Qorvo

FY18

About Us

Qorvo (Nasdaq: QRVO) makes a better world possible by providing 

innovative Radio Frequency (RF) solutions at the center of 

connectivity.  We combine product and technology leadership, 

systems-level expertise and global manufacturing scale to quickly 

solve our customers’ most complex technical challenges.  Qorvo 

serves diverse high-growth segments of large global markets, 

including advanced wireless devices, wired and wireless networks 

and defense radar and communications.  We also leverage unique 

competitive strengths to advance 5G networks, cloud computing, the 

Internet of Things, and other emerging applications that expand the 

global framework interconnecting people, places and things.  

Visit www.qorvo.com to learn how Qorvo connects the world.

To Our Stockholders,

In fiscal year 2018, we delivered improved operating 
results and positioned Qorvo for long-term, profitable 
growth.  We expanded gross and operating margins and
more than doubled free cash flow compared to the prior 
year.  We made great strides on productivity through 
focused efforts to drive effectiveness and efficiency, and we 
continued to reduce the capital requirements of our business
by managing our product portfolio, building stronger 
partnerships, and implementing numerous productivity
initiatives.  Qorvo’s culture of lean, coupled with cost control 
and capital efficiency, are driving improvements across our
organization, increasing cross-functional collaboration, 
improving the speed and success of our product 
development and enhancing our customer engagement. 

We enjoyed broad-based commercial traction, and we’re 
especially pleased with the success we achieved in 
products featuring our Bulk Acoustic Wave (BAW), 

Gallium Nitride (GaN) and other best-in-class technologies.  
In Infrastructure and Defense Products, we achieved
over 20% annual revenue growth, supported by strength 
in defense, connectivity, GaN and the Internet of Things
(IoT).  In Mobile Products, we made significant progress 
realigning our product portfolio to target the highest 
growth and most complex placements.  Most importantly, 
we are laser focused on delivering the technology and
quality our customers need, and these efforts are yielding 
both customer recognition and higher quality business. 

Qorvo has developed a comprehensive portfolio of 
enabling technologies, and we’re excited about the 
tremendous opportunities in LTE-Advanced/Pro, 5G
and IoT.  Qorvo’s strategy is clear – we’ve optimized our 
portfolio with a focus on both growth and profitability,
and we’re targeting the most valuable opportunities in
the most attractive markets, where performance wins.

111

Multiple Long-Term Growth Drivers

The growing global demand for data requires 
increasingly complex solutions that maximize 
throughput, improve efficiency and reduce product 
footprint.  This translates into demand for more and 
better RF across multiple markets.  Our opportunities 
for growth are poised to expand as 5G is layered onto 
LTE-Advanced/Pro, new GaN and IoT opportunities are 
enabled by 5G, and IoT continues to proliferate globally. 

In 4G, the industry is racing toward one gigabit-
per-second download speeds with LTE-Advanced/
Pro to enable a more consistent user experience as 
consumers travel between 5G and 4G signals.  Several 
approaches are being used to increase data throughput, 
including carrier aggregation, which combines multiple 
wireless frequencies to transmit and receive data much 
faster, and MIMO, which uses multiple transmit and 
receive paths to further increase the data throughput to 
and from the device.  Other efforts include combining 
LTE with unlicensed ISM spectrum to burst more data, 
and the deployment of higher signal modulation to 
expand data density in a single stream.  

In 5G, field trials are underway for both sub-6 
gigahertz and millimeter wave infrastructure solutions.  
Commercial deployments of sub-6 gigahertz solutions 

are expected first, with millimeter wave deployments 
to follow.  5G will expand data throughput, reduce 
latency to near zero, and enable massive machine-
to-machine connectivity.  This will enable many use 
cases that are not seen today and require billions of 
incremental networked connections – connections 
Qorvo supports.

In defense, broadband and base station markets, 
GaN adoption is accelerating because GaN delivers 
lower power consumption, higher power density, 
longer product life, smaller arrays and higher data 
throughput.  In fact, the market for GaN is projected to 
more than quadruple over the next five years.  

Finally, in IoT, the proliferation of sensors, smart home 
solutions, connected cars, connected cities, and other 
networked applications will drive massive growth in 
data traffic and require billions of connections across 
a broad range of protocols, including narrowband 
cellular, Wi-Fi, Zigbee®, Thread, and Bluetooth®.  While 
still largely undefined, the characteristics of protocol 
standards will likely mirror those in smartphones 
– offering short range, local area and wide area 
solutions to enable connectivity everywhere.  Qorvo 
supports all major connectivity protocols.

2

This is different than previous cellular generations, in that 
5G will address multiple market segments, translating 
into a wide range of possibilities for Qorvo.

Similarly, we expect to benefit from the acceleration of 
the migration to GaN.  Qorvo’s GaN technology allows us 
to create products that outperform the competition by 
offering the highest power, gain and efficiency at a given 
frequency and by operating at a higher operating voltage 
for reduced system current.  GaN is a winning technology 
for phased-array system architectures for defense 
applications including X-band and S-band radars.  GaN 
also enables cost-effective massive-MIMO active antenna 
deployments for base stations, improving performance at 
higher frequencies. 

In IoT, Qorvo is powering innovative applications in 
diverse markets, including home health, agriculture, 
automotive, media remotes, routers, televisions and 
wearables.  Qorvo’s multifunctional, standards-agnostic 
solutions support all major connectivity protocols to help 
accelerate our vision of a truly smart home, with a Pod 
in Every Room™.  Our GP695 combines Thread, Zigbee 
and Bluetooth into an integrated solution that optimizes 
energy efficiency and extends battery life.  In narrowband 
IoT, Qorvo recently teamed with Nordic Semiconductor to 
provide our state-of-the-art RF front end and advanced 
packaging for their nRF91 multimode system-in-package.  

Why Qorvo Wins

Qorvo has a unique portfolio of key enabling technologies 
to address multiple long-term growth drivers in diverse
market segments.  Our device technologies, design skills, and
manufacturing capabilities enable deep customer engagement
across a broad range of opportunities.  We are targeting and
winning the most complex and highest value RF solutions
by leveraging system-level expertise, proficiency across
communication protocols, and manufacturing and R&D scale.

Today, the story in 4G is the migration to LTE-Advanced/Pro to
meet the global demand for more data, with one gigabit-per-
second download performance.  Qorvo is making this possible
with products enabling carrier aggregation, advanced
modulation schemes and MIMO designs.  During fiscal 2018, 
we launched our RF Fusion™ for Phase 6, with support for 
carrier aggregation.  RF Fusion leverages Qorvo’s BAW
technology, multiplexer design and system-level expertise, 
to help customers enhance performance, extend battery life, 
reduce board layout and accelerate time-to-market.

Tomorrow, the story will be about LTE-Advanced/Pro + 5G.  
We’ve participated in dozens of 5G infrastructure field trials
including the commercial debut of 5G at the Winter Olympics
in South Korea.  We are the only RF supplier to support the 
full 5G spectrum, from sub-6 gigahertz through 39 gigahertz.  
We introduced the industry’s first 5G RF front end for
smartphones, and we are a full voting member of the 3GPP™, 
working to define tomorrow’s 5G RF solutions.  

5G will be rolled out in three distinct forms, and Qorvo
is positioned to benefit from each.  The first version of 
the standard will offer higher bandwidth connectivity for
smartphones and other mobile products, including protocols 
to support IoT applications requiring loong battery life. 
Another version will be a low-latency, high-quality standard 
optimized for applications like autonommous driving and 
augmented reality.  A third version willl be fixed wireless, 
which will operate at millimeter wave frequencies to supportrt 
applications with very high data speedd requirements. 

3

Better Positioned than Ever  

We’re proud of what the Qorvo team achieved in fiscal year 2018.  We 
delivered breakthrough products, enhanced productivity, and positioned 
Qorvo for a bright future.  In fiscal year 2019, we expect to build on 
our operating improvements and continue our focus on quality and 
customer satisfaction.  

Qorvo has developed a comprehensive portfolio of key enabling 
technologies that address long-term growth drivers in diverse markets.  
We’re able to target the most valuable opportunities in our industry’s 
most attractive markets, and we’re better positioned than ever to help 
transform how people around the world access their data, transact 
commerce and interact with their communities.  On behalf of our Board 
of Directors, senior management and global workforce, we thank you 
for your continued support of Qorvo.

Sincerely, 

Bob Bruggeworth
President and Chief Executive Officer 

4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2018
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

®

Qorvo, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
46-5288992
(I.R.S. Employer Identification No.)
7628 Thorndike Road, Greensboro, North Carolina 27409-9421
(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 class

Name of each exchange on which registered

Common Stock, $0.0001 par value

The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act:
None

the registrant

the Securities

for such shorter period that

is a well-known seasoned issuer, as defined in Rule 405 of

Indicate by check mark if
Act. Yes Í No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ‘ No Í
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 Í No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or
the registrant was required to submit and post such
files). Yes Í No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Í
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 filer Í Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘
(Do not check if a smaller reporting 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 Act). Yes ‘ No Í
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately
$8,954,525,040 as of September 30, 2017. For purposes of such calculation, shares of common stock held by persons who held
more than 10% of the outstanding shares of common stock and shares held by directors and officers of the registrant and their
immediate family members have been excluded because such persons may be deemed to be affiliates. This determination is not
necessarily conclusive.
There were 126,490,563 shares of the registrant’s common stock outstanding as of May 11, 2018.

DOCUMENTS INCORPORATED BY REFERENCE
The registrant has incorporated by reference into Part III of this report certain portions of its proxy statement for its 2018 annual
meeting of stockholders, which is expected to be filed pursuant to Regulation 14A within 120 days after the end of the registrant’s
fiscal year ended March 31, 2018.

QORVO, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED MARCH 31, 2018

Forward-Looking Information.

Item 1. Business.
Item 1A. Risk Factors.
Item 1B. Unresolved Staff Comments.
Item 2.
Item 3.
Item 4. Mine Safety Disclosures.

Properties.
Legal Proceedings.

INDEX

PART I

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities.

Item 6. Selected Financial Data.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Item 8.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial

Financial Statements and Supplementary Data.

Disclosure.

Item 9A. Controls and Procedures.
Item 9B. Other Information.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.
Item 14. Principal Accounting Fees and Services.

PART IV

Item 15. Exhibits, Financial Statement Schedules.
Item 16. Form 10-K Summary.
Exhibit Index.
Signatures.

2

Page

3

3
12
22
22
23
23

23
26

28
41
42

84
84
84

85
85

85
85
85

86
86
87
90

Forward-Looking Information

These

forward-looking

This report
includes “forward-looking statements”
within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995,
including but not
limited to certain disclosures
contained in Item 7, “Management’s Discussion and
Financial Condition and Results of
Analysis of
Operations.”
statements
include, but are not limited to, statements about our
representations and contentions,
plans, objectives,
and are not historical facts and typically are identified
by the use of terms such as “may,” “will,” “should,”
“could,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,”
“potential,”
“continue” and similar words, although some forward-
looking statements are expressed differently. You
should be aware that the forward-looking statements
included herein represent management’s current
judgment and expectations, but our actual results,
events and performance could differ materially from
those
forward-looking
statements. We do not intend to update any of these
forward-looking statements or publicly announce the
results of any revisions to these forward-looking
statements, other
the
federal securities laws.

than as is required under

“forecast,”

expressed

“predict,”

implied

by

or

The following discussion should be read in conjunction
with, and is qualified in its entirety by reference to, our
audited consolidated financial statements included in
this report, including the notes thereto.

