UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2022

or

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

    For the transition period from _____to _____

Commission File Number 001-36801

Qorvo, Inc.

(Exact name of registrant as specified in its charter) 

Delaware		46-5288992
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
7628 Thorndike Road
Greensboro,	North Carolina	27409-9421
(Address of principal executive offices)		(Zip code)

(336) 664-1233

(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, $0.0001 par value	QRVO	The Nasdaq Stock Market LLC

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

As of January 26, 2023, there were 99,889,210 shares of the registrant’s common stock outstanding.

QORVO, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Comprehensive Income	5
Condensed Consolidated Statements of Stockholders' Equity	6
Condensed Consolidated Statements of Cash Flows	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	29
Item 4. Controls and Procedures.	29
PART II — OTHER INFORMATION	30
Item 1A. Risk Factors.	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	30
Item 5. Other Information.	31
Item 6. Exhibits.	32
SIGNATURES	33

2

PART I — FINANCIAL INFORMATION

ITEM 1.

QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

	December 31, 2022		April 2, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	918,758	$	972,592
Accounts receivable, net of allowance of $405 and $402 as of December 31, 2022 and April 2, 2022, respectively	367,636		568,850
Inventories	857,277		755,748
Prepaid expenses	46,105		49,839
Other receivables	30,832		32,151
Other current assets	37,092		70,685
Total current assets	2,257,700		2,449,865
Property and equipment, net of accumulated depreciation of $1,846,373 and $1,734,608 as of December 31, 2022 and April 2, 2022, respectively	1,191,986		1,253,591
Goodwill	2,770,146		2,775,634
Intangible assets, net	567,375		674,786
Long-term investments	24,218		31,086
Other non-current assets	264,794		324,110
Total assets	$	7,076,219	$	7,509,072
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	225,111	$	327,915
Accrued liabilities	239,013		240,186
Other current liabilities	149,466		107,026
Total current liabilities	613,590		675,127
Long-term debt	2,047,743		2,047,098
Other long-term liabilities	250,318		233,629
Total liabilities	2,911,651		2,955,854
Commitments and contingent liabilities (Note 8)
Stockholders’ equity:
Preferred stock, $.0001 par value; 5,000 shares authorized; no shares issued and outstanding	—		—
Common stock and additional paid-in capital, $.0001 par value; 405,000 shares authorized; 100,021 and 106,303 shares issued and outstanding at December 31, 2022 and April 2, 2022, respectively	3,859,940		4,035,849
Accumulated other comprehensive (loss) income	(11,365)		5,232
Retained earnings	315,993		512,137
Total stockholders’ equity	4,164,568		4,553,218
Total liabilities and stockholders’ equity	$	7,076,219	$	7,509,072

See accompanying Notes to Condensed Consolidated Financial Statements.

3

 QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended				Nine Months Ended
	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022
Revenue	$	743,281	$	1,113,957	$	2,936,696	$	3,479,556
Cost of goods sold	475,230		565,864		1,754,468		1,763,727
Gross profit	268,051		548,093		1,182,228		1,715,829
Operating expenses:
Research and development	149,472		154,435		486,204		464,891
Selling, general and administrative	76,269		82,003		275,836		265,791
Other operating expense	33,581		15,645		48,038		29,675
Total operating expenses	259,322		252,083		810,078		760,357
Operating income	8,729		296,010		372,150		955,472
Interest expense	(17,066)		(15,328)		(51,222)		(45,934)
Other income, net	5,562		2,532		2,714		24,077
(Loss) income before income taxes	(2,775)		283,214		323,642		933,615
Income tax expense	(13,156)		(66,951)		(82,074)		(112,537)
Net (loss) income	$	(15,931)	$	216,263	$	241,568	$	821,078
Net (loss) income per share:
Basic	$	(0.16)	$	1.97	$	2.34	$	7.40
Diluted	$	(0.16)	$	1.95	$	2.33	$	7.30
Weighted average shares of common stock outstanding:
Basic	100,943		109,687		103,039		110,966
Diluted	100,943		110,810		103,812		112,415

See accompanying Notes to Condensed Consolidated Financial Statements.

4

QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended				Nine Months Ended
	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022
Net (loss) income	$	(15,931)	$	216,263	$	241,568	$	821,078
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, including intra-entity foreign currency transactions that are of a long-term investment nature	30,403		(8,488)		(16,623)		(14,767)
Reclassification adjustments, net of tax:
Foreign currency gain realized upon liquidation of subsidiary	—		(359)		—		(359)
Amortization of pension actuarial loss	8		29		26		90
Other comprehensive income (loss)	30,411		(8,818)		(16,597)		(15,036)
Total comprehensive income	$	14,480	$	207,445	$	224,971	$	806,042

                

See accompanying Notes to Condensed Consolidated Financial Statements.

