UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~June 26, 2020~~July 2, 2021

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

For the transition period from __________to__________

Commission file number 001-05560

Skyworks Solutions, Inc.

(Exact name of registrant as specified in its charter)

Delaware

04-2302115

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

5260 California Avenue

Irvine

California

92617

(Address of principal executive offices)

(Zip Code)

(949)

231-3000

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.25 per share

SWKS

Nasdaq Global Select Market

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. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

As of July ~~17, 2020,~~23, 2021, the registrant had ~~167,036,087~~165,144,931 shares of common stock, par value $0.25 per share, outstanding.

SKYWORKS SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~JUNE 26, 2020~~JULY 2, 2021

TABLE OF CONTENTS

Table of Contents

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share amounts)


		Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
		June 26, 2020		June 28, 2019		June 26, 2020		June 28, 2019			July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020
Net revenue	Net revenue	$	736.8	$	767.0	$	2,398.9	$	2,549.4	Net revenue	$	1,116.4	$	736.8	$	3,798.2	$	2,398.9
Cost of goods sold	Cost of goods sold	402.7		454.5		1,244.9		1,351.6		Cost of goods sold	557.8		402.7		1,899.5		1,244.9
Gross profit	Gross profit	334.1		312.5		1,154.0		1,197.8		Gross profit	558.6		334.1		1,898.7		1,154.0
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	117.0		100.6		337.9		317.3		Research and development	130.8		117.0		383.1		337.9
Selling, general and administrative		55.0		46.8		169.1		142.5
Selling, general, and administrative										Selling, general, and administrative	85.1		55.0		222.0		169.1
Amortization of intangibles	Amortization of intangibles	2.8		5.5		9.0		18.6		Amortization of intangibles	2.4		2.8		7.9		9.0
Restructuring, impairment and other charges		11.8		—		13.8		1.3
Restructuring, impairment, and other charges										Restructuring, impairment, and other charges	0.5		11.8		0.5		13.8
Total operating expenses	Total operating expenses	186.6		152.9		529.8		479.7		Total operating expenses	218.8		186.6		613.5		529.8
Operating income	Operating income	147.5		159.6		624.2		718.1		Operating income	339.8		147.5		1,285.2		624.2
Interest expense										Interest expense	(2.6)		0		(2.6)		0
Other income (expense), net	Other income (expense), net	(3.5)		2.3		1.4		8.9		Other income (expense), net	(1.0)		(3.5)		(0.1)		1.4
Income before income taxes	Income before income taxes	144.0		161.9		625.6		727.0		Income before income taxes	336.2		144.0		1,282.5		625.6
Provision for income taxes		14.3		17.8		57.7		84.0
Provision (benefit) for income taxes										Provision (benefit) for income taxes	(1.6)		14.3		110.5		57.7
Net income	Net income	$	129.7	$	144.1	$	567.9	$	643.0	Net income	$	337.8	$	129.7	$	1,172.0	$	567.9
Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	0.78	$	0.83	$	3.36	$	3.69	Basic	$	2.05	$	0.78	$	7.10	$	3.36
Diluted	Diluted	$	0.77	$	0.83	$	3.33	$	3.67	Diluted	$	2.02	$	0.77	$	7.02	$	3.33
Weighted average shares:	Weighted average shares:									Weighted average shares:
Basic	Basic	167.0		172.6		169.1		174.3		Basic	165.1		167.0		165.2		169.1
Diluted	Diluted	168.3		173.4		170.3		175.2		Diluted	167.0		168.3		166.9		170.3

Cash dividends declared and paid per share		$	0.44	$	0.38	$	1.32	$	1.14

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in millions)


		Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
		June 26, 2020		June 28, 2019		June 26, 2020		June 28, 2019			July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020
Net income	Net income	$	129.7	$	144.1	$	567.9	$	643.0	Net income	$	337.8	$	129.7	$	1,172.0	$	567.9
Other comprehensive income, net of tax	Other comprehensive income, net of tax									Other comprehensive income, net of tax
Fair value of investments	Fair value of investments	(0.1)		0.3		0.3		0.5		Fair value of investments	(0.2)		(0.1)		(0.5)		0.3
Pension adjustments	Pension adjustments	—		—		—		0.5		Pension adjustments	0		0		0.3		0
Comprehensive income	Comprehensive income	$	129.6	$	144.4	$	568.2	$	644.0	Comprehensive income	$	337.6	$	129.6	$	1,171.8	$	568.2

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)


		As of							As of
		June 26, 2020		September 27, 2019			July 2, 2021		October 2, 2020
ASSETS	ASSETS	(unaudited)				ASSETS	(unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	791.3	$	851.3	Cash and cash equivalents	$	2,845.0	$	566.7
Marketable securities	Marketable securities	347.0		203.3		Marketable securities	129.2		408.1
Receivables, net of allowance of $0.9 and $0.8, respectively		346.1		465.3
Receivables, net of allowances of $0.7 and $0.6, respectively						Receivables, net of allowances of $0.7 and $0.6, respectively	570.5		393.6
Inventory	Inventory	698.2		609.7		Inventory	808.7		806.0
Other current assets	Other current assets	154.8		105.0		Other current assets	168.5		143.2
Total current assets	Total current assets	2,337.4		2,234.6		Total current assets	4,521.9		2,317.6
Property, plant and equipment, net		1,206.9		1,205.6
Property, plant, and equipment, net						Property, plant, and equipment, net	1,452.2		1,249.5
Operating lease right-of-use assets	Operating lease right-of-use assets	172.7		—		Operating lease right-of-use assets	162.6		167.9
Goodwill	Goodwill	1,189.8		1,189.8		Goodwill	1,189.8		1,189.8
Intangible assets, net	Intangible assets, net	62.9		107.9		Intangible assets, net	34.7		53.5
Deferred tax assets, net	Deferred tax assets, net	42.6		40.8		Deferred tax assets, net	58.0		55.3
Marketable securities	Marketable securities	24.1		27.6		Marketable securities	3.9		5.2
Other long-term assets	Other long-term assets	36.0		33.3		Other long-term assets	63.1		67.9
Total assets	Total assets	$	5,072.4	$	4,839.6	Total assets	$	7,486.2	$	5,106.7
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	200.9	$	190.5	Accounts payable	$	319.5	$	226.9
Accrued compensation and benefits	Accrued compensation and benefits	94.6		76.0		Accrued compensation and benefits	108.5		113.5
Other current liabilities	Other current liabilities	105.6		107.5		Other current liabilities	150.3		108.0
Total current liabilities	Total current liabilities	401.1		374.0		Total current liabilities	578.3		448.4
Long-term debt						Long-term debt	1,487.1		0
Long-term tax liabilities	Long-term tax liabilities	300.6		312.4		Long-term tax liabilities	243.8		311.3
Long-term operating lease liabilities	Long-term operating lease liabilities	155.8		—		Long-term operating lease liabilities	142.7		150.7
Other long-term liabilities	Other long-term liabilities	32.5		30.9		Other long-term liabilities	31.5		32.1
Total liabilities	Total liabilities	890.0		717.3		Total liabilities	2,483.4		942.5
Commitments and contingencies (Note 9)
Commitments and contingencies (Note 9)						Commitments and contingencies (Note 9)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, no par value: 25.0 shares authorized, no shares issued	Preferred stock, no par value: 25.0 shares authorized, no shares issued	—		—		Preferred stock, no par value: 25.0 shares authorized, no shares issued	0		0
Common stock, $0.25 par value: 525.0 shares authorized; 232.1 shares issued and 167.1 shares outstanding at June 26, 2020, and 230.2 shares issued and 170.1 shares outstanding at September 27, 2019		41.8		42.5
Common stock, $0.25 par value: 525.0 shares authorized; 165.1 shares issued and 165.1 shares outstanding at July 2, 2021, and 232.3 shares issued and 165.6 shares outstanding at October 2, 2020						Common stock, $0.25 par value: 525.0 shares authorized; 165.1 shares issued and 165.1 shares outstanding at July 2, 2021, and 232.3 shares issued and 165.6 shares outstanding at October 2, 2020	41.3		41.4
Additional paid-in capital	Additional paid-in capital	3,351.5		3,188.0		Additional paid-in capital	17.5		3,403.7
Treasury stock, at cost	Treasury stock, at cost	(3,860.3)		(3,412.9)		Treasury stock, at cost	(0.1)		(4,093.5)
Retained earnings	Retained earnings	4,657.0		4,312.6		Retained earnings	4,952.1		4,820.4
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(7.6)		(7.9)		Accumulated other comprehensive loss	(8.0)		(7.8)
Total stockholders’ equity	Total stockholders’ equity	4,182.4		4,122.3		Total stockholders’ equity	5,002.8		4,164.2
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	5,072.4	$	4,839.6	Total liabilities and stockholders’ equity	$	7,486.2	$	5,106.7

See accompanying Notes to Consolidated Financial Statements.

~~Table of Contents~~

~~SKYWORKS SOLUTIONS, INC.~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(In millions)~~

Shares of common stock Par value of common stock Shares of treasury stock Value of treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss
Total stockholders’ equity
Balance at September 27, 2019 170.1 $ 42.5 60.1 $ (3,412.9) $ 3,188.0 $ 4,312.6 $ (7.9) $ 4,122.3
Net income — — — — — 257.1 — 257.1
Exercise and settlement of share-based awards, net of shares withheld for taxes 1.1 0.3 0.3 (26.7) 34.6 — — 8.2
Share-based compensation expense — — — — 29.1 — — 29.1
Stock repurchase program (0.7) (0.2) 0.7 (74.2) 0.2 — — (74.2)
Dividends declared — — — — — (75.1) — (75.1)
Other comprehensive loss — — — — — — (0.1) (0.1)
Balance at December 27, 2019 170.5 $ 42.6 61.1 $ (3,513.8) $ 3,251.9 $ 4,494.6 $ (8.0) $ 4,267.3
Net income — $ — — $ — $ — 181.1 — 181.1
Exercise and settlement of share-based awards and related tax benefit, net of shares withheld for taxes 0.3 0.1 — (2.0) 20.4 — — 18.5
Share-based compensation expense — — — — 34.1 — — 34.1
Stock repurchase program (3.2) (0.8) 3.2 (283.8) 0.8 — — (283.8)
Dividends declared — — — — — (74.9) — (74.9)
Other comprehensive income — — — — — — 0.5 0.5
Balance at March 27, 2020 167.6 $ 41.9 64.3 $ (3,799.6) $ 3,307.2 $ 4,600.8 $ (7.5) $ 4,142.8
Net income — — — — — 129.7 — 129.7
Exercise and settlement of share-based awards and related tax benefit, net of shares withheld for taxes 0.2 0.1 — (2.2) 8.9 — — 6.8
Share-based compensation expense — — — — 35.2 — — 35.2
Stock repurchase program (0.7) (0.2) 0.7 (58.5) 0.2 — — (58.5)
Dividends declared — — — — — (73.5) — (73.5)
Other comprehensive loss — — — — — — (0.1) (0.1)
Balance at June 26, 2020 167.1 $ 41.8 65.0 $ (3,860.3) $ 3,351.5 $ 4,657.0 $ (7.6) $ 4,182.4
Balance at September 28, 2018 177.4 $ 44.4 51.0 $ (2,732.5) $ 3,061.0 $ 3,732.9 $ (8.8) $ 4,097.0
Net income — — — — — 284.9 — 284.9
Exercise and settlement of share-based awards, net of shares withheld for taxes 0.7 0.1 0.2 (19.6) 5.1 — — (14.4)
Share-based compensation expense — — — — 21.3 — — 21.3
Stock repurchase program (4.0) (1.0) 4.0 (284.0) 1.0 — — (284.0)
Dividends declared — — — — — (67.1) — (67.1)
Other comprehensive income — — — — — — 0.6 0.6
Balance at December 28, 2018 174.1 $ 43.5 55.2 $ (3,036.1) $ 3,088.4 $ 3,950.7 $ (8.2) $ 4,038.3
Net income — — — — — 214.0 — 214.0
Exercise and settlement of share-based awards and related tax benefit, net of shares withheld for taxes 0.3 0.1 0.1 (1.5) 15.5 — — 14.2
Share-based compensation expense — — — — 21.8 — — 21.8
Stock repurchase program (1.7) (0.4) 1.7 (141.5) 0.5 — — (141.5)
Dividends declared — — — — — (66.0) — (66.0)
Other comprehensive income — — — — — — 0.1 0.1