PART I

We use a 52- or 53-week fiscal year ending on the
Saturday closest to March 31 of each year. Fiscal
years 2018 and 2017 were 52-week years, and fiscal
year 2016 was a 53-week year. Our other
fiscal
quarters end on the Saturday closest to June 30,
September 30 and December 31 of each year.

On February 22, 2014, RF Micro Devices,
Inc.
(“RFMD”) and TriQuint Semiconductor, Inc. (“TriQuint”)
entered into an Agreement and Plan of Merger and
Reorganization as subsequently amended on July 15,
2014 (the “Merger Agreement”), providing for
the
combination of RFMD and TriQuint in a merger of
equals (the “Business Combination”) under a new
holding company named Qorvo, Inc. (the “Company” or
“Qorvo”). The transactions contemplated by
the
Merger Agreement were consummated on January 1,
2015.

the Business
For more information concerning
Combination, see Note 6 of
the Notes to the
Consolidated Financial Statements set forth in Part II,
Item 8 of this report.

ITEM 1. BUSINESS.

Company Overview
Qorvo® is a product and technology leader at the
forefront of the growing global demand for always-on
broadband connectivity. We combine a broad portfolio
highly
of

solutions,

frequency

(“RF”)

radio

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

technologies,

semiconductor

differentiated
deep
systems-level expertise and scale manufacturing to
supply a diverse group of customers in expanding
markets,
including smartphones and other mobile
devices, defense and aerospace, Wi-Fi customer
premises equipment (“CPE”), cellular base stations,
optical networks, automotive connectivity and smart
home
our
products enable a broad range of
leading-edge
applications – from very-high-power wired and wireless
infrastructure solutions to ultra-low-power smart home
solutions. Our
products and technologies help
transform how people around the world access their
data,
transact commerce and interact with their
communities.

applications. Within

these markets,

and

(“BAW”)

facilities,

technologies. Our

Qorvo employs more than 8,300 people. We have
world-class manufacturing
our
fabrication facility in Richardson, Texas, is a United
States Department of Defense (“DoD”)-accredited
‘Trusted Source’ (Category 1A) for gallium arsenide
(“GaAs”), gallium nitride (“GaN”) and bulk acoustic
wave
and
manufacturing expertise covers many semiconductor
process technologies, which we source both internally
and through external suppliers. Our primary wafer
fabrication facilities are in Florida, North Carolina,
Oregon and Texas, and our primary assembly and test
facilities are in China, Costa Rica, Germany and
Texas. We also operate design, sales and other
manufacturing facilities throughout Asia, Europe and
North America.

design

Qorvo was incorporated in Delaware in 2013. Our
principal executive office is located at 7628 Thorndike
Road, Greensboro, North Carolina 27409 and our
telephone number is (336) 664-1233.

tablets,

computers, wearables,

Operating Segments
We design, develop, manufacture and market our
products to leading U.S. and international original
(“OEMs”) and original
equipment manufacturers
in the following
design manufacturers (“ODMs”)
operating segments:
‰ Mobile Products (MP) — MP is a leading global
supplier of cellular RF and Wi-Fi solutions into a
variety of mobile devices,
including smartphones,
and
notebook
cellular-based applications for the Internet of Things
(“IoT”). Mobile device manufacturers and mobile
network operators are adopting new technologies to
address the growing demand for data-intensive,
increasingly cloud-based distributed applications and
for mobile devices with smaller
form factors,
improved signal quality, less heat and longer talk
and standby times. New wireless communications
standards are being deployed to utilize available
spectrum more efficiently. Carrier aggregation (“CA”)
is being implemented to support wider bandwidths,
increase
network
performance. These trends increase the complexity
of smartphones, require more RF content and place

improve

rates

data

and

3

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

a premium on performance,
integration, systems-
level expertise, and product and technology portfolio
breadth, all of which are MP strengths. MP offers a
comprehensive product portfolio of BAW and surface
acoustic wave (“SAW”)
filters, power amplifiers
low noise amplifiers (“LNAs”), switches,
(“PAs”),
multimode multi-band PAs and transmit modules, RF
power management
integrated circuits (“ICs”),
diversity receive modules, antenna switch modules,
antenna tuning and control solutions, modules
incorporating PAs and duplexers (“PADs”) and
modules incorporating switches, PAs and duplexers
(“S-PADs”).

high

applications

‰ Infrastructure and Defense Products (IDP) — IDP is a
leading global supplier of RF solutions with a diverse
portfolio of solutions that “connect and protect,”
spanning communications and defense applications.
These
performance
include
defense systems such as radar, electronic warfare
and communication systems, Wi-Fi CPE for home
and work, high speed connectivity in Long-Term
Evolution (“LTE”) and 5G base stations, cloud
connectivity via data center communications and
telecom transport, automotive connectivity and other
IoT, including smart home solutions. IDP products
include GaAs and GaN PAs, LNAs, switches,
semiconductor
complementary
(“CMOS”)
solutions,
premium BAW and SAW filter solutions and various
multi-chip and hybrid assemblies.

metal
system-on-a-chip

(“SoC”)

oxide

financial

information about

For
the results of our
operating segments for each of the last three fiscal
years, see Note 16 of the Notes to the Consolidated
Financial Statements set forth in Part II, Item 8 of this
report.

Market Overview
Our business is diversified primarily across seven
strategic end markets: mobile devices, defense and
aerospace, CPE Wi-Fi, cellular base stations, optical,
automotive connectivity and smart home. These
markets compose the primary building blocks of the
IoT.

to

streaming media,

largest market, mobile devices,

Mobile Devices
In our
the most
significant trend today is the increasing demand for
ubiquitous broadband mobile data. This is driven
primarily by video, with data traffic for video exceeding
data traffic for web browsing and voice. Compounding
this, consumers want higher resolution screens and
access
traffic/
navigation, GPS, Bluetooth® connectivity and Wi-Fi. In
response,
leading smartphone providers are adding
4G LTE and 5G bands of coverage to their flagship
devices to reduce development costs and enable
larger, more concentrated marketing budgets in
support of fewer models. They are also adding CA
technology to enable simultaneous communication
over multiple frequency bands. This helps network
operators optimize spectral efficiency and provides an

real-time

4

can

increase

enhanced user experience for consumers. Both trends
levels of
content and drive higher
expand RF
integration,
performance
which
requirements for RF components and narrow the
competitive field. We see these trends continuing, as
consumers increasingly expect always-on, ultra-low
latency, broadband connectivity and as smartphone
manufacturers
to
network
enhance performance and the user experience
generation-over-generation.

operators

seek

and

Defense and Aerospace
The global defense and aerospace industries are
sharply focused on balancing cost, RF performance
and power consumption. The trends toward phased
arrays and higher
frequencies of operation are
expanding the market opportunities for monolithic
microwave integrated circuits (“MMICs”) and discrete
PAs, LNAs, passive devices, die level solutions and
multichip modules leveraging multiple semiconductor
technologies and advanced packaging techniques.
Additionally, as with all RF communications systems,
spectrum is becoming increasingly crowded and
interference-free connections which are
requires
addressed by premium filtering solutions. These
factors continue to drive demand for
increased
reliability and performance to address current and next
generation communications for defense and national
and with
both
capabilities,
security
international partners.

domestic

CPE Wi-Fi
In Wi-Fi markets, consumer and enterprise demand for
faster data rates, the growth in connected users and
the higher performance requirements of 802.11ac and
802.11ax mandate best-in-class RF solutions. Wi-Fi is
continuing to proliferate within CPE, including routers,
access points, set-top boxes and smart televisions, as
well as in automobiles. As spectrum becomes more
crowded,
interference-free
transmission and reception is expected to drive the
demand for high performance filters in RF solutions for
Wi-Fi equipment.

demand

the

for

Cellular Base Stations
The widespread use of data-intensive applications has
driven cellular operators to require more power-
efficient designs and solutions that enable increased
capacity from cellular networks. To meet network
demand, network equipment manufacturers are using
techniques such as CA, moving to new RF frequency
bands that have wider channel bandwidths and
incorporating cloud radio access networks, which use
a virtual radio access technology and remote radio
heads. As demand for data-intensive applications
continues to grow, the next generation network, called
5G,
in
2020. 5G networks will continue the progression of
operating at much higher frequencies, likely at 28GHz
and 39GHz. In the meantime, operators will continue
to evolve the performance of their LTE networks and

is forecasted to begin commercial

rollout

run field trials to prove out 5G technologies and
solutions. The future trends in the base station
market
include implementation of Multiple Input
Multiple Output (“MIMO”) and small cells.

applications.

Optical
long
The optical market is comprised of traditional
telecom network applications and hyperscale
haul,
Telecom applications
center
data
typically involve high-speed networks of
fiber optic
cable to enable voice and data communications in a
transcontinental,
regional or city-wide area. Data
center applications support the processing and routing
of massive amounts of internet data traffic to, from
and within hyperscale facilities used by Web 2.0
participants like Facebook, Google and Amazon in
support of their proprietary, cloud-based applications.
High-speed throughput, efficient power consumption
and cost efficiency are key attributes of the hyperscale
data center market.

the car

to other vehicles or

Automotive Connectivity
The automobile is becoming a more connected device
with the addition of multiple RF based connectivity
solutions such as satellite radio, in-car infotainment
and LTE connectivity solutions. Looking forward, new
standards are expected to be deployed that will
connect
to highway
create
infrastructure. All
opportunities that will drive the need for RF solutions
that will enhance passenger comfort, convenience and
safety. Most of these applications require AEC-Q100
qualified solutions, which is the standard in the
automobile industry. Additionally, in this market most
of the communications devices will need to share
frequency spectrum with either licensed or unlicensed
users.

applications

these

of

locked or unlocked, and actuators

Smart Home
The smart home is characterized as a dwelling that
contains devices such as sensors that detect light,
motion or temperature, or whether doors are open,
to
closed,
implement a command such as
the
temperature or opening your garage door. Typically,
these devices can be controlled via the internet, by a
computer or phone or through a direct peer-to-peer
connection such as a television remote control. The
standard
solutions
utilize
technologies like Bluetooth Low Energy
(“BLE”),
ZigBee, and Thread as well as proprietary solutions to
link to a central gateway that connects to the internet.

lowering

industry

often

open

Other Markets
We also participate in several smaller markets
including broadband cable, point-to-point radio, Very
Small
cellular
machine-to-machine (“M2M”) applications.