5

QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

				Accumulated Other Comprehensive (Loss) Income		Retained Earnings
	Common Stock
Three Months Ended	Shares	Amount						Total
Balance, October 1, 2022	102,061	$	3,915,969	$	(41,776)	$	447,947	$	4,322,140
Net loss	—	—		—		(15,931)		(15,931)
Other comprehensive income	—	—		30,411		—		30,411
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	41	(321)		—		—		(321)
Issuance of common stock in connection with employee stock purchase plan	150	11,276		—		—		11,276
Repurchase of common stock, including transaction costs	(2,231)	(85,610)		—		(116,023)		(201,633)
Stock-based compensation	—	18,626		—		—		18,626
Balance, December 31, 2022	100,021	$	3,859,940	$	(11,365)	$	315,993	$	4,164,568
Balance, October 2, 2021	110,461	$	4,158,170	$	23,431	$	546,153	$	4,727,754
Net income	—	—		—		216,263		216,263
Other comprehensive loss	—	—		(8,818)		—		(8,818)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	41	(527)		—		—		(527)
Issuance of common stock in connection with employee stock purchase plan	108	15,503		—		—		15,503
Repurchase of common stock, including transaction costs	(1,942)	(73,092)		—		(228,928)		(302,020)
Stock-based compensation	—	19,044		—		—		19,044
Balance, January 1, 2022	108,668	$	4,119,098	$	14,613	$	533,488	$	4,667,199

See accompanying Notes to Condensed Consolidated Financial Statements.

6

QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

				Accumulated Other Comprehensive (Loss) Income		Retained Earnings
	Common Stock
Nine Months Ended	Shares	Amount						Total
Balance, April 2, 2022	106,303	$	4,035,849	$	5,232	$	512,137	$	4,553,218
Net income	—	—		—		241,568		241,568
Other comprehensive loss	—	—		(16,597)		—		(16,597)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	550	(21,502)		—		—		(21,502)
Issuance of common stock in connection with employee stock purchase plan	345	30,169		—		—		30,169
Repurchase of common stock, including transaction costs	(7,177)	(274,020)		—		(437,712)		(711,732)
Stock-based compensation	—	89,444		—		—		89,444
Balance, December 31, 2022	100,021	$	3,859,940	$	(11,365)	$	315,993	$	4,164,568
Balance, April 3, 2021	112,557	$	4,244,740	$	29,649	$	355,036	$	4,629,425
Net income	—	—		—		821,078		821,078
Other comprehensive loss	—	—		(15,036)		—		(15,036)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes	683	(49,979)		—		—		(49,979)
Issuance of common stock in connection with employee stock purchase plan	273	33,297		—		—		33,297
Repurchase of common stock, including transaction costs	(4,845)	(182,767)		—		(642,626)		(825,393)
Stock-based compensation	—	73,807		—		—		73,807
Balance, January 1, 2022	108,668	$	4,119,098	$	14,613	$	533,488	$	4,667,199

See accompanying Notes to Condensed Consolidated Financial Statements.

7

QORVO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	December 31, 2022		January 1, 2022
Cash flows from operating activities:
Net income	$	241,568	$	821,078
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	155,132		159,038
Intangible assets amortization	99,476		112,523
Deferred income taxes	(2,557)		37,566
Stock-based compensation expense	86,911		73,236
Other, net	95,459		6,703
Changes in operating assets and liabilities:
Accounts receivable, net	201,823		(170,511)
Inventories	(98,882)		(190,247)
Prepaid expenses and other assets	42,979		(145,643)
Accounts payable and accrued liabilities	(85,321)		42,797
Income taxes payable and receivable	(17,281)		(16,303)
Other liabilities	58,481		(26,874)
Net cash provided by operating activities	777,788		703,363
Cash flows from investing activities:
Purchase of property and equipment	(124,853)		(162,993)
Purchase of businesses, net of cash acquired	(95)		(389,192)
Other investing activities	7,590		9
Net cash used in investing activities	(117,358)		(552,176)
Cash flows from financing activities:
Payment of debt	—		(197,500)
Proceeds from debt issuances	—		499,070
Repurchase of common stock, including transaction costs	(711,732)		(825,393)
Proceeds from the issuance of common stock	20,828		26,653
Tax withholding paid on behalf of employees for restricted stock units	(22,687)		(52,265)
Other financing activities	(422)		(9,078)
Net cash used in financing activities	(714,013)		(558,513)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(280)		(2,063)
Net decrease in cash, cash equivalents and restricted cash	(53,863)		(409,389)
Cash, cash equivalents and restricted cash at the beginning of the period	972,805		1,398,309
Cash, cash equivalents and restricted cash at the end of the period	$	918,942	$	988,920
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	918,758	$	988,527
Restricted cash included in "Other current assets" and "Other non-current assets"	184		393
Total cash, cash equivalents and restricted cash	$	918,942	$	988,920
Supplemental disclosure of cash flow information:
Capital expenditures included in liabilities	$	26,597	$	42,055

See accompanying Notes to Condensed Consolidated Financial Statements.