~~Table of Contents~~

Balance at March 29, 2019 172.7 $ 43.2 57.0 $ (3,179.1) $ 3,126.2 $ 4,098.7 $ (8.1) $ 4,080.9
Net income — — — — — 144.1 — 144.1
Exercise and settlement of share-based awards and related tax benefit, net of shares withheld for taxes 0.2 — — (0.7) 7.8 — — 7.1
Share-based compensation expense — — — — 19.0 — — 19.0
Stock repurchase program (1.2) (0.3) 1.2 (85.8) 0.2 — — (85.8)
Dividends declared — — — — — (65.7) — (65.7)
Other comprehensive income — — — — — — 0.3 0.3
Balance at June 28, 2019 171.6 $ 42.9 58.2 $ (3,265.6) $ 3,153.3 $ 4,177.1 $ (7.8) $ 4,099.9

~~See accompanying Notes to Consolidated Financial Statements.~~

Table of Contents

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


		Nine Months Ended							Nine Months Ended
		June 26, 2020		June 28, 2019			July 2, 2021		June 26, 2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	567.9	$	643.0	Net income	$	1,172.0	$	567.9
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	Share-based compensation	111.6		58.6		Share-based compensation	144.3		111.6
Depreciation	Depreciation	238.2		235.4		Depreciation	242.9		238.2
Amortization of intangible assets, including inventory step-up		35.4		43.3
Amortization of intangible assets						Amortization of intangible assets	23.8		35.4
Deferred income taxes	Deferred income taxes	(1.8)		(12.1)		Deferred income taxes	(2.6)		(1.8)
Asset impairment charges	Asset impairment charges	11.8		—		Asset impairment charges	0		11.8
Changes in fair value of contingent consideration		—		(3.1)
Other, net	Other, net	2.8		0.1		Other, net	0.2		2.8
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Receivables, net	Receivables, net	119.2		98.0		Receivables, net	(176.9)		119.2
Inventory	Inventory	(83.5)		(89.7)		Inventory	(5.9)		(83.5)
Accounts payable	Accounts payable	12.7		(24.5)		Accounts payable	21.8		12.7
Other current and long-term assets and liabilities	Other current and long-term assets and liabilities	(76.8)		1.4		Other current and long-term assets and liabilities	(45.9)		(76.8)
Net cash provided by operating activities	Net cash provided by operating activities	937.5		950.4		Net cash provided by operating activities	1,373.7		937.5
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(243.5)		(314.0)		Capital expenditures	(374.8)		(243.5)
Purchased intangibles	Purchased intangibles	(7.6)		(11.8)		Purchased intangibles	(7.4)		(7.6)
Purchases of marketable securities	Purchases of marketable securities	(439.9)		(243.7)		Purchases of marketable securities	(408.4)		(439.9)
Sales and maturities of marketable securities	Sales and maturities of marketable securities	300.0		334.4		Sales and maturities of marketable securities	689.6		300.0
Net cash used in investing activities	Net cash used in investing activities	(391.0)		(235.1)		Net cash used in investing activities	(101.0)		(391.0)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repurchase of common stock - payroll tax withholdings on equity awards	Repurchase of common stock - payroll tax withholdings on equity awards	(30.9)		(21.6)		Repurchase of common stock - payroll tax withholdings on equity awards	(53.6)		(30.9)
Repurchase of common stock - stock repurchase program	Repurchase of common stock - stock repurchase program	(416.5)		(511.3)		Repurchase of common stock - stock repurchase program	(195.6)		(416.5)
Dividends paid	Dividends paid	(223.5)		(198.8)		Dividends paid	(248.1)		(223.5)
Net proceeds from exercise of stock options	Net proceeds from exercise of stock options	52.2		14.6		Net proceeds from exercise of stock options	7.8		52.2
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	12.2		11.3		Proceeds from employee stock purchase plan	12.7		12.2
Net cash used in financing activities		(606.5)		(705.8)
Proceeds from issuance of long-term debt, net						Proceeds from issuance of long-term debt, net	1,489.7		0
Debt financing costs						Debt financing costs	(7.3)		0
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	1,005.6		(606.5)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(60.0)		9.5		Net increase (decrease) in cash and cash equivalents	2,278.3		(60.0)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	851.3		733.3		Cash and cash equivalents at beginning of period	566.7		851.3
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	791.3	$	742.8	Cash and cash equivalents at end of period	$	2,845.0	$	791.3
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:					Supplemental cash flow disclosures:
Income taxes paid	Income taxes paid	$	103.4	$	116.5	Income taxes paid	$	136.5	$	103.4
Incentives paid in common stock						Incentives paid in common stock	$	27.5	$	0
Non-cash investing in capital expenditures, accrued but not paid	Non-cash investing in capital expenditures, accrued but not paid	$	105.8	$	121.5	Non-cash investing in capital expenditures, accrued but not paid	$	149.9	$	105.8
Operating lease assets obtained in exchange for new lease liabilities						Operating lease assets obtained in exchange for new lease liabilities	$	15.9	$	30.5
Retirement of treasury stock						Retirement of treasury stock	$	4,342.6	$	0

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)


	Shares of common stock	Par value of common stock		Shares of treasury stock	Value of treasury stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total stockholders’ equity
Balance at October 2, 2020	165.6	$	41.4	66.7	$	(4,093.5)	$	3,403.7	$	4,820.4	$	(7.8)	$	4,164.2
Net income	—	—		—	—		—		509.3		—		509.3
Exercise and settlement of share-based awards, net of shares withheld for taxes	0.7	0.2		0.4	(47.8)		2.6		—		—		(45.0)
Share-based compensation expense	—	—		—	—		64.9		—		—		64.9
Stock repurchase program	(1.4)	(0.4)		1.4	(195.6)		0.4		—		—		(195.6)
Dividends declared	—	—		—	—		—		(83.0)		—		(83.0)
Other comprehensive income	—	—		—	—		—		—		0.1		0.1
Balance at January 1, 2021	164.9	$	41.2	68.5	$	(4,336.9)	$	3,471.6	$	5,246.7	$	(7.7)	$	4,414.9
Net income	—	$	—	—	$	—	$	—	325.0		—		325.0
Exercise and settlement of share-based awards, net of shares withheld for taxes	0.2	0.1		0	(3.6)		16.9		—		—		13.4
Share-based compensation expense	—	—		—	—		41.7		—		—		41.7
Dividends declared	—	—		—	—		—		(82.6)		—		(82.6)
Other comprehensive loss	—	—		—	—		—		—		(0.1)		(0.1)
Balance at April 2, 2021	165.1	$	41.3	68.5	$	(4,340.5)	$	3,530.2	$	5,489.1	$	(7.8)	$	4,712.3
Net income	—	—		—	—		—		337.8		—		337.8
Exercise and settlement of share-based awards, net of shares withheld for taxes	0	0		0	(2.2)		0.7		—		—		(1.5)
Share-based compensation expense	—	—		—	—		36.9		—		—		36.9
Retirement of treasury stock	—	—		(68.5)	4,342.6		(3,550.3)		(792.3)		—		0
Dividends declared	—	—		—	—		—		(82.5)		—		(82.5)
Other comprehensive loss	—	—		—	—		—		—		(0.2)		(0.2)
Balance at July 2, 2021	165.1	$	41.3	0	$	(0.1)	$	17.5	$	4,952.1	$	(8.0)	$	5,002.8

Balance at September 27, 2019	170.1	$	42.5	60.1	$	(3,412.9)	$	3,188.0	$	4,312.6	$	(7.9)	$	4,122.3
Net income	—	—		—	—		—		257.1		—		257.1
Exercise and settlement of share-based awards, net of shares withheld for taxes	1.1	0.3		0.3	(26.7)		34.6		—		—		8.2
Share-based compensation expense	—	—		—	—		29.1		—		—		29.1
Stock repurchase program	(0.7)	(0.2)		0.7	(74.2)		0.2		—		—		(74.2)
Dividends declared	—	—		—	—		—		(75.1)		—		(75.1)
Other comprehensive loss	—	—		—	—		—		—		(0.1)		(0.1)
Balance at December 27, 2019	170.5	$	42.6	61.1	$	(3,513.8)	$	3,251.9	$	4,494.6	$	(8.0)	$	4,267.3
Net income	—	—		—	—		—		181.1		—		181.1
Exercise and settlement of share-based awards, net of shares withheld for taxes	0.3	0.1		0	(2.0)		20.4		—		—		18.5
Share-based compensation expense	—	—		—	—		34.1		—		—		34.1
Stock repurchase program	(3.2)	(0.8)		3.2	(283.8)		0.8		—		—		(283.8)
Dividends declared	—	—		—	—		—		(74.9)		—		(74.9)
Other comprehensive income	—	—		—	—		—		—		0.5		0.5
Balance at March 27, 2020	167.6	$	41.9	64.3	$	(3,799.6)	$	3,307.2	$	4,600.8	$	(7.5)	$	4,142.8
Net income	—	—		—	—		—		129.7		—		129.7
Exercise and settlement of share-based awards, net of shares withheld for taxes	0.2	0.1		0	(2.2)		8.9		—		—		6.8

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Share-based compensation expense	—	—		—	—		35.2		—		—		35.2
Stock repurchase program	(0.7)	(0.2)		0.7	(58.5)		0.2		—		—		(58.5)
Dividends declared	—	—		—	—		—		(73.5)		—		(73.5)
Other comprehensive loss	—	—		—	—		—		—		(0.1)		(0.1)
Balance at June 26, 2020	167.1	$	41.8	65.0	$	(3,860.3)	$	3,351.5	$	4,657.0	$	(7.6)	$	4,182.4

See accompanying Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS, ~~AND~~ BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES

Skyworks Solutions, Inc., together with its consolidated subsidiaries (“Skyworks” or the “Company”), is empowering the wireless networking revolution. The Company’s analog semiconductors are connecting people, places, and things, spanning a number of new applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, smartphone, tablet, and wearable markets.

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and footnote disclosures, normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), have been condensed or omitted pursuant to those rules and regulations. However, in management’s opinion, the financial information reflects all adjustments, including those of a normal recurring nature, necessary to present fairly the results of operations, financial position, and cash flows of the Company for the periods presented. The results of operations, financial position, and cash flows for the Company during the interim periods are not necessarily indicative of those expected for the full year. This information should be read in conjunction with the Company’s financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended ~~September 27, 2019,~~October 2, 2020, filed with the SEC on November ~~14, 2019,~~17, 2020, as amended by Amendment No. 1 to such Annual Report on Form 10-K, filed with the SEC on January ~~27,~~ 29, 2021 (“2020 ~~(the “2019~~ 10-K”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, expenses, comprehensive income, and accumulated other comprehensive loss that are reported in these unaudited consolidated financial statements and accompanying disclosures. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Judgment is required in determining the reserves for, and fair value of, items such as overall fair value assessments of assets and liabilities, particularly those classified as Level 2 or Level 3 in the fair value hierarchy, marketable securities, inventory, intangible assets associated with business combinations, share-based compensation, loss contingencies, and income taxes. In addition, judgment is required in determining whether a potential indicator of impairment of long-lived assets exists and in estimating future cash flows for any necessary impairment testing. Actual results could differ significantly from these estimates.

The Company’s fiscal year ends on the Friday closest to September 30. Fiscal ~~2020~~2021 consists of 5352 weeks and ends on October ~~2, 2020.~~1, 2021. Fiscal ~~2019~~2020 consisted of 5253 weeks and ended on ~~September 27, 2019.~~October 2, 2020. The ~~third quarters of fiscal~~three and nine months ended July 2, 2021, and June 26, 2020, ~~and 2019~~ each consisted of 13 weeks and ~~ended on June 26, 2020, and June 28, 2019,~~39 weeks, respectively.

