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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 December 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from _____to _____
Commission File Number 001-36801
https://cdn.kscope.io/ba108889204b74ccc6f9df591bdfd4df-rfmd-20221231_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 offices)(Zip code)
(336) 664-1233
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each 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
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ

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


Table of Contents
QORVO, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 
 Page    
Condensed Consolidated Statements of Comprehensive Income

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)
 
December 31, 2022April 2, 2022
ASSETS
Current assets:
Cash and cash equivalents $918,758 $972,592 
Accounts receivable, net of allowance of $405 and $402 as of December 31, 2022 and April 2, 2022, respectively367,636 568,850 
Inventories857,277 755,748 
Prepaid expenses46,105 49,839 
Other receivables30,832 32,151 
Other current assets37,092 70,685 
Total current assets2,257,700 2,449,865 
Property and equipment, net of accumulated depreciation of $1,846,373 and $1,734,608 as of December 31, 2022 and April 2, 2022, respectively1,191,986 1,253,591 
Goodwill2,770,146 2,775,634 
Intangible assets, net567,375 674,786 
Long-term investments24,218 31,086 
Other non-current assets264,794 324,110 
Total assets$7,076,219 $7,509,072 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$225,111 $327,915 
Accrued liabilities239,013 240,186 
Other current liabilities149,466 107,026 
Total current liabilities613,590 675,127 
Long-term debt2,047,743 2,047,098 
Other long-term liabilities250,318 233,629 
Total liabilities2,911,651 2,955,854 
Commitments and contingent liabilities (Note 8)
Stockholders’ equity:
Preferred stock, $.0001 par value; 5,000 shares authorized; no shares issued and outstanding  
Common stock and additional paid-in capital, $.0001 par value; 405,000 shares authorized; 100,021 and 106,303 shares issued and outstanding at December 31, 2022 and April 2, 2022, respectively3,859,940 4,035,849 
Accumulated other comprehensive (loss) income(11,365)5,232 
Retained earnings315,993 512,137 
Total stockholders’ equity4,164,568 4,553,218 
Total liabilities and stockholders’ equity$7,076,219 $7,509,072 
See accompanying Notes to Condensed Consolidated Financial Statements.
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Table of Contents
 QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months EndedNine Months Ended
 December 31, 2022January 1, 2022December 31, 2022January 1, 2022
Revenue$743,281 $1,113,957 $2,936,696 $3,479,556 
Cost of goods sold475,230 565,864 1,754,468 1,763,727 
Gross profit268,051 548,093 1,182,228 1,715,829 
Operating expenses:
Research and development149,472 154,435 486,204 464,891 
Selling, general and administrative76,269 82,003 275,836 265,791 
Other operating expense33,581 15,645 48,038 29,675 
Total operating expenses259,322 252,083 810,078 760,357 
Operating income8,729 296,010 372,150 955,472 
Interest expense(17,066)(15,328)(51,222)(45,934)
Other income, net5,562 2,532 2,714 24,077 
(Loss) income before income taxes(2,775)283,214 323,642 933,615 
Income tax expense(13,156)(66,951)(82,074)(112,537)
Net (loss) income$(15,931)$216,263 $241,568 $821,078 
Net (loss) income per share:
Basic $(0.16)$1.97 $2.34 $7.40 
Diluted $(0.16)$1.95 $2.33 $7.30 
Weighted average shares of common stock outstanding:
Basic 100,943 109,687 103,039 110,966 
Diluted 100,943 110,810 103,812 112,415 

See accompanying Notes to Condensed Consolidated Financial Statements.

4

Table of Contents
QORVO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 Three Months EndedNine Months Ended
 December 31, 2022January 1, 2022December 31, 2022January 1, 2022
Net (loss) income$(15,931)$216,263 $241,568 $821,078 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, including intra-entity foreign currency transactions that are of a long-term investment nature30,403 (8,488)(16,623)(14,767)
Reclassification adjustments, net of tax:
Foreign currency gain realized upon liquidation of subsidiary (359) (359)
Amortization of pension actuarial loss 8 29 26 90 
Other comprehensive income (loss)30,411 (8,818)(16,597)(15,036)
Total comprehensive income$14,480 $207,445 $224,971 $806,042 
                
See accompanying Notes to Condensed Consolidated Financial Statements.