8

QORVO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements of Qorvo, Inc. and Subsidiaries (together, the "Company" or "Qorvo") have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of these financial statements requires management to make estimates and assumptions, which could differ materially from actual results. In addition, certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed, or omitted, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In the opinion of management, the financial statements include all adjustments (which are of a normal and recurring nature) necessary for the fair presentation of the results of the interim periods presented. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in Qorvo’s Annual Report on Form 10-K for the fiscal year ended April 2, 2022.

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. During the second quarter of fiscal 2023, the Company updated its organizational structure to more closely align similar technologies and applications with customers and end markets. The Company manages its business and reports its financial results in three reportable segments: High Performance Analog ("HPA"), Connectivity and Sensors Group ("CSG") and Advanced Cellular Group ("ACG").

Certain items in the fiscal 2022 financial statements (including prior period segment results) have been reclassified to conform with the fiscal 2023 presentation.

The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to March 31 of each year. Each fiscal year, the first quarter ends on the Saturday closest to June 30, the second quarter ends on the Saturday closest to September 30 and the third quarter ends on the Saturday closest to December 31. Fiscal years 2023 and 2022 are 52-week years.

2. INVENTORIES

The components of inventories, net of reserves, are as follows (in thousands):

	December 31, 2022		April 2, 2022
Raw materials	$	318,288	$	236,095
Work in process	350,122		357,332
Finished goods	188,867		162,321
Total inventories	$	857,277	$	755,748

3. BUSINESS ACQUISITIONS

United Silicon Carbide, Inc.

On October 19, 2021, the Company acquired all the outstanding equity interests of United Silicon Carbide, Inc. ("United SiC"), a leading manufacturer of silicon carbide ("SiC") power semiconductors, for a total purchase price of $236.7 million. The acquisition expanded the Company's offerings to include SiC power products for a range of applications, such as electric vehicles, battery charging, IT infrastructure, renewables and circuit protection.

The purchase price comprised cash consideration of $227.2 million and contingent consideration of up to $31.3 million which is expected to be paid to the sellers (in the first quarter of fiscal 2024) upon achieving certain revenue and gross margin targets over the period beginning on the acquisition date through December 31, 2022. The estimated fair value of the contingent consideration liability was $9.5 million as of the acquisition date. At April 2, 2022, the contingent consideration liability was remeasured to a fair value of $17.6 million and is included in "Other long-term liabilities" in the Condensed Consolidated Balance Sheet. At December 31, 2022, the maximum contingent consideration of $31.3 million was earned and is included in "Other current liabilities" in the Condensed Consolidated Balance Sheet, with the increase in fair value recognized in "Other operating expense" in the Condensed Consolidated Statement of Operations. Refer to Note 5 for further information related to the fair value measurement.

9

QORVO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

NextInput, Inc.

On April 5, 2021, the Company acquired all the outstanding equity interests of NextInput, Inc. ("NextInput"), a leader in microelectromechanical system ("MEMS")-based sensing solutions, for a total cash purchase price of $173.3 million. The acquisition expanded the Company's offerings of MEMS-based products for mobile applications, providing sensing solutions for a broad range of applications in other markets.

4. GOODWILL AND INTANGIBLE ASSETS

During the second quarter of fiscal 2023, the Company updated its organizational structure (see Note 1).

The changes in the carrying amount of goodwill are as follows (in thousands):

	HPA		CSG		ACG		Total
Balance as of April 2, 2022 (1)	$	501,899	$	539,875	$	1,733,860	$	2,775,634
NextInput measurement period adjustments	—		572		—		572
United SiC measurement period adjustments	(297)		—		—		(297)
Effect of changes in foreign currency exchange rates	—		(5,763)		—		(5,763)
Balance as of December 31, 2022 (1)	$	501,602	$	534,684	$	1,733,860	$	2,770,146

(1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs totaling $669.6 million, which were recognized in fiscal years 2009, 2013, 2014 and 2022.