~~Recently Adopted Accounting Pronouncements~~Treasury Stock

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”). This ASU requires lessees to reflect leases with a term greater than one year on their balance sheet as assets and obligations. The Company ~~adopted the standard in the first quarter of fiscal 2020,~~accounts for treasury stock using the ~~modified retrospective approach, whereby the~~cost method. The Company ~~was not required to adjust comparative period financial statements~~accounts for the ~~new standard. Upon adoption,~~retirement of treasury stock by charging any excess of cost over par value as a deduction from additional paid-in capital and the ~~Company recorded~~remaining excess as a ~~right-of-use asset of $141.4 million and a lease liability of $143.1 million. This standard did not have a material impact~~deduction to retained earnings on the ~~Consolidated Statement~~consolidated balance sheets. Retired treasury shares revert to the status of ~~Operations or Consolidated Statement of Cash Flows.~~

Upon adoption, the Company elected the package of three practical expedients that permits the Company to maintain its historical conclusions about lease identification, lease classification and initial direct costs for leases that exist at the date of adoption. Further, the Company elected the practical expedient to not separate lease and non-lease components.authorized but unissued shares.

2. REVENUE RECOGNITION

The Company presents net revenue by geographic area based upon the location of the original equipment manufacturers’ (“OEMs”) headquarters as it believes that doing so best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Net revenue by geographic area is as follows (in millions):

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		Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
		June 26, 2020		June 28, 2019		June 26, 2020		June 28, 2019			July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020
United States	United States	$	425.2	$	355.7	$	1,431.0	$	1,358.9	United States	$	636.0	$	425.2	$	2,372.6	$	1,431.0
China	China	166.5		212.9		512.9		606.8		China	262.0		166.5		759.6		512.9
Taiwan										Taiwan	90.4		64.9		310.6		165.9
South Korea	South Korea	46.0		76.9		178.9		282.0		South Korea	70.6		46.0		205.0		178.9
Taiwan		64.9		78.0		165.9		182.8
Europe, Middle East and Africa		29.0		36.5		91.9		100.2
Europe, Middle East, and Africa										Europe, Middle East, and Africa	49.5		29.0		128.7		91.9
Other Asia-Pacific	Other Asia-Pacific	5.2		7.0		18.3		18.7		Other Asia-Pacific	7.9		5.2		21.7		18.3
Total	Total	$	736.8	$	767.0	$	2,398.9	$	2,549.4	Total	$	1,116.4	$	736.8	$	3,798.2	$	2,398.9

The Company’s revenue from external customers is generated principally from the sale of semiconductor products that facilitate various wireless communication applications. Accordingly, the Company considers its product offerings to be similar in nature and therefore not segregated for reporting purposes. Accrued customer liabilities of $24.2 million and $38.5 million have been included in other current liabilities within the consolidated balance sheets as of June 26, 2020, and September 27, 2019, respectively.

~~Concentrations~~

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade accounts receivable. Trade accounts receivable are primarily derived from sales to electronic component distributors and manufacturers of communication products. The Company performs ongoing credit evaluations of its customers.

~~At June 26, 2020, and September 27, 2019, the Company's three largest accounts receivable balances comprised 64% and 67%, respectively, of aggregate gross accounts receivable.~~

Significant portions of the Company's sales are concentrated among a limited number of customers. The duration, severity, and future impact of the COVID-19 pandemic are highly uncertain and could result in significant disruptions to the business operations of the Company's customers. If one or more of these major customers significantly decreased its orders for the Company's products, the Company's business could be materially and adversely affected.

3. MARKETABLE SECURITIES

The Company's portfolio of available-for-sale marketable securities consists of the following (in millions):


		Current						Noncurrent							Current				Noncurrent
Available for sale:	Available for sale:	June 26, 2020		September 27, 2019		June 26, 2020		September 27, 2019		Available for sale:	July 2, 2021		October 2, 2020		July 2, 2021		October 2, 2020
U.S. Treasury and government	U.S. Treasury and government	$	53.9	$	34.2	$	15.4	$	20.0	U.S. Treasury and government	$	10.5	$	129.4	$	3.3	$	5.0
Corporate bonds and notes	Corporate bonds and notes	257.9		66.2		3.2		5.9		Corporate bonds and notes	106.8		276.8		0		0
Municipal bonds	Municipal bonds	35.2		102.9		5.5		1.7		Municipal bonds	11.9		1.9		0.6		0.2

Total	Total	$	347.0	$	203.3	$	24.1	$	27.6	Total	$	129.2	$	408.1	$	3.9	$	5.2

The contractual maturities of noncurrent available-for-sale marketable securities were due within two years or less. There were no gross unrealized gains or losses as of July 2, 2021. There were gross unrealized gains of ~~$0.5~~$0.3 million on U.S. Treasury securities and $0.2 million on corporate bonds and notes as of ~~June 26, 2020, and $0.1 million in gross unrealized losses on municipal bonds as of September 27, 2019.~~October 2, 2020.

4. FAIR VALUE

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

The Company groups its financial assets and liabilities measured at fair value on a recurring basis in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

~~Table of Contents~~

•Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions ~~(less active~~(less-active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data.

•Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by the Company.

Assets and liabilities recorded at fair value on a recurring basis consisted of the following (in millions):

As of June 26, 2020 As of September 27, 2019
Fair Value Measurements Fair Value Measurements
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets
Cash and cash equivalents* $ 791.3 $ 648.0 $ 143.3 $ — $ 851.3 $ 809.5 $ 41.8 $ —
U.S. Treasury and government securities 69.3 32.7 36.6 — 54.2 28.4 25.8 —
Corporate bonds and notes 261.1 — 261.1 — 72.1 — 72.1 —
Municipal bonds 40.7 — 40.7 — 104.6 — 104.6 —
Total $ 1,162.4 $ 680.7 $ 481.7 $ — $ 1,082.2 $ 837.9 $ 244.3 $ —

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	As of July 2, 2021								As of October 2, 2020
			Fair Value Measurements								Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents*	$	2,845.0	$	2,845.0	$	0	$	0	$	566.7	$	561.2	$	5.5	$	0
U.S. Treasury and government securities	13.8		4.4		9.4		0		134.4		43.2		91.2		0
Corporate bonds and notes	106.8		0		106.8		0		276.8		0		276.8		0
Municipal bonds	12.5		0		12.5		0		2.1		0		2.1		0
Total	$	2,978.1	$	2,849.4	$	128.7	$	0	$	980.0	$	604.4	$	375.6	$	0

* Cash equivalents included in Levels 1 and 2 consist of money market funds and corporate bonds and notes, ~~foreign government bonds,~~ commercial paper, and agency securities purchased with less than ninety days until maturity.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company’s non-financial assets and liabilities, such as goodwill, intangible assets, and other long-lived assets resulting from business combinations, are measured at fair value using income approach valuation methodologies at the date of acquisition and are subsequently re-measured if there are indicators of impairment. ~~During~~There were no indicators of impairment identified during the three and nine months ended ~~June 26, 2020, the Company abandoned a previously capitalized in-process research and development (“IPR&D”) project and recorded an impairment charge of $9.8 million.~~July 2, 2021.

5. INVENTORY

Inventory consists of the following (in millions):


		As of							As of
		June 26, 2020		September 27, 2019			July 2, 2021		October 2, 2020
Raw materials	Raw materials	$	37.7	$	24.4	Raw materials	$	56.0	$	37.8
Work-in-process	Work-in-process	484.4		336.2		Work-in-process	593.8		566.4
Finished goods	Finished goods	173.2		245.7		Finished goods	157.4		198.9
Finished goods held on consignment by customers	Finished goods held on consignment by customers	2.9		3.4		Finished goods held on consignment by customers	1.5		2.9
Total inventory	Total inventory	$	698.2	$	609.7	Total inventory	$	808.7	$	806.0

6. PROPERTY, PLANT, AND EQUIPMENT, NET

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


		As of							As of
		June 26, 2020		September 27, 2019			July 2, 2021		October 2, 2020
Land and improvements	Land and improvements	$	11.8	$	11.7	Land and improvements	$	11.8	$	11.8
Buildings and improvements	Buildings and improvements	413.4		354.4		Buildings and improvements	443.3		424.8
Furniture and fixtures	Furniture and fixtures	44.2		33.8		Furniture and fixtures	54.6		46.5
Machinery and equipment	Machinery and equipment	2,495.1		2,311.5		Machinery and equipment	2,897.0		2,556.1
Construction in progress	Construction in progress	118.9		172.5		Construction in progress	186.0		140.7
Total property, plant and equipment, gross		3,083.4		2,883.9
Total property, plant, and equipment, gross						Total property, plant, and equipment, gross	3,592.7		3,179.9
Accumulated depreciation	Accumulated depreciation	(1,876.5)		(1,678.3)		Accumulated depreciation	(2,140.5)		(1,930.4)
Total property, plant and equipment, net		$	1,206.9	$	1,205.6
Total property, plant, and equipment, net						Total property, plant, and equipment, net	$	1,452.2	$	1,249.5

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7. GOODWILL AND INTANGIBLE ASSETS

There were no0 changes to the carrying amount of goodwill during the three and nine months ended ~~June 26, 2020.~~July 2, 2021.

The Company tests its goodwill for impairment annually as of the first day of its fourth fiscal quarter and in interim periods if certain events occur indicating the carrying value of goodwill may be impaired. There were no indicators of impairment noted during the three and nine months ended ~~June 26, 2020.~~July 2, 2021.

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Intangible assets consist of the following (in millions):


			As of															As of																As of						As of
		Weighted Average Amortization Period (Years)	June 26, 2020															September 27, 2019															Weighted Average Amortization Period (Years)	July 2, 2021						October 2, 2020
					Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount		Weighted Average Amortization Period (Years)		Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount						Accumulated Amortization			Net Carrying Amount
Customer relationships	Customer relationships	5.0	$	18.2		$	(14.8)		$	3.4		$	25.6		$	(19.5)		$	6.1	Customer relationships	5.0				$	(18.2)		$	0		$	18.2		$	(15.8)		$	2.4
Developed technology and other	Developed technology and other	3.8	101.0			(74.5)			26.5			94.4			(48.9)			45.5		Developed technology and other	4.6	76.6			(55.1)			21.5			101.0			(81.6)			19.4
Trademarks	Trademarks	3.0	1.6			(1.6)			—			1.6			(1.3)			0.3		Trademarks	3.0	0			0			0			1.6			(1.5)			0.1
Technology licenses	Technology licenses	3.1	25.1			(11.6)			13.5			24.9			(4.8)			20.1		Technology licenses	2.7	31.5			(22.1)			9.4			26.3			(14.2)			12.1
IPR&D	IPR&D		19.5			—			19.5			35.9			—			35.9		IPR&D		3.8			0			3.8			19.5			0			19.5
Total intangible assets	Total intangible assets		$	165.4		$	(102.5)		$	62.9		$	182.4		$	(74.5)		$	107.9	Total intangible assets		$	130.1		$	(95.4)		$	34.7		$	166.6		$	(113.1)		$	53.5

Fully amortized intangible assets are eliminated from both the gross and accumulated amortization amounts in the first quarter of each fiscal year. Accrued technology licenses payable of $11.9 million and $20.1 million have been included in other current liabilities within the consolidated balance sheets as of June 26, 2020, and September 27, 2019, respectively.

Annual amortization expense for the next five fiscal years related to definite-lived intangible assets, excluding IPR&D, is expected to be as follows (in millions):


		Remaining 2020		2021		2022		2023		2024		Thereafter			Remaining 2021		2022		2023		2024		2025		Thereafter
Amortization expense, cost of goods sold	Amortization expense, cost of goods sold	$	5.3	$	6.0	$	0.1	$	0.1	$	0.1	$	1.8	Amortization expense, cost of goods sold	$	1.3	$	5.4	$	5.4	$	1.9	$	0.1	$	1.7
Amortization expense, operating expense	Amortization expense, operating expense	$	5.0	$	16.2	$	5.0	$	1.0	$	0.9	$	1.9	Amortization expense, operating expense	$	3.5	$	6.2	$	1.8	$	1.4	$	1.1	$	1.1
Total amortization expense	Total amortization expense	$	10.3	$	22.2	$	5.1	$	1.1	$	1.0	$	3.7	Total amortization expense	$	4.8	$	11.6	$	7.2	$	3.3	$	1.2	$	2.8

8. INCOME TAXES

The provision for income taxes consists of the following components (in millions):


		Three Months Ended									Nine Months Ended										Three Months Ended						Nine Months Ended
		June 26, 2020			June 28, 2019			June 26, 2020			June 28, 2019				July 2, 2021			June 26, 2020			July 2, 2021			June 26, 2020
United States income taxes	United States income taxes	$	4.1		$	1.8		$	27.3		$	52.7		United States income taxes	$	(13.8)		$	4.1		$	63.7		$	27.3
Foreign income taxes	Foreign income taxes	10.2			16.0			30.4			31.3			Foreign income taxes	12.2			10.2			46.8			30.4
Provision for income taxes		$	14.3		$	17.8		$	57.7		$	84.0
Provision (benefit) for income taxes														Provision (benefit) for income taxes	$	(1.6)		$	14.3		$	110.5		$	57.7

Effective tax rate	Effective tax rate	9.9		%	11.0		%	9.2		%	11.6		%	Effective tax rate	(0.5)		%	9.9		%	8.6		%	9.2		%

The difference between the Company’s effective tax rate and the 21.0% United States federal statutory rate for the three and nine months ended July 2, 2021, and June 26, 2020, ~~and June 28, 2019,~~ respectively, resulted primarily from foreign earnings taxed at rates lower than the federal statutory rate, a benefit related to a change in the reserve for uncertain tax positions, a benefit from foreign-derived intangible income deduction (“FDII”), windfall tax deductions, and research and experimentation and foreign tax credits earned, partially offset by a tax on global intangible low-taxed income (“GILTI”),.

