Skyworks Solutions, Inc 10-Q for FY2020 Q1

Skyworks Solutions, Inc. (SWKS)

10-Q 2020-01-24 For: 2019-12-27

Added on April 09, 2026

About this 10-Q

Skyworks Solutions, Inc filed this 10-Q on January 24, 2020, covering the quarter ended December 27, 2019 (FY2020 Q1).

Headline figures

Quarter ended December 27, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $896.1M; down 7.8% from $972M a year earlier
Net income: $257.1M; down 9.8% from net income of $284.9M a year earlier
Diluted EPS: $1.50; down 6.3% from $1.60 a year earlier

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Delaware	04-2302115
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



20 Sylvan Road,	Woburn	Massachusetts	01801
(Address of principal executive offices)			(Zip Code)

(781)			376-3000
(Registrant’s telephone number, including area code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.25 per share	SWKS	Nasdaq Global Select Market



Large accelerated filer	þ	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company	☐	Emerging growth company	☐



	PAGE NO.
PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)	2

CONSOLIDATED STATEMENTS OF OPERATIONS	2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	3

CONSOLIDATED BALANCE SHEETS	4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY	5

CONSOLIDATED STATEMENTS OF CASH FLOWS	6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18

ITEM 4: CONTROLS AND PROCEDURES	19

PART II. OTHER INFORMATION	19

ITEM 1: LEGAL PROCEEDINGS	19

ITEM 1A: RISK FACTORS	19

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19

ITEM 6: EXHIBITS	21

SIGNATURES	22



	Three Months Ended
	December 27, 2019		December 28, 2018
Net revenue	$	896.1	$	972.0
Cost of goods sold	451.8		486.9
Gross profit	444.3		485.1
Operating expenses:
Research and development	107.7		109.2
Selling, general and administrative	55.4		47.8
Amortization of intangibles	3.1		7.4
Restructuring and other charges (benefit)	0.8		(0.2		)
Total operating expenses	167.0		164.2
Operating income	277.3		320.9
Other income, net	1.4		2.9
Income before income taxes	278.7		323.8
Provision for income taxes	21.6		38.9
Net income	$	257.1	$	284.9
Earnings per share:
Basic	$	1.51	$	1.61
Diluted	$	1.50	$	1.60
Weighted average shares:
Basic	170.2		176.6
Diluted	171.6		177.7

Cash dividends declared and paid per share	$	0.44	$	0.38



	Three Months Ended
	December 27, 2019			December 28, 2018
Net income	$	257.1		$	284.9
Other comprehensive income, net of tax
Fair value of investments	(0.1		)	0.1
Comprehensive income	$	257.0		$	285.0



	As of
	December 27, 2019			September 27, 2019
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	928.2		$	851.3
Marketable securities	262.2			203.3
Receivables, net of allowance of $0.8 and $0.8, respectively	426.8			465.3
Inventory	604.4			609.7
Other current assets	124.9			105.0
Total current assets	2,346.5			2,234.6
Property, plant and equipment, net	1,190.8			1,205.6
Operating lease right-of-use assets	159.1			—
Goodwill	1,189.8			1,189.8
Intangible assets, net	96.5			107.9
Deferred tax assets, net	39.9			40.8
Marketable securities	38.2			27.6
Other long-term assets	31.0			33.3
Total assets	$	5,091.8		$	4,839.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	138.5		$	190.5
Accrued compensation and benefits	79.9			76.0
Other current liabilities	114.8			107.5
Total current liabilities	333.2			374.0
Long-term tax liabilities	309.5			312.4
Long-term operating lease liabilities	150.9			—
Other long-term liabilities	30.9			30.9
Total liabilities	824.5			717.3
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, no par value: 25.0 shares authorized, no shares issued	—			—
Common stock, $0.25 par value: 525.0 shares authorized; 231.5 shares issued and 170.5 shares outstanding at December 27, 2019, and 230.2 shares issued and 170.1 shares outstanding at September 27, 2019	42.6			42.5
Additional paid-in capital	3,251.9			3,188.0
Treasury stock, at cost	(3,513.8		)	(3,412.9		)
Retained earnings	4,494.6			4,312.6
Accumulated other comprehensive loss	(8.0		)	(7.9		)
Total stockholders’ equity	4,267.3			4,122.3
Total liabilities and stockholders’ equity	$	5,091.8		$	4,839.6



