rfmd-20210102
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Table of Contents
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 January 2, 2021
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
https://cdn.kscope.io/eec2068976a07f045f137e947bc18ca0-rfmd-20210102_g1.jpg
Qorvo, Inc.
(Exact name of registrant as specified in its charter) 
Delaware46-5288992
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification no.)
7628 Thorndike Road
Greensboro,North Carolina27409-9421
      (Address of principal executive office)(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par valueQRVOThe 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 filerþAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company


Table of Contents
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 25, 2021, there were 113,262,707 shares of the registrant’s common stock outstanding.


Table of Contents
QORVO, INC. AND SUBSIDIARIES
INDEX
 
 Page    

2

Table of Contents
PART I — FINANCIAL INFORMATION
ITEM 1.
QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
 
January 2, 2021March 28, 2020
ASSETS
Current assets:
Cash and cash equivalents $1,234,415 $714,939 
Accounts receivable, net of allowance of $560 and $55 as of January 2, 2021 and March 28, 2020, respectively507,078 367,172 
Inventories
479,340 517,198 
Prepaid expenses42,793 37,872 
Other receivables12,621 15,016 
Other current assets
46,010 38,305 
Total current assets2,322,257 1,690,502 
Property and equipment, net of accumulated depreciation of $1,519,829 and $1,415,397 as of January 2, 2021 and March 28, 2020, respectively1,232,374 1,259,203 
Goodwill2,650,912 2,614,274 
Intangible assets, net
656,239 808,892 
Long-term investments31,271 22,515 
Other non-current assets148,325 165,296 
Total assets$7,041,378 $6,560,682 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$301,576 $246,954 
Accrued liabilities214,532 217,801 
Current portion of long-term debt5,091 6,893 
Other current liabilities92,699 67,355 
Total current liabilities613,898 539,003 
Long-term debt1,743,794 1,567,231 
Other long-term liabilities179,985 161,783 
Total liabilities2,537,677 2,268,017 
Commitments and contingent liabilities (Note 9)
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; 113,299 and 114,625 shares issued and outstanding at January 2, 2021 and March 28, 2020, respectively4,262,883 4,290,377 
Accumulated other comprehensive income, net of tax47,489 2,288 
Retained earnings193,329  
Total stockholders’ equity4,503,701 4,292,665 
Total liabilities and stockholders’ equity$7,041,378 $6,560,682 
See accompanying Notes to Condensed Consolidated Financial Statements.
3

Table of Contents
 QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 Three Months EndedNine Months Ended
 January 2, 2021December 28, 2019January 2, 2021December 28, 2019
Revenue$1,094,834 $869,073 $2,942,577 $2,451,369 
Cost of goods sold557,082 500,962 1,587,486 1,465,387 
Gross profit537,752 368,111 1,355,091 985,982 
Operating expenses:
Research and development136,697 122,851 423,110 357,385 
Selling, general and administrative93,139 81,205 289,115 258,458 
Other operating expense8,713 10,986 29,307 49,077 
Total operating expenses238,549 215,042 741,532 664,920 
Operating income299,203 153,069 613,559 321,062 
Interest expense(17,453)(16,900)(59,788)(41,457)
Interest income467 2,874 2,929 8,112 
Other (expense) income, net(58,701)44,148 (36,106)42,737 
Income before income taxes223,516 183,191 520,594 330,454 
Income tax expense(22,481)(21,835)(85,720)(46,519)
Net income$201,035 $161,356 $434,874 $283,935 
Net income per share:
Basic $1.77 $1.39 $3.80 $2.42 
Diluted $1.74 $1.36 $3.74 $2.37 
Weighted average shares of common stock outstanding:
Basic 113,811 116,129 114,292 117,436 
Diluted 115,690 118,455 116,257 119,712 

See accompanying Notes to Condensed Consolidated Financial Statements.

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QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 Three Months EndedNine Months Ended
 January 2, 2021December 28, 2019January 2, 2021December 28, 2019
Net income$201,035 $161,356 $434,874 $283,935 
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
20,837 781 45,125 (674)
Reclassification adjustments, net of tax:
Foreign currency loss realized upon liquidation of subsidiary15  15 353 
Amortization of pension actuarial loss
21 34 61 102 
Other comprehensive income (loss)20,873 815 45,201 (219)
Total comprehensive income$221,908 $162,171 $480,075 $283,716 
See accompanying Notes to Condensed Consolidated Financial Statements.


