Consolidating Financial Information | CONDENSED CONSOLIDATING FINANCIAL INFORMATION In accordance with the Indentures governing the Notes, the Company's obligations under the Notes are fully and unconditionally guaranteed on a joint and several basis by each Guarantor, each of which is 100% owned, directly or indirectly, by Qorvo, Inc. ("Parent Company"). A Guarantor can be released in certain customary circumstances. The following presents the condensed consolidating financial information separately for: (i) Parent Company, the issuer of the guaranteed obligations; (ii) Guarantor subsidiaries, on a combined basis, as specified in the Indentures; (iii) Non-guarantor subsidiaries, on a combined basis; (iv) Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Parent Company, the guarantor subsidiaries and the non-guarantor subsidiaries, (b) eliminate intercompany profit in inventory, (c) eliminate the investments in the Company’s subsidiaries and (d) record consolidating entries; and (v) The Company, on a consolidated basis. Each entity in the condensed consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use by the Parent Company and guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries that are eliminated upon consolidation. The financial information may not necessarily be indicative of the financial position, results of operations, comprehensive (loss) income, and cash flows, had the Parent Company, guarantor or non-guarantor subsidiaries operated as independent entities. Condensed Consolidating Balance Sheet March 30, 2019 (in thousands) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 231,865 $ 479,170 $ — $ 711,035 Accounts receivable, less allowance — 47,181 330,991 — 378,172 Intercompany accounts and note receivable — 381,558 62,640 (444,198 ) — Inventories — 173,885 359,252 (21,344 ) 511,793 Prepaid expenses — 24,087 1,679 — 25,766 Other receivables — 5,121 16,813 — 21,934 Other current assets — 33,956 2,354 (169 ) 36,141 Total current assets — 897,653 1,252,899 (465,711 ) 1,684,841 Property and equipment, net — 1,090,171 268,040 8,302 1,366,513 Goodwill — 1,122,629 1,051,260 — 2,173,889 Intangible assets, net — 214,348 193,862 — 408,210 Long-term investments — 4,969 92,817 — 97,786 Long-term intercompany accounts and notes receivable — 1,239,474 93,923 (1,333,397 ) — Investment in subsidiaries 6,540,081 2,321,170 — (8,861,251 ) — Other non-current assets 17,245 46,784 28,234 (15,478 ) 76,785 Total assets $ 6,557,326 $ 6,937,198 $ 2,981,035 $ (10,667,535 ) $ 5,808,024 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ 95,089 $ 138,218 $ — $ 233,307 Intercompany accounts and notes payable — 62,640 381,558 (444,198 ) — Accrued liabilities 11,174 96,238 51,781 1,323 160,516 Other current liabilities — — 41,960 (169 ) 41,791 Total current liabilities 11,174 253,967 613,517 (443,044 ) 435,614 Long-term debt 919,270 — — — 919,270 Deferred tax liabilities — 30,361 333 (30,361 ) 333 Long-term intercompany accounts and notes payable 1,267,203 66,195 — (1,333,398 ) — Other long-term liabilities — 46,594 46,534 — 93,128 Total liabilities 2,197,647 397,117 660,384 (1,806,803 ) 1,448,345 Total stockholders’ equity 4,359,679 6,540,081 2,320,651 (8,860,732 ) 4,359,679 Total liabilities and stockholders’ equity $ 6,557,326 $ 6,937,198 $ 2,981,035 $ (10,667,535 ) $ 5,808,024 Condensed Consolidating Balance Sheet March 31, 2018 (in thousands) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 629,314 $ 296,723 $ — $ 926,037 Accounts receivable, less allowance — 76,863 269,094 — 345,957 Intercompany accounts and notes receivable — 272,409 53,363 (325,772 ) — Inventories — 154,651 339,434 (21,793 ) 472,292 Prepaid expenses — 17,530 6,379 — 23,909 Other receivables — 5,959 38,836 — 44,795 Other current assets — 29,627 1,188 — 30,815 Total current assets — 1,186,353 1,005,017 (347,565 ) 1,843,805 Property and equipment, net — 1,085,255 289,146 (289 ) 1,374,112 Goodwill — 1,121,941 1,051,948 — 2,173,889 Intangible assets, net — 395,317 465,019 — 860,336 Long-term investments — 1,847 61,918 — 63,765 Long-term intercompany accounts and notes receivable — 543,127 116,494 (659,621 ) — Investment in subsidiaries 6,198,885 2,388,222 — (8,587,107 ) — Other non-current assets 72,122 31,011 32,516 (70,037 ) 65,612 Total assets $ 6,271,007 $ 6,753,073 $ 3,022,058 $ (9,664,619 ) $ 6,381,519 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ 78,278 $ 134,915 $ — $ 213,193 Intercompany accounts and notes payable — 53,363 