for the U.S. dollar transactions on the day the loan is made.

During May 2013, MFC entered into a Line of Credit Agreement (the “CCB Credit Line”) with China Construction Bank, Suzhou Industry Park Sub-Branch (“CCB”), which provides for a borrowing facility for 300,000 RMB ($49,028 at December 31, 2014). The CCB Credit Line will mature on May 5, 2016. MFC and CCB have also entered into a Facility Offer Letter which sets forth the pricing negotiated by the parties. Interest on the credit line agreement for RMB lending is based on the current rate set by the People’s Bank of China at the time of borrowing. For U.S. dollar lending, the interest rate will be negotiated and determined by both parties based on the lending cost in the Chinese market for U.S. dollar transactions on the day the loan is made.

During March 2013, MFLEX Chengdu entered into a Line of Credit Agreement (the “MCH Credit Line”) with Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch (“BC”), providing for a line of credit to MFLEX Chengdu in an amount of $11,000. The MCH Credit Line matured on February 5, 2014.

During January 2012, MFLEX Singapore entered into a Facility Agreement (the “Facility Agreement”) with JPMorgan Chase Bank, N.A., Singapore Branch, as mandated lead arranger, the financial institutions from time to time party thereto, as lenders (the “Lenders”), and JPMorgan Chase Bank, N.A. acting through its Hong Kong Branch (“JPM”), as facility agent and as security agent. The Facility Agreement provides for a three-year, revolving credit facility, under which MFLEX Singapore may obtain loans and other financial accommodations in an aggregate principal amount of up to $50,000. As of December 31, 2013, the Company was not in compliance with one of the financial covenants under the Facility Agreement with JPM due to its trailing twelve-month net losses. No amounts were outstanding under the Facility Agreement with JPM as of December 31, 2013. Effective February 5, 2014, the Company terminated the Facility Agreement.

As of December 31, 2014, the Company was in compliance with all covenants under its lines of credit.

Based on the evaluation of the Company’s internal financial information, management believes that the Company operates in one reportable segment under one reporting unit. The Company is primarily engaged in the engineering, design and manufacture of flexible circuit boards along with related component assemblies. The Company operates in four geographical areas: United States, China, Singapore and Other (which includes Malaysia, Korea and the United Kingdom). Net sales are presented based on the country in which the sales originate, which is where the legal entity is domiciled. The financial results of the Company’s geographic areas are presented on a basis consistent with the consolidated financial statements. The geographic area’s net sales amounts include intra-company product sales transactions, which are offset in the elimination line.

Net sales by geographic region based on the location of the customer is summarized below:

	Three Months Ended		Fiscal Years Ended September 30,
	December 31, 2014		2014		2013		2012
United States	$	81,310	$	65,964	$	17,968	$	26,125
Mexico		—		—		8,489		39,195
Canada		413		5,688		1,965		6,245
China		53,589		357,170		580,804		460,489
Hong Kong		25,963		138,795		136,445		238,412
Japan		38,258		45,238		7,750		29
Malaysia		214		1,005		1,569		7,580
Other Asia-Pacific		10,193		17,361		26,591		22,278
Europe		4		21		5,301		16,339
Other		59		1,911		762		2,240
	$	210,003	$	633,153	$	787,644	$	818,932

Sales to customers in Other Asia-Pacific noted above included Singapore, Taiwan, Vietnam and Korea. Sales to customers in Europe included France, Germany, Hungary, the Netherlands and the United Kingdom.

For the three months ended December 31, 2014 and 2013, net sales to one of the Company’s largest Original Equipment Manufacturer (“OEM”) customers, inclusive of net sales made to its designated subcontractors, was 76% and 71%, respectively, of

total net sales. For the fiscal years ended September 30, 2014, 2013 and 2012, net sales to this OEM customer were 57%, 75% and 74% of total net sales, respectively.

Net sales to another OEM customer, inclusive of net sales made to its designated subcontractors was 12% of total net sales for the three months ended December 31, 2014. Net sales to the same OEM customer were 17%, 3% and 4% for the fiscal years ended September 30, 2014, 2013 and 2012, respectively.

Net sales direct to the Company’s largest customers, exclusive of OEM subcontractor relationship, which accounted for more than 10% of the Company’s net sales, and accounts receivable from such customers are presented below. The customers consist principally of major electronic companies or electronics company subcontractors.

The Company’s net sales into its largest industry sectors, as a percentage of total net sales, are presented below:

The Company leases certain of its facilities and equipment under non-cancelable operating leases which expire at various dates through 2017. Future minimum lease payments under non-cancelable operating leases at December 31, 2014 are as follows:

Rental expense for the aforementioned operating leases was $186 for the three months ended December 31, 2014. Rental expense for the aforementioned operating leases was $1,277, $1,428 and $1,201 for the fiscal years ended September 30, 2014, 2013 and 2012, respectively.

The Company is involved in litigation from time to time in the ordinary course of business. Management does not believe the outcome of any currently pending matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

As of December 31, 2014, the Company had outstanding purchase commitments to acquire capital assets and other materials and services of $8,791, which exclude amounts already recorded on the Consolidated Balance Sheets.

Pursuant to the laws applicable to the People’s Republic of China’s Foreign Investment Enterprises, the Company’s two wholly owned subsidiaries in China, MFC and MFLEX Chengdu, are restricted from paying cash dividends on 10% of MFC and MFLEX Chengdu’s after-tax profit, subject to certain cumulative limits. These restrictions on net income for the three months ended December 31, 2014 was $20,170. These restrictions on net income for the fiscal years ended September 30, 2014, 2013 and 2012 were $19,824, $19,838 and $17,741, respectively.

In the normal course of business, the Company provides indemnification and guarantees of varying scope to customers and others. These indemnities include among other things, intellectual property indemnities to customers in connection with the sale of the Company’s products, warranty guarantees to customers related to products sold and indemnities to the Company’s directors and officers to the maximum extent permitted by Delaware law. The duration of these indemnities and guarantees varies, and, in certain cases, is indeterminate. Historically, costs related to these indemnification provisions have not been significant, and with the exception of the warranty accrual (see Note 1), no liabilities have been recorded for these indemnification provisions.

At the Company’s annual meeting of stockholders on March 5, 2014, the stockholders approved the Company’s 2014 Equity Incentive Plan (the “2014 Plan”). Upon stockholder approval of the 2014 Plan, the Company’s 2004 Stock Incentive Plan, as amended and restated to date (the “2004 Plan”) was terminated.

The 2014 Plan provides for the granting of stock options, stock appreciation rights, restricted share awards and restricted stock units to employees, directors (including non-employee directors), advisors and consultants. Grants under the 2014 Plan vest and expire based on periods determined by the Administrator, but in no event can the expiration date be later than ten years from the date of grant (five years after the date of grant if the grant is an incentive stock option to an employee who owns more than 10% of the total combined voting power of all classes of the Company’s capital stock). Grants of stock options may be either incentive stock options or nonqualified stock options.

The Company’s assessment of the estimated fair value of stock options and stock appreciation rights granted is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables and the related tax impact. The Company utilizes the Black-Scholes option valuation model to estimate the fair value of stock options and stock appreciation rights granted. Expected forfeitures are estimated based on the historical turnover of the Company’s employees. The fair value of service-based restricted stock units granted is based on the closing price of the Company’s common stock on the date of grant.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. This model also requires the input of highly subjective assumptions including:

No stock options were granted during the three months ended December 31, 2014 and 2013 or the fiscal years ended September 30, 2014, 2013 and 2012. No unearned compensation existed as of December 31, 2014 related to stock options. As of December 31, 2014 and September 30, 2014, 15,000 stock options were outstanding and exercisable with a weighted-average exercise price of $20.81. As of December 31, 2014, the weighted-average remaining contractual life was 0.17 years. No stock options were exercised during the three months ended December 31, 2014. The aggregate intrinsic value of stock options exercised was $16 for the three months ended December 31, 2013. The aggregate intrinsic value of stock options exercised was $177, $278 and $255 for the fiscal years ended September 30, 2014, 2013 and 2012, respectively.

During the three months ended December 31, 2014 and fiscal years ended September 30, 2014, 2013 and 2012, the Company granted service-based restricted stock units (“RSUs”) under the 2014 Plan and the 2004 Plan to certain employees (including executive officers) and directors at no cost to such individuals. Each RSU represents one hypothetical share of the Company’s common stock, without voting or dividend rights. The RSUs granted to employees generally vest over a period of three years with one-third vesting on each of the anniversary dates of the grant date. Total compensation cost related to RSUs is determined based on the fair value of the Company’s common stock on the date of grant and is amortized into expense over the vesting period using the straight-line method.

The Company also grants performance-based RSUs to certain employees (including executive officers) from time to time. For such performance-based RSUs, the Company records stock-based compensation cost based on the grant-date fair value and the probability that the performance metrics will be achieved. Management generally considers the probability that the performance metrics will be achieved to be a 70% chance or greater (“Probability Threshold”). At the end of each reporting period, the Company evaluates the awards to determine if the related performance metrics meet the Probability Threshold. If the Company determines that the vesting of any of the outstanding performance-based RSUs does not meet the Probability Threshold, the compensation expense related to those performance-based RSUs is reversed in the period in which this determination is made. However, if at a future date conditions have changed and the Probability Threshold is deemed to be met, the previously reversed stock compensation expense, as well as all subsequent projected stock-based compensation expense through the date of evaluation, is recognized in the period in which this new determination is made.

On October 22, 2014, the Company granted 289,417 performance-based RSUs (the “TSR PSUs”), which vest upon both market and performance conditions. The market condition was measured by determining the Company’s total shareholder return (“TSR”), rounded to the nearest whole number, for the three-year period beginning October 1, 2014 through December 31, 2017 versus the TSR of the Nasdaq Total Return Index (the “Index”) for the same period, using the calendar three-month average daily closing price of each on October 1, 2014 as compared to December 31, 2017. On October 22, 2014, the Company also granted 94,507 performance-based RSUs (the “Stock Price PSUs”) containing both market and performance conditions, whereby the market condition was measured by the increase in the stock price of the Company, using the previous 20 trading day average daily closing price of each on October 21, 2014 and December 31, 2015.

An award with a market condition is accounted for and measured differently from an award that has only a performance or service condition. The effect of a market condition is reflected in the award’s fair value on the grant date (e.g., a discount may be taken when estimating the fair value of such grant to reflect the market condition). The fair value may be lower than the fair value of an identical award that has only a service or performance condition because those awards will not include a discount on the fair value. All stock-based compensation expense for an award that has a market condition will be recognized if the requisite service period is fulfilled, even if the market condition is never satisfied.

The grant date fair value of the TSR PSUs was calculated utilizing the following assumptions:

The grant date fair value of the Stock Price PSUs was calculated utilizing the following assumptions:

RSU activity for the three months ended December 31, 2014 is summarized as follows:

RSU details for the three months ended December 31, 2014 and 2013 as well as fiscal years ended September 30, 2014, 2013 and 2012 are summarized as follows:

Unearned compensation as of December 31, 2014 was $9,629 related to non-vested RSUs, which will be recognized into expense over the weighted-average remaining contractual life of the non-vested RSUs of 2.4 years.

No SSARs were granted during the three months ended December 31, 2014 and the fiscal year ended September 30, 2014. During the fiscal years ended September 30, 2013 and 2012, the Administrator approved the grant of SSARs to be settled in Company common stock. These grants were made under the 2004 Plan to certain employees (including executive officers) at no cost to such individual. Each SSAR has a base appreciation amount that is equal to the closing price of a share of the Company’s common stock on each applicable grant date as reported on the NASDAQ Global Select Market. The SSARs granted to employees generally vest either over a period of three years with one-third vesting on each of the anniversary dates of the grant date or may vest completely on the third anniversary date of the grant date and have a contractual life of 10 years. The Company’s SSARs are treated as equity awards and are measured using the initial compensation element of the award at the time of grant and the expense is recognized over the requisite service period (the vesting period) with an exercise price equal to the stock price on the date of grant. Upon exercise, each SSAR will be settled in the Company’s common stock. Whole Company shares will be issued based on the percentage of share appreciation between the weighted-average price per share for all grant dates and the fair market value per share on the exercise date, multiplied by the number of SSARs units being exercised. Total compensation cost related to SSARs is recognized over the vesting period and is determined based on the whole number of shares issued multiplied by the grant date fair value.

The grant date fair values of the SSARs granted during each of the fiscal years ended September 30, 2013 and 2012 were estimated using the Black-Scholes valuation pricing model with the following assumptions:

As of December 31, 2014 and September 30, 2014, 695,673 SSARs were outstanding and exercisable (with a weighted-average exercise price of $19.96). Unearned compensation as of December 31, 2014 was $0 as all SSARs were vested. No SSARs were exercised during the three months ended December 31, 2014 and 2013 as well as the fiscal years ended September 30, 2014 and 2013. The aggregate intrinsic value of SSARs exercised during the fiscal year ended September 30, 2012 was $69.

The following table shows a summary of the stock-based compensation expense by expense type (excluding the stock-based compensation expense resulting from the change in control described below) included in the Consolidated Statements of Comprehensive Income for the three months ended December 31, 2014 and 2013 as well as fiscal years ended September 30, 2014, 2013 and 2012:

The following table shows a summary of the stock-based compensation expense by award type (including the stock-based compensation expense of $7,932 for RSUs and $1,650 for SSARs resulting from the change in control described below) recorded for the three months ended December 31, 2014 and 2013 as well as fiscal years ended September 30, 2014, 2013 and 2012:

In connection with the stock acquisition made by UE of WBL discussed in Note 1, the Company reviewed the 2004 Plan, and its Change in Control Plan dated January 18, 2012 (the “CiC Plan”), and determined that a “Change in Control,” as defined in the 2004 Plan and the CiC Plan, occurred as of May 23, 2013. As a result, the Company recorded stock-based compensation expense of $9,582 during the Company’s third fiscal quarter of 2013 related to the accelerated vesting of outstanding serviced-based RSUs and SSARs, as well as the conversion of performance-based RSUs to service-based RSUs for awards outstanding as of May 23, 2013. The expense consisted of the following:

The expense was included as stock-based compensation expense resulting from change in control in the Consolidated Statements of Comprehensive Income for the fiscal year ended September 30, 2013.

The Company transacts business in various foreign countries and is therefore exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to purchases, obligations, and monetary assets and liabilities that are denominated in currencies other than the Company’s reporting currency. The Company has established foreign currency risk management programs to attempt to protect against volatility in the value of non-U.S. dollar denominated monetary assets and liabilities, and of future cash flows caused by changes in foreign currency exchange rates. As a result, from time to time, the Company enters into foreign currency forward contracts to hedge its aforementioned currency exposures.

