NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Skyworks Solutions, Inc., together with its consolidated subsidiaries, (“Skyworks” or the “Company”) is empowering the wireless networking revolution. The Company’s highly innovative analog semiconductors are connecting people, places, and things, spanning a number of new and previously unimagined applications within the automotive, broadband, cellular infrastructure, connected home, 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 October 2, 2015, filed with the SEC on November 24, 2015, as amended by Amendment No. 1 to such Annual Report on Form 10-K, filed with the SEC on February 1, 2016 (the “2015 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 and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Significant judgment is required in determining the recognition and/or disclosure of reserves for and fair value of items such as inventory, income taxes, share-based compensation, loss contingencies, subsequent events (which the Company has evaluated through the date of issuance of these unaudited consolidated financial statements), bad debt allowances, intangible assets associated with business combinations, and overall fair value assessments of assets and liabilities, particularly those classified as Level 2 or Level 3 in the fair value hierarchy. In addition, significant 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 tests. Actual results could differ significantly from these estimates.
The Company’s fiscal year ends on the Friday closest to September 30. Fiscal year 2016 consists of
52
weeks and ends on
September 30, 2016
. Fiscal year 2015 consisted of
52
weeks and ended on
October 2, 2015
. The
third
quarters of fiscal year 2016 and fiscal year 2015 each consisted of
13
weeks and ended on
July 1, 2016
, and
July 3, 2015
, respectively.
2. FAIR VALUE
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:
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•
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Level 1 - Quoted prices in active markets for identical assets or liabilities.
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•
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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 markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data.
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•
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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 Measured and Recorded at Fair Value on a Recurring Basis
The Company measures certain assets and liabilities at fair value on a recurring basis such as its financial instruments and derivatives. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the
three and nine months ended
July 1, 2016
.
Level 3 assets include an auction rate security that is classified as available for sale and recorded in other current assets. It is scheduled to mature in 2017. Due to the illiquid market for this security the Company has classified the carrying value as a Level
3 asset with the difference between the par and carrying value being categorized as a temporary loss and recorded in accumulated other comprehensive loss.
On August 1, 2014, the Company entered into a joint venture with Panasonic Corporation (“Panasonic”) with respect to the design, manufacture and sale of Panasonic filter products. The Company had the right to acquire Panasonic’s interest in the joint venture following the two-year anniversary of the acquisition (the “purchase option”). As a result of the purchase option, the Company consolidated the joint venture’s operations in their entirety as of July 1, 2016.
On June 24, 2016, the Company formally notified Panasonic that it intended to exercise the purchase option and on August 1, 2016, the Company exercised the purchase option and paid Panasonic cash of
$76.5 million
. As a result of exercising the purchase option, the Company owns
100%
of FilterCo. As of July 1, 2016, the amount of the purchase option was fixed however; it contained a foreign exchange adjustment (“foreign exchange collar”). In the event the exchange rate between the United States dollar and the Japanese yen fluctuates outside of a predetermined range upon the exercise of the purchase option, the total amount the Company owes to Panasonic could change. This feature was intended for the parties to share in foreign exchange exposure outside of this predetermined range. The Company calculated the present value of this obligation as of August 1, 2014, the date the joint venture was formed, and included that amount in its preliminary determination of goodwill using unobservable inputs and management judgment, therefore categorizing the obligation as a Level 3 liability. The difference between the calculated present value and the fixed settlement amount was accreted to earnings ratably over the purchase option period. The carrying value of this liability is included in other current liabilities on the consolidated balance sheet as of July 1, 2016.
The Company held currency call and put options (“foreign currency options”) that as of July 1, 2016, were intended to hedge the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese yen related to the foreign exchange collar. The Company netted the fair value of the foreign currency options and the fair value of the foreign exchange collar separately as either a current asset or liability with the total change in fair value being recorded to earnings each period. The Company measured the fair value of these derivatives using current spot rates and assumptions such as yield curves and option volatilities. As of July 1, 2016, these derivatives were netted on the consolidated balance sheet and classified as Level 3 assets and liabilities accordingly. The net change in fair value had a de minimis impact on the consolidated results. The foreign currency options expired unexercised on July 29, 2016, as the call and put were out of the money.