(“VSAT”)

Terminal

Aperture

and

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Products and Applications
Our semiconductor solutions serve RF, microwave and
millimeter-wave applications. We believe our products
deliver key advantages, as measured by size, weight,
output
linearity,
power-added
distortion,
frequency control, and other
efficiency, selectivity,
critical performance metrics.

power,

We utilize specialized substrate materials such as
GaAs, gallium nitride on silicon carbide (GaN on SiC),
silicon germanium (SiGe) and silicon for power
amplifiers. We use silicon on insulator (SOI) for tuners
and switches and silicon for controllers. Our filters use
substrates made of lithium tantalate for SAW filters,
lithium niobate for
temperature compensated SAW
filters (TC-SAW) and silicon for BAW filters. We use
heterojunction
and
bipolar
pseudomorphic high electron mobility
transistors
(“pHEMT”) technologies for our GaAS and GaN power
amplifiers. We use solid mounted resonator (“SMR”)
technology to manufacture our BAW filters.

transistor

(“HBT”)

Mobile Devices
Qorvo’s MP product portfolio includes our RF Fusion™
and RF Flex™ product families. RF Fusion leverages
Qorvo’s product and technology leadership, systems-
level expertise and advanced integration capabilities
to combine all major
transmit and receive RF
functionality in highly integrated, high-performance,
split-band placements. Qorvo’s RF Flex modules
leverage our deep systems-level expertise to integrate
core cellular transmit and receive functionality in high-
performance multiband PA modules and transmit
modules. RF Fusion solutions support the industry’s
most advanced smartphone architectures, and RF Flex
solutions
performance-tier
smartphone architectures.

cost-optimized

support

into

incorporate

in envelope tracking (“ET”)
Qorvo is a pioneer
technology, which we
power
management components and our most advanced
PAs. We also offer ET-capable PAs for third-party power
management components. Our ET technology enables
us to track the envelope of high-speed modulation
signals and adjust the PA in real time to maximize
efficiency and maintain the requisite levels of linearity.
This is increasingly necessary to maximize data rates
and satisfy user expectations for battery life and case
temperatures.

product

portfolio

includes

Our mobile
filters,
duplexers, switches, multimode/multi-band PAs and
ICs,
transmit modules, RF power management
diversity receive modules, antenna switch modules,
antenna tuning and control solutions, and modules
incorporating PAs, PADs, and S-PADs.

we

have

seasonal
Historically,
fluctuations in the sale of mobile products, with
revenue strongest
in our second and third fiscal
quarters and weakest in our fourth fiscal quarter.

experienced

5

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Defense and Aerospace
Contractors serving the United States and other
governments use our high performance and high
reliability products for mission critical solutions across
the military and aerospace industry. Our die-level
integrated circuits and discrete components, MMICs
and multi-chip modules are key components for radar,
electronic warfare and communications systems.
Program applications
shipboard,
airborne and battlefield radar systems as well as
communications and electronic warfare. We supply a
wide range of products for large-scale programs with
long lead-times. Once a component has been
designed into an end-use military application,
it is
generally used during the entire production life of the
end-use system.

include major

Our products for defense radar applications bring new
capabilities to detect and neutralize threats against
aircrews and shipboard and infantry forces around the
globe. Our microwave PAs provide the power at the
heart of phased array radar. These radars consist of
large element arrays composed of many individual
integrated circuits, with the capability to track multiple
targets simultaneously. We are strategically teamed
with top tier contractors to offer this type of capability
to new domestic and multi-national production
programs, along with retrofits of other essential
tactical military assets with critical enhancements and
service life extension capabilities.

In the defense communications field, we supply filters,
amplifiers and other components for handheld and
satellite communications systems. In addition, we use
our packaging and integrated assembly expertise to
speed designs, facilitate multi-chip package evolution
and deliver cost-effective solutions.

We are the leading supplier of GaN-based products to
global defense and aerospace markets and are
directly engaged with the United States government,
primarily through contracts with the Defense Advanced
the Air Force Research
Research Project Agency,
to
Laboratory and the Office of Naval Research,
develop next generation GaN devices for future high-
power phased array radar, electronic warfare and
communications systems. The DoD has certified our
GaN fabrication
at
Manufacturing Readiness Level 9, the highest in the
industry.

capabilities

production

and

high

discrete

CPE Wi-Fi
We address the high performance requirements
demanded in customer premises Wi-Fi equipment
through our portfolio of differentiated products,
including
and
integrated front-end modules (“iFEMs”) for mid and
low power, and our discrete and integrated BAW filter
capabilities. Our products primarily target high-end
Wi-Fi market segments,
(routers,
extenders and repeaters), distributed mesh solutions,
enterprise, service provider and carrier grade Wi-Fi.
Our solutions enable better home and business

including retail

amplifiers,

power

6

the

and more

coverage with
reliable
faster
connections required for video streaming, augmented/
virtual reality and high density user environments. We
use our GaN and GaAs technologies to supply leading
Wi-Fi chipset providers with highly integrated, power-
efficient solutions and we use our premium filter
technologies to provide coexistence and band-edge
solutions to address interference issues due to
spectrum crowding. This approach aligns with our key
customers’ need for more highly integrated, cost-
effective solutions to provide a high-quality user
experience at affordable prices.

and

designs

increased

Cellular Base Stations
We offer a broad set of custom RF amplifier solutions,
receive module technologies and premium filter
solutions to the leading base station OEMs to address
the current and future needs of
this market. To
address the increasing market demands for more
network
power-efficient
capacity, we offer transceiver products supporting LTE
massive MIMO deployments, primarily in China and
Japan. Our
these massive
MIMO systems include switch-LNA modules, variable
gain amplifiers and integrated PA modules. Our GaAs
base station solutions offer differentiated low noise
performance, while our GaN amplifiers combine high
linearity and efficiency with high output power and low
power consumption. We are a strategic supplier of
transceiver solutions to base station OEM market
leaders, and we expect to continue to grow these
relationships with new product categories.

integrated solutions for

legacy defense product
We are leveraging our
capabilities across
low frequencies up through
millimeter wave to respond to the product demands of
the next generation 5G networks for sub-6GHz and
millimeter wave solutions. Our current products are
embedded in ongoing 5G field trials, and we have
multiple product development engagements with top
OEMs to intersect network operators’ timelines for
deployment of 5G networks.

These

telecom, metro and datacenter
differentiated,

Optical
We supply linear and nonlinear driver solutions and
trans-impedance amplifiers (“TIAs”)
to the optical
market and have leveraged this market position by
extending our product offerings to include TIAs for long
interconnect
haul
applications.
value-added
products balance performance with the cost per
for our customers. Achieving this balance
gigabit
requires a mix of internal and external semiconductor
technologies and innovative packaging. Technologies
used for our optical products include GaAs pHEMT,
In
Indium Phosphide (“InP”), SiGe and silicon.
addition, we were the first to offer optical drivers with
surface mount packaging and we continue to innovate
to create smaller products that consume less power
and enhance throughput to address the 40G, 100G,
200G and beyond markets.

Automotive Connectivity
To address the growing demand for connected car
solutions, including solutions for cellular LTE, Wi-Fi,
and satellite digital audio radio service, we offer a
product portfolio that
includes differentiated BAW
filters, LNAs, switches, PAs and LTE front end
solutions, all of which meet or exceed the industry’s
automotive level quality and reliability standards. Our
BAW and SAW solutions address interference issues
due to licensed and unlicensed frequency bands being
contiguous or overlapping. We leverage our mobile and
CPE Wi-Fi and cellular LTE product portfolios and other
technology combinations to address the industry
needs. We have products on multiple reference
designs with key chipset makers to address future
vehicle-to-vehicle communication requirements.

Smart Home
Our product portfolio for
the smart home market
consists of silicon CMOS SoC devices and the
associated firmware and software to drive the radio
functions and enable application software to interface
with the SoC. To augment the SoC, we offer various
configurations of filtering and amplification utilizing our
extensive portfolio of filters, amplifiers and LNAs. Our
solutions are vertically focused on applications that
remote controls, and we
perform the functions of
provide
enable
support
development of application software to run on our
platforms. Our solutions typically support open
standard technologies such as BLE, ZigBee, and
Thread. Our smart home product development efforts
are focused on driving more functionality and system
power savings features into our hardware and
software architectures to address the needs of battery
powered devices, primarily remote controls. We are
also engaged with overall ecosystem providers to
develop products beyond remote controls to address
next generation smart home applications.

customers

our

to

to

Manufacturing
The majority of our products are multi-chip modules
utilizing multiple semiconductor and acoustic material
processing technologies. These products have varying
degrees of complexity and contain semiconductors
and other components that are manufactured in-house
or outsourced. We are a leading supplier of RF
solutions and a leading manufacturer of GaAs HBT,
GaAs pHEMT, GaN, SAW, TC-SAW and BAW products.

fabrication facilities for

We operate wafer
the
production of GaAs, GaN, SAW, TC-SAW and BAW
wafers in Apopka, Florida; Greensboro, North Carolina;
Hillsboro, Oregon; and Richardson, Texas. We also
use multiple silicon-based process technologies,
including SOI, SiGe and CMOS. We outsource all
silicon manufacturing to leading silicon foundries
located throughout the world. We have a global supply
chain and ship millions of units per day.

We have our own flip chip and wafer-level packaging
technologies and we also use external
(“WLP”)

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

suppliers for these and other packaging technologies.
In flip chip packages, the electrical connections are
created directly on the surface of
the die, which
eliminates wirebonds so the die may be attached
directly to a substrate or
leadframe. This type of
technology provides a higher density interconnection
than wirebonded die and enables smaller form factors
with improved thermal and electrical performance. We
use WLP technologies for our SAW, TC-SAW and BAW
filter products.

