Skyworks Reports Q1 FY19 Results

Certain Income Tax Items - including certain deferred tax charges and benefits that do not result in a current tax payment or tax refund and other adjustments, including but not limited to, items unrelated to the current fiscal year or that are not indicative of our ongoing business operations.

The non-GAAP financial measures presented in the table above should not be considered in isolation and are not an alternative for the respective GAAP financial measure that is most directly comparable to each such non-GAAP financial measure. Investors are cautioned against placing undue reliance on these non-GAAP financial measures and are urged to review and consider carefully the adjustments made by management to the most directly comparable GAAP financial measures to arrive at these non-GAAP financial measures. Non-GAAP financial measures may have limited value as analytical tools because they may exclude certain expenses that some investors consider important in evaluating our operating performance or ongoing business performance. Further, non-GAAP financial measures are likely to have limited value for purposes of drawing comparisons between companies because different companies may calculate similarly titled non-GAAP financial measures in different ways because non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Our earnings release contains forward-looking estimates of non-GAAP diluted earnings per share for the second quarter of our 2019 fiscal year (“Q2 2019”). We provide this non-GAAP measure to investors on a prospective basis for the same reasons (set forth above) that we provide it to investors on a historical basis. We are unable to provide a reconciliation of our forward-looking estimate of Q2 2019 GAAP diluted earnings per share to a forward-looking estimate of Q2 2019 non-GAAP diluted earnings per share because certain information needed to make a reasonable forward-looking estimate of GAAP diluted earnings per share for Q2 2019 (other than estimated share-based compensation expense of $0.10 to $0.15 per diluted share, certain tax items of $0.01 to $0.05 per diluted share and estimated amortization of intangibles of $0.05 to $0.09 per diluted share) is difficult to predict and estimate and is often dependent on future events that may be uncertain or outside of our control. Such events may include unanticipated changes in our GAAP effective tax rate, unanticipated one-time charges related to asset impairments (fixed assets, inventory, intangibles or goodwill), unanticipated acquisition-related expenses, unanticipated litigation settlement, gains, losses and expenses and other unanticipated non-recurring items not reflective of ongoing operations. The probable significance of these unknown items, in the aggregate, is estimated to be in the range of $0.00 to $0.10 in quarterly earnings per diluted share on a GAAP basis. Our forward-looking estimates of both GAAP and non-GAAP measures of our financial performance may differ materially from our actual results and should not be relied upon as statements of fact.

[a]			These charges represent expense recognized in accordance with ASC 718 - Compensation, Stock Compensation. For the three months ended December 28, 2018, approximately $3.6 million, $12.5 million and $4.7 million were included in cost of goods sold, research and development expense and selling, general and administrative expense, respectively.

			For the three months ended December 29, 2017, approximately $4.1 million, $11.2 million and $10.5 million were included in cost of goods sold, research and development expense and selling, general and administrative expense, respectively.

[b]			The acquisition-related expenses recognized during the three months ended December 28, 2018, include a $0.2 million charge to general and administrative expenses primarily associated with acquisitions completed or contemplated during the period and a $1.9 million charge to cost of goods sold related to the sale of acquired inventory.

			The acquisition-related expenses recognized during the three months ended December 29, 2017, include a $0.7 million charge to general and administrative expenses, primarily associated with acquisitions completed or contemplated during the period.

[c]			During the three months ended December 28, 2018, the Company incurred $4.7 million and $7.3 million in amortization of acquisition-related intangibles included in cost of goods sold, and selling, general and administrative expense, respectively.

			During the three months ended December 29, 2017, the Company incurred $4.0 million in amortization of acquisition-related intangibles included in selling, general and administrative expense.

[d]			During the three months ended December 28, 2018, the Company recognized $0.7 million in non-recurring charges.

[e]			During the three months ended December 28, 2018, the Company recognized a $0.1 million benefit in deferred executive compensation expense.

[f]			During the three months ended December 28, 2018, these amounts primarily represent the use of net operating loss and credit carryforwards, deferred tax expense not affecting taxes payable, and non-cash expense (benefit) related to uncertain tax positions.

			During the three months ended December 29, 2017, these amounts primarily represent a one-time charge of $257.8 million related to the mandatory deemed repatriation tax on foreign earnings, a one-time charge of $18.5 million related to the revaluation of deferred tax assets and liabilities related to tax reform, use of net operating loss carryforwards, deferred tax expense not affecting taxes payable, and non-cash expense (benefit) related to uncertain tax positions.


SKYWORKS SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
(in millions)	December 28, 2018		September 28, 2018
Assets
Cash, cash equivalents and marketable securities	$	1,101.8	$	1,050.2
Accounts receivable, net	524.4		655.8
Inventory	493.1		490.2
Property, plant and equipment, net	1,140.6		1,140.9
Goodwill and intangible assets, net	1,319.9		1,333.5
Other assets	159.1		158.3
Total assets	$	4,738.9	$	4,828.9

Liabilities and Equity
Accounts payable	$	156.5	$	229.9
Accrued and other liabilities	544.1		502.0
Stockholders’ equity	4,038.3		4,097.0
Total liabilities and equity	$	4,738.9	$	4,828.9


SKYWORKS SOLUTIONS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

			Three Months Ended
(in millions)			December 28, 2018			December 29, 2017
Cash flow from operating activities
		Net income	$	284.9		$	70.4
		Adjustments to reconcile net income to net cash provided by operating activities:
		Share-based compensation	20.8			25.8
		Depreciation	77.5			63.6
		Amortization of intangible assets, including inventory step-up	15.5			5.5
		Deferred income taxes	1.8			21.4
		Other, net	1.0			—
	Changes in operating assets:
		Receivables, net	131.4			(4.1		)
		Inventory	(5.0		)	34.5
		Other current and long-term assets	(2.6		)	(20.6		)
		Accounts payable	(22.2		)	(105.4		)
		Other current and long-term liabilities	45.9			269.7
		Net cash provided by operations	549.0			360.8
Cash flow from investing activities
		Capital expenditures	(129.5		)	(28.2		)
		Purchased intangibles	—			(6.0		)
		Purchases of marketable securities	(2.2		)	—
		Maturities and sales of marketable securities	303.2			—
		Net cash provided by (used in) investing activities	171.5			(34.2		)
Cash flow from financing activities
		Repurchase of common stock - payroll tax withholdings on equity awards	(19.4		)	(44.7		)
		Repurchase of common stock - stock repurchase program	(284.0		)	(172.5		)
		Dividends paid	(67.1		)	(59.1		)
		Net proceeds from exercise of stock options	2.4			14.4
		Net cash used in financing activities	(368.1		)	(261.9		)
		Net increase in cash and cash equivalents	352.4			64.7
		Cash and cash equivalents at beginning of period	733.3			1,616.8
		Cash and cash equivalents at end of period	$	1,085.7		$	1,681.5

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