During fiscal 2021, the Company concluded an Internal Revenue Service (“IRS”) examination of its federal income tax returns for fiscal 2015 and ~~an increase in tax expense related to a change in~~2016. With the conclusion of the audit, the Company decreased the reserve for uncertain tax ~~positions.~~positions, which resulted in the recognition of an income tax benefit of $42.8 million and $34.8 million during the three and nine months ended July 2, 2021, respectively.

The Company operates under a tax holiday in Singapore, which is effective through September 30, 2030. The current tax holiday is conditioned upon the Company’s compliance with certain employment and investment thresholds in Singapore.

9. COMMITMENTS AND CONTINGENCIES

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~~Accrued taxes of $29.5 million and $29.7 million have been included in other current liabilities within the consolidated balance sheets as of June 26, 2020, and September 27, 2019, respectively.~~

~~9. COMMITMENTS AND CONTINGENCIES~~

Legal Matters

From time to time, various lawsuits, claims, and proceedings have been, and may in the future be, instituted or asserted against the Company, including those pertaining to patent infringement, intellectual property, environmental hazards, product liability and warranty, safety and health, employment, and contractual matters.

The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights. From time to time, third parties have asserted and may in the future assert patent, copyright, trademark, and other intellectual property rights to technologies that are important to the Company’s business and have demanded and may in the future demand that the Company license their technology. The outcome of any such litigation cannot be predicted with certainty and some such lawsuits, claims, or proceedings may be disposed of unfavorably to the Company. Generally speaking, intellectual property disputes often have a risk of injunctive relief, which, if imposed against the Company, could materially and adversely affect the Company’s financial condition or results of operations. From time to time the Company may also be involved in legal proceedings in the ordinary course of business.

The Company monitors the status of legal proceedings and other contingencies on an ongoing basis to ensure loss contingencies are recognized and/or disclosed in its financial statements and footnotes. The Company does not believe there are any pending legal proceedings that are reasonably possible to result in a material loss. The Company is engaged in various legal actions in the normal course of business and, while there can be no assurances, the Company believes the outcome of all pending litigation involving the Company will not have, individually or in the aggregate, a material adverse effect on its business or financial statements.

Guarantees and Indemnities

The Company has made no significant contractual guarantees for the benefit of third parties. However, the Company generally indemnifies its customers from third-party intellectual property infringement litigation claims related to its products and, on occasion, also provides other indemnities related to product sales. In connection with certain facility leases, the Company has indemnified its lessors for certain claims arising from the facility or the lease.

The Company indemnifies its directors and officers to the maximum extent permitted under the laws of the state of Delaware. The duration of the indemnities varies and in many cases is indefinite. The indemnities to customers in connection with product sales generally are subject to limits based upon the amount of the related product sales and in many cases are subject to geographic and other restrictions. In certain instances, the Company’s indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities in the accompanying consolidated balance sheets and does not expect that such obligations will have a material adverse impact on its financial statements.

10. STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On January ~~30, 2019,~~26, 2021, the Board of Directors approved a stock repurchase program, pursuant to which the Company is authorized to repurchase up to $2.0 billion of its common stock from time to time prior to January ~~30, 2021,~~26, 2023, on the open market or in privately negotiated transactions, as permitted by securities laws and other legal requirements. This authorized stock repurchase plan replaced in its entirety the January 30, 2019, stock repurchase program. The timing and amount of any shares of the Company’s common stock that are repurchased under the repurchase program are determined by the Company’s management based on its evaluation of market conditions and other factors.

During the three months ended July 2, 2021, the Company did not repurchase any shares of its common stock. During the nine months ended July 2, 2021, the Company paid $195.6 million (including commissions) in connection with the repurchase of 1.4 million shares of its common stock (paying an average price of $138.85 per share), all of which shares were repurchased pursuant to the January 30, 2019, stock repurchase program. As of July 2, 2021, $2.0 billion remained available under the January 26, 2021, stock repurchase program. In connection with the Asset Purchase and the debt incurred to finance the Asset Purchase (as discussed in Notes 13 and 14 of the Notes to Consolidated Financial Statements), the Company has temporarily suspended repurchase activities under the January 26, 2021, stock repurchase program.

During the three and nine months ended July 2, 2021, the Board of Directors approved the retirement of 68.5 million shares of treasury stock at an aggregated historical cost of $4,342.6 million.

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During the three months ended June 26, 2020, the Company paid $58.5 million (including commissions) in connection with the repurchase of 0.7 million shares of its common stock (paying an average price of $87.42 per share). During the nine months ended June 26, 2020, the Company paid $416.5 million (including commissions) in connection with the repurchase of 4.6 million shares of its common stock (paying an average price of $89.56 per share). ~~As of June 26, 2020, $1.2 billion remained available under the existing stock repurchase authorization.~~

Dividends

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On July ~~23, 2020,~~29, 2021, the Company announced that the Board of Directors had declared a cash dividend on the Company’s common stock of ~~$0.50~~$0.56 per share. This dividend is payable on September ~~1, 2020,~~7, 2021, to the Company’s stockholders of record as of the close of business on August ~~11, 2020.~~17, 2021.

~~During the three and nine months ended June 26, 2020, dividends~~Dividends charged to retained earnings were as follows (in millions, except per share data):


		2020							2021				2020
		Per Share		Total Amount			Per Share		Total Amount		Per Share		Total Amount
First quarter	First quarter	$	0.44	$	75.1	First quarter	$	0.50	$	83.0	$	0.44	$	75.1
Second quarter	Second quarter	0.44		74.9		Second quarter	0.50		82.6		0.44		74.9
Third quarter	Third quarter	0.44		73.5		Third quarter	0.50		82.5		0.44		73.5
Total	Total	$	1.32	$	223.5	Total	$	1.50	$	248.1	$	1.32	$	223.5

Share-based Compensation

The following table summarizes the share-based compensation expense by line item in the Statements of Operations (in millions):


		Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
		June 26, 2020		June 28, 2019		June 26, 2020		June 28, 2019			July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020
Cost of goods sold	Cost of goods sold	$	4.7	$	1.3	$	16.1	$	8.2	Cost of goods sold	$	4.9	$	4.7	$	24.0	$	16.1
Research and development	Research and development	17.0		9.5		49.0		31.9		Research and development	17.9		17.0		62.2		49.0
Selling, general and administrative		16.1		5.2		46.5		18.5
Selling, general, and administrative										Selling, general, and administrative	20.6		16.1		58.1		46.5
Total share-based compensation	Total share-based compensation	$	37.8	$	16.0	$	111.6	$	58.6	Total share-based compensation	$	43.4	$	37.8	$	144.3	$	111.6

11. ~~LEASES~~

The Company determines if an arrangement is a lease at its inception. Right-of-use (“ROU”) assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised and excludes termination options. To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for these leases is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included in operating lease ROU assets, other current liabilities, and long-term operating lease liabilities in the Company's condensed consolidated balance sheet.

The Company’s lease arrangements consist primarily of corporate, manufacturing and other facility agreements as well as various machinery and office equipment agreements. The leases expire at various dates through 2033, some of which include options to extend the lease term. The options with the longest potential total lease term consist of options for extension of up to three five-year periods following expiration of the original lease term.

During the three and nine months ended June 26, 2020, the Company recorded $7.9 million and $20.2 million of operating lease expense and $1.2 million and $5.2 million of variable lease expense, respectively. During the three and nine months ended June 28, 2019, the Company recorded $4.4 million and $13.7 million of rent expense, respectively. The Company's finance leases and short-term leases are immaterial.

~~Supplemental cash information and non-cash activities related to operating leases are as follows (in millions):~~


	~~Nine Months Ended~~
	June 26, 2020
~~Operating cash outflows from operating leases~~	$	~~18.2~~
~~Operating lease assets obtained in exchange for new lease liabilities~~	$	~~30.5~~

~~Maturities of lease liabilities under operating leases by fiscal year are as follows (in millions):~~

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June 26,
2020
2020 (remainder) $ 3.0
2021 29.1
2022 28.1
2023 24.7
2024 21.5
Thereafter 101.9
Total lease payments 208.3
Less: imputed interest (28.5)
Present value of lease liabilities 179.8
Less: current portion (included in other current liabilities) (24.0)
Total $ 155.8

~~Future minimum lease liabilities under non-cancelable operating leases are as follows (in millions):~~

September 27,
2019
2020 $ 26.7
2021 25.9
2022 24.8
2023 23.3
2024 21.5
Thereafter 97.7
Total $ 219.9

~~Weighted-average remaining lease term and discount rate related to operating leases are as follows:~~


	June 26, 2020
~~Weighted-average remaining lease term (years)~~	~~8.4~~
~~Weighted-average discount rate~~	~~3.4~~	%

~~12.~~ EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):


		Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
		June 26, 2020		June 28, 2019		June 26, 2020		June 28, 2019			July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020
Net income	Net income	$	129.7	$	144.1	$	567.9	$	643.0	Net income	$	337.8	$	129.7	$	1,172.0	$	567.9

Weighted average shares outstanding – basic	Weighted average shares outstanding – basic	167.0		172.6		169.1		174.3		Weighted average shares outstanding – basic	165.1		167.0		165.2		169.1
Dilutive effect of equity-based awards	Dilutive effect of equity-based awards	1.3		0.8		1.2		0.9		Dilutive effect of equity-based awards	1.9		1.3		1.7		1.2
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted	168.3		173.4		170.3		175.2		Weighted average shares outstanding – diluted	167.0		168.3		166.9		170.3

Net income per share – basic	Net income per share – basic	$	0.78	$	0.83	$	3.36	$	3.69	Net income per share – basic	$	2.05	$	0.78	$	7.10	$	3.36
Net income per share – diluted	Net income per share – diluted	$	0.77	$	0.83	$	3.33	$	3.67	Net income per share – diluted	$	2.02	$	0.77	$	7.02	$	3.33

Anti-dilutive common stock equivalents	Anti-dilutive common stock equivalents	—		1.0		0.2		1.5		Anti-dilutive common stock equivalents	0		0		0		0.2

Basic earnings per share are calculated by dividing net income by the weighted average number of shares of the Company’s common stock outstanding during the period. The calculation of diluted earnings per share includes the dilutive effect of equity-based awards that were outstanding during the three and nine months ended July 2, 2021, and June 26, 2020, ~~and June 28, 2019,~~ using the treasury stock method. Shares issuable upon the vesting of performance stock awards are likewise included in the calculation of diluted earnings per share as of the date the condition(s) have been satisfied, assuming the end of the reporting period was the end of the

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contingency period. Certain of the Company’s outstanding share-based awards, noted in the table above, were excluded because they were anti-dilutive, but they could become dilutive in the future.