Once semiconductor wafers are manufactured, they
are singulated, or separated,
into individual units
called die. Prior to singulation of wafers into die, we
regularly conduct wafer level tests which could include
electrical validation, RF testing through the designed
frequency bands, as well as visual
inspection. For
module products, the next step is assembly. During
assembly, the die and other components are placed
on high-density interconnect substrates to provide
connectivity between the die and the components.
This
a
is
microelectronic package. Next,
the products are
tested for RF performance and prepared for shipment
through a tape and reel process. We primarily use
internal assembly facilities in China, Costa Rica,
Germany, and the U.S., and we also utilize external
suppliers. We also manufacture large volumes of WLP
die and discrete filters that our customers directly
assemble into their products.

populated

substrate

formed

into

and

complexity

factors,
the maturity

Manufacturing yields can vary significantly between
including
products, based on a number of
product
our
of
manufacturing processes. To maximize wafer yields
and quality, we test products multiple times, maintain
continuous
conduct
and
numerous quality control
inspections throughout the
production flow.

reliability monitoring

Our
internal manufacturing facilities require a high
level of fixed costs, consisting primarily of occupancy
costs, maintenance, repair, equipment depreciation,
and fixed labor costs related to manufacturing and
process engineering.

to

and

requires

contaminants,
highly

ICs and filter products are highly complex and
semiconductor
sensitive
clean
fabrication
environments. Wafers can be rejected or die on a
wafer can be found to be nonfunctional as a result of
minute impurities, variances in the fabrication process
or defects in the masks used to transfer circuits onto
the wafers.

controlled,

Our manufacturing facilities worldwide are certified to
the ISO 9001 quality standard, and select locations
are certified to additional automotive (IATF 16949),
aerospace (AS 9100) and environmental (ISO 14001)
standards. These stringent standards are audited and
certified by third-party auditors in addition to our
continuous
ISO 9001
standard is based on a number of quality management
the
principles including a strong customer

self-audits.

internal

focus,

The

7

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

and

incorporates

motivation of top management, the process approach
and continual improvement. IATF 16949 is the highest
international quality standard for the global automotive
industry
additional
requirements for the automotive industry. AS 9100 is
the standardized quality management system for the
aerospace industry. ISO 14001 is an internationally
agreed
environmental
management system. We require that all of our key
vendors and suppliers be compliant with select
standards, as applicable.

standard

specific

upon

for

an

Raw Materials
We purchase numerous raw materials, passive
components and substrates for our products and
manufacturing processes. For our GaAs and GaN
manufacturing operations, we use several
raw
including GaAs wafers and GaN on SiC
materials,
wafers.
filter manufacturing
operations, we use several raw materials, including
wafer starting materials made from quartz, silicon,
lithium niobate or lithium tantalite, as well as ceramic
or metal packages. Relatively few companies produce
these materials. Our most significant suppliers of
ceramic surface mount packages are based in Japan.

acoustic

our

For

For our silicon-based products, we use third-party
foundries. High demand for silicon wafers and wafer
starting materials has led to supply constraints from
time-to-time, and we have attempted to address this
by qualifying multiple silicon foundries and by
obtaining supply commitments,
in some cases in
exchange for purchase or capital commitments by us.

Our manufacturing strategy includes a balance of
internal and external sites (primarily for assembly and
test operations), which helps reduce costs, provides
flexibility of supply, and minimizes the risk of supply
disruption. We routinely qualify multiple sources of
supply and manufacturing sites to reduce the risk of
supply interruptions or price increases and closely
monitor suppliers’ key performance indicators. Our
suppliers’
are
sites
largest volume
geographically diversified (with our
sources distributed throughout Southern and Eastern
Asia). We believe we have adequate sources for the
supply of
raw materials, passive components and
substrates for our products and manufacturing needs.

our manufacturing

and

leading U.S.

Customers
We design, develop, manufacture and market products
for
and
ODMs. We also collaborate with leading baseband
reference design partners located primarily in the U.S.
and China.

international OEMs

and

We provided our products to our largest end customer,
Apple Inc. (“Apple”), through sales to multiple contract
manufacturers, which in the aggregate accounted for
36%, 34%, and 37% of total revenue in fiscal years
2018, 2017 and 2016,
respectively. Huawei
Technologies Co., Ltd. (“Huawei”) accounted for 8%,
11% and 12% of our total revenue in fiscal years

8

2018, 2017 and 2016, respectively. These customers
primarily purchase cellular RF and Wi-Fi solutions
offered by our MP segment for a variety of mobile
devices, including smartphones, notebook computers,
wearables, tablets and cellular-based applications for
the IoT.

Some of our sales to overseas customers are made
under export licenses that must be obtained from the
United States Department of Commerce.

about

segment
revenue
Information
revenue), operating profit or loss and total assets is
presented in Part II, Item 8, “Financial Statements and
Supplementary Data” of this report.

(including

Sales and Marketing
We sell our products worldwide directly to customers
as well as through a network of domestic and foreign
sales representative firms and distributors. We select
our domestic and foreign sales representatives based
on technical skills and sales experience, the presence
of complementary product
lines and the customer
base served. We provide ongoing training to our
internal and external sales representatives and
distributors to keep them educated about our
products. We maintain an internal sales and marketing
is responsible for key account
organization that
management, application engineering support
for
customers, sales and advertising literature, and
technical presentations for industry conferences. Our
sales and customer support centers are located near
our customers throughout the world.

Our website contains extensive product information,
and we publish a comprehensive product selection
guide annually. Our global
team of application
engineers interacts with customers during all stages
of design and production, maintains regular contact
with customer engineers, provides product application
notes and engineering data, and assists in the
resolution of technical problems. We maintain close
relationships with our
customers and platform
providers and provide them strong technical support to
help anticipate future product needs and enhance
their customer experience.

Research and Development
We maintain a high level of investment in research
and development (“R&D”) to develop the advanced
technologies and products necessary to lead in the
markets we serve. Our R&D activities focus primarily
on large, competitive design win opportunities for
major programs at key customers, which typically
requires us to improve the year-over-year functional
density, performance, size and cost of our products.
We also devote significant R&D resources for targeted
development of new products for general release to
various markets. Our R&D efforts require us to focus
on both continuous improvement in our processes for
design and manufacture as well as innovation in
fundamental areas like materials, software and
technologies,
firmware,

semiconductor

process

simulation and modeling, systems architecture, circuit
design, device packaging, module integration and test.

in

internally. We

technologies
invest

We have developed several generations of GaAs, GaN,
that we
BAW and SAW process
manufacture
these
technologies to improve device performance, reduce
die size and reduce manufacturing costs. We also help
develop and qualify
technologies made by key
suppliers, including SOI for switches and RF signal
conditioning solutions, SiGe and InP for amplifiers,
and CMOS for power management devices and SoC
solutions. We combine these external technologies
with our proprietary design methods,
intellectual
property and other expertise to improve performance,
increase integration and reduce the size and cost of
our products.

We invest in GaN process technologies and continue
to develop and release new GaN-based products to
exploit GaN’s performance advantages. The inherent
wide band gap, high electron mobility, and high
breakdown
GaN
semiconductor devices offer significant performance
advantages versus competing technologies.

characteristics

voltage

of

and

develop

advanced

We
packaging
qualify
technologies to allow us to eliminate wire bonds,
reduce component size,
improve performance and
reduce package costs. We are also investing in large
scale module assembly and test capabilities to bring
these technologies to market in very high volumes.

In fiscal years 2018, 2017 and 2016, we incurred
approximately $445.1 million, $470.8 million and
$448.8 million, respectively, in R&D expenses. We
expect to continue to spend substantial funds on R&D
in support of our growth and product diversification.

Competition
We operate in a competitive industry characterized by
rapid advances in technology and new product
introductions. Our customers’ product life cycles are
often short, and our competitiveness depends on our
ability to improve our products and processes faster
than our competitors, anticipate changing customer
requirements and successfully develop and launch
new products while
costs. Our
competitiveness is also affected by the quality of our
customer service and technical support and our ability
to design customized products that address each
customer’s particular requirements within their cost
limitations. The selection process for our products to
be included in our customers’ products is highly
competitive, and our customers provide no guarantees
that our products will be included in the next
generation of products introduced.

reducing

our

We compete primarily with the following companies:
Analog Devices,
Inc.; Broadcom Limited; M/A-COM
Technology Solutions, Inc.; Murata Manufacturing Co.,
Ltd.; Northrop Grumman Corporation; Qualcomm
Inc.; and
Technologies,
Sumitomo Electric Device Innovations.

Inc.; Skyworks Solutions,

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

and

positions

established

Many of our current and potential competitors have
customer
entrenched market
and
relationships,
other
patents
intellectual property and substantial
technological
capabilities. In some cases, our competitors are also
our customers or suppliers. Additionally, many of our
competitors may have significantly greater financial,
technical, manufacturing and marketing resources
than we do, which may allow them to implement new
technologies and develop new products more quickly
than we can.

Intellectual Property
We believe our intellectual property, including patents,
copyrights, trademarks and trade secrets, is important
to our business, and we actively seek opportunities to
leverage our intellectual property portfolio to promote
our business interests. We also actively seek to
monitor and protect our global
intellectual property
rights and to deter unauthorized use of our intellectual
property and other assets. Such efforts can be difficult
because of the absence of consistent international
standards and laws. Moreover, we respect
the
rights of others and have
intellectual property
implemented policies and procedures to mitigate the
risk of
infringing or misappropriating third party
intellectual property.

various reasons,

Patent applications are filed within the U.S. and in
other countries where we have a market presence. On
occasion, some applications do not mature into
patents for
including rejections
based on prior art.
In addition, the laws of some
foreign countries do not protect intellectual property
rights to the same extent as U.S.
laws. We have
approximately 1,300 patents that expire from 2018 to
2038. We also continue to acquire patents through
acquisitions or direct prosecution efforts and engage
in licensing transactions to secure the right to practice
third parties’ patents. In view of our rapid innovation
and product development and the comparative pace of
governments’ patenting processes,
there is no
guarantee that our products will not be obsolete
before the related patents expire or are granted.
However, we believe the duration and scope of our
most relevant patents are sufficient to support our
business, which as a whole is not significantly
dependent
other
intellectual property right. As we expand our products
and offerings, we also seek to expand our patent
prosecution efforts to cover such products.

particular

patent

any

on

or

rely

We periodically register federal trademarks, service
marks and trade names that distinguish our product
brand names in the market. We also monitor these
marks for their proper and intended use. Additionally,
confidentiality
we
agreements to protect our interest in confidential and
proprietary information that gives us a competitive
advantage, including business strategies, unpatented
inventions, designs and process technology. Such
information is closely monitored and made available

non-disclosure

and

on

9

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

to those employees whose responsibilities

only
require access to the information.

these hubs. Our

Backlog
Our sales are the result of standard purchase orders
or specific agreements with customers. We maintain
Qorvo-owned finished goods inventory at certain
customers’ “hub” locations and do not
recognize
revenue until our customers draw down the inventory
customers’ projections of
at
consumption of hub inventory and quantities on
purchase orders, as well as the shipment schedules,
are frequently revised within agreed-upon lead times to
reflect changes in the customers’ needs. Because
industry practice allows customers to cancel orders
with limited advance notice prior to shipment, and with
little or no penalty, we believe that backlog as of any
particular date may not be a reliable indicator of our
future revenue levels.

Employees
On March 31, 2018, we had more than 8,300
employees. We believe that our future prospects will
depend, in part, on our ability to continue to attract
and retain skilled employees. Competition for skilled
personnel is intense, and the number of persons with
relevant experience, particularly in RF engineering,
is limited.
product design and technical marketing,
None of our U.S. employees are represented by a
labor union. A number of our employees in Germany
(less than 5% of our global workforce as of March 31,
2018) are represented by internal works councils. We
have never experienced any work stoppage, and we
believe that our current employee relations are good.