As of
July 1, 2016
, assets and liabilities recorded at fair value on a recurring basis consisted of the following (in millions):
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As of July 1, 2016
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As of October 2, 2015
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Fair Value Measurements
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Fair Value Measurements
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Total
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Level 1
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Level 2
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Level 3
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Total
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Level 1
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Level 2
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Level 3
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Assets
|
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Money market funds
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$
|
318.6
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|
$
|
318.6
|
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|
$
|
—
|
|
|
$
|
—
|
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|
$
|
464.6
|
|
|
$
|
464.6
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|
|
$
|
—
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|
|
$
|
—
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Auction rate security
|
2.3
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—
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—
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2.3
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2.3
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—
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—
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2.3
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Foreign currency derivative assets
|
0.1
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—
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—
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0.1
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3.3
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—
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—
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3.3
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Total
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$
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321.0
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$
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318.6
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$
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—
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$
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2.4
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$
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470.2
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$
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464.6
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$
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—
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$
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5.6
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Liabilities
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Purchase obligation recorded for business combinations
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$
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76.4
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$
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—
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$
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—
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$
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76.4
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|
$
|
75.4
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$
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—
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$
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—
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$
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75.4
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Foreign currency derivative liabilities
|
—
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—
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—
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—
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2.8
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—
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—
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2.8
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Contingent consideration liability recorded for business combinations
|
8.2
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—
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—
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8.2
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0.5
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—
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—
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0.5
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Total
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$
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84.6
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$
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—
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$
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—
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|
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$
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84.6
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|
$
|
78.7
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$
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—
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$
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—
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$
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78.7
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The following table summarizes changes to the fair value of the Level 3 assets (in millions):
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Auction rate security
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Foreign currency derivative
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Balance as of October 2, 2015
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$
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2.3
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$
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3.3
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Changes in fair value included in earnings
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—
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(3.2
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)
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Balance as of July 1, 2016
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$
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2.3
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$
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0.1
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The following table summarizes changes to the fair value of the Level 3 liabilities (in millions):
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Purchase obligation
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Foreign currency derivative
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Contingent consideration
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Balance as of October 2, 2015
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$
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75.4
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$
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2.8
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$
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0.5
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Increases to Level 3 liabilities
|
—
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—
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7.7
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Changes in fair value included in earnings
|
1.0
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(2.8
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)
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—
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Balance as of July 1, 2016
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$
|
76.4
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$
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—
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$
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8.2
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The increase in Level 3 liabilities relates to contingent consideration associated with two separate business combinations completed during the three and nine months ended July 1, 2016. For further information regarding business combinations see Note 11 to Item 1 of this quarterly report on Form 10-Q.
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 subsequently re-measured if there are indicators of impairment. There were no indicators of impairment identified during the
three and nine months ended
July 1, 2016
.
3. INVENTORY
Inventory consists of the following (in millions):
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As of
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July 1,
2016
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October 2,
2015
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Raw materials
|
$
|
25.2
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$
|
30.0
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Work-in-process
|
275.2
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192.4
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Finished goods
|
126.3
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38.0
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Finished goods held on consignment by customers
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10.9
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|
7.5
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Total inventory
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$
|
437.6
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$
|
267.9
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4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net consists of the following (in millions):
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As of
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July 1,
2016
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October 2,
2015
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Land and improvements
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$
|
11.6
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|
$
|
11.6
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Buildings and improvements
|
116.3
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|
101.7
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Furniture and fixtures
|
28.8
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|
26.9
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Machinery and equipment
|
1,469.3
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|
1,285.4
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Construction in progress
|
126.8
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|
159.8
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Total property, plant and equipment, gross
|
1,752.8
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|
1,585.4
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Accumulated depreciation
|
(908.3
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)
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|
(759.0
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)
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Total property, plant and equipment, net
|
$
|
844.5
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|
$
|
826.4
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5. GOODWILL AND INTANGIBLE ASSETS
The changes to the carrying amount of goodwill during the
three and nine months ended
July 1, 2016
, are related to the business combinations which closed during the period. For further information regarding business combinations see Note 11 to Item 1 of this quarterly report on Form 10-Q.
The Company tests its goodwill and non-amortizing trademarks 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 or non-amortizing trademarks may be impaired. There were no indicators of impairment noted during the
three and nine months ended
July 1, 2016
.
Intangible assets consist of the following (in millions):
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As of
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As of
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Weighted
Average
Amortization
Period Remaining (Years)
|
July 1, 2016
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|
October 2, 2015
|
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Gross
Carrying
Amount
|
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Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
Customer relationships
|
2.2
|
$
|
60.3
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|
$
|
(55.3
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)
|
|
$
|
5.0
|
|
|
$
|
57.2
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|
|
$
|
(48.7
|
)
|
|
$
|
8.5
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|
Developed technology and other
|
5.8
|
146.8
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|
(85.2
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)
|
|
61.6
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|
|
99.7
|
|
|
(64.8
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)
|
|
34.9
|
|
Trademarks
|
Indefinite
|
1.6
|
|
|
—
|
|
|
1.6
|
|
|
1.6
|
|
|
—
|
|
|
1.6
|
|
Total intangible assets
|
|
$
|
208.7
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|
|
$
|
(140.5
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)
|
|
$
|
68.2
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|
|
$
|
158.5
|
|
|
$
|
(113.5
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)
|
|
$
|
45.0
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|
The increase in gross and net amounts of intangible assets are related to the business combinations which closed during the period. For further information regarding business combinations see Note 11 to Item 1 of this quarterly report on Form 10-Q.