272,409 (325,772 ) — Accrued liabilities 23,102 101,286 43,163 (369 ) 167,182 Other current liabilities — 3,882 57,022 — 60,904 Total current liabilities 23,102 236,809 507,509 (326,141 ) 441,279 Long-term debt 983,290 — — — 983,290 Deferred tax liabilities — 83,449 16,366 (36,731 ) 63,084 Long-term intercompany accounts and notes payable 489,051 116,494 54,076 (659,621 ) — Other long-term liabilities — 62,417 55,885 — 118,302 Total liabilities 1,495,443 499,169 633,836 (1,022,493 ) 1,605,955 Total stockholders’ equity 4,775,564 6,253,904 2,388,222 (8,642,126 ) 4,775,564 Total liabilities and stockholders’ equity $ 6,271,007 $ 6,753,073 $ 3,022,058 $ (9,664,619 ) $ 6,381,519 Condensed Consolidating Statement of Operations and Comprehensive Income Fiscal Year 2019 (in thousands) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications Consolidated Revenue $ — $ 997,043 $ 2,835,977 $ (742,695 ) 3,090,325 Cost of goods sold — 911,837 1,642,313 (659,008 ) 1,895,142 Gross profit — 85,206 1,193,664 (83,687 ) 1,195,183 Operating expenses: Research and development 28,717 13,914 414,571 (6,720 ) 450,482 Selling, general and administrative 42,377 206,604 305,060 (77,967 ) 476,074 Other operating expense 486 39,729 11,470 476 52,161 Total operating expenses 71,580 260,247 731,101 (84,211 ) 978,717 Operating income (loss) (71,580 ) (175,041 ) 462,563 524 216,466 Interest expense (42,482 ) (2,106 ) (971 ) 1,596 (43,963 ) Interest income — 3,717 8,851 (1,597 ) 10,971 Other (expense) income (90,201 ) 455 (1,936 ) — (91,682 ) Income (loss) before income taxes (204,263 ) (172,975 ) 468,507 523 91,792 Income tax benefit (expense) 49,642 24,568 (32,877 ) — 41,333 Income in subsidiaries 287,746 435,630 — (723,376 ) — Net income $ 133,125 $ 287,223 $ 435,630 $ (722,853 ) $ 133,125 Comprehensive income $ 129,253 $ 286,662 $ 432,023 $ (718,685 ) $ 129,253 Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income Fiscal Year 2018 (in thousands) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications Consolidated Revenue $ — $ 1,137,783 $ 2,689,676 $ (853,923 ) 2,973,536 Cost of goods sold — 828,496 1,723,829 (725,755 ) 1,826,570 Gross profit — 309,287 965,847 (128,168 ) 1,146,966 Operating expenses: Research and development 27,688 54,663 382,109 (19,357 ) 445,103 Selling, general and administrative 39,882 248,601 349,739 (110,471 ) 527,751 Other operating expense 588 89,454 13,463 325 103,830 Total operating expenses 68,158 392,718 745,311 (129,503 ) 1,076,684 Operating income (loss) (68,158 ) (83,431 ) 220,536 1,335 70,282 Interest expense (58,133 ) (2,340 ) (1,505 ) 2,430 (59,548 ) Interest income — 2,696 6,751 (2,430 ) 7,017 Other (expense) income (929 ) 973 (642 ) (8 ) (606 ) Income (loss) before income taxes (127,220 ) (82,102 ) 225,140 1,327 17,145 Income tax expense (26 ) (15,586 ) (41,821 ) — (57,433 ) Income in subsidiaries 86,958 183,319 — (270,277 ) — Net (loss) income $ (40,288 ) $ 85,631 $ 183,319 $ (268,950 ) $ (40,288 ) Comprehensive (loss) income $ (38,734 ) $ 87,654 $ 186,172 $ (273,826 ) $ (38,734 ) Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income Fiscal Year 2017 (in thousands) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications Consolidated Revenue $ — $ 1,316,576 $ 2,918,865 $ (1,202,867 ) 3,032,574 Cost of goods sold — 979,190 2,023,715 (1,105,843 ) 1,897,062 Gross profit — 337,386 895,150 (97,024 ) 1,135,512 Operating expenses: Research and development 35,379 40,918 416,869 (22,330 ) 470,836 Selling, general and administrative 53,465 253,531 370,812 (132,220 ) 545,588 Other operating expense — 16,065 8,409 6,555 31,029 Total operating expenses 88,844 310,514 796,090 (147,995 ) 1,047,453 Operating income (loss) (88,844 ) 26,872 99,060 50,971 88,059 Interest expense (57,344 ) (2,619 ) (3,129 ) 4,213 (58,879 ) Interest income — 4,457 759 (4,004 ) 1,212 Other (expense) income — 426 (1,999 ) (1,514 ) (3,087 ) Income (loss) before income taxes (146,188 ) 29,136 94,691 49,666 27,305 Income tax (expense) benefit 46,003 (63,893 ) (25,973 ) — (43,863 ) Income in subsidiaries 83,627 68,718 — (152,345 ) — Net (loss) income $ (16,558 ) $ 33,961 $ 68,718 $ (102,679 ) $ (16,558 ) Comprehensive (loss) income $ (17,731 ) $ 34,014 $ 67,492 $ (101,506 ) $ (17,731 ) Condensed Consolidating Statement of Cash Flows Fiscal Year 2019 (in thousands) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications Consolidated Net cash provided by (used in) operating activities $ 776,598 $ (675,191 ) $ 708,957 $ — $ 