Geographic Financial Summary
A summary of our operations by geographic area is as
follows (in thousands):

2018

Fiscal Year
2017

2016

Revenue:

United States

$ 524,472 $ 467,031 $ 306,328

International

2,449,064

2,565,543

2,304,398

March 31,
2018

April 1,
2017

April 2,
2016

Long-lived

tangible assets:

United States

$1,089,157 $1,082,754 $ 816,882

China

217,205

244,728

183,836

Other countries

67,750

64,450

46,170

Sales, for geographic disclosure purposes, are based
on the “sold to” address of the customer. The “sold
to” address is not always an accurate representation
of the location of final consumption of our products. Of
our total revenue for fiscal 2018, approximately 52%
($1,539.7 million) was attributable to customers in
China and 19% ($564.8 million) was attributable to

10

customers in Taiwan. Of our total revenue for fiscal
years 2017 and 2016, approximately 62% ($1,866.0
million) and 61% ($1,601.0 million), respectively, was
attributable to customers in China and 13% ($398.4
million) and 14% ($365.1 million), respectively, was
attributable to customers in Taiwan.

For financial
information regarding our operations by
geographic area, see Note 16 of the Notes to the
Consolidated Financial Statements set forth in Part II,
Item 8 of this report.

For a summary of certain risks associated with our
foreign operations, see Item 1A, “Risk Factors.”

process. We

Environmental Matters
By virtue of operating our wafer fabrication facilities,
we are subject to a variety of extensive and changing
domestic and international
federal, state and local
governmental laws, regulations and ordinances related
to the use, storage, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in the
manufacturing
own
manufacturing waste water pretreatment and disposal
for most of our manufacturing facilities, and we have
contracted for the disposal of our hazardous waste.
State agencies require us to report storage and
emissions of environmentally hazardous materials,
and we have retained appropriate personnel to help
ensure compliance with all applicable environmental
regulations. We believe that costs arising from existing
laws will not have a material adverse
environmental
effect on our
results of
operations.

financial position or

provide

our

We are an ISO 14001:2015 certified manufacturer
with a comprehensive Environmental Management
System (“EMS”) in place to help ensure control of the
environmental aspects of the manufacturing process.
Our EMS mandates compliance and establishes
appropriate checks and balances to minimize the
potential for non-compliance with environmental laws
and regulations.

We actively monitor the hazardous materials that are
used in the manufacture, assembly and testing of our
products, particularly materials that are retained in the
final product. We have developed specific restrictions
on the content of certain hazardous materials in our
products, as well as those of our suppliers and
outsourced manufacturers and subcontractors. This
helps to ensure that our products are compliant with
the requirements of
the markets into which the
products will be sold and with our customers’
are
example,
requirements.
compliant with the European Union RoHS Directive
(2011/65/EU on the Restriction of Use of Hazardous
Substances), which prohibits the sale in the European
Union market of new electrical and electronic
equipment containing certain families of substances
above a specified threshold.

products

our

For

We do not currently anticipate any material capital
facilities in
expenditures for environmental control
fiscal 2019.

Access to Public Information
We make available, free of charge through our website
(http://www.qorvo.com), our annual and quarterly
reports on Forms 10-K and 10-Q (including related
filings in XBRL format) and current reports on Form 8-K
and amendments to these reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”) as soon as reasonably practicable after we
electronically file these reports with, or furnish them
the United States Securities and Exchange
to,
Commission (“SEC”). The public may also request a
copy of our forms filed with the SEC, without charge
upon written request, directed to:

Investor Relations Department
Qorvo, Inc.,
7628 Thorndike Road
Greensboro, NC 27409-9421

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

The information contained on, or that can be accessed
through, our website is not incorporated by reference
into this Annual Report on Form 10-K. We have
included our website address as a factual reference
and do not intend it as an active link to our website.

information regarding issuers that

In addition, the SEC maintains an Internet site that
contains reports, proxy and information statements,
and other
file
electronically with the SEC at http://www.sec.gov. You
may also read and copy any documents that we file
with the SEC at the SEC’s Public Reference Room
located at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call
the SEC at
1-800-SEC-0330 for information on the operation of
the Public Reference Room.

11

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

ITEM 1A. RISK FACTORS.

for other

Our operating results fluctuate.
Our revenue, earnings, margins and other operating
results have fluctuated significantly in the past and
may fluctuate significantly in the future. If demand for
our products fluctuates as a result of economic
conditions or
revenue and
profitability could be impacted. Our future operating
results will depend on many factors,
including the
following:
‰ business, political and macroeconomic changes,
including trade disputes and downturns in the
semiconductor
industry and the overall global
economy;

reasons, our

‰ changes in consumer confidence caused by many
factors, including changes in interest rates, credit
markets, expectations for inflation, unemployment
levels, and energy or other commodity prices;

‰ fluctuations in demand for our customers’ products;
‰ our ability to forecast our customers’ demand for our

products accurately;

‰ the ability of third-party foundries and other third-
party suppliers to manufacture, assemble and test
our products in a timely and cost-effective manner;
‰ our customers’ and distributors’ ability to manage
they hold and to forecast

the inventory
accurately their demand for our products;

‰ our ability to achieve cost savings and improve
yields and margins on our new and existing
products; and

‰ our ability to utilize our capacity efficiently or acquire
customer

response

capacity

that

to

in

additional
demand.

It is likely that our future operating results could be
adversely affected by one or more of the factors set
future
forth above or other similar
operating results are below the expectations of stock
market analysts or our investors, our stock price may
decline.

factors.

If our

in

response

Our operating results are substantially dependent on
development of new products and achieving design
wins as our industry’s product life cycles are short and
our customers’ requirements change rapidly.
Our largest markets are characterized by short product
introduction of new
life cycles and the frequent
products
product
to
requirements, driven by end user demand for more
functionality, improved performance, lower costs and
largest MP customers
smaller
typically refresh some or all of their product portfolios
by releasing new models each year. In some cases,
product
either
opportunities to substantially increase our revenue by
winning a new design or a risk of a substantial
revenue loss by losing an incumbent product in a
customer’s device.

form factors. Our

designs we

represent

evolving

pursue

12

Our future success is dependent on our ability to
develop and introduce new products in a timely and
cost-effective manner and secure production orders
from our customers. The development of new products
is a highly complex process, and we have experienced
delays in completing the development and introduction
of new products at times in the past. Our successful
product development depends on a number of factors,
including the following:
‰ our ability to predict market requirements and define
and design new products that address those
requirements;

to design products that meet our
performance

cost,

size

and

‰ our ability
customers’
requirements;

‰ our ability to introduce new products that are
competitive and can be manufactured at lower costs
or that command higher prices based on superior
performance;

‰ acceptance of our new product designs;
‰ the availability of qualified product design engineers;
‰ our timely completion of product designs and ramp
up of new products according to our customers’
needs with acceptable manufacturing yields; and
‰ market acceptance of our customers’ products and

the duration of the life cycle of such products.

major
pursue

Most
that we

We may not be able to design and introduce new
products in a timely or cost-efficient manner, and our
new products may fail to meet market or customer
product
requirements.
design
opportunities
involve multiple
competitors, and we could lose a new product design
opportunity to a competitor that offers a lower cost or
equal or superior performing product.
If we are
unsuccessful
in achieving design wins against our
competitors, our revenue and operating results will be
adversely affected. Even when a design win is
achieved, our success is not assured. Design wins
may
require significant expenditures by us and
typically precede volume revenue by six to nine
months or more. Many customers seek a second
source for all major components in their devices,
which can significantly reduce the revenue obtained
from a design win. In many cases, the average selling
prices of our products decline over the products’ lives,
and we must achieve yield improvements, cost
reductions and other productivity enhancements in
order to maintain profitability. The actual value of a
design win to us will ultimately depend on the
commercial success of our customers’ products.

We depend on a few large customers for a substantial
portion of our revenue.
A substantial portion of our MP revenue comes from
large purchases by a small number of customers. Our
future operating results depend on both the success
largest customers and on our success in
of our
diversifying
base.
Collectively, our two largest end customers accounted

customer

products

and

our

for an aggregate of approximately 44%, 45% and 49%
of our revenue for fiscal years 2018, 2017 and 2016,
respectively.

individual

We typically manufacture custom products on an
exclusive basis for
customers for a
Increasingly, the top-tier
negotiated period of time.
cellular handset OEMs are releasing fewer new phone
models on an annual basis, which heightens the
importance of achieving design wins for these larger
opportunities. While the financial rewards and market
affirmation from a design win for
these premier
customers are greater, competition for these projects
is intense. The concentration of our revenue with a
relatively small number of customers makes us
particularly dependent on factors, both positive and
negative, affecting those customers.
If demand for
results are favorably
their products increases, our
impacted, while if
their products
decreases, they may reduce their purchases of, or
stop purchasing, our products and our operating
results would suffer. Even if we achieve a design win,
our customers can delay or cancel the release of a
new handset for any reason. Most of our customers
can cease incorporating our products into their
devices with little notice to us and with little or no
penalty. The loss of a large customer and failure to
add new customers to replace lost revenue would
have a material adverse effect on our business,
financial condition and results of operations.

demand for

States

government-sponsored

We face risks of a loss of revenue if contracts with the
United States government or defense and aerospace
contractors are canceled or delayed or if defense
spending is reduced.
We receive a portion of our revenue from the United
States government and from prime contractors on
United
programs,
principally for defense and aerospace applications.
These programs are subject to delays or cancellation.
Further, spending on defense and aerospace programs
can vary significantly depending on funding from the
United States government. We believe our government
and defense and aerospace business has been
negatively affected in the past by external factors such
as sequestration and political pressure to reduce
federal defense spending. Reductions in defense and
aerospace funding or the loss of a significant defense
and aerospace program or contract would have a
material adverse effect on our operating results.