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QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)


Accumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)
Common Stock
Three Months EndedSharesAmountTotal
Balance, October 3, 2020114,111 $4,267,987 $26,616 $112,563 $4,407,166 
Net income
   201,035 201,035 
Other comprehensive income
  20,873  20,873 
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
63 372   372 
Issuance of common stock in connection with employee stock purchase plan
188 15,608   15,608 
Repurchase of common stock, including transaction costs
(1,063)(39,754) (120,269)(160,023)
Stock-based compensation
— 18,670   18,670 
Balance, January 2, 2021113,299 $4,262,883 $47,489 $193,329 $4,503,701 
Balance, September 28, 2019116,294 $4,471,656 $(7,658)$(198,504)$4,265,494 
Net income
   161,356 161,356 
Other comprehensive income  815  815 
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
490 10,150   10,150 
Issuance of common stock in connection with employee stock purchase plan
213 13,710   13,710 
Repurchase of common stock, including transaction costs
(1,259)(125,012)  (125,012)
Stock-based compensation
— 12,864   12,864 
Balance, December 28, 2019115,738 $4,383,368 $(6,843)$(37,148)$4,339,377 

See accompanying Notes to Condensed Consolidated Financial Statements.

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QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)


Accumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)
Common Stock
Nine Months EndedSharesAmountTotal
Balance, March 28, 2020114,625 $4,290,377 $2,288 $ $4,292,665 
Net income
   434,874 434,874 
Other comprehensive income
  45,201  45,201 
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
889 (31,999)  (31,999)
Issuance of common stock in connection with employee stock purchase plan
417 31,366   31,366 
Cumulative-effect adoption of ASU 2016-13
   (38)(38)
Repurchase of common stock, including transaction costs
(2,632)(98,584) (241,487)(340,071)
Stock-based compensation
— 71,723   71,723 
Other
   (20)(20)
Balance, January 2, 2021113,299 $4,262,883 $47,489 $193,329 $4,503,701 
Balance, March 30, 2019119,063 $4,687,455 $(6,624)$(321,152)$4,359,679 
Net income
   283,935 283,935 
Other comprehensive loss
  (219) (219)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
1,327 (5,459)  (5,459)
Issuance of common stock in connection with employee stock purchase plan
452 28,658   28,658 
Cumulative-effect adoption of ASU 2016-02
   69 69 
Repurchase of common stock, including transaction costs
(5,104)(390,117)  (390,117)
Stock-based compensation
— 62,831   62,831 
Balance, December 28, 2019115,738 $4,383,368 $(6,843)$(37,148)$4,339,377 

See accompanying Notes to Condensed Consolidated Financial Statements.



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QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
January 2, 2021December 28, 2019
Cash flows from operating activities:
Net income$434,874 $283,935 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation152,337 172,314 
Intangible assets amortization217,781 177,930 
Loss on debt extinguishment61,991  
Deferred income taxes26,311 (1,207)
Gain on Cavendish investment (43,008)
Stock-based compensation expense71,154 62,210 
Other, net(128)18,111 
Changes in operating assets and liabilities:
Accounts receivable, net(140,054)(25,166)
Inventories38,851 44,863 
Prepaid expenses and other assets(1,921)2,942 
Accounts payable and accrued liabilities35,597 41,723 
Income taxes payable and receivable22,014 3,917 
Other liabilities(19,883)(7,313)
Net cash provided by operating activities898,924 731,251 
Cash flows from investing activities:
Purchase of property and equipment(109,505)(129,004)
Purchase of businesses, net of cash acquired(47,069)(494,783)
Proceeds from sales of available-for-sale debt securities 1,950 
Other investing activities15,277 (1,263)
Net cash used in investing activities(141,297)(623,100)
Cash flows from financing activities:
Payment of debt(1,086,744) 
Proceeds from borrowings and debt issuances1,206,750 659,000 
Repurchase of common stock, including transaction costs(340,071)(390,117)
Proceeds from the issuance of common stock28,659 37,530 
Tax withholding paid on behalf of employees for restricted stock units(37,069)(21,013)
Other financing activities(12,413)(6,252)
Net cash (used in) provided by financing activities(240,888)279,148 
Effect of exchange rate changes on cash, cash equivalents and restricted cash2,569 (501)
Net increase in cash, cash equivalents and restricted cash519,308 386,798 
Cash, cash equivalents and restricted cash at the beginning of the period715,612 711,382 
Cash, cash equivalents and restricted cash at the end of the period$1,234,920 $1,098,180 
Non-cash investing information:
Capital expenditure adjustments included in liabilities$45,592 $26,152 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$1,234,415 $1,097,724 
Restricted cash included in "Other current assets" and "Other non-current assets"505 456 
Total cash, cash equivalents and restricted cash$1,234,920 $1,098,180 