The Company accounts for all of its derivative instruments in accordance with the relevant FASB authoritative accounting guidance for derivatives and hedges. The guidance requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. As of December 31, 2014, there were no outstanding foreign currency forward contracts.

The changes in fair value of the Company’s derivative instruments are recognized in earnings during the period of change as other income (expense), net in the Consolidated Statements of Comprehensive Income. The Company recognized gains of $0 and $414 during the three months ended December 31, 2014 and 2013, respectively, related to derivative financial instruments. The Company recognized gains of $68, $872 and $270 during the fiscal years ended September 30, 2014, 2013 and 2012, respectively, related to derivative financial instruments.

During the three months ended March 31, 2014, following a full review of its manufacturing footprint and in an effort to realign its manufacturing capacity and costs with expected net sales, the Company initiated its plan to consolidate its production facilities to reduce the total manufacturing floor space by approximately one-third (the “Restructuring”). As part of the Restructuring, MFLEX Chengdu, along with two satellite manufacturing facilities in Suzhou, China (one of which is a leased facility), were consolidated into the Company’s two main manufacturing plants under MFC in Suzhou. In addition, as part of the Restructuring, the Company closed MFE, which was previously located in Cambridge, United Kingdom and has reduced headcount at its other locations.

The Company’s manufacturing facility in Chengdu, China ceased operations and met the criteria to be classified as assets held for sale per the relevant authoritative FASB guidance as of March 31, 2014. In addition, machinery and equipment at the Chengdu location and certain machinery and equipment and other fixed assets located at facilities in Suzhou, China ceased use and met the held for sale criteria as of March 31, 2014. Furthermore, one of the Company’s satellite manufacturing facilities, in Suzhou, China, certain machinery and equipment and other property, plant and equipment located at facilities in Suzhou, China ceased use and met the held for sale criteria as of September 30, 2014.

Based on the Company’s Restructuring plan, the Company determined that a triggering event to test its long-lived assets for recoverability existed during the three months ended December 31, 2014 and the fiscal year ended September 30, 2014. The Company’s long-lived assets consisted primarily of property, plant and equipment and other assets.

For assets classified as held and used, consisting of all property and equipment not held for sale, the Company compared its calculation of the undiscounted cash flows to the carrying value of the assets and concluded that no instances of impairment were identified as of December 31, 2014 and September 30, 2014.

For assets classified as held for sale, consisting of the Company’s manufacturing facility in Chengdu, one of the satellite facilities in Suzhou, and other property, plant and equipment in Chengdu and Suzhou, China, the Company compared the estimated fair value less costs to sell to the carrying value of the assets. If the estimated fair value less costs to sell exceeded the carrying amount, no impairment expense was recorded. However, if the estimated fair value less costs to sell was less than the carrying amount, an impairment expense of the difference was recorded. As a result, the Company concluded that certain assets held for sale were impaired, and pre-tax impairment charges of $18,241 were recorded during the fiscal year ended September 30, 2014 (of which

$9,860 was related to buildings and leasehold improvements, $8,344 was related to machinery and equipment and $37 was related to other property, plant and equipment).

A pre-tax restructuring charge of $15,698 was recorded during the fiscal year ended September 30, 2014, which included $9,699 of one-time termination benefits, $804 of contract termination costs and $5,195 of other costs (of which $198 was non-cash).

During the three months ended December 31, 2014, the Company recorded impairment and restructuring recoveries of $(396), which consisted of asset recoveries of $(1,816), one-time termination benefits of $701 and other costs of $719. The Company completed the sale of some of the assets previously classified as assets held for sale. The Company recorded a net gain of $1,818 related to machinery and equipment, partially offset by write-downs of $2 related to other property, plant and equipment. As of December 31, 2014, the Company completed its Restructuring initiatives.

The following table reflects the movement activity of the restructuring reserve:

The Company records the excess of an acquisition’s purchase price over the fair value of the identified assets and liabilities as goodwill. The Company evaluates its goodwill balance typically during the fourth quarter of each fiscal year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. Given the continued decline in the Company’s stock price and market capitalization below the carrying value of the Company’s net assets, as well as continued decreases in net sales, gross profit, and operating income compared with forecasted results during the third quarter of fiscal 2013, the Company considered these factors as indicators of possible impairment of goodwill as defined under the relevant FASB authoritative accounting guidance. As a result, the Company determined an interim impairment test was necessary while preparing its financial statements for the three and nine months ended June 30, 2013.

The Company performed the interim goodwill impairment test on its single reporting unit. Because the first phase of the goodwill impairment test (“Step 1”) indicated that the reporting unit’s carrying value exceeded its fair value, a second phase (“Step 2”) was performed. Under Step 2, for the purpose of deriving the implied fair value of goodwill, the fair value of the Company’s net assets were estimated using a discounted cash flow analysis based on the Company’s future budgets discounted using the Company’s weighted average cost of capital and market indicators, which was obtained using Level 3 fair value measurements on a non-recurring basis. To measure the amount of impairment, the implied fair value of the goodwill was then compared to the recorded goodwill. Upon completion of the impairment test, the Company determined that its goodwill was impaired and recorded a charge of $7,537 during the fiscal third quarter to fully impair its goodwill, resulting in a balance of $0 as of September 30, 2013.

With respect to long-lived assets which mainly consisted of property, plant and equipment held for use, the Company compared its calculation of the forecasted undiscounted cash flows to the carrying value of the assets and concluded that no other instances of impairment were identified as a result of the interim test as of June 30, 2013 and September 30, 2013.

During the fourth fiscal quarter of 2011, the Company committed to a plan to relocate its corporate headquarters to a smaller location in Orange County, California (the “Relocation Plan”). In fiscal 2012, as a result of the Relocation Plan, the Company completed the sale of certain of its machinery and equipment and incurred relocation costs and recorded net gains of $717 during the third fiscal quarter of 2012. During the second fiscal quarter of 2012, the Company completed the sale of its corporate headquarters in Anaheim, California which was previously classified as assets held for sale as of December 31, 2011. The completion of the sale resulted in a net gain of $1,067 which was recorded during the second fiscal quarter of 2012 as a reduction of impairment and restructuring in the Consolidated Statements of Comprehensive Income.

The Company evaluated its Tucson, Arizona facility, consisting of land and building (the “Tucson Facility”), under the “Long-Lived Assets to Be Disposed of by Sale” classification under the relevant FASB authoritative guidance. The Tucson Facility was closed during fiscal 2008 as part of the restructuring of Aurora Optical. Based on an arms-length offer received during the second fiscal quarter of 2012, the Company recorded the Tucson Facility as assets held for sale. During the third fiscal quarter of 2012, the Company completed the sale of the Tucson Facility, which resulted in a net gain of $684 recorded during the third fiscal quarter of 2012 as a reduction of impairment and restructuring in the Consolidated Statements of Comprehensive Income.

In February 2015, the Company completed the sale of a satellite facility in Suzhou, China that was classified as Assets held for sale on the Company’s Consolidated Balance Sheet as of December 31, 2014. The facility sold for RMB 38,300 ($6,259 as of December 31, 2014), which will result in a gain of approximately $1,100.

The following table presents the Company’s unaudited quarterly consolidated income statement data for its previous eight quarters. These quarterly results include all adjustments consisting of normal recurring adjustments that the Company considers necessary for the fair presentation for the quarters presented and are not necessarily indicative of the operating results for any future period.

	For the Quarters Ended (in thousands, except per share data)
	(unaudited)
	September 30, 2014			June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012
Net sales	$	172,884		$	130,804		$	117,793		$	211,672		$	188,254		$	136,066		$	173,674		$	289,650
Cost of sales		155,340			138,023			130,765			209,176			194,308			140,312			189,207			264,947
Gross profit (loss)		17,544			(7,219	)		(12,972	)		2,496			(6,054	)		(4,246	)		(15,533	)		24,703
Operating expenses:
Research and development		1,270			1,720			1,496			1,455			1,964			1,997			1,782			2,033
Sales and marketing		4,207			4,547			4,353			5,908			5,795			5,676			4,712			6,537
General and administrative		4,281			4,163			3,634			3,343			4,504			2,647			4,295			5,672
Stock-based compensation expense resulting from change in control		—			—			—			—			—			9,582			—			—
Impairment and restructuring		780			8,361			24,798			—			—			7,537			—			—
Total operating expenses		10,538			18,791			34,281			10,706			12,263			27,439			10,789			14,242
Operating income (loss)		7,006			(26,010	)		(47,253	)		(8,210	)		(18,317	)		(31,685	)		(26,322	)		10,461
Other income (expense), net:
Interest income		400			170			246			209			323			248			86			70
Interest expense		(139	)		(19	)		(217	)		(122	)		(126	)		(112	)		(138	)		(111	)
Other income (expense), net		375			711			116			296			774			73			170			(15	)
Income (loss) before income taxes		7,642			(25,148	)		(47,108	)		(7,827	)		(17,346	)		(31,476	)		(26,204	)		10,405
(Provision for) benefit from income taxes		(1,719	)		(3,612	)		(5,308	)		(1,452	)		(1,125	)		(53	)		2,325			(2,057	)
Net income (loss)	$	5,923		$	(28,760	)	$	(52,416	)	$	(9,279	)	$	(18,471	)	$	(31,529	)	$	(23,879	)	$	8,348
Net income (loss) per share:
Basic	$	0.25		$	(1.19	)	$	(2.18	)	$	(0.39	)	$	(0.77	)	$	(1.32	)	$	(1.00	)	$	0.35
Diluted	$	0.24		$	(1.19	)	$	(2.18	)	$	(0.39	)	$	(0.77	)	$	(1.32	)	$	(1.00	)	$	0.35

There have been no changes in our independent registered public accounting firm or disagreements with such accountants on any matter of accounting principles or practices, financial statement disclosure or auditing scope of procedure.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”) as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, management used the criteria set forth in the 1992 framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) entitled “Internal Control—Integrated Framework.” Based on this assessment and on the criteria in Internal Control—Integrated Framework, management has concluded that our internal control over financial reporting was effective as of December 31, 2014.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

There was no change in our internal control over financial reporting during the quarter ended December 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management including our CEO and CFO, as appropriate, to allow for timely decisions regarding required disclosure.

Based on an evaluation carried out as of the end of the period covered by this Transition Report, under the supervision and with the participation of our management, including our CEO and CFO, our CEO and CFO have concluded that, as of the end of such period, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act), are effective at the reasonable assurance level.

Certain information regarding our executive officers required by this item is set forth in Part I, Item 1 of this Transition Report under the caption “Executive Officers of the Registrant.” Biographical information concerning each of the directors as of February 12, 2015 is set forth below.

Hong Wai Chan joined our Board in February 2015. Mr. Chan served as a director of MFS Technology Ltd. (“MFS”) since 2010, was appointed as Executive Director in December 2013 and has served as its Chief Executive Officer since February 2014. MFS is presently a cash and non-operating company which sold its business in late 2014 and an affiliate of the Company by virtue of being a wholly owned subsidiary of UEL. Mr. Chan was Managing Director of the Manufacturing Services of WBL from 2007 to 2013 where Mr. Chan had oversight responsibilities for manufacturing sites in China, Malaysia and the United Kingdom. Mr. Chan previously had manufacturing management roles at MMI Holdings Ltd. from April 1999 to November 2007 and at IBM Data Storage from October 1994 to April 1999. Mr. Chan holds a Bachelor’s Degree in Pure and Applied Physics from National University in Singapore. Mr. Chan brings almost thirty years of engineering and manufacturing knowledge to our Board, specifically with respect to the Asia Pacific region.

Philippe Lemaitre has served on the Board since March 2009, and has been Chairman of the Board since March 2011. Since September 2007, Mr. Lemaitre has served as a director of Nasdaq-listed Sun Hydraulics Corporation, a leading designer and manufacturer of high performance screw-in hydraulic cartridge valves and manifolds for worldwide industrial and mobile markets, serving on its Audit and Nominating Committees and as the Chairman of its Compensation Committee. In 2013, Mr. Lemaitre became chairman of the board of Sun Hydraulics Corporation. From October 1999 to January 2007, Mr. Lemaitre served as Chief Executive Officer and President of Woodhead Industries, a publicly held automation and electrical products manufacturer. From October 1999 to September 2006, Mr. Lemaitre also served as a member of Woodhead Industries’ board of directors, and was the Chairman of the Board from January 2001 through September 2006. Mr. Lemaitre holds an M.S. in civil engineering from École Spéciale des Travaux Publics in Paris, France and an M.S. in engineering from the University of California at Berkeley. Mr. Lemaitre’s experience as a director, including serving as committee and board chairman of other public companies, has provided him with leadership skills and industry expertise that he now brings to our Board. Having served on several different board committees at other organizations, Mr. Lemaitre has a broad background in management nuances, including experience selecting directors and working with finance departments and outside auditors.

Linda Y.C. Lim, Ph.D. has served on the Board since March 2008. Since 1984, Dr. Lim has served as a faculty member at the University of Michigan, becoming Professor of Strategy at the Stephen M. Ross School of Business in 2001, and serving as Director of the Center for Southeast Asian Studies from 2005 through 2009. She is a member of the executive committees of the University’s Center for International Business Education and Research, and its Lieberthal-Rogel Center for Chinese Studies. She has also served as Associate Director of the University’s International Institute and as a trustee of the non-profit Asia Society in New York, and is a board member of the Knight-Wallace Journalism Fellows at the University. Dr. Lim teaches M.B.A courses and executive education sessions on The World Economy and Business in Asia. Dr. Lim has consulted for many organizations, including various U.S. companies, private think-tanks, United Nations agencies and the Organisation for Economic Cooperation and Development. From January 1998 to August 2006, Dr. Lim was a director of Woodhead Industries. Dr. Lim holds a B.A. in economics from Cambridge University, an M.A. in economics from Yale University and a Ph.D. in economics from the University of Michigan. Dr. Lim brings to the Board expertise in global macroeconomics and international relations, as well as strategic expertise, with more than 30 years of experience as a professor in those areas. Particularly, Dr. Lim has spent significant time teaching and researching in Asian studies, giving her specific knowledge of Asian economic and business environments. Her experience as a consultant to U.S. multinational companies further broadens her international business perspective.