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Table of Contents

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


Accumulated Other Comprehensive (Loss) IncomeRetained Earnings
Common Stock
Three Months EndedSharesAmountTotal
Balance, October 1, 2022102,061 $3,915,969 $(41,776)$447,947 $4,322,140 
Net loss—   (15,931)(15,931)
Other comprehensive income—  30,411  30,411 
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
41 (321)  (321)
Issuance of common stock in connection with employee stock purchase plan150 11,276   11,276 
Repurchase of common stock, including transaction costs
(2,231)(85,610) (116,023)(201,633)
Stock-based compensation
— 18,626   18,626 
Balance, December 31, 2022100,021 $3,859,940 $(11,365)$315,993 $4,164,568 
Balance, October 2, 2021110,461 $4,158,170 $23,431 $546,153 $4,727,754 
Net income
—   216,263 216,263 
Other comprehensive loss—  (8,818) (8,818)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
41 (527)  (527)
Issuance of common stock in connection with employee stock purchase plan
108 15,503   15,503 
Repurchase of common stock, including transaction costs
(1,942)(73,092) (228,928)(302,020)
Stock-based compensation
— 19,044   19,044 
Balance, January 1, 2022108,668 $4,119,098 $14,613 $533,488 $4,667,199 

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 (Loss) IncomeRetained Earnings
Common Stock
Nine Months EndedSharesAmountTotal
Balance, April 2, 2022106,303 $4,035,849 $5,232 $512,137 $4,553,218 
Net income
—   241,568 241,568 
Other comprehensive loss—  (16,597) (16,597)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
550 (21,502)  (21,502)
Issuance of common stock in connection with employee stock purchase plan
345 30,169   30,169 
Repurchase of common stock, including transaction costs
(7,177)(274,020) (437,712)(711,732)
Stock-based compensation
— 89,444   89,444 
Balance, December 31, 2022100,021 $3,859,940 $(11,365)$315,993 $4,164,568 
Balance, April 3, 2021112,557 $4,244,740 $29,649 $355,036 $4,629,425 
Net income
—   821,078 821,078 
Other comprehensive loss—  (15,036) (15,036)
Exercise of stock options and vesting of restricted stock units, net of shares withheld for employee taxes
683 (49,979)  (49,979)
Issuance of common stock in connection with employee stock purchase plan
273 33,297   33,297 
Repurchase of common stock, including transaction costs
(4,845)(182,767) (642,626)(825,393)
Stock-based compensation
— 73,807   73,807 
Balance, January 1, 2022108,668 $4,119,098 $14,613 $533,488 $4,667,199 

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
December 31, 2022January 1, 2022
Cash flows from operating activities:
Net income$241,568 $821,078 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation155,132 159,038 
Intangible assets amortization99,476 112,523 
Deferred income taxes(2,557)37,566 
Stock-based compensation expense86,911 73,236 
Other, net95,459 6,703 
Changes in operating assets and liabilities:
Accounts receivable, net201,823 (170,511)
Inventories(98,882)(190,247)
Prepaid expenses and other assets42,979 (145,643)
Accounts payable and accrued liabilities(85,321)42,797 
Income taxes payable and receivable(17,281)(16,303)
Other liabilities58,481 (26,874)
Net cash provided by operating activities777,788 703,363 
Cash flows from investing activities:
Purchase of property and equipment(124,853)(162,993)
Purchase of businesses, net of cash acquired(95)(389,192)
Other investing activities7,590 9 
Net cash used in investing activities(117,358)(552,176)
Cash flows from financing activities:
Payment of debt (197,500)
Proceeds from debt issuances 499,070 
Repurchase of common stock, including transaction costs(711,732)(825,393)
Proceeds from the issuance of common stock20,828 26,653 
Tax withholding paid on behalf of employees for restricted stock units(22,687)(52,265)
Other financing activities(422)(9,078)
Net cash used in financing activities(714,013)(558,513)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(280)(2,063)
Net decrease in cash, cash equivalents and restricted cash(53,863)(409,389)
Cash, cash equivalents and restricted cash at the beginning of the period972,805 1,398,309 
Cash, cash equivalents and restricted cash at the end of the period$918,942 $988,920 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$918,758 $988,527 
Restricted cash included in "Other current assets" and "Other non-current assets"184 393 
Total cash, cash equivalents and restricted cash$918,942 $988,920 
Supplemental disclosure of cash flow information:
Capital expenditures included in liabilities$26,597 $42,055 

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

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

2. INVENTORIES
The components of inventories, net of reserves, are as follows (in thousands):
December 31, 2022April 2, 2022
Raw materials$318,288 $236,095 
Work in process350,122 357,332 
Finished goods188,867 162,321 
Total inventories$857,277 $755,748 

3. BUSINESS ACQUISITIONS

United Silicon Carbide, Inc.