The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets (in thousands):

	December 31, 2022				April 2, 2022
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Developed technology	$	866,916	$	352,141	$	1,026,690	$	420,255
Customer relationships	104,429		62,703		104,778		47,208
Technology licenses	1,411		405		2,641		2,169
Trade names	899		664		1,933		1,358
In-process research and development	9,633		N/A		9,734		N/A
Total (1)	$	983,288	$	415,913	$	1,145,776	$	470,990

(1) Amounts include the impact of foreign currency translation.

At the beginning of each fiscal year, the Company removes the gross asset and accumulated amortization amounts of intangible assets that have reached the end of their useful lives and have been fully amortized. Useful lives are estimated based on the expected economic benefit to be derived from the intangible assets.

5. INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Equity Method Investments

The Company invests in limited partnerships and accounts for these investments using the equity method. The carrying amounts of these investments, as of December 31, 2022 and April 2, 2022, were $20.2 million and $27.1 million, respectively, and are classified as "Long-term investments" in the Condensed Consolidated Balance Sheets. During the three and nine months ended December 31, 2022, the Company recorded a loss of $5.0 million and $4.7 million, respectively, based on its share of the limited partnerships' earnings. During the three and nine months ended January 1, 2022, the Company recorded a loss of $2.4 million and income of $13.6 million, respectively, based on its share of the limited partnerships' earnings. These amounts are included in "Other income, net" in the Condensed Consolidated Statements of Operations. During the three and

10

QORVO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

nine months ended December 31, 2022, the Company received cash distributions of $0.2 million and $2.2 million, respectively, from these limited partnerships. No cash distributions were received during the three months ended January 1, 2022 and $13.5 million of cash distributions were received during the nine months ended January 1, 2022. The cash distributions were recognized as reductions to the carrying value of the investments and included in the cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows.

Fair Value of Financial Instruments

The fair value of the financial assets and liabilities measured on a recurring basis was determined using the following levels of inputs (in thousands):

	Total		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2022
Marketable equity securities	$	1,121	$	1,121	$	—	$	—
Invested funds in deferred compensation plan (1)	37,687		37,687		—		—
Contingent earn-out liability (2)	(31,250)		—		—		(31,250)
April 2, 2022
Marketable equity securities	$	2,906	$	2,906	$	—	$	—
Invested funds in deferred compensation plan (1)	39,356		39,356		—		—
Contingent earn-out liability (2)	(17,600)		—		—		(17,600)

(1) Invested funds under the Company's non-qualified deferred compensation plan are held in a rabbi trust and consist of mutual funds. The fair value of the mutual funds is calculated using the net asset value per share determined by quoted active market prices of the underlying investments.

(2) At December 31, 2022, the maximum contingent consideration was recorded related to the acquisition of United SiC (refer to Note 3). At April 2, 2022, the fair value of this liability was estimated using an option pricing model.

6. LONG-TERM DEBT

Long-term debt is as follows (in thousands):

	December 31, 2022		April 2, 2022
1.750% senior notes due 2024	$	500,000	$	500,000
4.375% senior notes due 2029	850,000		850,000
3.375% senior notes due 2031	700,000		700,000
Finance leases and other	1,839		2,581
Unamortized premium, discount and issuance costs, net	(3,645)		(4,692)
Less current portion of long-term debt	(451)		(791)
Total long-term debt	$	2,047,743	$	2,047,098

Credit Agreement

On September 29, 2020, the Company and certain of its U.S. subsidiaries (the "Guarantors") entered into a five-year unsecured senior credit facility pursuant to a credit agreement (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement") with Bank of America, N.A., acting as administrative agent, and a syndicate of lenders. The Credit Agreement amended and restated the previous credit agreement dated as of December 5, 2017. The Credit Agreement includes a senior revolving line of credit (the "Revolving Facility") of up to $300.0 million, and included a senior term loan of $200.0 million (collectively, the "Credit Facility"), that was fully repaid in fiscal 2022.

11

QORVO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

On April 6, 2022, the Company and the administrative agent entered into an amendment to the Credit Agreement (the "LIBOR Transition Amendment") to replace the London Interbank Offered Rate as a reference rate available for use in the computation of interest under the Credit Agreement. As a result of the LIBOR Transition Amendment, at the Company’s option, loans under the Credit Agreement will bear interest at (i) the Applicable Rate (as defined in the Credit Agreement) plus the Term SOFR (as defined in the Credit Agreement) or (ii) the Applicable Rate plus a rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by the administrative agent, and (c) the Term SOFR plus 1.0% (the "Base Rate"). All swing line loans will bear interest at a rate equal to the Applicable Rate plus the Base Rate. The Term SOFR is the rate per annum equal to the forward-looking Secured Overnight Financing Rate term rate for interest periods of one, three or six months (as selected by the Company) plus an adjustment (as defined in the Credit Agreement). The Applicable Rate for Term SOFR loans ranges from 1.000% per annum to 1.250% per annum, and the Applicable Rate for Base Rate loans ranges from 0.000% per annum to 0.250% per annum. Undrawn amounts under the Credit Facility are subject to a commitment fee ranging from 0.150% to 0.200%.