12. SUPPLEMENTAL FINANCIAL INFORMATION

Other current liabilities consist of the following (in millions):


	As of
	July 2, 2021		October 2, 2020
Accrued taxes	$	65.0	$	31.2
Operating lease liability	31.5		28.2
Accrued customer liabilities	28.8		20.3
Other	25.0		28.3
Total other current liabilities	$	150.3	$	108.0

Other income (expense), net consists of the following (in millions):


	Three Months Ended				Nine Months Ended
	July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020
Interest income	$	0.3	$	1.2	$	1.1	$	8.8
Net gains (losses) on marketable securities	0.1		0		0.1		0.1
Other income	1.2		5.4		4.0		7.4
Other expense	(2.6)		(10.1)		(5.3)		(14.9)
Total other income (expense), net	$	(1.0)	$	(3.5)	$	(0.1)	$	1.4

13. DEBT

Long-term debt consists of the following (in millions, except percentages):


			As of
	Effective Interest Rate		July 2, 2021		October 2, 2020
0.90% Senior Notes due 2023	1.15	%	$	500.0	$	0
1.80% Senior Notes due 2026	1.97	%	500.0		0
3.00% Senior Notes due 2031	3.13	%	500.0		0
Unamortized debt discount and issuance costs			(12.9)		0
Total debt			$	1,487.1	$	0

Senior Notes

On May 26, 2021, the Company issued $500.0 million of its 0.90% Senior Notes due 2023 (the “2023 Notes”), $500.0 million of its 1.80% Senior Notes due 2026 (the “2026 Notes”), and $500.0 million of its 3.00% Senior Notes due 2031 (the “2031 Notes” and, together with the 2023 Notes and the 2026 Notes, the “Notes”). The Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of its existing and future senior unsecured debt but effectively junior to any of the Company’s senior secured debt to the extent of the value of collateral securing such debt, and are structurally subordinated to all existing and future obligations of the Company’s subsidiaries. The Notes will mature on each respective maturity date, unless earlier redeemed in accordance with their terms. Interest on the Notes is payable on June 1 and December 1 of each year.

The Company may redeem all or a portion of the 2023 Notes at any time after June 1, 2022, and all or a portion of the 2026 Notes and the 2031 Notes at any time and from time to time prior to maturity, in whole or in part, for cash at the applicable redemption prices set forth in the respective supplemental indenture. If the Company undergoes a change of control repurchase event, as defined in the indenture governing the Notes (as supplemented, the “Indenture”), holders may require the Company to repurchase the Notes in whole or in part for cash at a price equal to 101% of the principal amount of the Notes to be purchased, plus any accrued and unpaid interest.

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The terms of the Indenture provided that, if (i) the consummation of the Asset Purchase (as defined in Note 14 of the Notes to Consolidated Financial Statements) had not occurred prior to 5:00 p.m., New York City time, on October 29, 2021, (ii) the Company had notified the trustee and the holders of the 2023 Notes that it would not pursue the consummation of the Asset Purchase or (iii) the Asset Purchase Agreement had been terminated without the consummation of the Asset Purchase, the 2023 Notes would be subject to a special mandatory redemption at 101% of the principal amount of the Notes then outstanding plus accrued interest. The 2026 Notes and the 2031 Notes were not subject to any special mandatory redemption if the Asset Purchase had not been completed. As of July 2, 2021, the Company considered the likelihood of acceleration and recorded the Notes as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings.

The Indenture contains customary events of default, including failure to make required payments of principal and interest, certain events of bankruptcy and insolvency, and default in the performance or breach of any covenant or warranty contained in the Indenture or the Notes.

Term Credit Agreement

On May 21, 2021, the Company entered into a term credit agreement (the “Term Credit Agreement”) providing for a $1.0 billion term loan facility (the “Term Loan Facility”). As of July 2, 2021, there were 0 borrowings outstanding under the Term Credit Agreement.

Borrowings under the Term Loan Facility are not currently guaranteed by any of the Company’s subsidiaries.

The Term Credit Agreement contains customary representations and warranties and covenants, including restrictions on the incurrence of indebtedness by non-guarantor subsidiaries and the creation of liens, and a financial covenant consisting of a limitation on leverage, defined as consolidated total indebtedness divided by consolidated earnings before interest, taxes, depreciation, and amortization for the period of four consecutive quarters not to exceed a ratio of 3.0 to 1.0. The Term Credit Agreement also contains customary events of default, which include failure to make required payments of principal and interest, breaches of representations and warranties, changes of control or failures to pay money judgments and certain defaults in respect of specified material indebtedness, upon the occurrence of which, among other remedies, the lenders may accelerate the maturity of the indebtedness and other obligations under the Term Credit Agreement.

Revolving Credit Agreement

On May 21, 2021, the Company entered into a revolving credit agreement (the “Revolving Credit Agreement”) providing for a $750 million revolving credit facility (the “Revolver”). The proceeds of the Revolver will be used for general corporate purposes and working capital needs of the Company and its subsidiaries.

The Revolver provides for revolving credit borrowings and letters of credit, with sublimits for letters of credit. The Revolver may be increased in specified circumstances by up to $250 million at the discretion of the lenders. The Revolver matures on July 26, 2026, and all unpaid borrowings, together with accrued and unpaid interest thereon, are repayable at maturity.

The Revolving Credit Agreement contains customary representations and warranties and covenants, including restrictions on the incurrence of indebtedness by non-guarantor subsidiaries and the creation of liens, and a financial covenant consisting of a limitation on leverage, defined as consolidated total indebtedness divided by consolidated earnings before interest, taxes, depreciation, and amortization for the period of four consecutive quarters not to exceed a ratio of 3.0 to 1.0. As of July 2, 2021, there were 0 borrowings outstanding under the Revolver.

Fair Value of Debt

The Company’s debt is carried at amortized cost and is measured at fair value quarterly for disclosure purposes. The estimated fair values are based on Level 2 inputs as the fair value is based on quoted prices for the Company’s debt and comparable instruments in inactive markets.

The estimated fair value of debt consists of the following (in millions):

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	As of
	July 2, 2021		October 2, 2020
0.90% Senior Notes due 2023	$	501.6	$	0
1.80% Senior Notes due 2026	507.0		0
3.00% Senior Notes due 2031	513.1		0
Total debt	$	1,521.7	$	0

14. SUBSEQUENT EVENTS

On July 26, 2021, the Company completed the acquisition of certain assets, rights, and properties, and the assumption of certain liabilities, comprising Silicon Laboratories Inc. (“Silicon Labs”) Infrastructure and Automotive business (the “Business”) in an all-cash transaction valued at $2.75 billion (the “Asset Purchase”).

The Company expects to account for the Asset Purchase as a business combination and is currently evaluating the purchase price allocation. It is not practicable to disclose the preliminary purchase price allocation or unaudited pro forma combined financial information for this transaction, given the short period of time between the acquisition date and the issuance of these consolidated financial statements.

In connection with the Asset Purchase, on July 26, 2021, the Company borrowed $1.0 billion in aggregate principal amount of term loans (the “Term Loans”) under the Term Loan Facility to finance a portion of the purchase price for the Asset Purchase and to pay fees and expenses incurred in connection therewith. Interest on the Term Loans is based on the applicable floating interest rate, plus an applicable margin based on the Company’s public debt credit ratings. The Term Loans mature on July 26, 2024, and all amounts then-outstanding under the Term Loans, together with accrued and unpaid interest thereon, are repayable at maturity. There is no premium or penalty for prepayment.

1516

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

This report and other documents we have filed with the SEC contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the “safe harbor” created by those sections. Words such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “seek,” “should,” “will,” “would,” and similar expressions or variations or negatives of such words are intended to identify forward-looking statements but are not the exclusive means of identifying forward-looking statements in this report. Additionally, statements concerning future matters such as the possible impacts of the COVID-19 pandemic, the development of new products, enhancements of technologies, sales levels, expense levels, the benefits of the acquisition of Silicon Labs’ Infrastructure and Automotive business, and other statements regarding matters that are not historical are forward-looking statements. Although forward-looking statements in this report reflect the good faith judgment of our management as of the date the statement is first made, such statements can only be based on facts and factors then known by us. Consequently, forward-looking statements involve inherent risks and uncertainties, and actual results and outcomes may differ materially and adversely from the results and outcomes discussed in, or anticipated by, the forward-looking statements. A number of important factors could cause actual results to differ materially and adversely from those in the forward-looking statements. We urge you to consider the risks and uncertainties discussed in this Quarterly Report on Form 10-Q and the ~~2019~~2020 10-K, under the heading “Risk Factors” and in the other documents we have filed with the SEC in evaluating our forward-looking statements. We have no plans, and undertake no obligation, to revise or update our forward-looking statements to reflect any event or circumstance that may arise after the date of the initial filing of this Quarterly Report on Form 10-Q. We caution readers not to place undue reliance upon any such forward-looking statements.

In this document, the words “we,” “our,” “ours,” and “us” refer only to Skyworks Solutions, Inc., and its subsidiaries and not any other person or entity.

~~IMPACT OF~~

Impact of COVID-19

The COVID-19 pandemic and the resulting economic downturn are affecting business conditions in our industry. ~~Overall demand for our products has decreased as a result of the pandemic, which impacted our operating results for the three and nine months ended June 26, 2020.~~ The duration, severity, and future impact of the pandemic, including as a result of more contagious variants of the virus that causes COVID-19, continue to be highly uncertain and could still result in significant disruptions to our business operations, including our supply chain, as well as negative impacts to our financial condition. ~~As a result of the temporary~~A renewed suspension of our operations in Mexicali, Mexico, ~~for approximately two weeks~~similar to what we experienced in April 2020, ~~we incurred a $23.4 million production utilization charge, as described below. A renewed suspension of our operations in Mexicali,~~ or a continued reduction in our production capacity due to employee quarantines, employee absenteeism, and restrictions on certain of our employees’ ability to work, would negatively impact our future operating results.

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RESULTS OF OPERATIONS

~~THREE AND NINE MONTHS ENDED JUNE~~Three and Nine Months Ended July 2, 2021, and June 26, 2020 ~~AND JUNE 28, 2019~~

The following table sets forth the results of our operations expressed as a percentage of net revenue:


		Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
		June 26, 2020		June 28, 2019		June 26, 2020		June 28, 2019			July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020
Net revenue	Net revenue	100.0	%	100.0	%	100.0	%	100.0	%	Net revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	Cost of goods sold	54.7		59.3		51.9		53.0		Cost of goods sold	50.0		54.7		50.0		51.9
Gross profit	Gross profit	45.3		40.7		48.1		47.0		Gross profit	50.0		45.3		50.0		48.1
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	15.9		13.1		14.1		12.4		Research and development	11.7		15.9		10.1		14.1
Selling, general and administrative		7.5		6.1		7.0		5.6
Selling, general, and administrative										Selling, general, and administrative	7.6		7.5		5.8		7.0
Amortization of intangibles	Amortization of intangibles	0.4		0.7		0.4		0.7		Amortization of intangibles	0.2		0.4		0.2		0.4
Restructuring, impairment and other charges		1.6		—		0.6		0.1
Restructuring, impairment, and other charges										Restructuring, impairment, and other charges	0.1		1.6		0.1		0.6
Total operating expenses	Total operating expenses	25.4		19.9		22.1		18.8		Total operating expenses	19.6		25.4		16.2		22.1
Operating income	Operating income	19.9		20.8		26.0		28.2		Operating income	30.4		19.9		33.8		26.0
Interest expense										Interest expense	(0.2)		—		(0.1)		—
Other income (expense), net	Other income (expense), net	(0.5)		0.3		—		0.2		Other income (expense), net	(0.1)		(0.5)		—		—
Income before income taxes	Income before income taxes	19.4		21.1		26.0		28.4		Income before income taxes	30.1		19.4		33.7		26.0
Provision for income taxes		1.9		2.3		2.4		3.3
Provision (benefit) for income taxes										Provision (benefit) for income taxes	(0.2)		1.9		2.8		2.4
Net income	Net income	17.5	%	18.8	%	23.6	%	25.1	%	Net income	30.3	%	17.5	%	30.9	%	23.6	%

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OVERVIEW

We, together with our consolidated subsidiaries, are empowering the wireless networking revolution. Our highly innovative analog semiconductors are connecting people, places, and things spanning a number of new and previously unimagined applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, smartphone, tablet, and wearable markets.