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

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

NextInput, Inc.

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

4. GOODWILL AND INTANGIBLE ASSETS

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

The changes in the carrying amount of goodwill are as follows (in thousands):
HPA
CSG
ACG
Total
Balance as of April 2, 2022 (1)
$501,899 $539,875 $1,733,860 $2,775,634 
NextInput measurement period adjustments 572  572 
United SiC measurement period adjustments(297)  (297)
Effect of changes in foreign currency exchange rates (5,763) (5,763)
Balance as of December 31, 2022 (1)
$501,602 $534,684 $1,733,860 $2,770,146 
(1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs totaling $669.6 million, which were recognized in fiscal years 2009, 2013, 2014 and 2022.

The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets (in thousands):
 December 31, 2022April 2, 2022
 Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Developed technology $866,916 $352,141 $1,026,690 $420,255 
Customer relationships 104,429 62,703 104,778 47,208 
Technology licenses 1,411 405 2,641 2,169 
Trade names 899 664 1,933 1,358 
In-process research and development9,633 N/A9,734 N/A
Total (1)
$983,288 $415,913 $1,145,776 $470,990 
(1) Amounts include the impact of foreign currency translation.

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

5. INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Equity Method Investments

The Company invests in limited partnerships and accounts for these investments using the equity method. The carrying amounts of these investments, as of December 31, 2022 and April 2, 2022, were $20.2 million and $27.1 million, respectively, and are classified as "Long-term investments" in the Condensed Consolidated Balance Sheets. During the three and nine months ended December 31, 2022, the Company recorded a loss of $5.0 million and $4.7 million, respectively, based on its share of the limited partnerships' earnings. During the three and nine months ended January 1, 2022, the Company recorded a loss of $2.4 million and income of $13.6 million, respectively, based on its share of the limited partnerships' earnings. These amounts are included in "Other income, net" in the Condensed Consolidated Statements of Operations. During the three and
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
nine months ended December 31, 2022, the Company received cash distributions of $0.2 million and $2.2 million, respectively, from these limited partnerships. No cash distributions were received during the three months ended January 1, 2022 and $13.5 million of cash distributions were received during the nine months ended January 1, 2022. The cash distributions were recognized as reductions to the carrying value of the investments and included in the cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows.

Fair Value of Financial Instruments

The fair value of the financial assets and liabilities measured on a recurring basis was determined using the following levels of inputs (in thousands):
TotalQuoted Prices In
Active Markets For
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31, 2022
Marketable equity securities$1,121 $1,121 $ $ 
Invested funds in deferred compensation plan (1)
37,687 37,687   
Contingent earn-out liability (2)
(31,250)  (31,250)
April 2, 2022
Marketable equity securities$2,906 $2,906 $ $ 
Invested funds in deferred compensation plan (1)
39,356 39,356   
Contingent earn-out liability (2)
(17,600)  (17,600)
(1) Invested funds under the Company's non-qualified deferred compensation plan are held in a rabbi trust and consist of mutual funds. The fair value of the mutual funds is calculated using the net asset value per share determined by quoted active market prices of the underlying investments.
(2) At December 31, 2022, the maximum contingent consideration was recorded related to the acquisition of United SiC (refer to Note 3). At April 2, 2022, the fair value of this liability was estimated using an option pricing model.

6. LONG-TERM DEBT

Long-term debt is as follows (in thousands):
December 31, 2022April 2, 2022
1.750% senior notes due 2024$500,000 $500,000 
4.375% senior notes due 2029850,000 850,000 
3.375% senior notes due 2031700,000 700,000 
Finance leases and other1,839 2,581 
Unamortized premium, discount and issuance costs, net(3,645)(4,692)
Less current portion of long-term debt(451)(791)
Total long-term debt$2,047,743 $2,047,098 
Credit Agreement

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

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

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

Senior Notes due 2024

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

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

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

Senior Notes due 2029

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

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

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

Senior Notes due 2031

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

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

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

Fair Value of Long-Term Debt

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

Interest Expense

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

7. STOCK REPURCHASES

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

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

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

8. COMMITMENTS AND CONTINGENT LIABILITIES

Purchase Obligations

Amidst ongoing industry-wide supply constraints, the Company entered into a long-term capacity reservation agreement with a foundry supplier during the second quarter of fiscal 2022. Under this agreement, the Company was required to purchase, and
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
the foundry supplier was required to supply, a certain number of wafers (at predetermined sales prices) for calendar years 2022 through 2025. In connection with this agreement, the Company paid a refundable deposit (which was recorded in "Other non-current assets" in the Condensed Consolidated Balance Sheets), and if the purchase commitments per the agreement were not met, under certain circumstances the supplier could deduct the amount of the purchase shortfall from the prepaid refundable deposit at the end of each calendar year.