James McCluney joined the Board in July 2013. Mr. McCluney served as president and chief operating officer of Emulex Corporation from November 2003 through August 2006, and chief executive officer from August 2006 through July 2013, when he became executive chairman of the Emulex board of directors. Prior to that, he served as chairman of the board of Vixel Corporation, which he joined in 1999 as president and chief executive officer. During his tenure he successfully took the company public, and in

late 2003, Emulex acquired Vixel. Earlier in his career, Mr. McCluney ran Apple’s European operations, rising to the position of senior vice president of worldwide operations and a member of the executive committee. Prior to working at Apple, he held senior management positions within Digital Equipment Corporation in the UK, Switzerland and the USA including vice president of worldwide materials and logistics. Mr. McCluney holds a Bachelor of Arts degree with honors in business and administration from Strathclyde University in Glasgow, Scotland. Mr. McCluney brings broad experience to the Company including operations management within technology companies and a history of board leadership.

Reza Meshgin joined us in June 1989, assumed his current position as our President and Chief Executive Officer in March 2008 and was elected to the Board of Directors in April 2008. Prior to his current role, Mr. Meshgin served as our President and Chief Operating Officer from January 2003 through February 2008, was Vice President and General Manager from May 2002 through December 2003, and prior to that time was our Engineering Supervisor, Application Engineering Manager, and Director of Engineering and Telecommunications Division Manager. Mr. Meshgin holds a B.S. in Electrical Engineering from Wichita State University and an M.B.A. from University of California at Irvine. Mr. Meshgin has served more than 20 years with the Company in multiple managerial roles, providing him with significant institutional knowledge and technical expertise. As our Chief Executive Officer, Mr. Meshgin brings to the Board significant senior leadership, as well as industry and global experience. Mr. Meshgin has been instrumental in our major expansion of our overseas manufacturing capacity and in our strategic initiative of diversifying our customer base.

Donald K. Schwanz has served on the Board since May 2008. Mr. Schwanz served from 2002 to 2007 as chairman of CTS Corporation, a leading designer and manufacturer of electronic components and sensors to OEMs in the automotive, computer, communications, medical and industrial markets. In addition, Mr. Schwanz served as CTS’ President and Chief Executive Officer between 2001 and 2007. From 1979 to 2000, Mr. Schwanz held numerous key management positions at Honeywell, Inc. Most recently he served as President of Honeywell Industrial Controls, a $2.8 billion global business specializing in process control systems. Prior to that, he was President of Honeywell’s Space and Aviation Controls business, the leading global supplier of avionics for commercial and business aircraft. Mr. Schwanz currently serves on the board of directors of PNM Resources, an energy holding company, and is on its Finance Committee and Audit and Ethics Committee. Mr. Schwanz began his business career in 1968 with Sperry Univac, Inc., where he held positions in program management, project engineering, sales and sales support. Mr. Schwanz is a 1966 graduate of the Massachusetts Institute of Technology where he received his B.S. in mechanical engineering. He received an M.B.A. from the Harvard Business School in 1968. Mr. Schwanz has significant executive experience with the strategic, financial and operational requirements of large manufacturing-oriented organizations, and brings to the Board senior leadership and electronics industry and financial experience. Mr. Schwanz’s experience as a member of various boards, including his work on a variety of board committees, has provided him with a broad business perspective and extensive experience on compensation matters.

Roy Chee Keong Tan joined the Board in 2012. Mr. Tan joined WBL Corporation Limited (“WBL”), our majority stockholder, in 2006 and served as its Chief Group Strategy Officer. After United Engineers Limited’s (“UEL”) acquisition of WBL, Mr. Tan began working for and served as Chief Strategy Officer of UEL, where his responsibilities include strategic development for UEL. Effective February 1, 2015, Mr. Tan was appointed as the Group Chief Financial Officer of UEL. Mr. Tan is also currently a board member of WBL. Mr. Tan has more than 15 years of experience in operations management, business development and strategic planning. Before joining WBL, Mr. Tan held various positions in OCBC Bank, ST Electronics and PhillipCapital. Mr. Tan graduated from University of Oxford with a Bachelor of Arts (Honors) in Mathematics; he also obtained a Master of Social Sciences (Applied Economics) and a Master of Science (Management of Technology) from the National University of Singapore. He is an FRM certified by Global Association of Risk Professionals, a CFA charterholder and a member of CFA Institute. Mr. Tan brings extensive experience with Asia-based companies in strategic planning to our Board. For a description of our agreements with WBL, see “Certain Relationships and Related Transactions.”

Sam Yau has served on the Board since June 2004. Since 1997, Mr. Yau has been a private investor. From 1995 to 1997, Mr. Yau served as Chief Executive Officer of National Education Corporation. From 1993 through 1994, Mr. Yau served as Chief Operating Officer of Advacare, Inc., a medical services company. Mr. Yau also served as a past Chairman of the Forum for Corporate Directors in Orange County, California. Mr. Yau holds a B.S.S. in economics from the University of Hong Kong and an M.B.A. from the University of Chicago. Mr. Yau brings expertise in corporate leadership and financial management to the Board, having served in executive roles with several large corporations. Mr. Yau has significant global experience in advising growth-focused companies with respect to strategic direction and corporate governance. Mr. Yau’s experience as a director of several public companies with overseas operations in the last 15 years also provides valuable cross-border experience.

Under the securities laws of the United States, our directors, executive officers and any person holding more than 10% of our common stock are required to report their initial ownership of our common stock and any subsequent change in that ownership to the SEC. Specific due dates for these reports have been established and we are required to identify in this Transition Report those persons who failed to timely file these reports. To our knowledge, based solely on a review of such reports furnished to us and written

representations that no other reports were required during the three-month period ended December 31, 2014 (the “December Period”), we believe that all required reports were timely filed.

We have adopted a Code of Ethics for Senior Officers (“Code of Ethics”), that applies to our CEO, President, CFO and other key management employees (including other senior financial officers) who have been identified by the board of directors. We have also adopted a Code of Business Conduct that applies to all of our employees, officers and directors. Each of the Code of Ethics and Code of Business Conduct may be found on our website at www.mflex.com. We will post (i) any waiver, if and when granted, to any provision of the Code of Ethics or Code of Business Conduct (for executive officers or directors) and (ii) any amendment to the Code of Ethics or Code of Business Conduct on our website.

We have a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee are Sam Yau (Chairperson), 66 years of age, Philippe Lemaitre, 65 years of age, James McCluney, 63 years of age, and Donald Schwanz, 70 years of age. All of such members meet the independence standards established by Nasdaq and the requirements under Section 10A of the Exchange Act for serving on an audit committee. Furthermore, our board of directors has determined that all of Messrs. Yau, Schwanz, McCluney and Lemaitre qualify as “audit committee financial experts” for audit committee member purposes within the meaning of such regulations.

The Compensation Committee operates under a written charter adopted by our Board on April 12, 2004, and most recently updated on December 4, 2014. A copy of the Compensation Committee Charter is available on the Company’s website at www.mflex.com. The members of the Compensation Committee are Linda Lim, Ph.D., James McCluney (Chair) and Sam Yau, each of whom is a non-employee director under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Further, each of Dr. Lim and Messrs. McCluney and Yau meets the independence standards established by Nasdaq.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by the SEC’s compensation disclosure rules with management and, based on such review and discussions, the Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Transition Report.

This section describes the compensation programs for our chief executive officer, or CEO, and chief financial officer, or CFO, for the December Period, as well as our three other executive officers employed at the end of the December Period, all of whom we refer to collectively as our named executive officers or NEOs. Our named executive officers for the December Period were:

Our executive compensation programs are intended to align our named executive officers’ interests with those of our stockholders by rewarding performance that meets or exceeds the goals the Compensation Committee establishes with the objective of increasing stockholder value. In line with our “pay-for-performance” philosophy, the total direct compensation received by our named

executive officers will vary based on corporate performance measured against annual and long-term performance goals. Our named executive officers’ total direct compensation is comprised of a mix of base salary, short-term incentive compensation and long-term incentive awards.

The Compensation Committee believes that employees in higher ranks should have a higher proportion of their total compensation delivered through performance-based components, such as performance-based incentive bonus opportunities and long-term incentive compensation in the form of equity awards. As a result, each named executive officer’s compensation is significantly correlated, both upward and downward, to our financial performance. The Compensation Committee further believes that the executive compensation packages provided to our named executive officers should include both cash and equity-based incentives. The use of equity-based compensation more directly ties their compensation and long-term wealth generation to the results received by our stockholders.

During 2014, we changed our fiscal year end from September 30 to December 31. When determining compensation for the December Period, the Compensation Committee determined that a one quarter short-term incentive compensation plan was appropriate for the December Period. However, except where specifically noted below, compensation decisions made in October 2014 cover both the December Period and fiscal year 2015.

The Compensation Committee structured our executive compensation program for the December Period and fiscal year 2015 similar to recent prior years, with the changes to our short-term incentive compensation plan discussed below. Cash compensation consisted of base salary and a short-term performance-based incentive opportunity, and long-term incentive compensation consisted of equity compensation in the form of service-based restricted stock awards (“RSUs”) and performance-based restricted stock unit awards (“PSUs”).

Our corporate performance was a key factor in our executive compensation actions and decisions for the December Period and fiscal year 2015. Entering fiscal 2014, we had experienced a decline in revenue from fiscal year 2011 to fiscal year 2012 and fiscal year 2012 to fiscal year 2013. During fiscal year 2014, we undertook significant restructuring efforts, closing several of our facilities in China and Europe, which generated approximately $56.0 million in annual cost savings, exceeding our initial cost savings expectations. While we again experienced a decline in revenue from fiscal year 2013 to fiscal year 2014 and we experienced a net loss of $84.5 million for fiscal year 2014, we were able to return to profitability for the fourth quarter of fiscal year 2014 (ended September 30, 2014), with gross margin of 10.1% for that quarter. Please see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on November 14, 2014 for a more detailed description of our fiscal year 2014 financial results.

Consistent with past practice, in 2014 the Compensation Committee commissioned both a pay-for-performance analysis and a competitive market analysis from its compensation consultant, Compensia, for use in setting future compensation. The market analysis assessed our fiscal year 2014 executive compensation opportunities at target pay levels as compared to target levels at the “market,” which for purposes of this analysis was a mix of our peers (where compensation information was available for a position) and published survey data. This study found that:

The pay-for-performance analysis, which compared our executive compensation and corporate performance to our peer group, again found moderate to strong alignment for the most recent one, two and three year periods.

In addition, Compensia provided the Compensation Committee with a historical pay analysis, which reviewed a five year comparison of target versus actual pay for our named executive officers. As noted above, the Company has had declining financial results since 2011 and the Compensation Committee wanted confirmation that our incentive plans were delivering compensation which appropriately fluctuated up and down with the Company’s performance. This analysis found that the pay-for-performance

aspect of the Company’s compensation plans have been well designed, since actual pay has been below target pay when performance has lagged. For example, while target opportunities for the named executive officers may have stayed at or higher than past levels, many of the elements of such target pay were not realized by the executives (note that no bonuses were paid for fiscal years 2013 or 2014 and the PSUs granted in June 2013 lapsed as of the end of that fiscal year since the performance metrics were not met). Following review of these studies, the Compensation Committee determined that analyzing actual pay in light of performance, versus target pay opportunities, was the appropriate metric for setting the December Period and fiscal year 2015 compensation, particularly given the importance of retaining key employees in a turn-around environment.

The Compensation Committee believes that compensation of our named executive officers should encourage creation of stockholder value and achievement of strategic corporate objectives. It is the Compensation Committee’s philosophy to align the interests of our stockholders and management by integrating compensation with our annual and long-term corporate strategic and financial objectives. The Compensation Committee believes that an executive compensation program can send powerful messages about expected behaviors and results. We believe that:

In furtherance of these beliefs, our executive compensation program is founded on the following:

The Compensation Committee is comprised of three directors, all of whom are “non-employee directors” as defined in Rule 16b-3 of the Exchange Act and independent under the applicable rules of the NASDAQ Stock Market LLC. The Compensation Committee is responsible for developing and monitoring compensation arrangements for our executives (including determining the compensation of our named executive officers), administering our equity incentive plans (including reviewing and approving grants to executives) and other compensation plans, as well as performing other activities and functions related to executive compensation as may be assigned from time to time by the Board.

Our CEO annually reviews the performance of each of his direct reports, whom we refer to as executives, including each of our other named executive officers, relative to individual and corporate annual performance goals established for the year. He then presents his compensation recommendations based on these reviews to the Compensation Committee. The Compensation Committee exercises its discretion in accepting, modifying or rejecting any compensation recommendations relating to our executives that were made by our CEO and approves all compensation decisions for our executives. The Board as a whole performs the annual performance review of our CEO and the Compensation Committee designs and approves all compensation decisions for our CEO. In addition to Compensation Committee approval, the independent members of our Board ratify all compensation arrangements for our CEO.

We believe that external comparisons for compensation-setting purposes should be primarily against companies which fairly represent the potential market for executive talent at the Company and that are consistent with the business and market challenges that we face. To attract and retain the most qualified executives, we seek to offer a total compensation package competitive with companies in our “peer group.” The Compensation Committee reviews the peer group on an annual basis to ensure continued appropriateness of each company in the group and the group as a whole and, in June 2014, commissioned Compensia, its compensation consultant, to review both the methodology for selecting the group and the peer group itself. Following such review, the Compensation Committee revised the criteria for the peer group such that generally, the peer group should meet the following criteria:

The changes made to the selection criteria were generally to remove provisions which specified that MFLEX’s revenue and market capitalization should be within a specified range as relates to the entire peer group, as it was found that these provisions caused some difficulty in crafting the peer group as a whole.

When selecting companies to comprise the peer group, the Compensation Committee uses discretion in determining which companies to include and a company that falls outside the desired criteria may continue to be included as a peer for a variety of factors. The factors which may be considered include, but are not limited to, location of the company, the character of the company’s international operations, whether the company refers to MFLEX as a peer company, headcount and revenue. We strive for our peer group to generally consist of 15 to 20 companies, provided enough companies meeting the above criteria are identified for inclusion.