~~GENERAL~~

General

During the nine months ended ~~June 26, 2020,~~July 2, 2021, the following key factors contributed to our overall results of operations, financial position, and cash flows:

•Net revenue ~~decreased~~increased by ~~5.9%~~58.3% to ~~$2,398.9~~$3,798.2 million for the nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding period in fiscal ~~2019.~~2020. This ~~decrease~~increase in revenue was driven primarily by reduced demand resulting from the U.S. Bureau of Industry and Security of the U.S. Department of Commerce continuing to keep Huawei Technologies Co., Ltd. and certain of its affiliates (collectively, “Huawei”) on the Bureau’s Entity List (the “Entity List”). Additionally, demand for our products was negatively impacted by the ongoing COVID-19 pandemic. These decreases in revenue were partially offset by an increase in overall demand for wireless connectivity products coupled with the ~~Company's new~~onset of technology upgrade cycles, including for 5G and Wi-Fi 6 solutions. Additionally, our average content per device for these next-generation solutions ~~being deployed across a growing set of customers.~~

increased.

•Our ending cash, cash equivalents, and marketable securities balance increased ~~7.4%~~203.9% to ~~$1,162.4~~$2,978.1 million as of ~~June 26, 2020,~~July 2, 2021, from ~~$1,082.2~~$980.0 million as of ~~September 27, 2019. This~~October 2, 2020. The increase in cash, cash equivalents and marketable securities during the nine months ended ~~June 26, 2020,~~July 2, 2021, was primarily due to the issuance of $500.0 million of Senior Notes due 2023 (the “2023 Notes”), $500.0 million of Senior Notes due 2026 (the “2026 Notes”), and $500.0 million of Senior Notes due 2031 (the “2031 Notes” and, together with the 2023 Notes and the 2026 Notes, the “Notes”) in order to fund the anticipated Asset Purchase. The remaining increase was primarily the result of cash generated from operations of ~~$937.5~~$1,373.7 million, partially offset by capital expenditures of $374.8 million, the repurchase of ~~4.6~~1.4 million shares of common stock for ~~$416.5 million, capital expenditures of $243.5~~$195.6 million, and dividend payments of ~~$223.5~~$248.1 million.

~~NET REVENUE~~Net Revenue

Three Months Ended Nine Months Ended
June 26,
2020 Change June 28,
2019 June 26,
2020 Change June 28,
2019
(dollars in millions)
Net revenue $ 736.8 (3.9)% $ 767.0 $ 2,398.9 (5.9)% $ 2,549.4

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	Three Months Ended					Nine Months Ended
	July 2, 2021		Change	June 26, 2020		July 2, 2021		Change	June 26, 2020
(dollars in millions)
Net revenue	$	1,116.4	51.5%	$	736.8	$	3,798.2	58.3%	$	2,398.9

We market and sell our products directly to OEMs of communications and electronics products, third-party original design manufacturers and contract manufacturers, and indirectly through electronic components distributors. We generally experience seasonal peaks during our fourth and first fiscal quarters (which correspond to the second half of the calendar year), primarily as a result of increased worldwide production of consumer electronics in anticipation of increased holiday sales, whereas our second and third fiscal quarters are typically lower and in line with seasonal industry trends.

The ~~decrease~~increase in net revenue for the three and nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding ~~periods~~period in fiscal ~~2019,~~2020, was driven ~~by reduced demand resulting from Huawei continuing to remain on the Entity List as well as the ongoing COVID-19 pandemic, partially offset~~primarily by an increase in overall demand for wireless connectivity products coupled with the ~~Company's new~~onset of technology upgrade cycles, including for 5G and Wi-Fi 6 solutions. Additionally, our average content per device for these next-generation solutions ~~being deployed across a growing set of customers.~~increased.

~~GROSS PROFIT~~Gross Profit


		Three Months Ended											Nine Months Ended											Three Months Ended							Nine Months Ended
		June 26, 2020			Change	June 28, 2019			June 26, 2020			Change	June 28, 2019				July 2, 2021			Change	June 26, 2020			July 2, 2021			Change	June 26, 2020
(dollars in millions)	(dollars in millions)															(dollars in millions)
Gross profit	Gross profit	$	334.1		6.9%	$	312.5		$	1,154.0		(3.7)%	$	1,197.8		Gross profit	$	558.6		67.2%	$	334.1		$	1,898.7		64.5%	$	1,154.0
% of net revenue	% of net revenue	45.3		%		40.7		%	48.1		%		47.0		%	% of net revenue	50.0		%		45.3		%	50.0		%		48.1		%

Gross profit represents net revenue less cost of goods sold. Our cost of goods sold consists primarily of purchased materials, labor, and overhead (including depreciation and share-based compensation expense) associated with product manufacturing. Erosion of average selling prices of established products is typical of the semiconductor industry. As part of our normal course of business, we mitigate the gross margin impact of declining average selling prices with efforts to increase unit volumes, reduce material costs, improve manufacturing efficiencies, lower manufacturing costs of existing products, and by introducing new and higher value-added products.

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The increase in gross profit for the three months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding period in fiscal ~~2019,~~2020, was primarily the result of a favorable product mix and higher unit volumes with a gross profit impact of $197.9 million, partially offset by ~~lower unit volumes and~~ lower average selling prices. In addition, there was a $23.4 million production utilization charge in the three months ended June 26, 2020, due to the temporary suspension of our operations in Mexicali in the government's effort to contain the COVID-19 pandemic. This one-time charge was less than the $66.6 million inventory-related one-time charge incurred in the three months ended June 28, 2019, due to lower expected demand as a result of Huawei being added to the Entity List. Gross profit margin increased to ~~45.3%~~50.0% of net revenue for the three months ended ~~June 26, 2020,~~July 2, 2021, as compared with ~~40.7%~~45.3% in the corresponding period in fiscal ~~2019.~~2020.

The ~~decrease~~increase in gross profit for the nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding period in fiscal ~~2019,~~2020, was primarily the result of ~~lower~~a favorable product mix and higher unit volumes ~~and~~with a gross profit impact of $766.0 million, partially offset by lower average selling ~~prices, partially offset by a favorable product mix.~~prices. In addition, there was a $23.4 million production utilization charge in the nine months ended June 26, 2020, due to the temporary suspension of our operations in Mexicali in the government's effort to contain the COVID-19 pandemic. This one-time charge was less than the $66.6 million inventory-related one-time charge incurred in the nine months ended June 28, 2019, due to lower expected demand as a result of Huawei being added to the Entity List. Gross profit margin increased to ~~48.1%~~50.0% of net revenue for the nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with ~~47.0%~~48.1% in the corresponding period in fiscal ~~2019.~~2020.

~~RESEARCH AND DEVELOPMENT~~Research and Development


		Three Months Ended											Nine Months Ended												Three Months Ended								Nine Months Ended
		June 26, 2020			Change	June 28, 2019			June 26, 2020			Change	June 28, 2019				July 2, 2021			Change		June 26, 2020			July 2, 2021			Change		June 26, 2020
(dollars in millions)	(dollars in millions)															(dollars in millions)
Research and development	Research and development	$	117.0		16.3%	$	100.6		$	337.9		6.5%	$	317.3		Research and development	$	130.8		11.8	%	$	117.0		$	383.1		13.4	%	$	337.9
% of net revenue	% of net revenue	15.9		%		13.1		%	14.1		%		12.4		%	% of net revenue	11.7		%			15.9		%	10.1		%			14.1		%

Research and development expenses consist primarily of direct personnel costs including share-based compensation expense, costs for pre-production evaluation and testing of new devices, masks, engineering prototypes, and design tool costs.

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The increase in research and development expenses for the three and nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding periods in fiscal ~~2019,~~2020, was primarily related to ~~an increase~~headcount-related expenses as a result of our increased investment in ~~employee-related compensation expense due to higher performance achievement with respect to performance stock awards.~~developing new technologies and products.

~~SELLING, GENERAL AND ADMINISTRATIVE~~Selling, General, and Administrative


		Three Months Ended											Nine Months Ended												Three Months Ended								Nine Months Ended
		June 26, 2020			Change	June 28, 2019			June 26, 2020			Change	June 28, 2019				July 2, 2021			Change		June 26, 2020			July 2, 2021			Change		June 26, 2020
(dollars in millions)	(dollars in millions)															(dollars in millions)
Selling, general and administrative		$	55.0		17.5%	$	46.8		$	169.1		18.7%	$	142.5
Selling, general, and administrative																Selling, general, and administrative	$	85.1		54.7	%	$	55.0		$	222.0		31.3	%	$	169.1
% of net revenue	% of net revenue	7.5		%		6.1		%	7.0		%		5.6		%	% of net revenue	7.6		%			7.5		%	5.8		%			7.0		%

Selling, general, and administrative expenses include legal and related costs, accounting, treasury, human resources, information systems, customer service, bad debt expense, sales commissions, share-based compensation expense, advertising, marketing, costs associated with business combinations completed or contemplated during the period, and other costs.

The increase in selling, general, and administrative expenses for the three and nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding periods in fiscal ~~2019,~~2020, was primarily related to increases in costs associated with business combinations contemplated during the period and increases in employee-related compensation expense, including share-based compensation ~~expense due to higher performance achievement with respect to performance stock awards.~~expense.

~~AMORTIZATION OF INTANGIBLES~~Amortization of Intangibles


		Three Months Ended								Nine Months Ended											Three Months Ended								Nine Months Ended
		June 26, 2020		Change	June 28, 2019		June 26, 2020		Change	June 28, 2019			July 2, 2021			Change		June 26, 2020			July 2, 2021			Change		June 26, 2020
(dollars in millions)	(dollars in millions)											(dollars in millions)

Total amortization of intangibles, including inventory step-up		12.7		(13.6)%	14.7		35.4		(18.2)%	43.3
Amortization of intangibles												Amortization of intangibles	$	2.4		(14.9)	%	$	2.8		$	7.9		(11.9)	%	$	9.0
% of net revenue	% of net revenue	1.7	%		1.9	%	1.5	%		1.7	%	% of net revenue	0.2		%			0.4		%	0.2		%			0.4		%

The decrease in ~~total~~ amortization expense for the three and nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding periods in fiscal ~~2019,~~2020, was primarily due to the end of the useful lives of certain intangible assets that were acquired in prior fiscal years.

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Interest Expense


	Three Months Ended								Nine Months Ended
	July 2, 2021			Change		June 26, 2020			July 2, 2021			Change		June 26, 2020
(dollars in millions)
Interest expense	$	(2.6)		100.0	%	$	0		$	(2.6)		100.0	%	$	0
% of net revenue	(0.2)		%			—		%	(0.1)		%			—		%

~~PROVISION FOR INCOME TAXES~~ The increase in interest expense for the three and nine months ended July 2, 2021, as compared with the corresponding periods in fiscal 2020, was due to the issuance of the Notes in May 2021.

Three Months Ended Nine Months Ended
June 26,
2020 Change June 28,
2019 June 26,
2020 Change June 28,
2019
(dollars in millions)
Provision for income taxes $ 14.3 (19.7)% $ 17.8 $ 57.7 (31.3)% $ 84.0
% of net revenue 1.9 % 2.3 % 2.4 % 3.3 %

Provision for Income Taxes


	Three Months Ended								Nine Months Ended
	July 2, 2021			Change		June 26, 2020			July 2, 2021			Change		June 26, 2020
(dollars in millions)
Provision (benefit) for income taxes	$	(1.6)		(111.2)	%	$	14.3		$	110.5		91.4	%	$	57.7
% of net revenue	(0.2)		%			1.9		%	2.8		%			2.4		%

We recorded a ~~provision~~benefit for income taxes of ~~$14.3~~$1.6 million (which consisted of ~~$4.1~~a benefit of $13.8 million and ~~$10.2~~a provision of $12.2 million related to United States and foreign income taxes, respectively) and ~~$57.7~~a provision of $110.5 million (which consisted

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of $63.7 million and ~~$30.4~~$46.8 million related to United States and foreign income taxes, respectively) for the three and nine months ended ~~June 26, 2020,~~July 2, 2021, respectively.

During fiscal 2021, we concluded an IRS examination of our federal income tax returns for fiscal 2015 and 2016. With the conclusion of the audit, we decreased the reserve for uncertain tax positions, which resulted in the recognition of an income tax benefit of $42.8 million and $34.8 million during the three and nine months ended July 2, 2021, respectively.

The decrease in income tax expense for the three ~~and nine~~ months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding periods in fiscal ~~2019,~~2020, was primarily due to a decrease in the reserve for uncertain tax positions, partially offset by increased income from operations, a reduction in the relative amount of benefits related to ~~increased~~ foreign ~~earnings~~income taxed at rates lower than the federal statutory rate, and ~~increased~~a reduction in the relative amount of windfall tax ~~deductions.~~deductions as compared to income from operations.