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

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

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

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

Legal Matters

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

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

The following table presents the Company's revenue disaggregated by geography, based on the location of the customers' headquarters (in thousands):
Three Months EndedNine Months Ended
December 31, 2022January 1, 2022December 31, 2022January 1, 2022
United States$459,194 $569,494 $1,470,231 $1,449,667 
China124,799 273,582 630,012 1,227,782 
Other Asia72,002 136,089 390,690 364,855 
Taiwan53,072 76,432 274,707 253,713 
Europe34,214 58,360 171,056 183,539 
Total revenue
$743,281 $1,113,957 $2,936,696 $3,479,556 

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

10. RESTRUCTURING

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

The following table summarizes the charges resulting from the restructuring actions (in thousands):
Three Months Ended December 31, 2022Nine Months Ended December 31, 2022
Cost of Goods SoldOther Operating ExpenseTotalCost of Goods SoldOther Operating ExpenseTotal
Contract termination and other costs$3,600 $11,509 $15,109 $3,600 $13,433 $17,033 
Asset impairment costs (1)
 12,899 12,899  12,899 12,899 
One-time employee termination benefits (2)
 (623)(623) 2,547 2,547 
Total
$3,600 $23,785 $27,385 $3,600 $28,879 $32,479 

(1) Relates to the adjustment of certain property and equipment to reflect its fair value.
(2) Includes reversal due to adjustment of previously accrued restructuring charges.

The following table summarizes the activity related to the Company's restructuring liabilities for the nine months ended December 31, 2022 (in thousands):
One-Time Employee Termination BenefitsContract Termination and Other CostsTotal
Accrued restructuring balance as of April 2, 2022$ $ $ 
Costs incurred and charged to expense2,547 17,033 19,580 
Cash payments(2,022)(967)(2,989)
Accrued restructuring balance as of December 31, 2022$525 $16,066 $16,591 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
11. OPERATING SEGMENT INFORMATION

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

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

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

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

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

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Table of Contents

QORVO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The following tables present details of the Company’s operating and reportable segments and a reconciliation of the "All other" category (in thousands):
 Three Months EndedNine Months Ended
December 31, 2022January 1, 2022December 31, 2022January 1, 2022
Revenue:
HPA$155,011 $181,876 $594,094 $496,842 
CSG96,810 157,578 392,454 525,190 
ACG491,460 774,503 1,950,148 2,457,524 
Total revenue$743,281 $1,113,957 $2,936,696 $3,479,556 
Operating income (loss):
HPA$29,836 $56,951 $181,102 $140,953 
CSG(31,145)21,109 (29,926)77,287 
ACG99,862 293,948 569,439 956,215 
All other(89,824)(75,998)(348,465)(218,983)
Operating income8,729 296,010 372,150 955,472 
Interest expense(17,066)(15,328)(51,222)(45,934)
Other income, net5,562 2,532 2,714 24,077 
(Loss) income before income taxes$(2,775)$283,214 $323,642 $933,615 
 
 Three Months EndedNine Months Ended
December 31, 2022January 1, 2022December 31, 2022January 1, 2022
Reconciliation of "All other" category:
Stock-based compensation expense$(19,708)$(19,307)$(86,911)$(73,236)
Amortization of intangible assets(32,844)(38,443)(99,283)(112,243)
Restructuring related charges (1)
(27,385) (32,479) 
Acquisition and integration related costs
(6,296)(6,552)(21,246)(16,585)
Charges associated with a long-term capacity reservation agreement (2)
  (110,000) 
Other (3,591)(11,696)1,454 (16,919)
Loss from operations for "All other"$(89,824)$(75,998)$(348,465)$(218,983)
(1) Refer to Note 10 for additional information.
(2) Refer to Note 8 for additional information.

12. INCOME TAXES

The Company’s income tax expense was $