Annual amortization expense for the next five years related to intangible assets is expected to be as follows (in millions):
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Remaining 2016
|
|
2017
|
|
2018
|
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2019
|
|
2020
|
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Thereafter
|
Amortization expense
|
$
|
9.8
|
|
|
$
|
22.7
|
|
|
$
|
10.3
|
|
|
$
|
8.6
|
|
|
$
|
6.7
|
|
|
$
|
8.5
|
|
6. INCOME TAXES
The provision for income taxes consists of the following components (in millions):
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Three Months Ended
|
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Nine Months Ended
|
|
July 1,
2016
|
|
July 3,
2015
|
|
July 1,
2016
|
|
July 3,
2015
|
United States income taxes
|
$
|
43.7
|
|
|
$
|
44.1
|
|
|
$
|
137.2
|
|
|
$
|
142.2
|
|
Foreign income taxes
|
7.5
|
|
|
7.9
|
|
|
23.9
|
|
|
16.1
|
|
Provision for income taxes
|
$
|
51.2
|
|
|
$
|
52.0
|
|
|
$
|
161.1
|
|
|
$
|
158.3
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
21.7
|
%
|
|
20.1
|
%
|
|
17.7
|
%
|
|
21.8
|
%
|
The difference between the Company’s effective tax rate and the
35%
United States federal statutory rate for the
three and nine months ended
July 1, 2016
, resulted primarily from foreign earnings taxed at rates lower than the federal statutory rate, the domestic production activities deduction, research and experimentation tax credits earned, and benefits from the settlement of the Internal Revenue Service (“IRS”) audit of the fiscal years 2012 and 2013 income tax returns, partially offset by an increase in the Company’s tax expense related to a change in the Company’s current year reserve for uncertain tax positions.
During the nine months ended July 1, 2016, the Company concluded an IRS examination of its federal income tax returns for fiscal years 2012 and 2013. The Company agreed to various adjustments to its fiscal year 2012 and 2013 tax returns that resulted in the recognition of current year tax expense of
$2.6 million
during the nine months ended July 1, 2016. With the conclusion of the audit, the Company decreased the reserve for uncertain tax positions which resulted in the recognition of an income tax benefit of
$24.0 million
in fiscal year 2016.
In December 2015, the United States Congress enacted the Protecting Americans from Tax Hikes Act of 2015, extending numerous tax provisions that had expired. This legislation included a permanent extension of the federal research and experimentation tax credit. As a result of the enactment of this legislation,
$10.2 million
of federal research and experimentation tax credits that were earned in fiscal year 2015 reduced the Company’s tax expense and tax rate during the nine months ended July 1, 2016.
The difference between the Company’s effective tax rate and the
35%
United States federal statutory rate for the
three and nine months ended
July 3, 2015
, resulted primarily from foreign earnings taxed at rates lower than the federal statutory rate, the domestic production activities deduction, and research and experimentation tax credits earned, partially offset by an increase in the Company’s tax expense related to a change in the Company’s reserve for uncertain tax positions.
In December 2014, the United States Congress enacted the Tax Increase Prevention Act of 2014, extending numerous tax provisions that had expired through the end of 2014. As a result of the enactment of this legislation,
$11.0 million
of federal research and experimentation tax credits that were earned in fiscal year 2014 reduced the Company’s tax expense and tax rate during the nine months ended July 3, 2015.
7. 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. Legal costs are expensed as incurred.
The Company monitors the status of legal proceedings and other contingencies on an ongoing basis to ensure amounts are recognized and/or disclosed in its financial statements and footnotes as required by Accounting Standards Codification 450,
Loss Contingencies
. At the time of this filing, the Company had not recorded any accrual for loss contingencies associated with its legal proceedings as losses resulting from such matters were determined not to be probable. The Company does not believe there are any pending legal proceedings that are reasonably possible to result in a material loss. We are 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.
Guarantees and Indemnifications
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 condition or results of operations.