The increase in income tax expense for the nine months ended July 2, 2021, as compared with the corresponding periods in fiscal 2020, was primarily due to increased income from operations, a reduction in the relative amount of benefits related to foreign income taxed at rates lower than the federal statutory rate, and a reduction in the relative amount of windfall tax deductions as compared to income from operations, partially offset by a decrease in the reserve for uncertain tax positions.

LIQUIDITY AND CAPITAL RESOURCES


		Nine Months Ended							Nine Months Ended
(in millions)	(in millions)	June 26, 2020		June 28, 2019		(in millions)	July 2, 2021		June 26, 2020
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	$	851.3	$	733.3	Cash and cash equivalents at beginning of period	$	566.7	$	851.3
Net cash provided by operating activities	Net cash provided by operating activities	937.5		950.4		Net cash provided by operating activities	1,373.7		937.5
Net cash used in investing activities	Net cash used in investing activities	(391.0)		(235.1)		Net cash used in investing activities	(101.0)		(391.0)
Net cash used in financing activities		(606.5)		(705.8)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	1,005.6		(606.5)
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	791.3	$	742.8	Cash and cash equivalents at end of period	$	2,845.0	$	791.3

Cash provided by operating activities:

Cash provided by operating activities consists of net income for the period adjusted for certain non-cash items and changes in certain operating assets and liabilities. The ~~$12.9~~$436.2 million ~~decrease~~increase in cash provided by operating activities during the nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding period in fiscal ~~2019,~~2020, was primarily related to a $604.1 million increase in net income, partially offset by $178.5 million of unfavorable changes in working ~~capital.~~capital, due primarily to an increase in net cash outflows for accounts receivable which correlates with higher sales during the period.

Cash used in investing activities:

Cash used in investing activities consists primarily of capital expenditures and cash paid related to the purchase of marketable securities, offset by cash received related to the sale or maturity of marketable securities. The ~~$155.9~~$290.0 million ~~increase~~decrease in cash used in investing activities during the nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding period in fiscal ~~2019,~~2020, was primarily related to a ~~$230.6~~$421.1 million ~~difference~~increase in the net ~~purchase and~~ sale of marketable securities, partially offset by a ~~$70.5~~$131.3 million ~~decrease~~increase in cash used for capital expenditures.

Cash ~~used in~~provided by financing activities:

Cash ~~used in~~provided by financing activities consists primarily of proceeds and payments related to our long-term borrowings and cash transactions related to equity. The ~~$99.3~~$1,612.1 million ~~decrease~~net increase in cash ~~used in~~provided by financing activities during the nine months ended ~~June 26, 2020,~~July 2, 2021, as compared with the corresponding period in fiscal ~~2019,~~2020, was primarily related to an increase of $1,489.7 million in long-term debt issued and a decrease of ~~$94.8~~$220.9 million in stock repurchase activity, ~~and~~partially offset by an increase of ~~$37.6~~$24.6 million in dividend payments, a decrease of $44.4 million in net proceeds from employee stock option ~~exercises. These decreases in cash used in financing activities were partially offset by an increase of $24.7 million in dividend payments~~exercises, and an increase of ~~$9.3~~$22.7 million related to the minimum statutory payroll tax withholdings upon vesting of employee performance and restricted stock awards.

Liquidity:

Cash, cash equivalents, and marketable securities totaled ~~$1,162.4~~$2,978.1 million as of ~~June 26, 2020,~~July 2, 2021, representing an increase of ~~$80.2~~$1,998.1 million from ~~September 27, 2019.~~October 2, 2020. The increase resulted ~~primarily~~ from ~~$937.5~~$1,489.7 million in long-term debt issued, $1,373.7 million in cash generated from operations, partially offset by ~~$416.5~~$374.8 million in capital expenditures, $195.6 million used to repurchase ~~4.6~~1.4 million shares of stock, ~~$223.5~~and $248.1 million in cash dividend ~~payments,~~payments.

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We have outstanding $500 million of Notes Due 2023, $500 million of Notes Due 2026, and ~~$243.5~~$500 million of Notes Due 2031. We have a Revolving Credit Agreement (the “Revolving Credit Agreement”)under which we may borrow up to $750 million for general corporate purposes and working capital needs of the Company and its subsidiaries. As of July 2, 2021, there were no borrowings outstanding under the revolving credit facility (the “Revolver”). The Revolving Credit Agreement expires July 26, 2026. On May 21, 2021, we entered into a term credit agreement (the “Term Credit Agreement”) providing for a $1.0 billion term loan facility (the “Term Loan Facility”). As of July 2, 2021, there were no borrowings outstanding under the Term Credit Agreement. On July 26, 2021, we borrowed $1.0 billion in ~~capital expenditures.~~ aggregate principal amount of term loans under the Term Loan Facility to finance a portion of the purchase price for the Asset Purchase and to pay fees and expenses incurred in connection therewith.

Based on our historical results of operations, we expect that our cash, cash equivalents, and marketable securities on hand, ~~and~~ the cash we expect to generate from operations, proceeds from the Term Loan Facility, and funds from our Revolver will be sufficient to fund our research and development, capital expenditures, potential acquisitions, working capital, quarterly cash dividend payments (if such dividends are declared by the Board of Directors), outstanding commitments, and other liquidity requirements associated with existing operations for at least the next 12 months. However, we cannot be certain that our cash on hand, ~~and~~ cash generated from operations, and funds from our Revolver will be

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available in the future to fund all of our capital and operating requirements. In addition, any future strategic investments and significant acquisitions may require additional cash and capital resources. If we are unable to obtain sufficient cash or capital to meet our needs on a timely basis and on favorable terms, our business and operations could be materially and adversely affected.

Our invested cash balances primarily consist of highly liquid marketable securities that are available to meet near-term cash requirements including: term deposits, ~~certificate~~certificates of deposits, money market funds, U.S. Treasury securities, agency securities, ~~other government securities,~~ corporate debt securities and commercial paper.

We are exposed to interest rate risk via the terms of our Revolver and Term Loan Facility, which have variable interest rates. See Note 13 of the Notes to Consolidated Financial Statements for further information. A potential change in the associated interest rates would be immaterial to the results of our operations.

CONTRACTUAL OBLIGATIONS

~~Our~~Except for the issuance of our Notes, our contractual obligations disclosure in the ~~2019~~2020 10-K has not materially changed since we filed that report. Refer to Note 13 of the Notes to Consolidated Financial Statements for further information.

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~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~We have no material off-balance sheet arrangements as defined in SEC Regulation S-K Item 303(a)(4)(ii).~~

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are subject to overall financial market risks, such as changes in market liquidity, credit quality, investment risk, interest rate risk, and foreign exchange rate risk as described below.

Investment and Interest Rate Risk

Our exposure to interest rate and general market risks relates principally to our investment portfolio, which consists of cash and cash equivalents (money market funds and marketable securities purchased with less than ninety days until maturity) that total approximately ~~$791.3~~$2,845.0 million and marketable securities (U.S. Treasury and government securities, corporate bonds and notes, and municipal ~~bonds, other government securities)~~bonds) that total approximately ~~$347.0~~$129.2 million and ~~$24.1~~$3.9 million within short-term and long-term marketable securities, respectively, as of ~~June 26, 2020.~~July 2, 2021.

The main objectives of our investment activities are liquidity and preservation of capital. Our cash equivalent investments have short-term maturity periods that dampen the impact of market or interest rate risk. Our marketable securities consist of short-term and long-term maturity periods between 90 days and two years. Credit risk associated with our investments is not material because our investments are diversified across several types of securities with high credit ratings, which reduces the amount of credit exposure to any one investment.

Based on our results of operations for the three and nine months ended ~~June 26, 2020,~~July 2, 2021, a hypothetical reduction in the interest rates on our cash, cash equivalents, and other investments to zero would result in an immaterial reduction of interest income with a de minimis impact on income before taxes.

Given the low interest rate environment, the objectives of our investment activities, and the relatively low interest income generated from our cash, cash equivalents, and other investments, we do not believe that investment or interest rate risks currently pose material exposures to our business or results of operations.

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Foreign Exchange Rate Risk

Substantially all sales to customers and arrangements with third-party manufacturers provide for pricing and payment in United States dollars, thereby reducing the impact of foreign exchange rate fluctuations on our results. A percentage of our international operational expenses are denominated in foreign currencies and exchange rate volatility could positively or negatively impact those operating costs. Increases in the value of the United States dollar relative to other currencies could make our products more expensive, which could negatively impact our ability to compete. Conversely, decreases in the value of the United States dollar relative to other currencies could result in our suppliers raising their prices to continue doing business with us. Given the relatively small number of customers and arrangements with third-party manufacturers denominated in foreign currencies, we do not believe that foreign exchange volatility ~~currently~~ has a material impact on our current business or results of operations. However, fluctuations in currency exchange rates could have a greater effect on our business or results of operations in the future to the extent our expenses increasingly become denominated in foreign currencies.

We may enter into foreign currency forward and ~~option~~options contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows, and net investments in foreign subsidiaries. However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. For the three months ended ~~June 26, 2020,~~July 2, 2021, we had no outstanding foreign currency forward or ~~option~~options contracts with financial institutions.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~June 26, 2020.~~July 2, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the

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cost-benefit relationship of possible controls and procedures. Based on management’s evaluation of our disclosure controls and procedures as of ~~June 26, 2020,~~July 2, 2021, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There are no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the third quarter of fiscal ~~2020~~2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Due to the ongoing COVID-19 pandemic, a significant number of our employees are now working from home. The design of our processes, systems, and controls allows for remote execution with accessibility to secure data.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

ITEM 1A. RISK FACTORS.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in the ~~2019~~2020 10-K, which could materially affect our business, financial condition, or future results. The ongoing COVID-19 pandemic has heightened, and in some cases manifested, certain of the risks we normally face in operating our business, including those disclosed in the 2019 10-K, and such prior risk factor disclosure is qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q, including the new risk factor set forth below. There have been no other material changes to the risk factors previously disclosed in the 2019 10-K.

~~The effects~~Risks Related to the Acquisition of the ~~global COVID-19 pandemic are adversely affecting our business operations, sales,~~Infrastructure and ~~financial condition.~~Automotive Business of Silicon Labs

~~The ongoing COVID-19 pandemic—~~We may not achieve the anticipated benefits of the acquisition of the Infrastructure and Automotive business of Silicon Labs.

On July 26, 2021, the Company completed the acquisition of certain assets, rights, and properties, and assumed certain liabilities, comprising Silicon Labs’ Infrastructure and Automotive business (the “Acquisition”).

Achieving the anticipated benefits of the Acquisition is subject to a number of uncertainties, including ~~both~~ the ~~resulting public health crisis as well as~~Company’s ability to successfully integrate the ~~measures being taken by governments, businesses,~~assets acquired and ~~individuals~~employees transferred in ~~an effort~~connection with the Acquisition. Failure to ~~limit COVID-19’s spread—has adversely affected,~~achieve the anticipated benefits of the Acquisition in the expected timeframe or at all could result in increased costs and ~~is likely to continue to~~diversion of management’s time and energy and could materially adversely affect our business, ~~operations. The negative impacts of the COVID-19 pandemic on our business operations and~~ financial condition, and ~~on our workforce, and the duration~~results of ~~such impacts, are uncertain, constantly evolving, and difficult to quantify, but have thus far included, or in the future may include, the following:~~operations.

•We have experienced an overall decrease in the demand for our products. We may experience further decreases in demand or in the pricing of our products, or an increased cost to manufacture our products, any of which could be exacerbated by a global economic downturn or recession or by delays in the widespread commercial deployment of 5G technology.

•In April 2020, we suspended our operations in Mexicali, Mexico, for approximately two weeks pursuant to an order by the government of the state of Baja California, Mexico, resulting in the temporary reduction in our production levels. In the event that our manufacturing operations in Mexicali become subject to significant restrictions or are suspended again, or in the event that one or more of our other facilities is forced to suspend or limit its activities, including, but not limited to, as a result of such operations or activities not being considered to be an “essential” business under applicable laws, regulations, or orders, we may experience further reductions in production levels, which would limit our ability to meet customer demand and impact our operating results.