Following the changes to our peer group criteria, the Compensation Committee determined that, while many of the companies in the previous peer group did not meet at least one of the three specified criteria, the industry and revenue criteria were more important than the market capitalization criteria. Noting its discretion to determine which companies to include in selecting a peer group, the Compensation Committee determined its preference to keep companies from the current group when it felt that those companies were still relevant peers. In addition, given the restructuring we were undergoing in fiscal year 2014 and the projected market capitalization of MFLEX based upon certain financial assumptions, the Compensation Committee determined that keeping many of the companies in the previous group, even though they did not all meet all three specified criteria, while adding a few additional companies that met all three criteria, was appropriate. Given these findings, the Compensation Committee made slight changes to the group such that for the December Period and fiscal year 2015 compensation decisions, our peer group consisted of:

In general, the Compensation Committee’s practice is to review general industry trends in executive compensation, and additionally to review peer group compensation practices and compensation levels during the course of the year prior to actually establishing annual compensation packages for our executives. Approval of executive compensation is generally made in the first quarter of each new fiscal year. This process allows the Compensation Committee to consider data regarding our financial performance during the prior year in its analysis, to conduct an assessment of the executives’ contribution to our overall performance, and evaluate progress and results achieved that directly link to corporate business goals and objectives. The Compensation Committee then utilizes this aggregation of information to establish annual base compensation, performance-based incentive bonus awards and equity grants (both time and performance-based). Given the transition of our fiscal year end from September 30 to December 31, this year, the Compensation Committee made its determination regarding the December Period and fiscal year 2015 compensation in October 2014 (with approval of the fiscal year 2015 non-equity incentive plan being made in January 2015).

On a regular basis, the Compensation Committee is provided with a “tally sheet” report prepared by management for each executive, including our named executive officers. The tally sheet includes, among other things, total annual compensation, the value of unexercised or unvested equity compensation awards, and the value of cumulative stock exercises by the executive. The Compensation Committee uses tally sheets to provide additional perspective on the value the executives have accumulated from prior equity awards and plan accruals and the retentive value of such awards, consider any changes to our program that may be appropriate (including the mix of compensation elements), and provide additional context for their compensation decisions.

The Compensation Committee uses the services of external compensation consultants to obtain relevant information on compensation practices and trends within the peer group and among the broader market. Beginning in 2010, and as it related to the process for developing executive compensation for the December Period and fiscal year 2015, the Compensation Committee engaged Compensia as its compensation consultant.

Compensia is engaged by, and reports directly to, the Compensation Committee. Management did not participate in the selection process for the Compensation Committee’s compensation consultant. The Compensation Committee is not aware of any conflict of interest on the part of Compensia or any factor that would otherwise impair the independence of Compensia relating to the services it performed for the Compensation Committee. Compensia has not been engaged by the Company previously and does not perform any services for the Company. The Compensation Committee has a policy prohibiting Compensia from providing any services to MFLEX or MFLEX’s management without the Compensation Committee’s prior approval, and has expressed its intention that such approval will be given only in exceptional cases.

Compensia generally reviews the materials prepared for the Compensation Committee by management, prepares additional materials as may be requested by the Compensation Committee, and attends Compensation Committee meetings. In its advisory role, Compensia assists the Compensation Committee in the design and implementation of our executive compensation programs. This includes assisting the Compensation Committee in selecting the key elements to include in the program, the targeted payments for each element, and the establishment of performance targets. In particular with respect to the December Period and fiscal year 2015 compensation, Compensia assisted the Compensation Committee in designing our short-term performance-based non-equity incentive plan and in the design of the performance-based equity compensation (both in terms of the split between time-based and performance-based equity and the choice of performance metrics and targets for those metrics for the performance-based equity). This assistance included providing information on trends and best practices in the area of executive compensation and the compensation practices at peer companies.

Compensia also provides market comparison data and peer group data, which are factors considered by the Compensation Committee in making compensation decisions. Based on this data, Compensia advises the Compensation Committee with respect to the competitiveness of our executive compensation program in comparison to industry practices, and identifies any trends in executive compensation.

From time to time, the Company and the Compensation Committee may also utilize the services of other outside advisors, primarily attorneys. During the December Period, the Company and the Compensation Committee received compensation-related advice from our outside legal counsel, DLA Piper LLP (US), primarily related to documenting our compensation plans.

The components of named executive officer compensation consist of base salary; short-term performance-based incentive compensation (cash bonus); long-term incentive compensation, consisting of both time-based and performance based equity awards;

health and welfare benefits and post-employment compensation, which are discussed separately below. The Compensation Committee structures compensation such that a significant portion of our executive compensation is variable and incentive-based and tied directly to our performance.

The Compensation Committee conducts an annual review of the base salary of each named executive officer and sets the salary level of each executive officer on a case-by-case basis, taking into account the salaries paid to comparable executives in our peer

group and in market surveys, internal pay equity, the individual’s level of responsibilities and performance, hiring needs, unique market demands and experience level. The Compensation Committee begins by reviewing the base salaries recommended by our CEO for our executives (other than the CEO), as well as a competitive assessment of our executive pay relative to market information, including compensation data from our peer group and industry data compiled by the Compensation Committee’s compensation consultant from a variety of high technology companies, which we refer to as industry data. In addition, the Compensation Committee is provided with a financial assessment of the Company relative to our peer group to facilitate a pay-for-performance comparison versus our peers.

In reviewing base salaries for the December Period and fiscal year 2015, the Compensation Committee began by noting that Mr. Meshgin had not received a salary increase for either 2013 or 2014, and the other executives had not received an increase for 2014. In addition, the Committee noted the successful restructuring undertaken by the Company during fiscal year 2014, and the large discrepancy between certain of the executives’ base salaries and the market median.

Based on the foregoing, the Compensation Committee determined to bring the executives’ base salaries in-line with the market median, and approved annualized base salaries for the December Period and fiscal year 2015 for our named executive officers as follows:

The Compensation Committee believes that a significant portion of executive officer compensation should be contingent upon our performance in order to motivate our executives to meet our business and financial objectives. Accordingly, the Compensation Committee approves an incentive program under the portion of our equity incentive plans that has been qualified to comply with the “performance-based compensation” exception of Section 162(m) of the Code. In adopting the incentive program, the Compensation Committee specifies the applicable performance metrics and method for calculating each named executive officers’ bonus. Following the close of the performance period, the Compensation Committee reviews the performance of the Company versus the approved metrics, and based upon such review, approves the named executive officer bonuses for the period.

Generally, our named executive officers are eligible to receive non-equity (cash) incentive compensation, or bonuses, on an annual basis. However, given the change in our year end from September 30^th to December 31^st, the Compensation Committee determined it was appropriate to establish a one quarter transitional incentive plan for the December Period. This plan was based upon achievement of two financial performance metrics: net revenue and operating income. The specific target for each metric was consistent with the Company’s business plan for the December Period. Net revenue was selected as a metric because the Compensation Committee believes that long-term success is dependent upon revenue growth, and, therefore, the achievement of revenue targets is to be encouraged. Operating income was selected as a metric because the Company’s restructuring plan had been successfully completed and the Compensation Committee felt that on-going profitability was the best measure of the success of the restructuring plan, while also being a key driver of shareholder value. No bonus was payable under the plan if a minimum threshold for operating income is not met. The following table sets forth the December Period “On Plan” target bonus opportunity for each named executive officer. In setting the December Period target bonus opportunities for our named executive officers, the Compensation Committee noted that the 50^th percentile for the Company’s peer group and industry data equated to 100% of the CEO’s base salary, 70% of the CFO’s base salary, and between 50 to 65% of the other NEO’s base salaries. Taking such information into consideration, the Compensation Committee determined that the target bonus opportunities set for each of the NEOs under the plan was appropriate. Sixty percent of the bonus opportunity for each NEO was tied to net revenue and forty percent to operating income. The portion of annual incentive compensation to be determined by each metric was set by the Compensation Committee to achieve a reasonable balance among the metrics.

At 100% “On Plan” achievement, the December Period incentive program would pay out 100% of the targeted incentive for each of the net revenue and operating income metrics. For below “On Plan” performance, the payout would be reduced in accordance with a linear formula (to 50% at a minimum threshold), and for above “On Plan” performance, the payout would be increased in the same manner. Payouts are thereby tied to the performance of the Company. Performance against each metric is calculated and the payout is determined independently, except that above “On Plan” payouts could not be earned unless the Company earned operating income of a minimum specified percentage of net revenue. This gating requirement was established to ensure that revenue growth was not pursued at the expense of profitability. The maximum bonus that could be earned by any named executive officer was 250% of his or her target bonus opportunity.

We achieved financial performance levels for each of the net revenue and operating income metrics for the December Period that were above the “On-Plan” target levels, and therefore, the following bonuses will be paid to our named executive officers for the December Period:

Pursuant to the provisions of our incentive program, the performance metrics were calculated as reported in the financial statements included in this Transition Report, but excluding the effect of: any asset write-down; any litigation or claim judgment or settlement; any changes in tax laws, accounting principles, or other laws or provisions affecting reported results; any reorganization or restructuring programs; extraordinary or nonrecurring item (as defined for purposes of generally accepted accounting principles); the third party costs associated with the pursuit or closing of any acquisitions or divestitures; and any foreign exchange loss or gain. In addition, operating income was calculated before the accrual of expense of any bonuses payable pursuant to this December Period incentive program.

These potential adjustments to “as reported” results were established in order to help ensure that events outside executive management control were not unduly beneficial or detrimental to the executives from a compensation perspective, and to further guard against the structure of the incentive plan discouraging executive actions that would be in stockholder interests but which might adversely impact annual incentive payouts. These potential adjustments had no effect on the amounts earned by the named executive officers for the December Period

The Compensation Committee believes that structuring long-term incentive awards to be payable in equity (versus cash) has the added benefit of directly aligning award value to stockholder value. By coupling such awards with guidelines for equity ownership for executives, the Compensation Committee believes it further aligns the interest of each executive with the interests of our stockholders and promotes retention of key personnel, which is also in the best interest of our stockholders.

Awards made to our CEO and other named executive officers are approved by the Compensation Committee, and in the case of our CEO, are also recommended to the independent members of our Board for ratification. The Compensation Committee views equity awards as long-term incentive opportunities because they typically vest over multiple-year periods, and their vested value is therefore dependent on our longer-term performance. In making equity awards, the Compensation Committee considers the percentage of Company equity represented by the award and compares this to peer company equity usage rates (“burn rates”). The Compensation Committee generally has kept the burn rates in granting equity awards well below those of its peer companies.

In October 2014, the Compensation Committee granted equity awards to our named executive officers and other employees. In making awards to our named executive officers, the Compensation Committee elected to use a combination of RSUs (time-based equity) and PSUs. Because of the change in our fiscal year end, these awards were intended to cover both the December Period and

fiscal year 2015, and thus the RSUs vest in three equal tranches, roughly 15, 27 and 39 months after the date of grant. The PSUs granted in October 2014 are broken into two types of grants: (1) the TSR PSUs and (2) the Stock Price PSUs. Provided the executive remains employed by us through the vesting certification date, the PSUs vest as follows:

The total value and total number of shares of our common stock subject to the equity awards granted in October 2014 as described above is reflected in the following table. The TSR PSU share amounts assume the metric is achieved at the maximum level. The maximum “additional” number of TSR PSUs that can vest is 50% of the base amount of TSR PSUs.

Consistent with past fiscal years, the grant values were approved by the Compensation Committee after considering target equity values, individual and corporate performance generally and overall levels of total compensation of our named executive officers relative to our peer group and market data. In addition, the Compensation Committee proportionately increased the size of the equity grants to account for the change in the Company’s fiscal year end since these grants were intended to provide compensation for the transitional period from October 1^st to December 31^st in addition to the full fiscal year 2015. Furthermore, the Compensation Committee took into account the successful restructuring of the Company during 2014, including the significant annual cost savings achieved from such restructuring and the resulting return to profitability in the fourth quarter of fiscal year 2014, in making the award of the Stock Price PSUs and in determining the size of the time-based RSU grant. The RSU grants were made pursuant to our new form of RSU agreement which requires a “double-trigger” for accelerated vesting in the event of a change in control, as discussed in more detail below under “Potential Payments upon Termination and Change in Control – 2014 Plan.”

We periodically review the perquisites and other personal benefits that our named executive officers receive. It is the Compensation Committee’s philosophy that perquisites should be minimal in amount and constitute a minor portion of total compensation. As described in the Summary Compensation Table below, our named executive officers are entitled to few benefits that are not otherwise available to all of our employees. While the Compensation Committee eliminated automobile allowances effective as of January 1, 2012 for executives based in the U.S., executives based outside the U.S. may continue to receive car and driver benefits customary for the location in which they work. In addition, executives on expatriate assignment are eligible for certain benefits under our expatriate policy which are designed to reimburse them for additional costs associated with their expatriate status, including tax equalization and tax gross-ups of amounts paid directly by us for housing, which are deemed taxable benefits under applicable tax regulations. The Compensation Committee has determined that these limited tax gross-ups are appropriate given the importance of the work being done by these executives in foreign jurisdictions.

We believe that benefits should be competitive with other similarly sized companies in our industry and we provide broad-based benefits to our named executive officers and all other employees alike, including health and dental insurance, life and disability insurance and a Section 401(k) plan. Participants in the Section 401(k) plan, including our named executive officers, are permitted to contribute to the plan through payroll deductions within statutory and plan limits. Participants may select from a variety of investment options. Section 401(k) plan investment options do not include our common stock. In addition, we currently provide matching contributions for the participants in the Section 401(k) plan, including our named executive officers.

To further align the interests of our management with those of our stockholders, the Compensation Committee has approved guidelines that require each Executive (as defined below) to maintain certain stock ownership levels. As used in these equity ownership guidelines and the compensation recovery policy described below, “Executive” means the CEO, any Vice President or higher level employee who reports to the CEO and any other individual designated by the Compensation Committee as an Executive for these purposes. The following ownership guidelines became effective for Executives in fiscal year 2010:

Executives are expected to achieve the guideline level within five years of the guideline first becoming applicable to an Executive. The following types of ownership will be counted towards satisfying the guideline: shares owned directly by the Executive and his or her immediate family members. Our policies also prohibit an Executive from short-selling, pledging or engaging in any financial activity where they would benefit or be insulated from a decline in our stock price. The Compensation Committee may elect to suspend or delay the guidelines for any Executive in the event of a financial emergency or undue hardship for the Executive or in the event that general economic conditions result in significant stock value changes over a very short period.

Until such time as an Executive has attained their guideline holding level, the Executive is expected to retain at least 60% of all vested equity, net of taxes.

In the event of a material misstatement of our financial results that requires us to restate all or a portion of our financial statements, our Board may, in its sole discretion and subject to applicable law and regulations, require an Executive to reimburse the Company for the difference between any performance awards paid to the Executive based on achievement of financial results that were subsequently restated and the amount the Executive would have earned under such awards based on the restated financial results (as well as any such other amounts as may be required by law or regulation).