See accompanying Notes to Condensed Consolidated Financial Statements.
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QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(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 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 March 28, 2020.

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. Certain items in the fiscal 2020 financial statements have been reclassified to conform with the fiscal 2021 presentation.

The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to March 31 of each year. The first fiscal quarter of each year ends on the Saturday closest to June 30, the second fiscal quarter of each year ends on the Saturday closest to September 30 and the third fiscal quarter of each year ends on the Saturday closest to December 31. Fiscal 2020 was a 52-week year and fiscal 2021 is a 53-week year with the additional week included in the second fiscal quarter ended October 3, 2020.

2. RECENT ACCOUNTING PRONOUNCEMENTS

The Company assesses recently issued accounting standards by the Financial Accounting Standards Board ("FASB") to determine the expected impacts on the Company's financial statements. The summary below describes impacts from newly issued standards as well as material updates to our previous assessments, if any, from Qorvo’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020.

In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires a current lifetime expected credit loss methodology to be used to measure impairments of accounts receivable and other financial assets. Using this methodology will result in earlier recognition of losses than under the previous incurred loss approach, which requires waiting to recognize a loss until it is probable of being incurred. The Company adopted this standard using the modified retrospective transition method, in the first quarter of fiscal 2021, which resulted in a cumulative-effect adjustment to retained earnings of less than $0.1 million.

Under this new standard, the Company's trade receivables are now evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics. These aggregated risk pools will be reassessed at each measurement date. A combination of factors is considered in determining the appropriate estimate of expected credit losses which include broad-based economic indicators as well as customers' financial strength, credit standing, payment history and any historical defaults. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

3. INVENTORIES
The components of inventories, net of reserves, are as follows (in thousands):
January 2, 2021March 28, 2020
Raw materials$126,695 $112,671 
Work in process270,562 291,028 
Finished goods82,083 113,499 
Total inventories$479,340 $517,198 

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QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)


4. BUSINESS ACQUISITIONS

In the second quarter of fiscal 2021, the Company completed the acquisition of 7Hugs Labs S.A.S. ("7Hugs"). During fiscal 2020, the Company completed the acquisitions of Decawave Limited ("Decawave"), Custom MMIC Design Services, Inc. ("Custom MMIC"), Cavendish Kinetics Limited ("Cavendish") and Active-Semi International, Inc. ("Active-Semi"). The operating results of these companies have been included in the Company's consolidated financial statements as of the acquisition dates.

7Hugs Labs S.A.S.

On October 1, 2020, the Company acquired all of the outstanding equity interests of 7Hugs, a private developer of ultra-wide band ("UWB") software and solutions, for a total purchase price of $48.7 million, including cash acquired of $1.0 million. The acquisition expands the Company's product offerings and is expected to support the ongoing development and adoption of UWB products and solutions.

The purchase price was allocated to 7Hugs' net tangible liabilities (approximately $5.4 million, which includes debt assumed), deferred tax liability (approximately $8.2 million) and an intangible asset (approximately $40.1 million, entirely related to developed technology) based on their estimated fair values. The fair value of the developed technology was determined based on an income approach using the "relief from royalty method," which estimated the value by discounting the royalties avoided by acquiring the technology to present value as of the valuation date. The acquired developed technology asset is being amortized on a straight-line basis over the estimated useful life of 10 years. The excess of the purchase price over the value of the net tangible liabilities, deferred tax liability and intangible asset resulted in goodwill of approximately $22.2 million.