8. STOCKHOLDERS’ EQUITY
Stock Repurchase Program
On November 10, 2015, the Board of Directors approved a stock repurchase program, pursuant to which the Company is authorized to repurchase up to
$400.0 million
of its common stock from time to time on the open market or in privately negotiated transactions, as permitted by securities laws and other legal requirements. During the three months ended
July 1, 2016
, the Company paid
$191.9 million
(including commissions) in connection with the repurchase of
3.0 million
shares of its common stock (paying an average price of
$63.96
per share). During the nine months ended
July 1, 2016
, the Company paid
$327.0 million
(including commissions) in connection with the repurchase of
5.0 million
shares of its common stock (paying an average price of
$65.40
per share). As of
July 1, 2016
,
$73.0 million
remained available under the existing stock repurchase authorization.
On
July 19, 2016
, the Board of Directors approved a new stock repurchase program, pursuant to which the Company is authorized to repurchase up to
$400.0 million
of its common stock from time to time prior to
July 19, 2018
, on the open market or in privately negotiated transactions, as permitted by securities laws and other legal requirements. This newly authorized stock repurchase plan replaces in its entirety the aforementioned November 10, 2015 plan.
Dividends
On
July 21, 2016
, the Company announced that the Board of Directors had declared a cash dividend on its common stock of
$0.28
per share, payable on
August 25, 2016
, to the Company’s stockholders of record as of the close of business on
August 4, 2016
. During the three and nine months ended
July 1, 2016
, dividends charged to retained earnings were as follows (in millions, except per share data):
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|
|
|
|
|
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Per share
|
|
Total
|
First quarter
|
$
|
0.26
|
|
|
$
|
49.8
|
|
Second quarter
|
0.26
|
|
|
49.3
|
|
Third quarter
|
0.26
|
|
|
49.5
|
|
Total
|
$
|
0.78
|
|
|
$
|
148.6
|
|
Share-based Compensation
The following table summarizes the share-based compensation expense by line item in the Statement of Operations (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
July 1,
2016
|
|
July 3,
2015
|
|
July 1,
2016
|
|
July 3,
2015
|
Cost of sales
|
$
|
2.2
|
|
|
$
|
3.6
|
|
|
$
|
9.4
|
|
|
$
|
10.6
|
|
Research and development
|
7.7
|
|
|
11.7
|
|
|
23.9
|
|
|
33.9
|
|
Selling, general and administrative
|
8.0
|
|
|
10.6
|
|
|
25.0
|
|
|
29.9
|
|
Total share-based compensation
|
$
|
17.9
|
|
|
$
|
25.9
|
|
|
$
|
58.3
|
|
|
$
|
74.4
|
|
9. 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
|
|
July 1,
2016
|
|
July 3,
2015
|
|
July 1,
2016
|
|
July 3,
2015
|
Net income
|
$
|
185.0
|
|
|
$
|
207.4
|
|
|
$
|
748.4
|
|
|
$
|
569.1
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic
|
188.7
|
|
|
190.0
|
|
|
189.8
|
|
|
189.5
|
|
Dilutive effect of equity based awards
|
3.0
|
|
|
5.4
|
|
|
3.4
|
|
|
5.4
|
|
Weighted average shares outstanding – diluted
|
191.7
|
|
|
195.4
|
|
|
193.2
|
|
|
194.9
|
|
|
|
|
|
|
|
|
|
Net income per share – basic
|
$
|
0.98
|
|
|
$
|
1.09
|
|
|
$
|
3.94
|
|
|
$
|
3.00
|
|
Net income per share – diluted
|
$
|
0.97
|
|
|
$
|
1.06
|
|
|
$
|
3.87
|
|
|
$
|
2.92
|
|
|
|
|
|
|
|
|
|
Anti-dilutive common stock equivalents
|
1.8
|
|
|
0.1
|
|
|
1.5
|
|
|
0.4
|
|
Basic earnings per share are calculated by dividing net income by the weighted average number of shares of the Company’s common stock outstanding. 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 1, 2016
, and
July 3, 2015
, using the treasury stock method. 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.
10. ASSETS HELD FOR SALE
During the three and nine months ended July 1, 2016, management determined not to proceed with the sale of the asset group that had been previously classified as held for sale on the consolidated balance sheet. As a result of the decision to retain the asset group, the Company concluded that it was unlikely that a disposal of the asset group would occur within 12 months, and accordingly, the asset group has been reclassified out of the held for sale designation at July 1, 2016. The decision not to proceed with the sale of the asset group had an immaterial impact on the results of operations for the three and nine months ended July 1, 2016.