We generally intend to qualify executive compensation for deductibility without limitation under Section 162(m) of the Code. Section 162(m) provides that, for purposes of regular income tax and the alternative minimum tax, the otherwise allowable deduction for compensation paid or accrued with respect to a covered employee of a publicly-held corporation (other than certain exempt performance-based compensation) is limited to no more than $1 million per year. We do not expect that any material portion of the non-exempt compensation paid to any of our executive officers for fiscal year 2014 as calculated for purposes of Section 162(m) will exceed the $1 million limit. However, to maintain flexibility in compensating the Company’s executives in a manner designed to promote corporate goals, it is not a policy of the Compensation Committee that all executive compensation must be deductible.

We have assessed our compensation programs and have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Our management and the Compensation Committee assessed our executive and broad-based compensation and benefits programs on a worldwide basis to determine if the programs’ provisions and operations create undesired or unintentional risks of a material nature. This risk assessment process included a review of program policies and practices; program analysis to identify risk and risk controls related to the programs; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward, risk control, and the contribution of the programs and their risks to our strategy. Although we reviewed all compensation programs, we focused on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout, including applicable compensation recovery policies.

Based on the foregoing, we believe that our compensation policies and practices do not create inappropriate or unintended significant risk to the Company as a whole. We also believe that our incentive compensation arrangements are compatible with effective internal controls and the risk management practices of the Company and are supported by the oversight and administration of the Compensation Committee with regard to our executive compensation programs.

The following table discloses the compensation paid to or earned from us during each of the December Period (“CQ4”) and the fiscal years ended September 30, 2014, 2013 and 2012 by our named executive officers (our CEO, CFO and our three other most highly paid executive officers, including such persons who met the foregoing criteria, during, but not at the end, of the December Period):

Name and Principal Position	Year	Salary(1) ($)		Stock Awards(2) ($)		Option Award(s)(3) ($)		Non-Equity Incentive Plan Compensation(4) ($)		All Other Compensation ($)			Total Compensation ($)
Reza Meshgin,	CQ4	$	165,738	$	2,335,470	$	0	$	295,022	$	5,799	⁽⁵⁾	$	2,802,029	⁽¹⁰⁾
President and Chief	2014	$	631,382	$	1,683,433	$	0	$	0	$	32,687		$	2,347,502
Executive Officer	2013	$	631,382	$	1,304,723	$	480,510	$	0	$	34,918		$	2,451,533
	2012	$	631,382	$	1,069,314	$	399,176	$	150,092	$	31,486		$	2,281,450
Tom Liguori,	CQ4	$	99,799	$	752,333	$	0	$	115,471	$	7,069	⁽⁶⁾	$	974,672	⁽¹⁰⁾
Executive Vice President	2014	$	385,696	$	514,172	$	0	$	0	$	33,880		$	933,748
and Chief Financial Officer	2013	$	385,696	$	396,723	$	146,767	$	0	$	38,523		$	967,709
	2012	$	378,134	$	451,380	$	142,300	$	49,439	$	24,989		$	1,046,242
Thomas Lee,	CQ4	$	85,647	$	633,838	$	0	$	91,474	$	5,497	⁽⁷⁾	$	816,456	⁽¹⁰⁾
Executive Vice President,	2014	$	314,301	$	444,148	$	0	$	0	$	28,229		$	786,678
Business Development	2013	$	314,301	$	345,949	$	126,773	$	0	$	28,722		$	815,745
	2012	$	308,138	$	333,244	$	92,767	$	36,625	$	31,800		$	802,574
Christine Besnard,	CQ4	$	84,972	$	486,927	$	0	$	83,190	$	7,898	⁽⁸⁾	$	662,986	⁽¹⁰⁾
Executive Vice President,	2014	$	311,822	$	340,860	$	0	$	0	$	31,370		$	648,052
General Counsel and Secretary	2013	$	311,822	$	264,084	$	97,300	$	0	$	29,570		$	702,776
	2012	$	302,740	$	310,391	$	79,750	$	35,984	$	38,058		$	766,923
Lance Jin,	CQ4	$	94,331	$	607,765	$	0	$	100,748	$	6,130	⁽⁹⁾	$	808,974	⁽¹⁰⁾
Executive Vice President	2014	$	366,332	$	498,132	$	0	$	0	$	65,741		$	930,205
and Managing Director of China	2013	$	366,332	$	379,622	$	142,188	$	0	$	44,626		$	932,768
	2012	$	357,398	$	466,746	$	107,597	$	42,480	$	86,205		$	1,060,426

The following table discloses the actual RSU and PSU awards granted to the named executive officers during the December Period and their respective grant date fair values. It also captures potential pay-outs under non-equity incentive plans for the December Period. No SSARs or options were awarded in the December Period.

											All Other
									Estimated		Stock
			Estimated						Future Payouts		Awards:		Grant Date
			Future Payouts						Under Equity		Number of		Fair Value
			Under Non-Equity						Incentive Plan		Shares of		of Stock
			Incentive Plan Awards						Awards		Stock or		and Option
	Grant		Threshold		Target		Maximum		Target		Units		Awards
Name	Date⁽¹⁾		($)⁽²⁾		($)⁽³⁾		($)⁽⁴⁾		(#)⁽⁶⁾		(#)⁽⁷⁾		($)

Reza Meshgin	N/A	⁽⁵⁾	$	33,148	$	165,738	$	414,344		—		—		—
	10/22/2014			—		—		—		162,733		—	$	906,423	⁽⁸⁾
	10/22/2014			—		—		—		33,381		—	$	157,892
	10/22/2014			—		—		—		—		141,870	$	1,271,155

Tom Liguori	N/A	⁽⁵⁾	$	12,974	$	64,869	$	162,173		—		—		—
	10/22/2014			—		—		—		29,397		—	$	163,741	⁽⁸⁾
	10/22/2014			—		—		—		13,065		—	$	61,797
	10/22/2014			—		—		—		—		58,794	$	526,794

Thomas Lee	N/A	⁽⁵⁾	$	10,278	$	51,388	$	128,471		—		—		—
	10/22/2014			—		—		—		25,228		—	$	140,520	⁽⁸⁾
	10/22/2014			—		—		—		10,350		—	$	48,956
	10/22/2014			—		—		—		—		49,594	$	444,362

Christine Besnard	N/A	⁽⁵⁾	$	9,347	$	46,734	$	116,836		—		—		—
	10/22/2014			—		—		—		18,355		—	$	102,237	⁽⁸⁾
	10/22/2014			—		—		—		9,413		—	$	44,523
	10/22/2014			—		—		—		—		37,965	$	340,166

Lance Jin	N/A	⁽⁵⁾	$	11,320	$	56,598	$	141,496		—		—		—
	10/22/2014			—		—		—		23,155		—	$	128,973	⁽⁸⁾
	10/22/2014			—		—		—		11,399		—	$	53,917
	10/22/2014			—		—		—		—		47,419	$	424,874

The following table discloses outstanding stock option awards (SSARs and options) classified as exercisable and unexercisable as of December 31, 2014 for each of our named executive officers. The table also shows unvested stock awards (RSUs and PSUs) as of December 31, 2014 assuming a market value of $11.23 per share (the closing market price of our common stock on December 31, 2014).


	Option Awards				Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock that Have Not Vested (#)⁽¹⁾	Market Value of Shares or Units of Stock that Have Not Vested ($)⁽¹⁾
Reza Meshgin	18,006	—	$10.76	12/05/2018	509,813	$5,725,200
	15,255	—	$12.70	03/05/2019
	8,847	—	$21.90	06/05/2019
	6,779	—	$28.58	09/04/2019
	43,178	—	$25.96	11/16/2019
	40,010	—	$22.17	11/15/2020
	55,074	—	$19.65	11/14/2021
	90,240	—	$17.90	11/13/2022

Tom Liguori	5,808	—	$10.76	12/05/2018	153,738	$1,726,478
	4,921	—	$12.70	03/05/2019
	2,853	—	$21.90	06/05/2019
	2,186	—	$28.58	09/04/2019
	17,425	—	$25.96	11/16/2019
	16,073	—	$22.17	11/15/2020
	19,633	—	$19.65	11/14/2021
	27,563	—	$17.90	11/13/2022

Thomas Lee	4,646	—	$10.76	12/05/2018	130,506	$1,465,582
	3,937	—	$12.70	03/05/2019
	2,283	—	$21.90	06/05/2019
	1,749	—	$28.58	09/04/2019
	14,094	—	$25.96	11/16/2019
	13,001	—	$22.17	11/15/2020
	12,799	—	$19.65	11/14/2021
	23,808	—	$17.90	11/13/2022

Christine Besnard	3,485	—	$10.76	12/05/2018	100,525	$1,128,896
	2,952	—	$12.70	03/05/2019
	1,712	—	$21.90	06/05/2019
	1,312	—	$28.58	09/04/2019
	13,770	—	$25.96	11/16/2019
	12,889	—	$22.17	11/15/2020
	11,003	—	$19.65	11/14/2021
	18,273	—	$17.90	11/13/2022

Lance Jin	5,227	—	$10.76	12/05/2018	132,818	$1,491,546
	4,429	—	$12.70	03/05/2019
	2,568	—	$21.90	06/05/2019
	1,968	—	$28.58	09/04/2019
	16,500	—	$25.96	11/16/2019
	15,295	—	$22.17	11/15/2020
	14,845	—	$19.65	11/14/2021
	26,703	—	$17.90	11/13/2022

The following chart summarizes the number of RSUs vesting and PSUs scheduled to vest on each particular date for each named executive officer as of December 31, 2014:

Vesting Date	Reza Meshgin		Tom Liguori		Thomas Lee		Christine Besnard		Lance Jin
September 30, 2015⁽¹⁾		30,080		9,188		7,936		6,091		8,901
November 15, 2015		16,200		4,948		4,274		3,280		4,794
January 1, 2016		47,290		19,598		16,531		12,655		15,806
January 8, 2016		33,381		13,065		10,350		9,413		11,399
September 30, 2016		46,911		14,328		12,377		9,498		13,881
November 15, 2016		16,200		4,948		4,274		3,281		4,794
November 30, 2016		62,438		19,070		16,473		12,642		18,475
January 1, 2017		47,290		19,598		16,531		12,655		15,806
December 31, 2017		162,733		29,397		25,228		18,355		23,155
January 1, 2018		47,290		19,598		16,532		12,655		15,807
Total		509,813		153,738		130,506		100,525		132,818

The following table discloses certain information concerning exercises of stock options and the vesting of RSU awards for each named executive officer during the December Period.

We did not sponsor any defined benefit pension or other actuarial plan for our named executive officers during the December Period.

We did not maintain any nonqualified defined contribution or other deferred compensation plans or arrangements for our named executive officers during the December Period.

On January 18, 2012, the Compensation Committee adopted the CiC Plan covering each of our named executive officers. The purpose of the CiC Plan is to provide our executives with specified compensation and benefits in the event of a change in control and termination of employment under specified circumstances. Each of our NEOs has entered into an agreement with the Company pursuant to the CiC Plan. The terms of each of the change in control agreements remained in effect for an initial term of two years, with automatic one-year extensions unless a change in control occurs or the CiC Plan is terminated by the Company at least 12 months prior to its expiration date. The Compensation Committee did not elect to terminate the CiC Plan or the agreements in fiscal year 2014 or during the December Period.

Under the agreements, “cause” is generally defined as the executive’s (a) willful or reckless and repeated failure to satisfactorily perform the executive’s duties with the Company, (b) failure to comply with all material applicable laws, (c) failure to comply with all

lawful and material directives from the Company’s executive management or Board in performing the executive’s duties or in directing the conduct of the Company’s business, (d) commission of any felony or intentionally fraudulent act against the Company that demonstrates the executive’s untrustworthiness or lack of integrity, (e) commission of any material fraud against the Company or use or intentional appropriation for personal use or benefit of any material funds or properties of the Company not authorized by the Company to be so used or appropriated, or (f) material noncompliance with Company policy or procedure. “Good reason” is generally defined as (a) a material diminution in the executive’s authority, duties or responsibilities, (b) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the executive is required to report, (c) a material reduction in the executive’s base salary or annual target bonus, (d) a material diminution in the budget over which the executive retains authority, (e) the relocation of the executive to a work location more than fifty miles from the executive’s then present location of employment, or (f) any other action or inaction by the Company or its successor that constitutes a material breach of the agreement or any employment agreement with the Company or its successor to which the executive is a party.

The CiC Plan generally provides that upon the occurrence of a change in control of the Company:

In addition, participants in the CiC Plan will be entitled to specified payments and benefits if (1) a change in control occurs and (2) the participant’s employment is terminated without cause or the participant resigns for good reason (an “Involuntary Termination”) within the period that is three months prior to, through 24 months following, the change in control. These payments and benefits are:

If any part of the payments or benefits received by a participant in connection with a termination of employment following a change in control constitutes an excess parachute payment under Section 4999 of the Code, the participant will receive the greater of (a) the amount of such payments and benefits reduced so that none of the amount constitutes an excess parachute payment, net of income taxes, or (b) the amount of such payments and benefits, net of income taxes and net of excise taxes under Section 4999 of the Code.

The CiC Plan requires the participant’s continued compliance with non-solicitation covenants for 36 months following Mr. Meshgin’s termination and 24 months following each other executive’s termination, as well as non-disparagement obligations and continued protection of confidential Company information. The participants must also execute a release of claims for the severance payments to be made.

Pursuant to the terms of the 2004 Plan, any outstanding awards of RSUs or SSARs held by any participant in the 2004 Plan, including our named executive officers, will become vested in full upon (1) the occurrence of certain change in control transactions and (2) if, within 12 months following such change in control transaction, the participant’s employment is terminated by the Company without “cause” or by the participant for a “good reason,” in each case as defined in the 2004 Plan. Also, pursuant to the terms of the 2004 Plan, any outstanding award of RSUs or SSARS fully vest in the event that the Company gives written notice of its intent to delist from Nasdaq, without at the same time relisting on another exchange. The Compensation Committee may also, in its discretion, allow PSUs to vest upon the triggering events described above.