The purchase price allocation includes net adjustments of approximately $3.7 million recorded in the third quarter of fiscal 2021. The Company will continue to evaluate certain assets, liabilities and tax estimates over the measurement period (up to one year from the acquisition date). During the three and nine months ended January 2, 2021, the Company recorded acquisition and integration costs associated with the acquisition of 7Hugs of $0.7 million and $2.1 million, respectively, in "Other operating expense" in the Condensed Consolidated Statements of Income.

Decawave Limited

On February 21, 2020, the Company acquired all of the outstanding equity interests of Decawave, a pioneer in UWB technology and provider of UWB solutions for mobile, automotive and Internet of Things ("IoT") applications, for a total purchase price of $372.2 million. The acquisition expands the Company's product and technology offerings that enable real-time, highly accurate and reliable local area precision-location services.

During the nine months ended January 2, 2021, the Company recognized a decrease to goodwill of approximately $3.1 million as a result of purchase price allocation adjustments. The Company will continue to evaluate certain assets, liabilities, and tax estimates over the measurement period (up to one year from the acquisition date).

Custom MMIC Design Services, Inc.

On February 6, 2020, the Company acquired all of the outstanding equity interests of Custom MMIC, a supplier of high-performance gallium arsenide ("GaAs") and gallium nitride ("GaN") monolithic microwave integrated circuits ("MMICs") for defense and commercial applications, for a total purchase price of $91.7 million. The acquisition expands the Company's millimeter wave ("mmWave") capabilities in defense and commercial markets. On the acquisition date, the purchase price was comprised of cash consideration of $86.0 million and contingent consideration of $5.7 million (based on estimated fair value). The contingent consideration will be payable to the sellers in the first quarter of fiscal 2022 if certain revenue targets are attained over a one-year period from the acquisition date for a maximum amount payable of $10.0 million. The contingent consideration liability is included in "Accrued liabilities" and remeasured to fair value with changes recognized in "Other operating expense." The fair value of the contingent consideration liability as of January 2, 2021 was equal to the maximum amount payable of $10.0 million as a result of achieving revenue targets. See Note 6 for further information related to the fair value measurement.

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QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)


During the nine months ended January 2, 2021, the Company recognized a decrease to goodwill of approximately $0.6 million as a result of purchase price allocation adjustments. The Company will continue to evaluate certain assets, liabilities, and tax estimates over the measurement period (up to one year from the acquisition date).

Cavendish Kinetics Limited

As of September 28, 2019, the Company had an investment in preferred shares in Cavendish, a private supplier of high-performance radio frequency ("RF") microelectromechanical system ("MEMS") technology for antenna tuning applications, with a carrying value of $59.4 million. The Company accounted for this investment as an equity investment without a readily determinable fair value using the measurement alternative in accordance with Accounting Standards Codification ("ASC") 321, "Investments-Equity Securities."

On October 4, 2019, the Company acquired the remaining issued and outstanding capital of Cavendish for cash consideration of $198.4 million. The acquisition advances RF MEMS technology for applications across the Company's products and the technology will be transitioned into high-volume manufacturing for mobile devices and other markets.

The purchase of the remaining equity interest in Cavendish was considered to be an acquisition achieved in stages, whereby the previously held equity interest was remeasured at its acquisition-date fair value. The Company determined that the fair value of its previously held equity investment was $102.4 million based on the purchase consideration exchanged to acquire the remaining issued and outstanding capital of Cavendish. This resulted in recognition of a gain of $43.0 million in the third quarter of fiscal 2020, which is recorded in "Other (expense) income, net" in the Condensed Consolidated Statements of Income.

In fiscal 2021, the Company recognized an increase to goodwill of approximately $2.0 million and a decrease to intangible assets of approximately $2.0 million as a result of finalizing the purchase price allocation.

Active-Semi International, Inc.

On May 6, 2019, the Company acquired all of the outstanding equity interests of Active-Semi, a private fabless supplier of programmable analog power management solutions, for a total purchase price of $307.9 million. The acquisition expanded the Company's product offerings in power management markets.