	Shares of common stock		Par value of common stock			Shares of treasury stock	Value of treasury stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss			Total stockholders’ equity
Balance at September 27, 2019	170.1		$	42.5		60.1	$	(3,412.9	)	$	3,188.0	$	4,312.6		$	(7.9	)	$	4,122.3
Net income	—		—			—	—			—		257.1			—			257.1
Exercise and settlement of share based awards, net of shares withheld for taxes	1.1		0.3			0.3	(26.7		)	34.6		—			—			8.2
Share-based compensation expense	—		—			—	—			29.1		—			—			29.1
Stock repurchase program	(0.7	)	(0.2		)	0.7	(74.2		)	0.2		—			—			(74.2		)
Dividends declared	—		—			—	—			—		(75.1		)	—			(75.1		)
Other comprehensive loss	—		—			—	—			—		—			(0.1		)	(0.1		)
Balance at December 27, 2019	170.5		$	42.6		61.1	$	(3,513.8	)	$	3,251.9	$	4,494.6		$	(8.0	)	$	4,267.3

Balance at September 28, 2018	177.4		$	44.4		51.0	$	(2,732.5	)	$	3,061.0	$	3,732.9		$	(8.8	)	$	4,097.0
Net income	—		—			—	—			—		284.9			—			284.9
Exercise and settlement of share based awards, net of shares withheld for taxes	0.7		0.1			0.2	(19.6		)	5.1		—			—			(14.4		)
Share-based compensation expense	—		—			—	—			21.3		—			—			21.3
Stock repurchase program	(4.0	)	(1.0		)	4.0	(284.0		)	1.0		—			—			(284.0		)
Dividends declared	—		—			—	—			—		(67.1		)	—			(67.1		)
Other comprehensive income	—		—			—	—			—		—			0.6			0.6
Balance at December 28, 2018	174.1		$	43.5		55.2	$	(3,036.1	)	$	3,088.4	$	3,950.7		$	(8.2	)	$	4,038.3



	Current				Noncurrent
Available for sale:	December 27, 2019		September 27, 2019		December 27, 2019		September 27, 2019
U.S. Treasury and government	$	58.6	$	34.2	$	27.7	$	20.0
Corporate bonds and notes	94.9		66.2		10.5		5.9
Municipal bonds	108.7		102.9		—		1.7
Total	$	262.2	$	203.3	$	38.2	$	27.6


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


•	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.


•	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.



	As of December 27, 2019								As of September 27, 2019
			Fair Value Measurements								Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents*	$	928.2	$	852.5	$	75.7	$	—	$	851.3	$	809.5	$	41.8	$	—
U.S. Treasury and government securities	86.3		46.5		39.8		—		54.2		28.4		25.8		—
Corporate bonds and notes	105.4		—		105.4		—		72.1		—		72.1		—
Municipal bonds	108.7		—		108.7		—		104.6		—		104.6		—
Total	$	1,228.6	$	899.0	$	329.6	$	—	$	1,082.2	$	837.9	$	244.3	$	—



		As of							As of
	Weighted Average Amortization Period (Years)	December 27, 2019							September 27, 2019
	Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	5.0	$	18.2	$	(13.0	)	$	5.2	$	25.6	$	(19.5	)	$	6.1
Developed technology and other	4.1	94.4		(56.9		)	37.5		94.4		(48.9		)	45.5
Trademarks	3.0	1.6		(1.5		)	0.1		1.6		(1.3		)	0.3
Technology licenses	3.1	24.9		(7.1		)	17.8		24.9		(4.8		)	20.1
IPR&D		35.9		—			35.9		35.9		—			35.9
Total intangible assets		$	175.0	$	(78.5	)	$	96.5	$	182.4	$	(74.5	)	$	107.9