810,364 Investing activities: Purchase of property and equipment — (183,482 ) (37,455 ) — (220,937 ) Purchase of available-for-sale securities — (132,732 ) — — (132,732 ) Proceeds from sales and maturities of available-for-sale debt securities — 133,132 — — 133,132 Other investing — (3,581 ) (23,436 ) — (27,017 ) Net transactions with related parties — 505,050 — (505,050 ) — Net cash (used in) provided by investing activities — 318,387 (60,891 ) (505,050 ) (247,554 ) Financing activities: Repurchase of debt (1,050,680 ) — — — (1,050,680 ) Proceeds from debt issuances 905,350 — — — 905,350 Repurchase of common stock, including transaction costs (638,074 ) — — — (638,074 ) Proceeds from the issuance of common stock 41,289 — — — 41,289 Tax withholding paid on behalf of employees for restricted stock units (24,835 ) — — — (24,835 ) Other financing activities (9,648 ) — (66 ) — (9,714 ) Net transactions with related parties — (40,645 ) (464,405 ) 505,050 — Net cash used in financing activities (776,598 ) (40,645 ) (464,471 ) 505,050 (776,664 ) Effect of exchange rate changes on cash — — (1,166 ) — (1,166 ) Net (decrease) increase in cash, cash equivalents and restricted cash — (397,449 ) 182,429 — (215,020 ) Cash, cash equivalents and restricted cash at the beginning of the period — 629,314 297,088 — 926,402 Cash, cash equivalents and restricted cash at the end of the period $ — $ 231,865 $ 479,517 $ — $ 711,382 Condensed Consolidating Statement of Cash Flows Fiscal Year 2018 (in thousands) Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications Consolidated Net cash provided by operating activities $ 196,848 $ 165,883 $ 489,789 $ — $ 852,520 Investing activities: Purchase of property and equipment — (226,860 ) (42,975 ) — (269,835 ) Other investing — 22,800 (30,374 ) — (7,574 ) Net transactions with related parties — 439,925 (24,100 ) (415,825 ) — Net cash (used in) provided by investing activities — 235,865 (97,449 ) (415,825 ) (277,409 ) Financing activities: Payment of debt (107,729 ) — — — (107,729 ) Proceeds from debt issuances 100,000 — — — 100,000 Repurchase of common stock, including transaction costs (219,907 ) — — — (219,907 ) Proceeds from the issuance of common stock 57,412 — — — 57,412 Tax withholding paid on behalf of employees for restricted stock units (24,708 ) — — — (24,708 ) Other financing (1,916 ) — — — (1,916 ) Net transactions with related parties — 1,380 (417,205 ) 415,825 — Net cash (used in) provided by financing activities (196,848 ) 1,380 (417,205 ) 415,825 (196,848 ) Effect of exchange rate changes on cash — — 2,360 — 2,360 Net increase (decrease) in cash, cash equivalents and restricted cash — 403,128 (22,505 ) — 380,623 Cash, cash equivalents and restricted cash at the beginning of the period — 226,186 319,593 — 545,779 Cash, cash equivalents and restricted cash at the end of the period $ — $ 629,314 $ 297,088 $ — $ 926,402 Condensed Consolidating Statement of Cash Flows Fiscal Year 2017 (in thousands) Parent Company Guarantor Subsidiaries Non-guarantor Subsidiaries Eliminations and Reclassifications Consolidated Net cash provided by operating activities $ 165,660 $ 175,988 $ 435,172 $ — $ 776,820 Investing activities: Purchase of property and equipment — (424,175 ) (128,527 ) — (552,702 ) Purchase of available-for-sale securities — (469 ) — — (469 ) Proceeds from maturities of available-for-sale securities — 186,793 — — 186,793 Purchase of business, net of cash acquired — — (117,994 ) — (117,994 ) Other investing — 3,924 (9,900 ) — (5,976 ) Net transactions with related parties — 61,891 — (61,891 ) — Net cash used in investing activities — (172,036 ) (256,421 ) (61,891 ) (490,348 ) Financing activities: Repurchase of common stock, including transaction costs (209,357 ) — — — (209,357 ) Proceeds from the issuance of common stock 59,148 — — — 59,148 Tax withholding paid on behalf of employees for restricted stock units (15,516 ) — — — (15,516 ) Other financing 65 14 (4 ) — 75 Net transactions with related parties — 1,587 (63,478 ) 61,891 — Net cash (used in) provided by financing activities (165,660 ) 1,601 (63,482 ) 61,891 (165,650 ) Effect of exchange rate changes on cash — — (1,105 ) — (1,105 ) Net increase in cash, cash equivalents and restricted cash — 5,553 114,164 — 119,717 Cash, cash equivalents and restricted cash at the beginning of the period — 220,633 205,429 — 426,062 Cash, cash equivalents and restricted cash at the end of the period $ — $ 226,186 $ 319,593 $ — $ 545,779 |