In fiscal 2021, the Company recognized an increase to goodwill of approximately $0.1 million in connection with finalizing the purchase price allocation.

5. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the nine months ended January 2, 2021 are as follows (in thousands):
Mobile ProductsInfrastructure and Defense ProductsTotal
Balance as of March 28, 2020 (1)
$2,005,432 $608,842 $2,614,274 
Goodwill resulting from 7Hugs acquisition (Note 4)
22,195 — 22,195 
Measurement period adjustments from prior acquisitions (Note 4)
(1,075)(514)(1,589)
Foreign currency translation16,032  16,032 
Balance as of January 2, 2021 (1)
$2,042,584 $608,328 $2,650,912 
(1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs of $621.6 million.

Goodwill is allocated to the reporting units that are expected to benefit from the synergies of the business combinations generating the underlying goodwill.
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QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)



The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets (in thousands):
 January 2, 2021March 28, 2020
 Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Developed technology $1,272,572 $716,397 $1,325,472 $652,400 
Customer relationships 458,150 399,505 463,772 346,799 
Technology licenses 2,271 1,895 3,271 2,327 
Backlog1,600 1,467 1,600 267 
Trade names 1,000 458 1,200 283 
In-process research and development 9,600 N/A9,600 N/A
Foreign currency translation35,497 4,729 6,064 11 
Total$1,780,690 $1,124,451 $1,810,979 $1,002,087 

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 expected economic benefit to be derived from the intangible assets.

Total intangible assets amortization expense was $73.3 million and $217.8 million for the three and nine months ended January 2, 2021, respectively, and $63.1 million and $177.9 million for the three and nine months ended December 28, 2019, respectively.

6. INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Equity Method Investments
The Company invests in limited partnerships which are accounted for using the equity method. The carrying amounts of these investments as of January 2, 2021 and March 28, 2020 were $25.7 million and $14.2 million, respectively, and are classified as “Long-term investments” in the Condensed Consolidated Balance Sheets. During the three and nine months ended January 2, 2021, the Company recorded $1.8 million and $17.4 million of income, respectively, based on its share of the limited partnerships' earnings. These amounts are included in “Other (expense) income, net” in the Condensed Consolidated Statements of Income. During the three months ended January 2, 2021, the Company received cash distributions of $5.9 million from one of these equity method investments. The distributions were recognized as a reduction to the carrying value of the investment, the majority of which represented a return of investment in cash flows from investing activities.

Equity Investments Without a Readily Determinable Fair Value
During the fourth quarter of fiscal 2020, the Company recorded an impairment of $18.3 million on an equity investment without a readily determinable fair value based on observable price changes present at the time. During the first quarter of fiscal 2021, the Company recorded an additional impairment of $2.8 million to fully impair this investment. This amount is recorded in “Other (expense) income, net” in the Condensed Consolidated Statement of Income.

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QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)


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 as of January 2, 2021 and March 28, 2020 (in thousands):
TotalQuoted Prices In
Active Markets For
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
January 2, 2021
Assets
Marketable equity securities$644 $644 $ $ 
Invested funds in deferred compensation plan (1)
31,015 31,015   
Total assets measured at fair value$31,659 $31,659 $ $ 
Liabilities
Deferred compensation plan obligation (1)
$31,015 $31,015 $ $ 
Contingent earn-out liability (2)
10,000   10,000 
Total liabilities measured at fair value$41,015 $31,015 $ $10,000 
March 28, 2020
Assets
Marketable equity securities$459 $459 $ $ 
Invested funds in deferred compensation plan (1)
19,398 19,398   
Total assets measured at fair value$19,857 $19,857 $ $ 
Liabilities
Deferred compensation plan obligation (1)
$19,398 $19,398 $ $ 
Contingent earn-out liability (2)
5,700   5,700 
Total liabilities measured at fair value$25,098 $19,398 $ $5,700 
(1) The Company's non-qualified deferred compensation plan provides eligible employees and members of the Board of Directors with the opportunity to defer a specified percentage of their cash compensation. The Company includes the assets deferred by the participants in the “Other current assets” and “Other non-current assets” line items of its Condensed Consolidated Balance Sheets and the Company's obligation to deliver the deferred compensation in the “Other current liabilities” and “Other long-term liabilities” line items of its Condensed Consolidated Balance Sheets.
(2) The Company recorded a contingent earn-out liability in conjunction with the Custom MMIC acquisition. The fair value of this liability is estimated using an option pricing model and is remeasured to fair value each period with changes in fair value reported in “Other operating expense” in the Condensed Consolidated Statements of Income. As of January 2, 2021, the fair value of the contingent consideration liability was equal to the maximum amount payable of $10.0 million. No payments have been made for the contingent liability as the earn-out assessment period is still ongoing. Any anticipated payments are expected to be settled during the first quarter of fiscal 2022.