We depend heavily on third parties.
We purchase numerous component parts, substrates
and silicon-based products from external suppliers.
We also utilize third-party suppliers for numerous
services, including die processing, wafer bumping, test
and tape and reel. The use of external suppliers
involves a number of risks, including the possibility of
material disruptions in the supply of key components
and the lack of control over delivery schedules,
capacity constraints, manufacturing yields, product
quality and fabrication costs.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Although our key suppliers commit
to us to be
compliant with applicable ISO 9001 and/or TS-16949
quality standards, we have experienced quality and
reliability issues in the past with certain suppliers.
Quality or reliability issues in our supply chain could
negatively affect our products, our reputation and our
results of operations.

party

technical

distributors’

distributors. We

We face risks related to sales through distributors.
We sell a significant portion of our products through
depend on these
third
distributors to help us create end customer demand,
provide technical support and other
value-added
services to customers, fill customer orders, and stock
our products. We may rely on one or more key
distributors for a product, and a material change in our
relationship with one or more of these distributors or
their failure to perform as expected could reduce our
revenue. Our ability to add or replace distributors for
some of our products may be limited because our end
customers may be hesitant to accept the addition or
replacement of a distributor due to advantages in the
incumbent
and
favorable business terms related to payments,
discounts and stocking of acceptable inventory
levels. Using third parties for distribution exposes us
to many
competitive pressure,
concentration, credit risk, and compliance risks. Other
third parties may use one of our distributors to sell
products that compete with our products, and we may
need to provide financial and other incentives to the
distributors to focus them on the sale of our products.
Our
face financial difficulties,
including bankruptcy, which could harm our collection
of accounts receivable and financial results. Violations
of the Foreign Corrupt Practices Act or similar laws by
our distributors or other
third-party intermediaries
could have a material impact on our business. Failure
to manage risks related to our use of distributors may
reduce sales,
increase expenses, and weaken our
competitive position.

distributors may

including

support

risks,

We face risks associated with the operation of our
manufacturing facilities.
We operate wafer fabrication facilities in Florida, North
Carolina, Oregon and Texas. We currently use several
international and domestic assembly suppliers, as
well as internal assembly facilities in China, Costa
Rica, Germany and the U.S. to assemble and test our
products. We currently have our own test and tape and
reel facilities located in China, Costa Rica and the
U.S., and we also utilize contract suppliers and
partners in Asia to test our products.

results,

A number of factors related to our facilities will affect
our business and financial
including the
following:
‰ our ability to adjust production capacity in a timely
fashion in response to changes in demand for our
products;

‰ the significant fixed costs of operating the facilities;
‰ factory utilization rates;

13

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

‰ our ability to qualify our facilities for new products

and new technologies in a timely manner;

‰ the availability of raw materials, the impact of the
volatility of commodity pricing and tariffs imposed on
raw materials, including substrates, gold, platinum
and high purity source materials such as gallium,
aluminum, arsenic, indium, silicon, phosphorous and
palladium;

‰ our manufacturing cycle times;
‰ our manufacturing yields;
‰ the
political,
associated with our
operations;

regulatory

and

risks
international manufacturing

economic

‰ potential violations by our international employees or
laws

international or U.S.

third-party agents of
relevant to foreign operations;

train and manage qualified

‰ our ability to hire,
production personnel;

‰ our compliance with applicable environmental and

other laws and regulations; and

‰ our ability to avoid prolonged periods of down-time in

our facilities for any reason.

and

damage

property

or water

Business disruptions could harm our business, lead to
a decline in revenues and increase our costs.
Our worldwide operations and business could be
disrupted by natural disasters,
industrial accidents,
cybersecurity incidents, telecommunications failures,
extreme weather
shortages,
power
conditions, public health issues, military actions, acts
of terrorism, political or regulatory issues and other
man-made disasters or catastrophic events. We carry
business
commercial
interruption insurance against various risks, with limits
we deem adequate for reimbursement for damage to
our
fixed assets and resulting disruption of our
operations. However, the occurrence of any of these
business disruptions could harm our business and
result in significant losses, a decline in revenue and
costs and expenses. Any
an increase in our
disruptions
require
substantial expenditures and recovery time in order to
fully
resume operations and could also have a
material adverse effect on our operations and financial
results to the extent that losses are uninsured or
exceed insurance recoveries and to the extent that
such disruptions adversely impact our relationships
with our customers.

from these

events

could

If we experience poor manufacturing yields, our
operating results may suffer.
Our products have unique designs and are fabricated
using multiple semiconductor process technologies
that are highly complex. In many cases, our products
are assembled in customized packages. Many of our
products consist of multiple components in a single
module and feature enhanced levels of integration and
complexity. Our customers insist that our products be
designed to meet their exact specifications for quality,
performance and reliability. Our manufacturing yield is
a combination of yields across the entire supply chain,

14

including wafer fabrication, assembly and test yields.
in an assembled
Defects in a single component
module product can impact the yield for the entire
module, which means the adverse economic impacts
of an individual defect can be multiplied many times
over if we fail to discover the defect before the module
is assembled. Due to the complexity of our products,
we periodically experience difficulties in achieving
acceptable yields and other quality issues, particularly
with respect to new products.

Our customers test our products once they have been
assembled into their products. The number of usable
products that result from our production process can
fluctuate as a result of many factors, including:
‰ design errors;
‰ defects in photomasks (which are used to print

circuits on a wafer);

‰ minute impurities in materials used;
‰ contamination of the manufacturing environment;
‰ equipment failure or variations in the manufacturing

processes;

‰ losses from broken wafers or other human error; and
‰ defects in packaging.

We constantly seek to improve our manufacturing
yields. Typically, for a given level of sales, when our
yields improve, our gross margins improve, and when
our yields decrease, our unit costs are higher, our
margins are lower, and our operating results are
adversely affected.

Costs of product defects and deviations from required
specifications could include the following:
‰ writing off the value of inventory;
‰ disposing of products that cannot be fixed;
‰ recalling products that have been shipped;
‰ providing product replacements or modifications;
‰ direct and indirect costs incurred by our customers
in recalling their products due to defects in our
products; and

‰ defending against litigation.

These costs could be significant and could reduce our
gross margins. Our reputation with customers also
could be damaged as a result of product defects and
quality issues, and product demand could be reduced,
which could harm our business and financial results.

We are subject to increased inventory risks and costs
because we build our products based on forecasts
provided by customers before receiving purchase
orders for the products.
In order to ensure availability of our products for some
of our largest end customers, we start manufacturing
receiving purchase
certain products in advance of
orders based on forecasts provided by
these
customers. However, these forecasts do not represent
binding purchase commitments and we do not
recognize sales for
they are
shipped to or consumed by the customer. As a result,
we incur significant inventory and manufacturing costs
in advance of anticipated sales. Because demand for

these products until

our products may not materialize, or may be lower
than expected, manufacturing based on forecasts
subjects us to heightened risks of higher inventory
carrying costs,
increased obsolescence and higher
operating costs. These inventory risks are exacerbated
through
when our customers purchase indirectly
contract manufacturers or hold component inventory
levels greater than their consumption rate because
this reduces our visibility regarding the customers’
accumulated levels of inventory. If product demand
decreases or we fail to forecast demand accurately,
we could be required to write-off
inventory, which
would have a negative impact on our gross margin and
other operating results.

We sell certain of our products based on reference
designs of platform providers, and our inability to
effectively manage or maintain our evolving
relationships with these companies may have an
adverse effect on our business.
Platform providers are typically large companies that
provide system reference designs for OEMs and ODMs
that
include the platform provider’s baseband and
other complementary products. A platform provider
may own or control IP that gives it a strong market
position for
its baseband products for certain air
interface standards, which provides it with significant
influence and control over sales of RF products for
these standards. Platform providers historically looked
to us and our competitors to provide RF products to
their customers as part of the overall system design,
and we competed with other RF companies to have
our products included in the platform provider’s
system reference design. This market dynamic has
evolved in recent years as platform providers have
worked to develop more fully integrated solutions that
include their own RF technologies and components.

if

they offer

Platform providers may be in a different business from
ours or we may be their customer or direct competitor.
Accordingly, we must balance our interest in obtaining
new business with competitive and other
factors.
Because platform providers control the overall system
reference design,
competitive RF
technologies or their own RF solutions as a part of
their reference design and exclude our products from
competitive
the design, we are at a distinct
disadvantage with OEMs and ODMs that are seeking a
turn-key design solution, even if our products offer
superior performance. This requires us to work more
closely with OEMs and ODMs to secure the design of
our products in their handsets and other devices.

Our relationships with platform providers are complex
and evolving, and the inability to effectively manage or
maintain these relationships could have an adverse
effect on our business, financial condition and results
of operations.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

We are subject to risks from international sales and
operations.
We operate globally with sales offices and R&D
activities as well as manufacturing, assembly and
testing facilities in multiple countries, and some of our
business activities may be concentrated in one or
more geographic areas. As a result, we are subject to
regulatory, geopolitical and other risks associated with
doing business outside the U.S., including:
‰ global and local economic and political conditions;
‰ currency controls and fluctuations;
‰ tariff, trade (including import/export regulations) and

other related restrictions and regulations;

‰ labor market conditions and workers’ rights affecting
our transportation or manufacturing arrangements or
those of our customers or suppliers;

‰ disruptions of capital and trading markets;
‰ occurrences of geopolitical crises such as terrorist
activity, armed conflict, civil or military unrest or
political instability, which may disrupt manufacturing,
assembly,
logistics, security and communications
and result in reduced demand for our products;

‰ compliance with laws and regulations that differ
among jurisdictions, including those covering taxes,
intellectual property ownership and infringement,
imports and exports, anti-corruption and anti-bribery,
antitrust
and
data
environment, health, and safety; and

competition,

‰ pandemics and similar major health concerns, which
could adversely affect our business and our
customer order patterns.

privacy,

and

to customers

respectively. We expect

Sales
located outside the U.S.
accounted for approximately 82% of our revenue in
fiscal 2018, of which approximately 52% and 19%
were attributable to sales to customers located in
China and Taiwan,
that
revenue from international sales to China and other
markets will continue to be a significant part of our
total revenue. Any weakness in the Chinese economy
could result in a decrease in demand for consumer
products that contain our products, which could
materially and adversely affect our business. The
imposition by the U.S. of tariffs on goods imported
from China and other government actions that restrict
our ability to sell our products to Chinese customers,
and countermeasures imposed by China in response,
impact our
could directly or
manufacturing costs and the sales of our products in
China and other markets.

indirectly adversely

As a global company, our
results are affected by
movements in currency exchange rates. Our exposure
may increase or decrease over time as our foreign
business levels fluctuate in the countries where we
have operations, and these changes could have a
material impact on our financial results. The functional
currency for most of our international operations is the
U.S. dollar. We have foreign operations in Asia, Europe
and Costa Rica and Europe, and a substantial portion
of our revenue is derived from sales to customers
outside the U.S. Our international revenue is primarily

15

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

some

denominated in U.S. dollars. Operating expenses and
items related to our foreign-
certain working capital
in
based
instances,
are,
operations
denominated in the local
foreign currencies and
therefore are affected by changes in the U.S. dollar
exchange rate in relation to foreign currencies, such
as the Costa Rican Colon, Euro, Pound Sterling,
Renminbi and Singapore Dollar.
the U.S. dollar
weakens compared to these and other currencies, our
operating expenses for
foreign operations will be
higher when remeasured back into U.S. dollars.

If

Economic regulation in China could adversely impact
our business and results of operations.
We have a significant portion of our assembly and
testing capacity in China. In recent years, the Chinese
economy has experienced periods of rapid expansion
and wide fluctuations in the rate of
In
response to these factors, the Chinese government
has, from time to time, adopted measures to regulate
growth and contain inflation,
including measures
designed to restrict credit or to control prices. Such
actions in the future, as well as other changes in
Chinese laws and regulations, could increase the cost
of doing business in China or decrease the demand
for our products in China, which could have a material
adverse effect on our business and results of
operations.

inflation.