	Three Months Ended
	December 27, 2019		December 28, 2018
United States	$	590.4	$	600.1
China	168.4		194.5
South Korea	59.0		99.1
Taiwan	42.0		40.7
Europe, Middle East and Africa	30.3		32.7
Other Asia-Pacific	6.0		4.9
Total	$	896.1	$	972.0



	As of
	December 27, 2019		September 27, 2019
Raw materials	$	22.8	$	24.4
Work-in-process	376.5		336.2
Finished goods	202.8		245.7
Finished goods held on consignment by customers	2.3		3.4
Total inventory	$	604.4	$	609.7



	As of
	December 27, 2019			September 27, 2019
Land and improvements	$	11.8		$	11.7
Buildings and improvements	392.0			354.4
Furniture and fixtures	38.0			33.8
Machinery and equipment	2,346.6			2,311.5
Construction in progress	157.0			172.5
Total property, plant and equipment, gross	2,945.3			2,883.9
Accumulated depreciation	(1,754.5		)	(1,678.3		)
Total property, plant and equipment, net	$	1,190.8		$	1,205.6



	Remaining 2020		2021		2022		2023		2024		Thereafter
Amortization expense, cost of goods sold	$	15.6	$	4.9	$	0.9	$	1.0	$	1.0	$	1.9
Amortization expense, operating expense	$	17.4	$	11.7	$	4.2	$	0.1	$	0.1	$	1.8
Total amortization expense	$	33.0	$	16.6	$	5.1	$	1.1	$	1.1	$	3.7



	Three Months Ended
	December 27, 2019
Operating cash flows from operating leases	$	5.1
Operating lease assets obtained in exchange for new lease liabilities	20.7



	December 27, 2019
2020	$	11.8
2021	23.4
2022	22.1
2023	21.8
2024	20.1
Thereafter	89.7
Total lease payments	188.9
Less: imputed interest	(28.7		)
Present value of lease liabilities	160.2
Less: current portion (included in other current assets)	(9.3		)
Total	$	150.9



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



	December 27, 2019
Weighted-average remaining lease term (years)	8.26
Weighted-average discount rate	3.37	%



	Three Months Ended
	December 27, 2019		Change	December 28, 2018
(dollars in millions)
Net revenue	$	896.1	(7.8)%	$	972.0



	Three Months Ended
(in millions)	December 27, 2019			December 28, 2018
Cash and cash equivalents at beginning of period	$	851.3		$	733.3
Net cash provided by operating activities	398.4			549.0
Net cash provided by (used in) investing activities	(180.5		)	171.5
Net cash used in financing activities	(141.0		)	(368.1		)
Cash and cash equivalents at end of period	$	928.2		$	1,085.7



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
9/28/19-10/25/19	279,111(2)	$77.61	278,064	$1.60 billion
10/26/19-11/22/19	264,799(3)	$99.48	—	$1.60 billion
11/23/19-12/27/19	466,657(4)	$113.25	463,724	$1.55 billion
Total	1,197,144		741,788



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


10.1*+	Fiscal Year 2020 Executive Incentive Plan					X

10.2*	Change in Control / Severance Agreement, dated April 13, 2018, between the Company and Kari A. Durham					X

10.3*	Amendment to International Assignment Agreement, dated November 18, 2019, between the Company and Peter L. Gammel					X

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

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

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

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

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

101.SCH	Inline XBRL Taxonomy Extension Schema Document					X

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					X

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					X

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document					X

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document					X

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




		SKYWORKS SOLUTIONS, INC.

Date:	January 24, 2020	By:	/s/ Liam K. Griffin
			Liam K. Griffin
			President and Chief Executive Officer
			(Principal Executive Officer)

		By:	/s/ Kris Sennesael
			Kris Sennesael
			Senior Vice President and Chief Financial Officer
			(Principal Accounting and Financial Officer)