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QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)


7. LONG-TERM DEBT

Long-term debt as of January 2, 2021 and March 28, 2020 is as follows (in thousands):
January 2, 2021March 28, 2020
Term loan$198,750 $100,000 
7.00% senior notes due 2025 23,404 
5.50% senior notes due 2026 900,000 
4.375% senior notes due 2029850,000 550,000 
3.375% senior notes due 2031700,000  
Finance leases1,648 2,252 
Unamortized premium and issuance costs, net(1,513)(1,532)
Less current portion of long-term debt(5,091)(6,893)
Total long-term debt$1,743,794 $1,567,231 

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 (the “2020 Credit Agreement”) with Bank of America, N.A. acting as administrative agent (the “Administrative Agent”) and a syndicate of lenders. The 2020 Credit Agreement amended and restated the previous credit agreement dated as of December 5, 2017 (the “2017 Credit Agreement”). The 2020 Credit Agreement includes a senior term loan (the “2020 Term Loan”) of up to $200.0 million and a senior revolving line of credit (the “Revolving Facility”) of up to $300.0 million (collectively the “Credit Facility”).

On the closing date of the 2020 Credit Agreement, the Company repaid the remaining principal balance of $97.5 million on the term loan under the 2017 Credit Agreement (the “2017 Term Loan”) and concurrently drew $200.0 million under the 2020 Term Loan.

Principal paid on the 2020 Term Loan during the three months ended January 2, 2021 was $1.3 million. Interest paid on the 2017 Term Loan and 2020 Term Loan during the three and nine months ended January 2, 2021 was $0.7 million and $1.5 million, respectively.

Pursuant to the 2020 Credit Agreement, the Company may request one or more additional tranches of term loans or increases to the Revolving Facility, up to an aggregate of $500.0 million and subject to securing additional funding commitments from the existing or new lenders. The Revolving Facility includes a $25.0 million sublimit for the issuance of standby letters of credit and a $10.0 million sublimit for swing line loans. The Credit Facility is available to finance working capital, capital expenditures and other general corporate purposes. Outstanding amounts are due in full on the maturity date of September 29, 2025, subject to scheduled amortization of the 2020 Term Loan principal prior to the maturity date as set forth in the 2020 Credit Agreement. During the nine months ended January 2, 2021, there were no borrowings under the Revolving Facility.

At the Company’s option, loans under the 2020 Credit Agreement will bear interest at (i) the Applicable Rate (as defined in the 2020 Credit Agreement) plus the Eurodollar Rate (as defined in the 2020 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 Eurodollar Rate 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 Eurodollar Rate is the rate per annum equal to the reserve adjusted London Interbank Offered Rate (or a comparable or successor rate), for dollar deposits for interest periods of one, two, three or six months, as selected by the Company. The Applicable Rate for Eurodollar Rate loans ranges from 1.000% per annum to 1.250% per annum and is set at 1.125% per annum until the delivery of the Company’s first compliance certificate to the lenders following the fiscal quarter ended January 2, 2021. The Applicable Rate for Base Rate loans ranges from 0.000% per annum to 0.250% per annum, and is set at 0.125% per annum until the delivery of the Company’s first compliance certificate to the lenders following the fiscal quarter ended January 2, 2021. Undrawn amounts under the Credit Facility are subject to a commitment fee ranging from 0.150% to 0.200%. Interest for Eurodollar Rate loans is payable at the end of each applicable interest period or at three-month intervals if such interest period exceeds three months. Interest for Base Rate loans is payable quarterly in arrears.