On May 28, 2013, UEL and UECV filed with the SEC an Initial Statement of Beneficial Ownership of Securities on Form 3 (the “Form 3”) and a Schedule 13D under the Securities Exchange Act of 1934 (the “Schedule 13D”) announcing that, UEL, through UECV, its wholly-owned subsidiary, owned or had agreed to acquire, pursuant to a cash offer, more than 50% of the ordinary stock units of WBL. The filing of the Form 3 and the Schedule 13D was the first instance the Company was informed that UE had acquired a majority of the ordinary stock units of WBL. As reported in the past and disclosed in the Form 3 and Schedule 13D, WBL may be deemed to indirectly beneficially own 14,817,052 shares of our common stock (the “Shares”), which are held by Wearnes Technology (Private) Limited (“WT”) and United Wearnes Technology Pte Ltd (“UWT”). Based on the disclosure in the Form 3 and the 13D regarding the acquisition of a controlling interest in WBL by UE, UE may also be deemed to now share voting and dispositive power over the Shares with WBL, which resulted in a new controlling entity with respect to the Company.

Based on the disclosure in the Schedule 13D, on March 27, 2013, UECV made mandatory conditional cash offers to acquire all of the issued ordinary stock units of WBL, at a price of $4.15 per stock unit (which was raised to $4.50 per stock unit on May 9, 2013), as well as all of the outstanding 2.5% convertible bonds due June 20, 2014 issued by WBL (other than those stock units and convertible bonds already owned, controlled or agreed to be acquired by UE and its “Concert Party Group” (as defined in the documentation for such offers)). Based on the disclosure in the Schedule 13D, the offers for stock units and bonds would be funded by way of UE’s internal funds, financing from financial institution(s) and/or the issuance of medium term notes by UEL pursuant to its existing S$500 million multicurrency medium term note program. Based on the disclosure in the Schedule 13D, the offers were declared unconditional in all respects on May 13, 2013.

Based on the disclosure in the Schedule 13D, UE owned or had agreed to acquire such number of WBL stock units carrying more than 50% of the voting rights attributable to the maximum potential stock capital of WBL (assuming conversion of all outstanding convertible bonds excluding those owned by UE and the Concert Party Group and for which valid acceptances have been received) as of May 16, 2013 and, upon settlement of the valid acceptances of the stock units, WBL became a subsidiary of UE. Accordingly, based on the disclosure in the Schedule 13D regarding its acquisition of voting control of WBL, UE may be deemed to share voting and dispositive power over the Shares, which equates to approximately 61.5% of the total number of shares of common stock outstanding as of the Record Date. Based on the disclosure in the Schedule 13D, UE shares voting and dispositive power over the Shares with WBL, which includes 11,817,052 Shares held by WT and 3,000,000 Shares held by UWT. See “Certain Relationships and Related Transactions” below for arrangements among UE, WBL and the Company with respect to the election of directors.

In connection with the foregoing, the Company reviewed its 2004 Plan, and its CiC Plan and determined that a “change in control,” as defined in the 2004 Plan and the CiC Plan, occurred as of May 23, 2013, the date on which UE advised the Company that it owned a controlling majority of the stock units of WBL. Pursuant to the terms of the 2004 Plan, this change in control affected all outstanding equity grants, resulting in (i) the accelerated vesting of all then outstanding RSUs, (ii) the accelerated vesting of all then outstanding SSARs, and (iii) the conversion of all then outstanding PSUs to time-based RSUs, with new vesting dates between September 30, 2013 through September 30, 2015.

Pursuant to the terms of the 2014 Plan, unless otherwise provided by the applicable award agreement, each RSU award outstanding immediately prior to the consummation of a change in control (as defined in the 2014 Plan) held by a participant whose service has not terminated prior to such change in control shall be treated as follows: (i) time vesting awards shall vest in full immediately prior to the consummation of the change in control, and (ii) performance vesting awards shall vest at the same vesting level that they would vest upon achievement of 100% of the applicable performance goals (without regard to the actual achievement of any such performance goal) upon the first to occur of (A) the date of completion of the performance period applicable to the awards, provided that the participant’s service has not terminated prior to such date, (B) the qualifying termination (as defined in the 2014 Plan) of the participant, or (C) subject to certain restrictions, the time immediately prior to the consummation of the change in control in the event that the acquiror will not, pursuant to the change in control, assume or continue the Company’s rights and obligations under the award or substitute for the award substantially equivalent awards for equity securities of such corporation, in each such case exercisable for or convertible into equity securities of such corporation which are registered under the Securities Act and traded on a United States securities exchange.

Prior to the grant of equity awards for the December Period and fiscal year 2015, we revised our form RSU agreements to require both a change in control (as defined in the CiC Plan) and a double-trigger event for the vesting of time-based equity awards to accelerate. A double-trigger event includes the acquiror not assuming the obligations of the award and a participant’s Involuntary Termination. This means that, under our new form RSU Agreement, notwithstanding the terms of our change in control agreements with our named executive officers or the terms of the 2014 Plan, a change in control of the Company without a double-trigger event will not cause the vesting of time-based RSUs to accelerate. We intend that all future time-based equity awards will be subject to this new form RSU Agreement.

The following table quantifies the potential payments and benefits to be received by our named executive officers assuming one of the following scenarios:

The payments and benefits are calculated assuming the events occurred on December 31, 2014, the last business day of the December Period determined by our closing stock price of $11.23 per share on such date. The table does not reflect equity grants that were fully vested as of such date. The amounts below would be limited, to the extent applicable, by the excess parachute payment provisions under Section 4999 of the Code described above.


Name	Pro Rata Bonus Payment⁽¹⁾	Lump Sum Cash Payment	Non-Compete Payment	Continuing Health Care Benefits⁽²⁾	Early Vesting of PSUs	Early Vesting of RSUs and SSARs⁽³⁾	Total ($)
Reza Meshgin
CiC only	N/A	N/A	N/A	N/A	N/A	$ 701,650	$ 701,650
PSU Conversion	N/A	N/A	N/A	N/A	$2,821,189	$ 701,650	$ 3,522,840
Not Assumed	N/A	N/A	N/A	N/A	$2,821,189	$2,294,851	$ 5,116,040
Invol Term	$639,275⁽⁴⁾	$3,255,564⁽⁴⁾	$651,113⁽⁴⁾	$85,658⁽⁴⁾	$2,821,189	$2,294,851	$ 9,747,649

Tom Liguori
CiC only	N/A	N/A	N/A	N/A	N/A	$ 214,313	$ 214,313
PSU Conversion	N/A	N/A	N/A	N/A	$741,865	$ 214,313	$ 956,178
Not Assumed	N/A	N/A	N/A	N/A	$741,865	$ 874,570	$ 1,616,435
Invol Term	$252,896⁽⁴⁾	$1,108,557⁽⁴⁾	$195,628⁽⁴⁾	$70,398⁽⁴⁾	$741,865	$ 874,570	$ 3,243,913

Thomas Lee
CiC only	N/A	N/A	N/A	N/A	N/A	$ 185,115	$ 185,115
PSU Conversion	N/A	N/A	N/A	N/A	$629,093	$ 185,115	$ 814,209
Not Assumed	N/A	N/A	N/A	N/A	$629,093	$ 742,056	$ 1,371,149
Invol Term	$181,038⁽⁴⁾	$890,163⁽⁴⁾	$157,088⁽⁴⁾	$49,634⁽⁴⁾	$629,093	$ 742,056	$ 2,649,072

Christine Besnard
CiC only	N/A	N/A	N/A	N/A	N/A	$ 142,082	$ 142,082
PSU Conversion	N/A	N/A	N/A	N/A	$491,762	$ 142,082	$ 633,844
Not Assumed	N/A	N/A	N/A	N/A	$491,762	$ 568,429	$ 1,060,191
Invol Term	$175,361⁽⁴⁾	$875,919⁽⁴⁾	$154,574⁽⁴⁾	$37,456⁽⁴⁾	$491,472	$ 568,429	$ 2,303,500

Lance Jin
CiC only	N/A	N/A	N/A	N/A	N/A	$ 207,631	$ 207,631
PSU Conversion	N/A	N/A	N/A	N/A	$664,726	$ 207,631	$ 872,358
Not Assumed	N/A	N/A	N/A	N/A	$664,726	$ 740,147	$ 1,404,873
Invol Term	$221,448⁽⁴⁾	$1,017,909⁽⁴⁾	$179,631⁽⁴⁾	$34,436⁽⁴⁾	$664,726	$ 740,147	$ 2,858,297

Employees of UEL and its subsidiaries who serve on our Board are entitled to receive the same compensation as other non-employee members of our Board. However, Messrs. Chan and Tan have informed the Company that they will not accept monetary payments or equity awards for their service, other than for reimbursement of their expenses in attending Board meetings.

The Company pays its other non-employee Board members the following fees related to their service on our Board:

If a Board member attends less than 75% of the Board meetings held in any given year, the Board member would receive (i) the per meeting fee for the meetings he/she actually attended during such year and (ii) a percentage of the annual Board retainer equal to the proportion of total Board meetings attended to the total Board meetings scheduled. Additionally, we reimburse the directors for reasonable expenses in connection with attendance at Board and committee meetings. There is no financial penalty if a Committee member does not attend at least 75% of the Committee meetings.

In addition, in the event the Board forms any special or ad hoc committee, non-employee members of such committee are paid meetings fees for meetings actually attended and the chair, if any, is typically paid a retainer in the same amount as the chairman of the Nominating Committee.

As part of our director compensation, we have a practice of granting an annual equity award to our non-employee directors. Following our annual meeting of stockholders in March 2014, each of our continuing non-employee directors, except Mr. Tan who is an employee of UEL, received a discretionary RSU award under the 2014 Plan for 6,186 shares of our common stock. This grant size was deemed appropriate by our Board following a fulsome review the prior year of our Board compensation practices.

To further align the interests of our non-employee directors with those of our stockholders, the Compensation Committee has approved guidelines that require each non-employee director to maintain certain stock ownership levels. The following ownership guidelines became effective for non-employee directors in fiscal year 2011:

Non-employee directors are expected to achieve the guideline level within three years of the guideline first becoming applicable to such director. The following types of ownership will be counted towards satisfying the guideline: shares owned outright by the director and shares owned by immediate family members. The guidelines also prohibit a director from short-selling or engaging in any financial activity where they would benefit or be insulated from a decline in our stock price. The Compensation Committee may elect to suspend or delay the guidelines for any director in the event of a financial emergency or undue hardship for the director or in the event that general economic conditions result in significant stock value changes over a very short period and the guidelines are waived for any director who does not accept stock grants from us. Until such time as a non-employee director has attained their guideline holding level, the director is expected to retain at least 30% of the gross of all equity grants.

The following table discloses certain information concerning the compensation of our non-employee directors for the December Period:

The following table represents the aggregate number of shares of our common stock subject to stock awards and options outstanding at the end of the December Period for each non-employee director:

During various times during the December Period, Messrs. McCluney, Schwanz and Yau and Dr. Lim each served as members of our Compensation Committee. None of the members of the Compensation Committee at any time has been one of our officers or employees. No interlocking relationship exists, or has existed in the past, between the Board or Compensation Committee and the board of directors or compensation committee of any other entity.

The following table sets forth certain information as of January 7, 2015 as to shares of the common stock beneficially owned by: (i) each person who is known by us to own beneficially more than 5% of our common stock, (ii) each of our Named Executive Officers under “Summary Compensation Table,” (iii) each of our current directors, (iv) each of our nominees for director, and (v) all of our current directors and executive officers as a group. Ownership information is based upon information furnished by the respective individuals or entities, as the case may be. Unless otherwise noted below, the address of each beneficial owner is c/o Multi-Fineline Electronix, Inc., 8659 Research Dr., Irvine, California, 92618. Except as indicated in the footnotes to this table, the persons or entities named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws, where applicable. The percentage of common stock beneficially owned is based on 24,303,267 shares outstanding as January 7, 2015. In addition, shares issuable pursuant to options, SSARs and RSUs which may be exercised or will vest within 60 days of January 7, 2015 are deemed to be issued and outstanding and have been treated as outstanding in calculating the percentage ownership of those individuals possessing such interest, but not for any other individual. Thus, the number of shares considered to be outstanding for the purposes of this table may vary depending on the individual’s particular circumstances.

The following summarizes the Company’s equity compensation plans at December 31, 2014:

We have entered into indemnification agreements with each of our executive officers, directors and certain other employees. In addition, our executive officers and directors are indemnified under Delaware General Corporation Law and our Bylaws to the fullest extent permitted under Delaware law. We have an insurance policy covering our directors and officers with respect to specified liabilities, including liabilities arising under the Securities Act or otherwise. On January 18, 2012, the Company adopted the CiC plan, which authorized the Company to enter into the change in control agreements as described above under “Potential Payments upon Termination and Change in Control.”

As discussed above under “Security Ownership of Certain Beneficial Owners and Management,” as of January 31, 2015, UE and its affiliated entities beneficially owned approximately 61% of our outstanding common stock.

On October 25, 2005, we entered into an Amended and Restated Stockholders Agreement (the “Stockholders Agreement”) with WBL, WT and UWT (the “WBL stockholders”). The Stockholders Agreement provides, among other things, that so long as the WBL stockholders in the aggregate effectively own (as defined in the Stockholders Agreement) one-third or more of our outstanding common stock, the appointment of our chief executive officer or the issuance of securities that would reduce the WBL stockholders’ effective ownership in us to below a majority of our shares outstanding on a fully diluted basis requires the affirmative vote of at least one individual who has been formally designated by any of the WBL stockholders to serve as a director on our Board and who is subsequently elected to our Board (a “WBL Designee”). Roy Tan, the Group Chief Financial Officer of UEL and a board member of WBL, and Hong Wai Chan, Chief Executive Officer of MFS, are members of our Board and each serve as a WBL Designee. Mr. Duster served as a WBL Designee prior to his resignation.

The Stockholders Agreement will terminate when the WBL stockholders no longer effectively own at least one-third of the outstanding shares of our common stock (on an as converted and as exchanged basis).

In addition to the rights under the Stockholders Agreement, as the owner of shares of our common stock representing over a majority of our outstanding shares of common stock, the WBL stockholders have the power to determine or significantly influence the outcome of our director elections and matters requiring the affirmative vote of our stockholders, including the power to prevent an acquisition of us or any other change in control of our company. Because the interests of the WBL stockholders as our controlling stockholders may differ from the interests of our other stockholders, actions taken by the WBL stockholders with respect to us may not be favorable to such other stockholders.

On November 30, 2012, the Company entered into a Registration Rights Agreement, as amended by the parties on February 4, 2014 (the “Registration Rights Agreement”) with the WBL stockholders. Pursuant to the Registration Rights Agreement, the Company registered the shares of its common stock held by the WBL stockholders by filing a shelf registration statement that permits the resale of shares by the WBL stockholders and their permitted assigns into the market from time to time over an extended period.