During the three and nine months ended December 31, 2022, there were no borrowings under the Revolving Facility.

Senior Notes due 2024

On December 14, 2021, the Company issued $500.0 million aggregate principal amount of its 1.750% senior notes due 2024 (the "2024 Notes"). The 2024 Notes will mature on December 15, 2024, unless earlier redeemed in accordance with their terms. The 2024 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors.

The 2024 Notes were issued pursuant to an indenture, dated as of December 14, 2021 (the "2021 Indenture"), by and among the Company, the Guarantors and Computershare Trust Company, N.A., as trustee. The 2021 Indenture contains customary events of default, including payment default, exchange default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events. The 2021 Indenture also contains customary negative covenants.

Interest is payable on the 2024 Notes on June 15 and December 15 of each year. The Company paid interest of $4.4 million and $8.8 million on the 2024 Notes during the three and nine months ended December 31, 2022, respectively.

Senior Notes due 2029

On September 30, 2019, the Company issued $350.0 million aggregate principal amount of its 4.375% senior notes due 2029 (the "Initial 2029 Notes"). On December 20, 2019, and June 11, 2020, the Company issued an additional $200.0 million and $300.0 million, respectively, aggregate principal amount of such notes (together, the "Additional 2029 Notes" and together with the Initial 2029 Notes, the "2029 Notes"). The 2029 Notes will mature on October 15, 2029, unless earlier redeemed in accordance with their terms. The 2029 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors.

The Initial 2029 Notes were issued pursuant to an indenture, dated as of September 30, 2019, by and among the Company, the Guarantors and MUFG Union Bank, N.A., as trustee, and the Additional 2029 Notes were issued pursuant to supplemental indentures, dated as of December 20, 2019, and June 11, 2020 (such indenture and supplemental indentures, collectively, the "2019 Indenture"). The 2019 Indenture contains substantially the same customary events of default and negative covenants as the 2021 Indenture.

Interest is payable on the 2029 Notes on April 15 and October 15 of each year. The Company paid interest of $18.6 million on the 2029 Notes during the three months ended December 31, 2022 and January 1, 2022, and paid interest of $37.2 million during the nine months ended December 31, 2022 and January 1, 2022.

Senior Notes due 2031

On September 29, 2020, the Company issued $700.0 million aggregate principal amount of its 3.375% senior notes due 2031 (the "2031 Notes"). The 2031 Notes will mature on April 1, 2031, unless earlier redeemed in accordance with their terms. The 2031 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by the Guarantors.

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(Unaudited)

The 2031 Notes were issued pursuant to an indenture, dated as of September 29, 2020, by and among the Company, the Guarantors and MUFG Union Bank, N.A., as trustee (the "2020 Indenture"). The 2020 Indenture contains substantially the same customary events of default and negative covenants as the 2021 Indenture.

Interest is payable on the 2031 Notes on April 1 and October 1 of each year. The Company paid no interest on the 2031 Notes during the three months ended December 31, 2022 and January 1, 2022, and paid interest of $11.8 million during the nine months ended December 31, 2022 and January 1, 2022.

Fair Value of Long-Term Debt

The Company's debt is carried at amortized cost and is measured quarterly at fair value for disclosure purposes. The estimated fair value of the 2024 Notes, the 2029 Notes and the 2031 Notes as of December 31, 2022 was $459.8 million, $777.8 million and $572.3 million, respectively (compared to the outstanding principal amount of $500.0 million, $850.0 million and $700.0 million, respectively). The estimated fair value of the 2024 Notes, the 2029 Notes and the 2031 Notes as of April 2, 2022 was $476.9 million, $852.6 million and $638.6 million, respectively (compared to the outstanding principal amount of $500.0 million, $850.0 million and $700.0 million, respectively). The Company considers its debt to be Level 2 in the fair value hierarchy. Fair values are estimated based on quoted market prices for identical or similar instruments. The 2024 Notes, the 2029 Notes and the 2031 Notes currently trade over-the-counter, and the fair values were estimated based upon the value of the last trade at the end of the period.

Interest Expense

During the three and nine months ended December 31, 2022, the Company recognized total interest expense of $18.1 million and $54.2 million, respectively, primarily related to the 2024 Notes, the 2029 Notes and the 2031 Notes, partially offset by interest capitalized to property and equipment of $1.0 million and $3.0 million, respectively. During the three and nine months ended January 1, 2022, the Company recognized total interest expense of $16.3 million and $48.7 million, respectively, primarily related to the 2029 Notes and the 2031 Notes, partially offset by interest capitalized to property and equipment of $0.9 million and $2.8 million, respectively.