•We have implemented certain measures at our facilities worldwide in an effort to protect our employees’ health and well-being (including social distancing, encouraging remote-work options wherever possible, limiting the number of employees attending meetings, reduced shift staffing, and suspending employee travel) which has reduced the overall efficiency of our operations.

•We have experienced reduced production capacity as a result of employee quarantines, employee absenteeism, and restrictions on certain of our employees’ ability to work. Additionally, we may experience negative impacts to our sales, marketing, research and development and other critical business functions for similar reasons.

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•~~Given that our suppliers are facing similar challenges as a result of the pandemic, it is possible that we will experience disruptions to our supply chain~~We incurred significant indebtedness in connection with the ~~sourcing~~Acquisition, which could reduce our flexibility to operate our business.

On May 21, 2021, the Company, as borrower, entered into a term credit agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $1.0 billion Term Loan Facility. Additionally, on May 26, 2021, the Company issued $500 million of ~~materials, equipment, engineering support,~~its 0.900% 2023 Notes, $500 million of its 1.800% 2026 Notes, and $500 million of its 3.000% 2031 Notes in a public offering. The proceeds of the Term Loan Facility and the issuance of Notes were used to finance a portion of the purchase price for the Acquisition.

Additionally, on May 21, 2021, the Company entered into the Revolving Credit Agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $750 million Revolver. Borrowings under the Revolving Credit Facility will be used for general corporate purposes and working capital needs of the Company and its subsidiaries.

This indebtedness could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions. We also have incurred, and will continue to incur, various costs and expenses associated with our indebtedness. Our ability to make payments of principal and interest on our indebtedness when due depends upon our future performance, which will be subject to general economic conditions, industry cycles, and financial, business, and other ~~services.~~

•Wefactors affecting our operations, many of which are beyond our control. The incurrence of this or any additional indebtedness could reduce funds available for working capital, capital expenditures, acquisitions, and other general corporate purposes and may ~~experience increased disruptions~~create competitive disadvantages relative to ~~global transportation networks, limiting or delaying~~other companies with lower debt levels. Further, if we do not achieve the anticipated benefits from the Acquisition, our ability to ~~send~~service our indebtedness may be adversely impacted. Even if we achieve the anticipated benefits from the Acquisition, we may be required to raise substantial additional financing to fund working capital, capital expenditures, acquisitions, or ~~receive products~~other general corporate purposes. Our ability to arrange additional financing and ~~materials at one or more~~make payments of principal and interest on our ~~facilities, including as a result of trade restrictions, border closures, or disruptions in the operations of third-party carriers.~~

•~~Significant portions of~~indebtedness will depend on our ~~sales are concentrated among a limited number of customers. We may experience negative impacts~~future performance, which will be subject to ~~our~~general economic, financial, and business ~~operations if one or more of these major customers were to significantly decrease its orders for our products due to disruptions to its business operations.~~

•~~Our business operations,~~conditions as well as ~~the business~~other factors affecting our operations, many of which are beyond our customers, suppliers, and other third-party service providers, are subject to frequent and unpredictable changes in the political, regulatory, legal, or economic conditions in the jurisdictions in which they operate.

•~~The deterioration of worldwide credit and financial markets could limit the ability of our customers to pay for product purchases in a timely manner, or pay at all.~~

•~~In the event we are unable to fulfill our contractual obligations, lawsuits may be threatened or filed against us by customers or other third parties.~~control.

~~These effects, alone~~In addition, our credit ratings affect the cost and availability of future borrowings and, accordingly, our cost of capital. Our ratings reflect each rating organization’s opinion of our financial strength, operating performance, and ability to meet our debt obligations. There can be no assurance that we will achieve a particular rating or ~~taken together,~~maintain a particular rating in the future. An inability to obtain or maintain a rating could increase the cost of future borrowings or refinancings of our indebtedness, limit our access to sources of financing in the future, or lead to other potentially adverse consequences.

The agreements that govern our indebtedness contain various covenants that impose restrictions that may affect our ability to operate our businesses.

The agreements that govern the Term Loan Facility, the Notes, and the Revolver contain various affirmative and negative covenants that, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, change the nature of our business, and/or merge or consolidate with any other person or sell or convey certain assets to any one person. In addition, some of the agreements contain a financial covenant consisting of a limitation on leverage. Our ability to comply with these provisions may be affected by events beyond our control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations. Any such acceleration of our repayment obligations could have a material adverse effect on our business, financial condition, results of operations, ~~customer and supplier relations, employee relations,~~ cash flows, and financial condition. A prolonged COVID-19 outbreak could exacerbate the adverse impact of such effects. The resumption of normal business operations after any such business interruptions may be delayed and/or constrained by lingering effects of COVID-19 on our customers, suppliers, and other third-party service providers. There can be no assurance that any decrease in sales resulting from COVID-19 will be offset by increased sales in subsequent periods.

The degree to which COVID-19 impacts us will depend on future developments that are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain COVID-19 or treat its impact, and how quickly and to what extent normal economic and operating conditions resume. Even after the COVID-19 pandemic has subsided as a public health matter, we may experience material adverse impacts to our business as a result of its adverse impact on the global economy.

stock price.

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

The following table provides information regarding repurchases of common stock made during the three months ended ~~June 26, 2020:~~July 2, 2021:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
03/28/20-04/24/20 660,493 (2) $87.26 645,931 $1.21 billion
04/25/20-05/22/20 31,463 (3) $97.55 22,920 $1.21 billion
05/23/20-06/26/20 — $— — $1.21 billion
Total 691,956 668,851


Period	Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
04/3/21-04/30/21	2,200	(2)	$188.73	—	$2.0 billion
05/1/21-05/28/21	10,469	(2)	$164.16	—	$2.0 billion
05/29/21-07/2/21	448	(2)	$173.23	—	$2.0 billion
Total	13,117			—

Table of Contents

(1) ~~The~~We announced on January 28, 2021, that our Board of Directors had approved a stock repurchase program ~~approved by the Board of Directors~~ on January ~~30, 2019,~~26, 2021, which authorizes the repurchase of up to $2.0 billion of our common stock from time to time on the open market or in privately negotiated transactions as permitted by securities laws and other legal ~~requirements. The January 30, 2019, stock repurchase program replaced in its entirety the January 31, 2018, plan~~requirements and ~~is scheduled to expire~~which expires on January ~~30, 2021.~~26, 2023.

(2) ~~645,931~~Represents shares ~~were repurchased at an average price of $87.19 per share as part of our stock repurchase program, and 14,562 shares were~~ repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award ~~agreements with an average price of $90.00 per share.~~

(3) 22,920 shares were repurchased at an average price of $93.73 per share as part of our stock repurchase program, and 8,543 shares were repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award agreements with an average price of $107.80 per share.agreements.

2526

Table of Contents

ITEM 6. EXHIBITS.


Exhibit Number	Exhibit Description	Form	Incorporated by Reference			Filed Herewith
			File No.	Exhibit	Filing Date


2.1	Asset Purchase Agreement, dated as of April 22, 2021, by and between Skyworks Solutions, Inc., and Silicon Laboratories Inc.**	8-K	001-05560	2.1	4/22/2021

4.1	Indenture, dated as of May 26, 2021, by and between the Company and U.S. Bank National Association	8-K	001-05560	4.1	5/26/2021

4.2	First Supplemental Indenture, dated as of May 26, 2021, by and between the Company and U.S. Bank National Association	8-K	001-05560	4.2	5/26/2021

4.3	Second Supplemental Indenture, dated as of May 26, 2021, by and between the Company and U.S. Bank National Association	8-K	001-05560	4.3	5/26/2021

4.4	Third Supplemental Indenture, dated as of May 26, 2021, by and between the Company and U.S. Bank National Association	8-K	001-05560	4.4	5/26/2021

10.1	Debt Commitment Letter, dated as of April 22, 2021, by and between Skyworks Solutions, Inc., and JPMorgan Chase Bank, N.A.	8-K	001-05560	10.1	4/22/2021

10.2	Skyworks Solutions, Inc. Amended and Restated 2015 Long-Term Incentive Plan*					X

10.3	Term Credit Agreement, dated as of May 21, 2021, among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as the administrative agent**	8-K	001-05560	10.1	5/26/2021

10.4	Revolving Credit Agreement, dated as of May 21, 2021, among the Company, the Borrowing Subsidiaries party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as the administrative agent**	8-K	001-05560	10.2	5/26/2021

31.1	Certification of the Company’s Chief Executive Officer pursuant to Securities Exchange Act of 1934, as amended, Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

31.2	Certification of the Company’s Chief Financial Officer pursuant to Securities Exchange Act of 1934, as amended, Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

32.1	Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

32.2	Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

Table of Contents

Exhibit

Number

Exhibit Description

Form

Incorporated by Reference

Filed Herewith

File No.

Exhibit

Filing Date

10.1*

~~2002 Employee Stock Purchase Plan, as Amended~~

10.2*

~~Non-Qualified Employee Stock Purchase Plan, as Amended~~

~~31.1~~

Certification of the Company’s Chief Executive Officer pursuant to Securities Exchange Act of 1934, as amended, Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~31.2~~

Certification of the Company’s Chief Financial Officer pursuant to Securities Exchange Act of 1934, as amended, Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~32.1~~

~~Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~32.2~~

~~Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

* Indicates a management contract or compensatory plan or arrangement.

**Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish the omitted schedules and exhibits to the Securities and Exchange Commission upon request.

Table of Contents

SIGNATURES

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

SKYWORKS SOLUTIONS, INC.

Date:

July ~~23, 2020~~29, 2021

By:

/s/ Liam K. Griffin

Liam K. Griffin

~~President and~~Chairman, Chief Executive Officer and President

(Principal Executive Officer)

By:

/s/ Kris Sennesael

Kris Sennesael

Senior Vice President and Chief Financial Officer

(Principal Accounting and Financial Officer)

2729


			PAGE NO.
PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)			2

CONSOLIDATED STATEMENTS OF OPERATIONS			2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME			3

CONSOLIDATED BALANCE SHEETS			4

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS' EQUITY~~CASH FLOWS			5

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS' EQUITY			76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			8

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			1617

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			22

ITEM 4: CONTROLS AND PROCEDURES			2223

PART II. OTHER INFORMATION			24

ITEM 1: LEGAL PROCEEDINGS			24

ITEM 1A: RISK FACTORS			24

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			25

ITEM 6: EXHIBITS			2627

SIGNATURES			2729


Balance at March 29, 2019	172.7	$	43.2	57.0	$	(3,179.1)	$	3,126.2	$	4,098.7	$	(8.1)	$	4,080.9
Net income	—	—		—	—		—		144.1		—		144.1
Exercise and settlement of share-based awards and related tax benefit, net of shares withheld for taxes	0.2	—		—	(0.7)		7.8		—		—		7.1
Share-based compensation expense	—	—		—	—		19.0		—		—		19.0
Stock repurchase program	(1.2)	(0.3)		1.2	(85.8)		0.2		—		—		(85.8)
Dividends declared	—	—		—	—		—		(65.7)		—		(65.7)
Other comprehensive income	—	—		—	—		—		—		0.3		0.3
Balance at June 28, 2019	171.6	$	42.9	58.2	$	(3,265.6)	$	3,153.3	$	4,177.1	$	(7.8)	$	4,099.9


	As of June 26, 2020														As of September 27, 2019
			Fair Value Measurements												Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents*	$	791.3	$	648.0	$	143.3	$	—	$	851.3	$	809.5	$	41.8	$	—
U.S. Treasury and government securities	69.3		32.7		36.6		—		54.2		28.4		25.8		—
Corporate bonds and notes	261.1		—		261.1		—		72.1		—		72.1		—
Municipal bonds	40.7		—		40.7		—		104.6		—		104.6		—

Total	$	1,162.4	$	680.7	$	481.7	$	—	$	1,082.2	$	837.9	$	244.3	$	—


	June 26, 2020
2020 (remainder)	$	3.0
2021	29.1
2022	28.1
2023	24.7
2024	21.5
Thereafter	101.9
Total lease payments	208.3
Less: imputed interest	(28.5)
Present value of lease liabilities	179.8
Less: current portion (included in other current liabilities)	(24.0)
Total	$	155.8


	September 27, 2019
2020	$	26.7
2021	25.9
2022	24.8
2023	23.3
2024	21.5
Thereafter	97.7
Total	$	219.9