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QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)


The 2020 Credit Agreement contains various conditions, covenants and representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default. As of January 2, 2021, the Company was in compliance with these covenants.

Senior Notes due 2025
On November 19, 2015, the Company issued $550.0 million aggregate principal amount of its 7.00% senior notes due December 1, 2025 (the “2025 Notes”). The 2025 Notes were senior unsecured obligations of the Company and guaranteed, jointly and severally, by the Guarantors.

In fiscal years 2018 and 2019, the Company retired $526.6 million of the 2025 Notes. On December 1, 2020, the Company redeemed the remaining $23.4 million principal amount of the 2025 Notes using cash on hand, at a redemption price equal to 103.50% of the principal amount, plus accrued and unpaid interest. In connection with the redemption, the Company recognized a loss on debt extinguishment of $1.0 million as "Other (expense) income, net" in the Condensed Consolidated Statements of Income. The loss on debt extinguishment consisted of a $0.8 million redemption premium and a $0.2 million write-off of the unamortized portion of the debt issuance costs.

Interest on the 2025 Notes was payable on June 1 and December 1 of each year. Interest paid on the 2025 Notes during the three and nine months ended January 2, 2021 was $0.8 million and $1.6 million, respectively. Interest paid on the 2025 Notes during the three and nine months ended December 28, 2019 was $0.8 million and $1.6 million, respectively.

Senior Notes due 2026
On July 16, 2018, the Company issued $500.0 million aggregate principal amount of its 5.50% senior notes due July 15, 2026 (the “Initial 2026 Notes”). On August 28, 2018 and March 5, 2019, the Company issued an additional $130.0 million and $270.0 million, respectively, aggregate principal amount of such notes (together with the Initial 2026 Notes, the “2026 Notes”). The 2026 Notes were senior unsecured obligations of the Company and guaranteed, jointly and severally, by the Guarantors.

On October 16, 2020, the Company redeemed all of the 2026 Notes at a redemption price equal to 106.363% of the $900.0 million principal amount, plus accrued and unpaid interest. The 2026 Notes were redeemed using proceeds from the issuance of the 2031 Notes (as defined below) combined with cash on hand plus borrowings under the 2020 Term Loan. In connection with the redemption, the Company recognized a loss on debt extinguishment of $61.0 million as "Other (expense) income, net" in the Condensed Consolidated Statements of Income. The loss on debt extinguishment consisted of a $57.3 million redemption premium and a $3.7 million net write-off of unamortized debt issuance costs and bond premium. The primary purpose of the redemption was to reduce future interest expense.

Interest on the 2026 Notes was payable on January 15 and July 15 of each year. No interest was paid on the 2026 Notes during the three months ended January 2, 2021 and December 28, 2019. Interest paid on the 2026 Notes during the nine months ended January 2, 2021 and December 28, 2019 was $24.8 million.

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 customary events of default, including payment default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events and also contains customary negative covenants.

Interest is payable on the 2029 Notes on April 15 and October 15 of each year. Interest paid on the 2029 Notes during the three and nine months ended January 2, 2021 was $18.6 million and $31.6 million, respectively.

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(Unaudited)


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”). Interest is payable on the 2031 Notes on April 1 and October 1 of each year, commencing April 1, 2021. 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.

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 customary events of default, including payment default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events and also contains customary negative covenants.

The 2031 Notes have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and may not be offered or sold in the United States absent an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

Fair Value of Debt
The Company's debt is carried at amortized cost and is measured at fair value quarterly for disclosure purposes. The estimated fair value of the 2029 Notes and the 2031 Notes as of January 2, 2021 was $935.2 million and $720.1 million, respectively (compared to a carrying value of $850.0 million and $700.0 million, respectively). The estimated fair value of the 2025 Notes, the 2026 Notes and the 2029 Notes as of March 28, 2020 was $23.9 million, $962.8 million, and $489.5 million, respectively (compared to a carrying value of $23.4 million, $900.0 million, and $550.0 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 2029 Notes and the 2031 Notes currently trade – and the 2025 Notes and the 2026 Notes previously traded – over the counter and their fair values were estimated based upon the value of their last trade at the end of the period.