7. STOCK REPURCHASES

On November 2, 2022, the Company announced that its Board of Directors authorized a new share repurchase program to repurchase up to $2.0 billion of the Company's outstanding common stock, which included the remaining authorized dollar amount under a prior program terminated concurrent with the new authorization. Under the current program, share repurchases are made in accordance with applicable securities laws on the open market or in privately negotiated transactions. The extent to which the Company repurchases its shares, the number of shares and the timing of any repurchases depends on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. The program does not require the Company to repurchase a minimum number of shares, does not have a fixed term, and may be modified, suspended, or terminated at any time without prior notice.

During the three and nine months ended December 31, 2022, the Company repurchased approximately 2.2 million and 7.2 million shares of its common stock for approximately $201.6 million and $711.7 million, respectively (including transaction costs) under the prior and current share repurchase programs. As of December 31, 2022, approximately $1,855.0 million remains available for repurchases under the current share repurchase program.

During the three and nine months ended January 1, 2022, the Company repurchased approximately 1.9 million and 4.8 million shares, respectively, of its common stock for approximately $302.0 million and $825.4 million, respectively (including transaction costs).

8. COMMITMENTS AND CONTINGENT LIABILITIES

Purchase Obligations

Amidst ongoing industry-wide supply constraints, the Company entered into a long-term capacity reservation agreement with a foundry supplier during the second quarter of fiscal 2022. Under this agreement, the Company was required to purchase, and

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(Unaudited)

the foundry supplier was required to supply, a certain number of wafers (at predetermined sales prices) for calendar years 2022 through 2025. In connection with this agreement, the Company paid a refundable deposit (which was recorded in "Other non-current assets" in the Condensed Consolidated Balance Sheets), and if the purchase commitments per the agreement were not met, under certain circumstances the supplier could deduct the amount of the purchase shortfall from the prepaid refundable deposit at the end of each calendar year.

During fiscal 2023, the Company has experienced unexpectedly weakened demand for 5G handsets in China and EMEA primarily due to unprecedented disruption resulting from measures taken in China to control the COVID-19 pandemic and the conflict in Ukraine. As a result, the Company did not meet the minimum purchase commitments under this long-term capacity reservation agreement.

In the first quarter of fiscal 2023, the purchase shortfall resulted in an impairment to the prepaid refundable deposit of approximately $13.0 million and additional reserves of approximately $11.0 million for inventory in excess of demand forecasts were recorded. Additionally, the Company assessed the future minimum purchase commitments over the remaining term of the agreement and recorded an estimated shortfall of $86.0 million, of which $8.0 million was recorded in "Other current liabilities" and $78.0 million was recorded in "Other long-term liabilities" in accordance with Accounting Standards Codification ("ASC") 330, "Inventory." These transactions resulted in a total increase to cost of goods sold of $110.0 million in the first quarter of fiscal 2023.

In October 2022, the Company renegotiated the terms of the agreement with the foundry supplier, which included extending the duration of the agreement through calendar year 2026. The Company believes that the amended agreement more closely aligns the contractual purchase commitments with forecasted demand. As a result of the amended agreement, in the second quarter of fiscal 2023, the Company recorded an impairment to the prepaid refundable deposit of approximately $38.0 million and additional reserves of approximately $5.0 million for inventory in excess of demand forecasts, which reduced the estimated shortfall liability that was previously recorded by $43.0 million. In the third quarter of fiscal 2023, the Company recorded an impairment to the prepaid refundable deposit of approximately $8.0 million and additional reserves of approximately $4.0 million for inventory in excess of demand forecasts, which reduced the estimated shortfall liability that was previously recorded by $12.0 million. There was no impact to the statements of operations in the second or third quarters of fiscal 2023. There were no material changes to the Company's estimated future purchase obligations under the current terms of the capacity reservation agreement during the current quarter.

In performing these assessments, the Company considered Company-specific forecasts, legal obligations, macroeconomic and geopolitical factors as well as market and industry trends. These factors include significant management judgment and estimates and, to the extent that these assumptions are incorrect or there are further declines in management's demand forecasts, additional charges may be recorded in future periods.

Legal Matters

The Company is involved in various legal proceedings and claims that have arisen in the ordinary course of business that have not been fully adjudicated. The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company regularly evaluates developments in its legal matters that could affect the amount of the previously accrued liability and records adjustments as appropriate. Although it is not possible to predict with certainty the outcome of the unresolved legal matters, it is the opinion of management that these matters will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position or results of operations. The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal matters is not material.