We operate in a very competitive industry and must
continue to implement innovative technologies.
We compete with several companies primarily engaged
in the business of designing, manufacturing and
selling RF solutions, as well as suppliers of discrete
integrated circuits and modules.
In addition to our
direct competitors, some of our largest end customers
and leading platform partners also compete with us to
some extent by designing and manufacturing their own
products.
Increased competition from any source
could adversely affect our operating results through
lower prices for our products, reduced demand for our
losses of existing design slots with key
products,
customers and a corresponding reduction in our ability
to
and
recover
manufacturing costs.

development,

engineering

Many of our existing and potential competitors have
entrenched market positions, historical affiliations
with OEMs,
considerable internal manufacturing
capacity, established IP rights and substantial
technological capabilities. The semiconductor industry
has experienced increased industry consolidation over
the last several years, a trend we expect to continue.
Many of our existing and potential competitors may
have greater
technical, manufacturing or
marketing resources than we do. We cannot be sure
that we will be able to compete successfully with our
competitors.

financial,

16

to

it
for

Industry overcapacity could cause us to underutilize
our manufacturing facilities and have a material
adverse effect on our financial performance.
It is difficult to predict future demand for our products,
difficult
which makes
future
capacity. Capacity
production
requirements
expansion projects have long lead times and require
capital commitments based on forecasted product
trends and demand well
in advance of production
orders from customers. In recent years, we have made
investments to expand our BAW,
significant capital
SAW and TC-SAW filter capacity to address forecasted
future demand patterns.

estimate

exceeded

In the past, capacity additions by us and our
demand
sometimes
competitors
requirements,
leading to overcapacity situations.
Fluctuations in the growth rate of industry capacity
relative to the growth rate in demand for our products
also lead to overcapacity and contribute to cyclicality
in the semiconductor market.

As many of our manufacturing costs are fixed, these
costs cannot be reduced in proportion to the reduced
revenues experienced during periods in which we
underutilize our manufacturing facilities as a result of
overcapacity. If the demand for our products is not
consistent with our expectations, underutilization of
our manufacturing facilities may have a material
adverse effect on average selling prices, our gross
margin and other operating results. If demand for our
products experiences a prolonged decrease, we may
be required to write down our long-lived assets or
lives of underutilized assets and
shorten the useful
accelerate depreciation, which would increase our
expenses.

of

Bank

America, N.A.,

We may not be able to borrow funds under our credit
facility or secure future financing.
On December 5, 2017, we entered into a five-year
unsecured senior credit facility pursuant to a credit
agreement with
as
administrative agent, swing line lender and L/C issuer,
and a syndicate of lenders (the “Credit Agreement”).
The Credit Agreement
includes a $300.0 million
revolving credit facility which includes a $25.0 million
sublimit for the issuance of standby letters of credit
and a $10.0 million sublimit for swing line loans. We
may request, at any time and from time to time, that
the revolving credit
the Term Loan (as
facility or
defined below) be increased by an amount not to
exceed $300.0 million. The revolving credit facility is
available
capital
expenditures and for other corporate purposes. This
facility contains various conditions, covenants and
representations with which we must be in compliance
in order to borrow funds. We cannot assure that we
will be in compliance with these conditions, covenants
and representations in the future when we may need
to borrow funds under this facility.

working

capital,

finance

to

We may not be able to generate sufficient cash to
service all of our debt, including our Term Loan and
Senior Notes, or to fund capital expenditures and may
be forced to take other actions to satisfy our debt
obligations and financing requirements, which may not
be successful or on terms favorable to us.
The Credit Agreement also includes a $400.0 million
senior delayed draw term loan (the “Term Loan”), of
which $100.0 million was funded at closing and then
subsequently
repaid during March 2018. At our
discretion, we may draw down the remaining balance
in up to two advances prior to June 5, 2018.

In November 2015, we issued $450.0 million
aggregate principal amount of 6.75% Senior Notes
due 2023 (the “2023 Notes”) and $550.0 million
aggregate principal amount of 7.00% Senior Notes
due 2025 (the “2025 Notes” and together with the
2023 Notes, the “Notes”). The Notes were issued
pursuant to an indenture dated as of November 19,
2015 (the “Indenture”).
In September 2016, we
completed an exchange offer, in which all of the 2023
Notes and substantially all of the 2025 Notes were
exchanged for new notes that have been registered
under the Securities Act of 1933, as amended (the
“Securities Act”). Our ability to make scheduled
payments on or
to refinance our debt obligations,
including the Term Loan and the Notes, and to fund
working capital, planned capital expenditures and
expansion efforts and any strategic alliances or
acquisitions we may make in the future depends on
our ability to generate cash in the future and on our
financial condition and operating performance, which
are subject to prevailing economic and competitive
conditions and to certain financial, business and other
factors beyond our control. We cannot be sure that we
will maintain a level of cash flows from operating
activities sufficient to permit us to pay the principal,
premium, if any, and interest on our debt, including
the Term Loan and the Notes. If our cash flows and
capital resources are insufficient to fund our debt
service obligations, we may face liquidity issues and
be forced to reduce or delay investments and capital
expenditures, or to sell assets, seek additional capital
or restructure or refinance our debt, including the Term
Loan and the Notes. These alternative measures may
not be successful and may not permit us to meet our
obligations.
debt
scheduled
Additionally,
the agreements governing our Credit
Agreement and the Indenture governing the Notes limit
the use of the proceeds from any disposition; as a
result, we may not be allowed under these documents
to use proceeds from such dispositions to satisfy our
debt service obligations. Further, we may need to
refinance all or a portion of our debt on or before
maturity, and we cannot be sure that we will be able to
refinance any of our debt on commercially reasonable
terms or at all.

service

other

and

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

The agreements and instruments governing our debt
impose restrictions that may limit our operating and
financial flexibility.
The Credit Agreement governing our revolving credit
facility and the Term Loan and the Indenture governing
the Notes contain a number of significant restrictions
and covenants that limit our ability to:
‰ incur additional debt;
‰ pay

dividends, make

distributions

other

or

repurchase or redeem our capital stock;
‰ prepay, redeem or repurchase certain debt;
‰ make loans and investments;
‰ sell, transfer or otherwise dispose of assets;
‰ incur or permit to exist certain liens;
‰ enter

into certain types of

transactions with

affiliates;

‰ enter into agreements restricting our subsidiaries’

ability to pay dividends; and

‰ consolidate, amalgamate, merge or sell all or

substantially all of our assets.

certain

including a significant

financial maintenance

These covenants could have the effect of limiting our
flexibility in planning for or reacting to changes in our
business and the markets in which we compete. In
addition, the Credit Agreement requires us to comply
with
covenants.
Operating results below current levels or other adverse
factors,
increase in interest
rates, could result in our being unable to comply with
the financial covenants contained in our
revolving
credit facility. If we violate covenants under the Credit
Agreement and are unable to obtain a waiver from our
lenders, our debt under our revolving credit facility
would be in default and could be accelerated by our
lenders. Because of cross-default provisions in the
agreements and instruments governing our debt, a
default under one agreement or
instrument could
result in a default under, and the acceleration of, our
other debt. If our debt is accelerated, we may not be
able to repay our debt or borrow sufficient funds to
refinance it. Even if we are able to obtain new
financing, it may not be on commercially reasonable
terms, on terms that are acceptable to us, or at all. If
our debt is in default for any reason, our business,
financial condition and results of operations could be
materially
addition,
complying with these covenants may also cause us to
take actions that are not favorable to holders of the
notes and may make it more difficult
for us to
successfully execute our business strategy and
compete against companies that are not subject to
such restrictions.

adversely

affected.

and

In

The price of our common stock may be volatile.
The price of our common stock, which is traded on the
Nasdaq Global Select Market, has been and may
to wide
to
continue
fluctuations.
In addition, the trading volume of our
common stock may fluctuate and cause significant
price variations to occur. Some of the factors that

subject

volatile

and

be

17

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

could cause fluctuations in the stock price or trading
volume of our common stock include:
‰ general market
economic

and

and
including market

political
conditions in the

conditions,
semiconductor industry;

‰ actual or expected variations in quarterly operating

results;

‰ differences between actual operating results and

those expected by investors and analysts;

‰ changes in recommendations by securities analysts;
‰ operations and stock performance of competitors

and major customers;

‰ accounting charges, including charges relating to the

impairment of goodwill and restructuring;

‰ significant acquisitions, strategic alliances, capital
commitments, or new products announced by us or
by our competitors;

‰ sales of our common stock, including sales by our

directors and officers or significant investors;

‰ repurchases of our common stock;
‰ recruitment or departure of key personnel; and
‰ loss of key customers.

We cannot assure you that the price of our common
stock will not fluctuate or decline significantly in the
future. In addition, the stock market in general can
experience considerable price and volume fluctuations
that are unrelated to our performance.

Our stock repurchases may fluctuate.
The amount and timing of our stock repurchases may
fluctuate based on a number of factors, including our
priorities for the use of our cash for other purposes,
such as capital spending and acquisitions, restrictions
under securities laws and because of changes in our
cash flows, tax laws and the market price of our
common stock.

offer

growth

technical capabilities, or

We may engage in future acquisitions that dilute our
stockholders’ ownership, cause us to incur debt and
assume contingent liabilities or adversely affect our
results of operations.
to
As part of our business strategy, we expect
continue to review potential acquisitions and strategic
investments that could complement our current
product offerings, augment our market coverage or
enhance our
that may
or margin improvement
otherwise
opportunities. In the event of future acquisitions of
businesses, products or technologies, we could issue
equity securities that would dilute our
current
incur substantial debt or
stockholders’ ownership,
financial obligations or assume contingent
other
liabilities. Such actions could harm our
results of
operations or
the price of our common stock.
Acquisitions and strategic investments also entail
numerous other risks that could adversely affect our
business,
financial
results
condition, including:
‰ unanticipated costs, capital expenditures or working

operations

and

of

capital requirements;

18

‰ acquisition-related charges and amortization of

acquired technology and other intangibles;

‰ the potential loss of key employees from a company

we acquire or in which we invest;

‰ diversion of management’s attention from our

business;

‰ dissynergies or other harm to existing business

relationships with suppliers and customers;

‰ losses

or

impairment
research

of
and

investments

development

from
by

unsuccessful
companies in which we invest;

‰ failure

to

successfully

acquired
businesses, operations, products, technologies and
personnel; and

integrate

‰ unrealized expected synergies.

In order to compete, we must attract, retain, and
motivate key employees, and our failure to do so could
harm our business and our results of operations.
In order to compete effectively, we must:
‰ hire and retain qualified employees;
‰ continue to develop leaders for key business units

and functions;

‰ expand our presence in international locations and
adapt to cultural norms of foreign locations; and

‰ train and motivate our employee base.

Our future operating results and success depend on
keeping key technical personnel and management and
expanding our sales and marketing, R&D and
administrative support. We do not have employment
agreements with the vast majority of our employees.
We must also continue to attract qualified personnel.
The competition for qualified personnel is intense, and
the number of people with experience, particularly in
RF engineering, integrated circuit and filter design, and
technical marketing and support,
In
addition, existing or new immigration laws, policies or
regulations in the U.S. may limit the pool of available
talent. Travels bans, difficulties obtaining visas and
other restrictions on international travel could make it
more difficult to effectively manage our international
operations, collaborate as a global company or service
our international customer base. We cannot be sure
that we will be able to attract and retain skilled
personnel
in the future, which could harm our
business and our results of operations.

is limited.