11. BUSINESS COMBINATIONS
On October 29, 2015, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”) with PMC-Sierra Inc. (“PMC”), providing for, subject to the terms and conditions of the Merger Agreement, the cash acquisition of PMC by the Company. On November 23, 2015, PMC notified the Company that it had terminated the Merger Agreement. As a result, on November 24, 2015, PMC paid the Company a termination fee of
$88.5 million
pursuant to the Merger Agreement.
During the three and nine months ended July 1, 2016, the Company acquired two businesses for total aggregate cash consideration of
$55.0 million
together with future contingent payments. The future contingent consideration payments range from
zero
to
$10.0 million
and are based upon the achievement of specified objectives that are payable up to two years from the anniversary of the acquisitions, which at closing had an estimated fair value of
$7.7 million
. In allocating the total purchase consideration for these acquisitions based on preliminary estimated fair values, the Company recorded
$9.1 million
of goodwill and
$41.2 million
of identifiable intangibles assets. Intangible assets acquired primarily included customer relationships and developed technology with weighted average useful lives of
4.0 years
. These acquisitions are treated as asset purchases for tax purposes and accordingly, the goodwill resulting from these acquisitions is expected to be deductible.
The fair value estimates for the assets acquired and liabilities assumed for acquisitions completed during the three and nine months ended July 1, 2016 were based upon preliminary calculations and valuations, and the Company‘s estimates and assumptions for each of these acquisitions are subject to change as it obtains additional information during the respective measurement periods (up to one year from the respective acquisition dates). The primary areas of preliminary estimates that were not yet finalized related to fixed assets and intangible assets acquired.
Net revenue and net income from these acquisitions has been included in the Consolidated Statements of Operations from the acquisition date through the end of the fiscal quarter on July 1, 2016. The impact of these acquisitions to the ongoing operations on the Company’s net revenue and net income were not significant for the period ended July 1, 2016. The Company incurred immaterial transaction-related costs during the period ended July 1, 2016, which were included within the sales, administrative and general expense.
12. RESTRUCTURING AND OTHER CHARGES
During the three and nine months ended July 1, 2016, the Company implemented a restructuring plan to reduce redundancies associated with the acquisitions made during the period and recorded
$4.0 million
related to employee severance. The Company began formulating the restructuring plan prior to the acquisitions and none of these costs were included in the preliminary purchase accounting. The Company anticipates making substantially all of the cash payments during the fourth fiscal quarter and does not expect any further contingencies related to the restructuring plan. Charges associated with the restructuring plan are categorized in the “FY16 restructuring programs” in the table below.
The Company recorded other immaterial restructuring charges related to severance costs associated with separate organizational restructuring plans during the three and nine months ended July 1, 2016. The Company does not anticipate any further contingencies related to these plans and has summarized the charges and cash payments under “Other restructuring” in the table below.
The following tables present a summary of the Company’s restructuring activity (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended July 1, 2016
|
|
Balance at April 1, 2016
|
|
Current Charges
|
|
Cash Payments
|
|
Other
|
|
Balance at July 1, 2016
|
FY16 restructuring programs
|
|
|
|
|
|
|
|
|
|
|
Employee severance costs
|
|
$
|
—
|
|
|
$
|
4.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.0
|
|
FY13 restructuring programs
|
|
|
|
|
|
|
|
|
|
|
Employee severance costs
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Other restructuring
|
|
|
|
|
|
|
|
|
|
|
Employee severance costs, lease and other contractual obligations
|
|
0.4
|
|
|
0.9
|
|
|
(0.9
|
)
|
|
0.1
|
|
|
0.5
|
|
Total
|
|
$
|
0.5
|
|
|
$
|
4.9
|
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
$
|
4.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended July 1, 2016
|
|
Balance at October 2, 2015
|
|
Current Charges
|
|
Cash Payments
|
|
Other
|
|
Balance at July 1, 2016
|
FY16 restructuring programs
|
|
|
|
|
|
|
|
|
|
|
Employee severance costs
|
|
$
|
—
|
|
|
$
|
4.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.0
|
|
FY13 restructuring programs
|
|
|
|
|
|
|
|
|
|
|
Employee severance costs
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Other restructuring
|
|
|
|
|
|
|
|
|
|
|
Employee severance costs, lease and other contractual obligations
|
|
0.3
|
|
|
1.2
|
|
|
(1.1
|
)
|
|
0.1
|
|
|
0.5
|
|
Total
|
|
$
|
0.4
|
|
|
$
|
5.2
|
|
|
$
|
(1.1
|
)
|
|
$
|
—
|
|
|
$
|
4.5
|
|