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(Unaudited)

9. REVENUE

The following table presents the Company's revenue disaggregated by geography, based on the location of the customers' headquarters (in thousands):

	Three Months Ended				Nine Months Ended
	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022
United States	$	459,194	$	569,494	$	1,470,231	$	1,449,667
China	124,799		273,582		630,012		1,227,782
Other Asia	72,002		136,089		390,690		364,855
Taiwan	53,072		76,432		274,707		253,713
Europe	34,214		58,360		171,056		183,539
Total revenue	$	743,281	$	1,113,957	$	2,936,696	$	3,479,556

The Company also disaggregates revenue by operating segments (refer to Note 11).

10. RESTRUCTURING

In fiscal 2023, the Company has taken actions to improve efficiencies in its operations and further align the organization with its strategic objectives.  The Company will continue to evaluate its operating footprint, cost structure and strategic opportunities.

The following table summarizes the charges resulting from the restructuring actions (in thousands):

	Three Months Ended December 31, 2022						Nine Months Ended December 31, 2022
	Cost of Goods Sold		Other Operating Expense		Total		Cost of Goods Sold		Other Operating Expense		Total
Contract termination and other costs	$	3,600	$	11,509	$	15,109	$	3,600	$	13,433	$	17,033
Asset impairment costs (1)	—		12,899		12,899		—		12,899		12,899
One-time employee termination benefits (2)	—		(623)		(623)		—		2,547		2,547
Total	$	3,600	$	23,785	$	27,385	$	3,600	$	28,879	$	32,479

(1) Relates to the adjustment of certain property and equipment to reflect its fair value.

(2) Includes reversal due to adjustment of previously accrued restructuring charges.

The following table summarizes the activity related to the Company's restructuring liabilities for the nine months ended December 31, 2022 (in thousands):

	One-Time Employee Termination Benefits		Contract Termination and Other Costs		Total
Accrued restructuring balance as of April 2, 2022	$	—	$	—	$	—
Costs incurred and charged to expense	2,547		17,033		19,580
Cash payments	(2,022)		(967)		(2,989)
Accrued restructuring balance as of December 31, 2022	$	525	$	16,066	$	16,591

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(Unaudited)

11. OPERATING SEGMENT INFORMATION

In the second quarter of fiscal 2023, the Company updated its organizational structure from two operating segments (Mobile Products and Infrastructure and Defense Products) to three operating segments (High Performance Analog ("HPA"), Connectivity and Sensors Group ("CSG") and Advanced Cellular Group ("ACG")). This change was made to more closely align similar technologies and applications with customers and end markets, which represents how the Company currently manages its three operating segments (which are also its reportable segments). The Company's Chief Executive Officer, who is also the Company's chief operating decision maker ("CODM"), allocates resources and evaluates the performance of each of the three operating segments primarily based on operating income. All prior-period segment data has been retrospectively adjusted to reflect these three operating segments.

HPA is a leading global supplier of RF and power management solutions for infrastructure, defense and aerospace, automotive power and other markets. HPA leverages a diverse portfolio of differentiated technologies and products to support multiyear growth trends, including electrification, renewable energy, the increasing semiconductor spend in defense and 5G deployments outside of China.

CSG is a leading global supplier of connectivity and sensor components and systems featuring multiple technologies such as UWB, Matter®, Bluetooth® Low Energy, Zigbee®, Thread®, Wi-Fi®, cellular IoT and MEMS-/BAW-based sensors. CSG combines the connectivity and sensors businesses formerly split between Mobile Products and Infrastructure and Defense Products. CSG’s markets include smart home, automotive connectivity, industrial automation, smartphones, wearables, gaming and other high-growth IoT connectivity and healthcare markets.

ACG is a leading global supplier of cellular RF solutions for smartphones, wearables, laptops, tablets and various other devices. ACG leverages world-class technology and systems-level expertise to deliver a broad portfolio of high performance cellular products to the world's leading smartphone and consumer electronics companies. ACG is a highly diversified supplier of custom and open market cellular solutions, serving iOS and Android original equipment manufacturers.

The "All other" category includes operating expenses such as stock-based compensation expense, amortization of intangible assets, restructuring related charges, acquisition and integration related costs, charges associated with a long-term capacity reservation agreement, fixed asset impairments, gain (loss) on sale of fixed assets, start-up costs and other miscellaneous corporate overhead expenses that the Company does not allocate to its reportable segments because these expenses are not included in the segment operating performance measures evaluated by the Company’s CODM. The CODM does not evaluate operating segments using discrete asset information. The Company’s operating segments do not record intercompany revenue. The Company does not allocate gains and losses from investments, interest expense, other (expense) income, or taxes to operating segments. Except as discussed above regarding the "All other" category, the Company’s accounting policies for segment reporting are the same as for the Company as a whole.