In addition, the Registration Rights Agreement provides the WBL stockholders and their permitted assigns with the ability to exercise certain piggyback registration rights with respect to the Company’s shares they hold if the Company elects to register any of its common stock, and includes provisions dealing with allocation of securities included in registration statements, registration procedures, indemnification, contribution, assignment, and allocation of expenses. The Registration Rights Agreement terminated effective February 8, 2015.

As of December 31, 2014, we leased a facility from WBL in Singapore. The aggregate lease payments made to WBL for the December Period were approximately $54,000. We believe that this lease was made or entered into on terms that are no less favorable to us than those we could obtain from unaffiliated third parties.

Management fees may be charged to us by an affiliate of WBL, pursuant to a Corporate Services Agreement between us and such entity. Under this agreement, we may be billed for services on a time and materials basis. For the December Period, no services were provided under this agreement.

The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest.

Our Audit Committee charter requires that members of the Audit Committee, all of whom are independent directors, review and discuss with management and the independent auditors any related party transactions which are significant in size or involve terms that would otherwise not likely be negotiated with independent parties, and that are relevant to an understanding of our financial statements. Current SEC rules define a related party transaction to include any transaction, arrangement or relationship in which we are a participant and in which any of the following persons has or will have a direct or indirect interest:

All related party transactions will be disclosed in our applicable filings with the SEC as required by the SEC rules.

A majority of the Board must qualify as “independent directors” within the meaning of Nasdaq Rule 5605. The Board has determined that Messrs. Lemaitre, McCluney, Schwanz and Yau and Dr. Lim qualify as independent directors. The Board has also determined that each director who currently serves on the Audit Committee, the Nominating Committee and the Compensation Committee is “independent,” as that term is defined by applicable listing standards of Nasdaq and the SEC rules. Messrs. Chan and Tan are not deemed independent under the applicable rules because Mr. Chan is an employee of an UEL-affiliated company, and Mr. Tan serves as Group Chief Financial Officer of UEL, whose subsidiaries in turn own a majority of our outstanding common stock. Each member of the Compensation Committee qualifies as a non-employee director.

The following table presents fees for professional services rendered by PricewaterhouseCoopers LLP for the audit of our financial statements for the December Period, and fiscal years ended September 30, 2014 and 2013 and fees billed for other non-audit services rendered by PricewaterhouseCoopers LLP.

It is our policy that all audit and non-audit services to be performed by our principal independent registered public accounting firm be approved in advance by the Audit Committee. The Audit Committee will not approve the engagement of our principal independent registered public accounting firm to perform any service that the independent registered public accounting firm would be prohibited from providing under applicable listing standards of Nasdaq or SEC rules. In assessing whether to approve use of our principal independent registered public accounting firm for permitted non-audit services, the Audit Committee tries to minimize relationships that could appear to impair the objectivity of the firm. The Audit Committee will approve permitted non-audit services by our principal independent registered public accounting firm only when it will be more effective or economical to have such services provided by the independent registered public accounting firm and where the nature of the services will not impair the firm’s independence. The Audit Committee has granted Mr. Yau, Chairman of the Audit Committee, the discretion to determine whether non-audit services proposed to be performed by PricewaterhouseCoopers LLP require the review of the entire Audit Committee, and in any situation where he deems it appropriate, Mr. Yau, acting alone, has been granted authority by the Audit Committee to negotiate and approve the engagement and/or terms of any non-audit service for us by PricewaterhouseCoopers LLP within the guidelines mentioned above. Mr. Yau reports regularly to the Audit Committee on any non-audit services he approves pursuant to such authority. During the December Period and the fiscal years ended September 30, 2014 and 2013, all audit and non-audit services performed by our principal independent registered public accounting firm were approved in advance by the Audit Committee or by Mr. Yau on behalf of the Audit Committee.

All other schedules have been omitted for the reason that the required information is presented in the financial statements or notes thereto, the amounts involved are not significant or the schedules are not applicable.

The exhibit list required by this Item is incorporated by reference to the Exhibit Index immediately following the signature page of this report.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Transition Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Reza Meshgin and Thomas Liguori, and each of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him in any and all capacities, to sign any amendments to this Transition Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Transition Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Incorporated by Reference

Exhibit

Number

Exhibit Title

Filed with this
Form 10-K

Form

File No.

Date Filed

3.2

Restated Certificate of Incorporation of the Company.

S-1

333-114510

6/3/2004

3.4

Amended and Restated Bylaws of the Company.

8-K

000-50812

12/8/2009

4.1

Form of Common Stock Certificate.

S-1

333-114510

4/15/2004

4.2

Registration Rights Agreement dated November 30, 2012 among Multi-Fineline Electronix, Inc., Wearnes Technology (Private) Limited, United Wearnes Technology Pte Ltd, and WBL Corporation Limited.

8-K (Exhibit 4.1)

000-50812

12/3/2012

4.3

Amendment to the Registration Rights Agreement dated February 2, 2014 among Multi-Fineline Electronix, Inc., Wearnes Technology (Private) Limited, United Wearnes Technology Pte Ltd, and WBL Corporation Limited.

10-Q

000-50812

2/6/2014

10.1*

Form of Indemnification Agreement between the Company and its officers, directors and agents.

S-1

333-114510

6/3/2004

10.20

Amended and Restated Stockholders Agreement dated October 25, 2005 between Multi-Fineline Electronix, Inc., Wearnes Technology Pte. Ltd, United Wearnes Technology Pte. Ltd., and WBL Corporation Limited.

8-K

000-50812

10/25/2005

10.45*

Form of Stock Appreciation Rights Agreement.

10-K

000-50812

12/9/2008

10.57*

Form of Restricted Stock Unit Agreement.

10-K

000-50812

11/17/2009

10.60

Line of Credit Agreement between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

8-K

000-50812

4/1/2010

10.61

Facility Offer Letter between Multi-Fineline Electronix (Suzhou) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

8-K

000-50812

4/1/2010

10.62

Line of Credit Agreement between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

8-K

000-50812

4/1/2010

10.63

Facility Offer Letter between Multi-Fineline Electronix (Suzhou No. 2) Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated March 29, 2010.

8-K

000-50812

4/1/2010

10.67

Line of General Credit Agreement between MFLEX Suzhou Co., Ltd. and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 31, 2010.

10-Q

000-50812

8/5/2010

Incorporated by Reference

Exhibit

Number

Exhibit Title

Filed with this
Form 10-K

Form

File No.

Date Filed

10.68

Facility Offer Letter between MFLEX Suzhou Co., Ltd., and Agricultural Bank of China,

Suzhou Wuzhong Sub-branch dated July 31, 2010.

10-Q

000-50812

8/5/2010

10.70

Agreement for Sales of Buildings in Stock by and between Wearnes Global (Suzhou) Co., Ltd. and MFLEX Suzhou Co., Ltd. dated January 6, 2011.

10-Q

000-50812

2/3/2011

10.71

Supplemental Agreement to Agreement for Sales of Buildings in Stock by and between Wearnes Global (Suzhou) Co., Ltd. and MFLEX Suzhou Co., Ltd. dated January 6, 2011.

10-Q

000-50812

2/3/2011

10.72

Guarantee Letter by Wearnes Global (Suzhou) Co., Ltd. dated January 6, 2011.

10-Q

000-50812

2/3/2011

10.73

Agreement on the Escrow of Transaction Funds for Building Stock (Fund Trusteeship Agreement) by and among Wearnes Global (Suzhou) Co., Ltd., MFLEX Suzhou Co., Ltd. and Wuzhong District Real Estate Transaction Management Center executed January 19, 2011 and dated January 18, 2011.

10-Q

000-50812

2/3/2011

10.74

Second Supplemental Agreement to Agreement for Sales of Buildings in Stock by and between Wearnes Global (Suzhou) Co., Ltd and MFLEX Suzhou Co., Ltd. dated March 31, 2011.

10-Q

000-50812

5/5/2011

10.76

Facility Agreement, dated as of January 17, 2012, by and between Multi-Fineline Electronix Singapore Pte. Ltd., as borrower; JPMorgan Chase Bank, N.A., Singapore Branch, as mandated lead arranger; the financial institutions listed in Schedule 1, as original lenders; JPMorgan Chase Bank, N.A., acting through its Hong Kong Branch, as facility agent of the other Finance Parties; and JPMorgan Chase Bank, N.A. acting through its Hong Kong Branch, as security agent of the other Finance Parties.

8-K

000-50812

1/19/2012

10.77

Form of Parent Guaranty by Multi-Fineline Electronix, Inc., in favor of JPMorgan Chase Bank, N.A., acting through its Hong Kong Branch, as security agent, for the ratable benefit of the Holders of Guaranteed Obligations (as defined therein).

8-K

000-50812

1/19/2012

10.78*

Change in Control Plan.

8-K

000-50812

1/19/2012

10.79*

Amended and Restated 2004 Stock Incentive Plan.

8-K

000-50812

1/19/2012

10.80

Line of Credit Agreement between MFLEX Chengdu Co., Ltd. and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 23, 2012.

8-K

000-50812

3/27/2012

10.81

Facility Offer Letter between MFLEX Chengdu Co., Ltd. and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 23, 2012.

8-K

000-50812

3/27/2012

Incorporated by Reference

Exhibit

Number

Exhibit Title

Filed with this
Form 10-K

Form

File No.

Date Filed

10.82#

Master Development and Supply Agreement by and between Apple Computer, Inc. and Multi-

Fineline Electronix, Inc. dated May 2, 2012.

10-Q

000-50812

5/3/2012

10.83*

Executive Officer Tax Audit Reimbursement Plan.

10-Q

000-50812

8/3/2012

10.84

Line of Credit Agreement between MFLEX Chengdu Co., Ltd. and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 1, 2013.

8-K

000-50812

3/7/2013

10.85

Facility Offer Letter between MFLEX Chengdu Co., Ltd, and Bank of China Co., Ltd. Chengdu Development West Zone Sub-Branch dated March 1, 2013.

8-K

000-50812

3/7/2013

10.86

Line of Credit Agreement between MFLEX Suzhou Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated May 6, 2013.

10-Q

000-50812

5/8/2013

10.87

Facility Offer Letter Agreement between MFLEX Suzhou Co., Ltd., and China Construction Bank, Suzhou Industry Park Sub-Branch dated May 6, 2013.

10-Q

000-50812

5/8/2013

10.88

Line of General Credit Agreement between MFLEX Suzhou Co., Ltd., and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 1, 2013.

8-K

000-50812

7/2/2013

10.89

Facility Offer Letter between MFLEX Suzhou Co., Ltd., and Agricultural Bank of China, Suzhou Wuzhong Sub-branch dated July 1, 2013.

8-K

000-50812

7/2/2013

10.90*

Multi-Fineline Electronix, Inc. 2014 Equity Incentive Plan.

DEF14A

000-50812

1/23/2014

10.91*

Form of Stock Appreciation Rights Agreement under 2014 Equity Incentive Plan.

10-Q

000-50812

5/5/2014

10.92*

Form of Restricted Stock Unit Agreement under 2014 Equity Incentive Plan.

10-Q

000-50812

5/5/2014

10.93#

Loan and Security Agreement by and among the Company, as guarantor, MFLEX Singapore, as borrower, certain financial institutions, as lenders, and Bank of America, N.A., as agent dated August 6, 2014.

10-K

000-50812

11/13/2014

21.1

List of Subsidiaries of Registrant.

23.1

Consent of PricewaterhouseCoopers LLP.

24.1

Power of Attorney (included on the signature page hereto).

31.1

Section 302 Certification by the Company’s chief executive officer.

31.2

Section 302 Certification by the Company’s principal financial officer.

32.1

Section 906 Certification by the Company’s chief executive officer and principal financial officer.

101.INS

XBRL Instance Document.

Delaware		95-3947402
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
8659 Research Drive Irvine, California		92618
(Address of principal executive offices)		(Zip Code)

Title of each class		Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share		NASDAQ Global Select Market

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	23
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 8.	Financial Statements and Supplementary Data	38
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	67
Item 9A.	Controls and Procedures	67
Item 9B.	Other Information	67
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	68
Item 11.	Executive Compensation	70
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	90
Item 13.	Certain Relationships, Related Transactions, and Director Independence	92
Item 14.	Principal Accounting Fees and Services	94
PART IV
Item 15.	Exhibits, Financial Statement Schedules	95
	Signatures	97

Entity	Function	Location	Square Feet (Building)	Lease Expiration Dates
Multi-Fineline Electronix, Inc.	Executive offices, research and development	Irvine, California	Leased—20,171	April 2015
MFLEX Suzhou Co., Ltd.	Engineering, circuit fabrication and assembly	Nanhu Road, Suzhou, China	Owned—566,108	2053*
MFLEX Suzhou Co., Ltd.	Circuit fabrication	Tangdon Road, Suzhou, China	Owned—594,254	2058*
MFLEX Suzhou Co., Ltd.— held-for-sale**	Circuit assembly	Puzhuang, China	Owned—127,036	2052*
MFLEX Chengdu Co., Ltd.— held-for-sale**	Circuit assembly	Chengdu, China	Owned—322,132	2059*
Multi-Fineline Electronix Singapore Pte. Ltd.	Regional office	Singapore	Leased—12,000	December 2015
MFLEX Korea, Ltd.	Regional office	Seoul, Korea	Leased—2,915	June 2016

Name	Age	Position(s)
Reza Meshgin	51	President and Chief Executive Officer
Thomas Liguori	56	Executive Vice President and Chief Financial Officer
Thomas Lee	55	Executive Vice President of Business Development
Christine Besnard	44	Executive Vice President, General Counsel and Secretary
Lance Jin	49	Executive Vice President and Managing Director of China Operations


Three Months Ended December 31, 2014	High		Low
Quarter ended December 31, 2014	$	11.35	$	8.11

Fiscal Year Ended September 30, 2014	High		Low
First quarter, ended December 31, 2013	$	16.32	$	12.12
Second quarter, ended March 31, 2014	$	15.30	$	12.56
Third quarter, ended June 30, 2014	$	13.18	$	9.62
Fourth quarter, ended September 30, 2014	$	11.47	$	9.33

Fiscal Year Ended September 30, 2013	High		Low
First quarter, ended December 31, 2012	$	23.10	$	15.12
Second quarter, ended March 31, 2013	$	22.88	$	14.24
Third quarter, ended June 30, 2013	$	16.22	$	13.89
Fourth quarter, ended September 30, 2013	$	17.43	$	14.55