The 2020 Term Loan carries a variable interest rate set at current market rates, and as such, the fair value of the 2020 Term Loan approximated book value as of January 2, 2021.

Interest Expense
During the three and nine months ended January 2, 2021, the Company recognized total interest expense of $18.3 million and $62.9 million, respectively, primarily related to the 2026 Notes, the 2029 Notes and the 2031 Notes, which was partially offset by interest capitalized to property and equipment of $0.9 million and $3.1 million, respectively. During the three and nine months ended December 28, 2019, the Company recognized total interest expense of $18.3 million and $45.8 million, respectively, primarily related to the 2026 Notes and the 2029 Notes, which was partially offset by interest capitalized to property and equipment of $1.4 million and $4.4 million, respectively.

8. STOCK REPURCHASES

On October 31, 2019, the Company announced that its Board of Directors authorized a new share repurchase program to repurchase up to $1.0 billion of the Company's outstanding common stock, which included approximately $117.0 million authorized under the prior program which was terminated concurrent with the new authorization. Under this 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 January 2, 2021, the Company repurchased approximately 1.1 million and 2.6 million shares, respectively, of its common stock for approximately $160.0 million and $340.1 million, respectively, under the current share repurchase program. As of January 2, 2021, approximately $425.8 million remained available for repurchases under the current share repurchase program.

During the three and nine months ended December 28, 2019, the Company repurchased approximately 1.3 million and 5.1 million shares, respectively, of its common stock for approximately $125.0 million and $390.1 million, respectively, under the prior and current share repurchase programs.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)



9. COMMITMENTS AND CONTINGENT LIABILITIES

Legal Matters
The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the Company's views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Company's accrued liabilities would be recorded in the period in which such determination is made.

The Company is involved in various legal proceedings and claims that have arisen in the ordinary course of its business that have not been fully adjudicated. The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material. In some cases, the Company cannot reasonably estimate a range of loss because there is insufficient information regarding the matter. However, the Company believes there is no more than a remote chance that any liability arising from these matters would be material. Although it is not possible to predict with certainty the outcome of these unresolved legal actions, it is the opinion of management that these actions will not individually or in the aggregate have a material adverse effect on the Company’s consolidated financial position or results of operations.

10. REVENUE

The following table presents the Company's revenue disaggregated by geography, based on the location of the customers' headquarters (in thousands):
Three Months EndedNine Months Ended
January 2, 2021December 28, 2019January 2, 2021December 28, 2019
United States$587,737 $423,573 $1,295,398 $1,143,995 
China305,887 281,024 1,084,120 842,112 
Other Asia83,070 80,729 243,715 229,344 
Taiwan69,492 43,156 176,171 122,189 
Europe48,648 40,591 143,173 113,729 
Total revenue
$1,094,834 $869,073 $2,942,577 $2,451,369 

The Company also disaggregates revenue by operating segments (see Note 12).

11. RESTRUCTURING

During fiscal 2019, the Company initiated restructuring actions to reduce operating expenses and improve its manufacturing cost structure, including the phased closure of a wafer fabrication facility in Florida and idling production at a wafer fabrication facility in Texas.  As a result of these restructuring actions, the Company has recorded cumulative restructuring related charges totaling $93.1 million as of the end of the third quarter of fiscal 2021, including accelerated depreciation of $47.4 million (to reflect changes in estimated useful lives of certain property and equipment), impairment charges of $15.9 million (to adjust the carrying value of certain property and equipment to reflect its fair value), employee termination benefits of $13.8 million and other exit costs of $16.0 million.  The Company expects to record additional expenses of approximately $0.1 million for employee termination benefits and other exit costs as a result of these actions. 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)


The following table summarizes the restructuring charges resulting from the 2019 restructuring event (in thousands):
Three Months Ended January 2, 2021Three Months Ended December 28, 2019
Cost of Goods SoldOther Operating ExpenseTotalCost of Goods SoldOther Operating ExpenseTotal
One-time employee termination benefits (1)
$ $141 $141 $ $1,677 $1,677 
Contract termination and other associated costs 154 154 3,437 809 4,246 
Accelerated depreciation   4,324  4,324 
Total
$ $295 $295 $7,761