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(Unaudited)

The following tables present details of the Company’s operating and reportable segments and a reconciliation of the "All other" category (in thousands):

	Three Months Ended				Nine Months Ended
	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022
Revenue:
HPA	$	155,011	$	181,876	$	594,094	$	496,842
CSG	96,810		157,578		392,454		525,190
ACG	491,460		774,503		1,950,148		2,457,524
Total revenue	$	743,281	$	1,113,957	$	2,936,696	$	3,479,556
Operating income (loss):
HPA	$	29,836	$	56,951	$	181,102	$	140,953
CSG	(31,145)		21,109		(29,926)		77,287
ACG	99,862		293,948		569,439		956,215
All other	(89,824)		(75,998)		(348,465)		(218,983)
Operating income	8,729		296,010		372,150		955,472
Interest expense	(17,066)		(15,328)		(51,222)		(45,934)
Other income, net	5,562		2,532		2,714		24,077
(Loss) income before income taxes	$	(2,775)	$	283,214	$	323,642	$	933,615

	Three Months Ended				Nine Months Ended
	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022
Reconciliation of "All other" category:
Stock-based compensation expense	$	(19,708)	$	(19,307)	$	(86,911)	$	(73,236)
Amortization of intangible assets	(32,844)		(38,443)		(99,283)		(112,243)
Restructuring related charges (1)	(27,385)		—		(32,479)		—
Acquisition and integration related costs	(6,296)		(6,552)		(21,246)		(16,585)
Charges associated with a long-term capacity reservation agreement (2)	—		—		(110,000)		—
Other	(3,591)		(11,696)		1,454		(16,919)
Loss from operations for "All other"	$	(89,824)	$	(75,998)	$	(348,465)	$	(218,983)

(1) Refer to Note 10 for additional information.

(2) Refer to Note 8 for additional information.

12. INCOME TAXES

The Company’s income tax expense was $13.2 million and $82.1 million for the three and nine months ended December 31, 2022, respectively, and $67.0 million and $112.5 million, for the three and nine months ended January 1, 2022, respectively. The Company’s effective tax rate was (474.1)% and 25.4% for the three and nine months ended December 31, 2022, respectively, and 23.6% and 12.1% for the three and nine months ended January 1, 2022, respectively.

The Company's effective tax rate for the three and nine months ended December 31, 2022 differed from the statutory rate primarily due to tax rate differences in foreign jurisdictions, global intangible low tax income ("GILTI"), domestic tax credits generated and discrete tax items recorded during the period. A discrete tax expense of $2.2 million and a discrete tax benefit of $10.4 million was recorded for the three and nine months ended December 31, 2022. The discrete tax expense for the three months ended December 31, 2022 primarily resulted from foreign currency gains recognized for tax purposes. The discrete tax benefit for the nine months ended December 31, 2022 primarily resulted from certain charges associated with a long-term

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(Unaudited)

capacity reservation agreement (refer to Note 8 for further information), partially offset by foreign currency gains recognized for tax purposes.

The Company's effective tax rate for the three and nine months ended January 1, 2022 differed from the statutory rate primarily due to tax rate differences in foreign jurisdictions, GILTI, domestic tax credits and discrete tax items recorded during the period. A discrete tax expense of $42.5 million and $12.0 million was recorded during the three and nine months ended January 1, 2022, respectively. The discrete tax expense for the three and nine months ended January 1, 2022 primarily related to the revaluation of deferred tax assets due to the extension of the Company’s tax holiday in Singapore. The discrete tax expense for the nine months ended January 1, 2022 was partially offset by the recognition of previously unrecognized tax benefits due to the expiration of the statute of limitations, stock-based compensation deductions and net tax benefits associated with other non-recurring restructuring activities, including a discrete charge associated with the intercompany restructuring of the NextInput intellectual property.

13. NET (LOSS) INCOME PER SHARE

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except per share data):

	Three Months Ended				Nine Months Ended
	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022
Numerator:
Numerator for basic and diluted net (loss) income per share — net (loss) income available to common stockholders	$	(15,931)	$	216,263	$	241,568	$	821,078
Denominator:
Denominator for basic net (loss) income per share — weighted average shares	100,943		109,687		103,039		110,966
Effect of dilutive securities:
Stock-based awards	—		1,123		773		1,449
Denominator for diluted net (loss) income per share — adjusted weighted average shares and assumed conversions	100,943		110,810		103,812		112,4