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		2 to 3 years		4 to 5 years		More than 5 years
Operating leases	$	366	$	327	$	39	$	—	$	—
Unconditional purchase obligations		8,791		8,791		—		—		—
Total contractual obligations	$	9,157	$	9,118	$	39	$	—	$	—

		Page
Report of Independent Registered Public Accounting Firm		39
Consolidated Balance Sheets		40
Consolidated Statements of Comprehensive Income		41
Consolidated Statements of Stockholders’ Equity		42
Consolidated Statements of Cash Flows		43
Notes to Consolidated Financial Statements		44
Quarterly Financial Summary (unaudited)		66
Schedule II—Consolidated Valuation and Qualifying Accounts and Reserves		96

	Fair Value Measurements of Assets and Liabilities on a Recurring Basis as of December 31, 2014
	Level 1		Level 2		Level 3
Money market funds (cash and cash equivalents)	$	18,208	$	—	$	—
	$	18,208	$	—	$	—

	Fair Value Measurements of Assets and Liabilities on a Recurring Basis as of September 30, 2014
	Level 1		Level 2		Level 3
Money market funds (cash and cash equivalents)	$	19,118	$	—	$	—
	$	19,118	$	—	$	—

	Fair Value Measurements of Assets on a Non-Recurring Basis as of December 31, 2014
	Level 1		Level 2		Level 3
Building and equipment (assets held for sale)	$	—	$	—	$	11,387
	$	—	$	—	$	11,387

	Fair Value Measurements of Assets on a Non-Recurring Basis as of September 30, 2014
	Level 1		Level 2		Level 3
Building and equipment (assets held for sale)	$	—	$	—	$	12,219
	$	—	$	—	$	12,219

Buildings and building improvement		20 - 39 years
Machinery and equipment		3 -10 years
Furniture and fixtures		3 - 5 years
Computers and capitalized software		3 - 5 years
Leasehold improvements		Shorter of 15 years or life of lease

	Balance at Beginning of Period		Warranty Expenditures			Provision for Estimated Warranty Cost		Balance at End of Period
Three Months Ended December 31, 2014	$	997	$	(467	)	$	483	$	1,013
Fiscal Year Ended September 30, 2014	$	1,076	$	(4,570	)	$	4,491	$	997
Fiscal Year Ended September 30, 2013	$	346	$	(3,469	)	$	4,199	$	1,076
Fiscal Year Ended September 30, 2012	$	279	$	(991	)	$	1,058	$	346

	Fiscal Year Ended September 31, 2012
Net income, as reported	$	29,485
Additional tax in China and Singapore		(780	)
Pro forma net income	$	28,705
Net income per share:
Basic, as reported	$	1.24
Basic, pro forma	$	1.21
Diluted, as reported	$	1.22
Diluted, pro forma	$	1.19

	December 31, 2014		September 30, 2014			September 30, 2013
Unrecognized tax benefits at beginning of the period	$	24,143	$	15,425		$	15,423
Increases for positions taken in current period		—		9,526			2
Increases for positions taken in prior period		1,966		6,268			—
Decreases for positions settled with taxing authorities		—		(7,075	)		—
Decreases for expiration of statute of limitations		—		(1	)
Unrecognized tax benefits at end of the period	$	26,109	$	24,143		$	15,425

	Amounts Available at						Amounts Outstanding at
	December 31, 2014		September 30, 2014		September 30, 2013		December 31, 2014		September 30, 2014		September 30, 2013
Line of credit (BA)	$	30,000	$	30,000	$	—	$	—	$	—	$	—
Line of credit (ABC)		32,685		32,507		32,531		—		—		—
Line of credit (CCB)		49,028		48,761		48,796		—		—		—
Line of credit (BC)		—		—		11,000		—		—		—
Line of credit (JPM)		—		—		50,000		—		—		—
	$	111,713	$	111,268	$	142,327	$	—	$	—	$	—

	As of December 31, 2014			As of September 30,
				2014			2013
Accounts receivable
Customer—7		20	%		22	%		1	%
Customer—8		35	%		24	%		1	%
Customer—9		9	%		17	%		3	%

Year Ending December 31,	Future Minimum Lease Payments
2015		327
2016		38
2017		1
2018		—
2019 and beyond		—
Total	$	366

	TSR PSUs			Nasdaq Total Return Index Benchmark Inputs
Expected stock return/ discount rate¹		0.88	%		0.88	%
Dividend yield		—			—
Volatility²		40.0	%		15.0	%
Grant date	10/22/2014			10/22/2014
Three-month average share price³	$	10.20		$	4,952.85
Expected vesting period (in years)		3.3		N/A
Correlation		0.47			0.47
Fair value per share	$	5.57		N/A

	Stock Price PSUs
Expected stock return/ discount rate¹		0.20	%
Dividend yield		—
Volatility²		35.0	%
Grant date	10/22/2014
20-trading day average share price³	$	9.39
Expected vesting period (in years)		1.2
Fair value per share	$	4.73

	Number of Shares			Weighted- Average Grant-Date Fair Value
Non-vested shares outstanding at September 30, 2014		708,469		$	12.61
Granted		978,386			7.55
Vested		(106,990	)		13.10
Forfeited		(11,500	)		11.52
Non-vested shares outstanding at December 31, 2014		1,568,365		$	9.43

	Fiscal Years Ended September 30,
	2013			2012
Risk-free interest rate		0.33	%		0.40	%
Expected dividends		—			—
Expected volatility		40.66	%		51.70	%
Expected term (in years)		3.43			3.40
Grant date fair value	$	5.32		$	7.25

	Number of Units		Fiscal Year Ended September 30, 2013
Serviced-based RSUs		364,625	$	5,330
SSARs		346,484		1,650
Conversion of performance-based RSUs to service-based RSUs		266,166		2,602
Total			$	9,582

	One-Time Termination Benefits			Contract Termination Costs			Other Costs			Total Accrued Restructuring
Accrued at September 30, 2013	$	—		$	—		$	—		$	—
Restructuring additions		9,699			804			4,997			15,500
Adjustment/foreign exchange effect		88			—			—			88
Amount paid		(9,636	)		(804	)		(337	)		(10,777	)
Accrued at September 30, 2014	$	151		$	-		$	4,660		$	4,811
Restructuring additions		701			-			722			1,423
Adjustment/foreign exchange effect		54			(3	)		—			51
Amount paid		(364	)		-			(211	)		(575	)
Accrued at December 31, 2014	$	542		$	(3	)	$	5,171		$	5,710

Name	Age	Position
Hong Wai Chan	53	Class III director
Philippe Lemaitre	65	Class II director and Chairman of the Board
Linda Yuen-Ching Lim, Ph.D.	64	Class I director
James McCluney	63	Class I director
Reza Meshgin	51	Class III director, President and Chief Executive Officer
Donald K. Schwanz	70	Class II director
Roy Chee Keong Tan	43	Class II director
Sam Yau	66	Class I director


Compensation Element	Objectives	Key Features
Base Salaries	Provides a fixed level of cash compensation to reward ongoing services, demonstrated experience, skills and competencies relative to the market value of the job.	Targeted generally around the 50^th percentile of market practice but varies based on unique market demands, hiring needs, experience and other factors. Adjustments are considered annually based on individual performance, level of pay relative to our peer group and the market, and internal pay equity.

Short-Term Performance-Based Incentive Compensation (Cash Bonus)	Rewards annual corporate performance and achievement of strategic goals.	Incentive payments are cash awards based on financial targets (net revenue and operating income in the December Period), as adjusted for unusual or non-recurring items.
	Aligns NEO’s interests with those of our stockholders by promoting strong annual results.	Annualized “target” cash bonuses for the NEOs for the December Period were generally the same as the previous year: •CEO – 100% of his base salary; •CFO – 65% of his base salary; and •Other NEO’s – 55 or 60% of their respective base salaries.
	Retains NEOs by providing market-competitive compensation.	Awards are variable and formula-based, although the Compensation Committee can exercise its discretion to make adjustments (downward only).

Long-Term Time-Based Incentive Compensation (Equity Awards)	Aligns NEOs’ interests with long-term stockholder interests by linking part of each NEO’s compensation to long-term corporate performance as reflected in equity values.	Targeted at a level that will provide total direct compensation (base salary + annual incentive + equity awards) generally around the 50^th percentile of the relevant market practice, though the target may range between the 25^th and 75^th percentile depending upon various factors.
Long-Term Time-Based Incentive Compensation (Equity Awards)	Provides opportunities for wealth creation and ownership, which promotes retention and enables us to attract and motivate our NEOs.	After a review of market practices, the Compensation Committee determined to use RSUs as the sole equity vehicle for the December Period/fiscal year 2015. RSUs may increase or decrease in value based on the stock price of the underlying equity, and therefore directly track stockholder value.
	Supports retention of NEOs through multi-year vesting of equity grants.	Awards granted for the December Period/fiscal year 2015 vest in equal increments over roughly 15, 27 and 39 months from the date of grant (to accommodate the change in our year-end).

Long-Term Performance-Based Incentive Compensation (Equity Awards)	Same objectives as time-based equity awards above, but with additional objective of rewarding achievement of long-term corporate financial, operating or strategic objectives.	Uses PSUs that vest based on achievement of corporate performance metrics over multi-year periods. The vesting metrics for grants made for the December Period/fiscal year 2015 are measured over the December Period through fiscal year 2017 (for the TSR PSUs) or the December Period and fiscal year 2015 (for the Stock Price PSUs).

Other Benefits/Perquisites	To provide nominal supplemental benefits such as insurance and retirement savings plans to our NEOs that are consistent with industry/peer practices.	NEOs are offered: A reasonable Section 401(k) plan in which executives may participate at the same benefit level as all other U.S.-based employees; The same medical, dental and vision plans as other similarly located employees (with the premiums covered by the Company);
		Long-term disability, life and AD&D plans (with the premiums covered the Company); and Financial planning services in an amount up to $5,000 per year. Executives based outside the U.S. are eligible for certain benefits customary for the location in which they work, and expatriate executives are eligible for certain benefits in accordance with our expatriate policy.

Name	Target Bonus Opportunity		Target Bonus Opportunity as a Percentage of Base Salary			Annualized Target Bonus Opportunity as a Percentage of Base Salary
Reza Meshgin	$	165,738		25	%		100	%
Tom Liguori	$	64,869		16.25	%		65	%
Christine Besnard	$	46,734		13.75	%		55	%
Lance Jin	$	56,598		15	%		60	%
Thomas Lee	$	51,388		15	%		60	%

Name	Total Bonus Paid
Reza Meshgin	$	295,022
Tom Liguori	$	115,471
Christine Besnard	$	83,190
Lance Jin	$	100,748
Thomas Lee	$	91,474

	RSU Value ($)⁽¹⁾		Total RSU grant (#)		TSR PSU Value ($)⁽¹⁾		Total TSR PSU grant (#)		Stock Price PSU Value ($)⁽¹⁾		Total Stock Price PSU grant (#)
Reza Meshgin	$	1,271,155		141,870	$	906,423		162,733	$	157,892		33,381
Tom Liguori	$	526,794		58,794	$	163,741		29,397	$	61,797		13,065
Christine Besnard	$	340,166		37,965	$	102,237		18,355	$	44,523		9,413
Lance Jin	$	424,874		47,419	$	128,973		23,155	$	53,917		11,399
Thomas Lee	$	444,362		49,594	$	140,520		25,228	$	48,956		10,350

	Option Awards			Stock Awards
	Number of Shares	Value Realized on		Number of Shares		Value Realized on
Name	Acquired on Exercise (#)	Exercise ($)		Acquired on Vesting (#)		Vesting ($)⁽¹⁾
Reza Meshgin	—	$	—		16,199	$	175,759
Tom Liguori	—	$	—		4,948	$	53,686
Thomas Lee	—	$	—		4,274	$	46,373
Christine Besnard	—	$	—		3,280	$	35,588
Lance Jin	—	$	—		4,793	$	52,004



Name	Fees Earned or Paid in Cash ($)⁽¹⁾	Stock Awards ($)	Total ($)
Benjamin Duster⁽²⁾	$16,250	—	$16,250
Philippe Lemaitre	$35,750	—	$35,750
Linda Y.C. Lim, Ph.D.	$22,500	—	$22,500
James McCluney	$22,250	—	$22,250
Donald Schwanz	$25,250	—	$25,250
Roy Tan	$0	—	$0
Sam Yau	$24,500	—	$24,500



Name	Options	Stock (RSUs)
Benjamin Duster	—	6,186
Philippe Lemaitre	—	6,186
Linda Y.C. Lim, Ph.D.	—	6,186
James McCluney	—	6,186
Donald Schwanz	—	6,186
Roy Tan	—	—
Sam Yau	15,000	6,186

Name and Address of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned	Percentage of Common Stock Beneficially Owned
Stockholders Owning More Than 5% of the Common Stock:
Entities affiliated with UE⁽¹⁾	14,817,052	60.97	%
FMR LLC⁽²⁾	2,556,311	10.52	%
Executive Officers, Directors and Director Nominees:
Reza Meshgin⁽³⁾	144,545	*
Tom Liguori⁽⁴⁾	47,553	*
Thomas Lee⁽⁵⁾	23,986	*
Christine Besnard⁽⁶⁾	29,255	*
Lance Jin⁽⁷⁾	45,204	*
Benjamin C. Duster, IV⁽⁸⁾	6,741	*
Philippe Lemaitre⁽⁹⁾	31,648	*
James McCluney⁽¹⁰⁾	11,908	*
Linda Y.C. Lim, Ph.D.⁽¹¹⁾	31,604	*
Donald Schwanz⁽¹²⁾	32,778	*
Roy Chee Keong Tan	—	—
Sam Yau⁽¹³⁾	58,313	*
All current directors and executive officers as a group (12 persons)⁽¹⁴⁾	463,535	1.91	%



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights⁽¹⁾	Weighted-average exercise price of outstanding options, warrants and rights⁽²⁾	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))⁽³⁾
	(a)	(b)	(c)
Equity compensation plans approved by security holders	2,279,038	$19.98	1,207,888
Equity compensation plans not approved by security holders	—	—	—
Total	2,279,038	$19.98	1,207,888

		Three Months Ended		Fiscal Year Ended September 30,
	December 31, 2014				2014		2013
Audit Fees⁽¹⁾	$	480,000	⁽³⁾	$	1,082,838	$	948,538
Tax Fees⁽²⁾		97,435			542,546		571,829
Total	$	577,435		$	1,625,384	$	1,520,367

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company