We rely on our intellectual property portfolio and may
not be able to successfully protect against the use of
our intellectual property by third parties.
We rely on a combination of patents, trademarks,
laws, confidentiality procedures and
trade secret
licensing arrangements to protect our
intellectual
property rights. We cannot be certain that patents will
be issued from any of our pending applications or that
patents will be issued in all countries where our
products can be sold. Further, we cannot be certain
that any claims allowed from pending applications will
be of sufficient scope or strength to provide
meaningful protection against our competitors. Our
competitors may also be able to design around our
patents.

The laws of some countries in which our products are
developed, manufactured or sold may not protect our
products or intellectual property rights to the same
extent as U.S. laws. This increases the possibility of
piracy of our technology and products. Although we
intend to vigorously defend our intellectual property
rights, we may not be able to prevent misappropriation
of our technology. Additionally, our competitors may be
able
non-infringing
technologies that are substantially equivalent or
superior to ours.

independently

develop

to

intellectual property

We may need to engage in legal actions to enforce or
defend our
rights. Generally,
intellectual property litigation is both expensive and
unpredictable. Our involvement in intellectual property
litigation could divert the attention of our management
and technical personnel and have a material, adverse
effect on our business.

We may be subject to claims of infringement of third-
party intellectual property rights.
Our operating results may be adversely affected if
third parties were to assert claims that our products
infringed their patent, copyright or other intellectual
property
rights. Such assertions could lead to
expensive and unpredictable litigation, diverting the
attention of management and technical personnel. An
unsuccessful result in any such litigation could have
adverse effects on our business, which may include
injunctions, exclusion orders and royalty payments to
third parties. In addition, if one of our customers or
another supplier to one of our customers were found
to be infringing on third-party intellectual property
rights, such finding could adversely affect the demand
for our products.

Security breaches and other disruptions could
compromise our proprietary information and expose us
to liability, which would cause our business and
reputation to suffer.
We rely on trade secrets,
technical know-how and
other unpatented proprietary information relating to
our product development and manufacturing activities
to provide us with competitive advantages. We protect
into confidentiality
this
agreements with
consultants,
strategic partners and other third parties. We also
design our computer networks and implement various
procedures to restrict unauthorized access to our
proprietary information.

information by entering

employees,

our

We face internal and external data security threats.
Current, departing or former employees or third parties
could attempt
to improperly use or access our
computer systems and networks to copy, obtain, or
misappropriate
or
otherwise interrupt our business. Like others, we are
to significant system or network
also subject
including
disruptions
from numerous
computer viruses and other cyber-attacks,
facility
access issues, new system implementations and
energy blackouts.

information

proprietary

causes,

our

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Security breaches,
computer malware, phishing,
spoofing, and other cyber-attacks have become more
prevalent and sophisticated in recent years. While we
defend against these threats on a daily basis, we do
not believe that such attacks to date have caused us
any material damage. Because the techniques used
by computer hackers and others to access or
sabotage networks constantly evolve and generally are
not recognized until launched against a target, we may
be unable to anticipate, counter or ameliorate all of
these techniques. As a result, our and our customers’
proprietary information may be misappropriated and
the impact of any future incident cannot be predicted.
loss of such information could harm our
Any
in a loss of customer
competitive position,
confidence in the adequacy of our threat mitigation
and detection processes and procedures, or cause us
to incur significant costs to remedy the damages
caused by
implement
the incident. We routinely
improvements to our network security safeguards and
we are devoting increasing resources to the security of
our
information technology systems. We cannot,
however, assure that such system improvements will
be sufficient to prevent or limit the damage from any
future cyber-attack or network disruptions.

result

The costs related to cyber-attacks or other security
threats or computer systems disruptions typically
would not be fully insured or indemnified by others.
Occurrence of any of the events described above could
result in loss of competitive advantages derived from
our R&D efforts or our IP. Moreover, these events may
in the early obsolescence of our products,
result
the
product development delays, or diversion of
information
attention
technology
otherwise
adversely affect our internal operations and reputation
or degrade our financial results and stock price.

and
resources,

of management

other

and

key

or

We may be subject to theft, loss, or misuse of
personal data by or about our employees, customers
or other third parties, which could increase our
expenses, damage our reputation, or result in legal or
regulatory proceedings.
In the ordinary course of our business, we have
access to sensitive, confidential or personal data or
information regarding our employees and others that
is subject to privacy and security laws and regulations.
The theft, loss, or misuse of personal data collected,
used, stored, or transferred by us to run our business,
or by our
including
third party service providers,
business process software applications providers and
other vendors that have access to sensitive data,
could result in damage to our reputation, disruption of
our
increased
business and security costs or costs related to
defending legal claims.

significantly

activities,

business

Global privacy legislation, enforcement, and policy
activity in this area are rapidly expanding and creating
a complex regulatory compliance environment. For
example, the European Union adopted the General

19

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Data Protection Regulation (“GDPR”), which requires
companies to meet new requirements beginning in
May 2018 regarding the handling of personal data,
including its use, protection and the ability of persons
whose data is stored to correct or delete such data
about themselves. Failure to meet GDPR requirements
could result in penalties of up to 4% of worldwide
revenue. In addition, the interpretation and application
of consumer and data protection laws in the U.S.,
Europe and elsewhere are often uncertain and fluid,
and may be interpreted and applied in a manner that
is inconsistent with our data practices. Complying with
these changing laws has caused, and could continue
to cause, us to incur substantial costs, which could
have an adverse effect on our business and results of
operations. Further, failure to comply with existing or
new rules may result in significant penalties or orders
to stop the alleged non-compliant activity. Finally, even
our inadvertent failure to comply with federal, state, or
international privacy- related or data protection laws
and regulations could result in proceedings against us
by governmental entities or others.

We are subject to warranty claims, product recalls and
product liability.
From time to time, we may be subject to warranty or
product liability claims that could lead to significant
expense. We may also be exposed to such claims as
a result of any acquisition we may undertake in the
future. Although we maintain reserves for reasonably
estimable liabilities and purchase product
liability
insurance, we may elect to self-insure with respect to
certain matters and our reserves may be inadequate
to cover the uninsured portion of such claims.

contain

typically

liability insurance is subject

Product
to significant
deductibles and such insurance may be unavailable or
inadequate to protect against all claims. If one of our
customers recalls a product containing one of our
devices, we may incur significant costs and expenses,
including replacement costs, direct and indirect
product recall-related costs, diversion of technical and
other resources and reputational harm. Our customer
contracts
and
indemnification provisions, and in certain cases may
also contain liquidated damages provisions, relating to
product
liabilities
associated with such provisions are significant, and in
some cases, including in agreements with some of our
largest end customers, are potentially unlimited. Any
such liabilities may greatly exceed any revenue we
receive from sale of the relevant products. Costs,
payments or damages incurred or paid by us in
connection with warranty and product liability claims
and product
recalls could materially and adversely
affect our financial condition and results of operations.

potential

warranty

issues.

quality

The

We are subject to risks associated with environmental,
health and safety regulations and climate change.
We are subject to a broad array of U.S. and foreign
environmental, health and safety laws and regulations.
These laws and regulations include those related to

20

the use, transportation, storage, handling, emission,
discharge and recycling or disposal of hazardous
materials used in our manufacturing, assembly and
testing processes. Our failure to comply with any of
these existing or
regulations could
future laws or
result in:
‰ regulatory penalties and fines;
‰ legal

liabilities, including financial responsibility for
are

properties

our

if

remedial measures
contaminated;
to

secure
governmental approvals;

‰ expenses

required

permits

and

‰ reputational damage;
‰ suspension or curtailment of our manufacturing,

assembly and test processes; and

‰ increased costs to acquire pollution abatement or
remediation equipment or to modify our equipment,
facilities or manufacturing processes to bring them
into
and
regulations.

compliance

applicable

laws

with

Existing and future environmental laws and regulations
could also impact our product designs and limit or
restrict the materials or components that are included
in our products. In addition, many of our largest end
customers require us to comply with corporate social
responsibility
include
employment, health, safety, environmental and other
legal
requirements
requirements.
policies
increases our operating expenses and non-compliance
can adversely affect customer relationships and harm
our business.

that
Compliance with

applicable
these

policies,

exceed

which

often

to procure.

New climate change laws and regulations could
require us to change our manufacturing processes or
procure substitute raw materials that may cost more
or be more difficult
In addition, new
restrictions on emissions of carbon dioxide or other
greenhouse gases could result in increased costs for
us and our suppliers. Various jurisdictions are
developing other climate change-based regulations
that also may increase our expenses and adversely
affect our operating results. We expect
increased
worldwide regulatory activity relating to climate change
in the future. Future compliance with these laws and
regulations may adversely affect our business and
results of operations.

Compliance with regulations regarding the use
of “conflict minerals” could limit the supply and
increase the cost of certain metals used in
manufacturing our products.
Regulations in the U.S. currently require that we
determine whether certain materials used in our
products, referred to as conflict minerals, originated in
the Democratic Republic of the Congo or adjoining
countries, or were from recycled or scrap sources. The
verification and reporting requirements could affect
the sourcing and availability of minerals that are used
in the manufacture of our products. We have incurred
costs and expect to incur additional costs associated

face reputational

with complying with these requirements. Additionally,
challenges with our
we may
customers and other stakeholders if we are unable to
sufficiently verify the origins of all minerals used in our
products through the due diligence procedures that we
implement. We may also face challenges with
government
customers and
suppliers if we are unable to sufficiently make any
required determination that the metals used in our
products are conflict free.

regulators and our

Our certificate of incorporation and bylaws and the
General Corporation Law of the State of Delaware may
discourage takeovers and business combinations that
our stockholders might consider to be in their best
interests.
Certain provisions in our amended and restated
certificate of incorporation and amended and restated
bylaws may have the effect of delaying, deterring,
rendering more difficult a change in
preventing or
control of Qorvo that our stockholders might consider
to be in their best interests. These provisions include:
‰ granting to the board of directors sole power to set
the number of directors and fill any vacancy on the
board of directors, whether such vacancy occurs as
a result of an increase in the number of directors or
otherwise;

‰ the ability of the board of directors to designate and
issue one or more series of preferred stock without
stockholder approval, the terms of which may be
determined at the sole discretion of the board of
directors;

‰ the inability of stockholders to call special meetings

of stockholders;

‰ establishment of advance notice requirements for
stockholder proposals and nominations for election
to the board of directors at stockholder meetings;
and

‰ the inability of stockholders to act by written

consent.

that

contains

provisions

In addition, the General Corporation Law of the State
regulate
of Delaware
“business combinations” between corporations and
interested stockholders who own 15% or more of the
corporation’s voting stock, except under certain
also
circumstances.
discourage potential acquisition proposals and delay
or prevent a change in control.

provisions

These

could

These provisions may prevent our stockholders from
receiving the benefit of any premium to the market
price of our common stock offered by a bidder in a
takeover context, and may also make it more difficult
for a third party to replace directors on our board of
directors. Further, the existence of these provisions
may adversely affect the prevailing market price of our
common stock if
they are viewed as discouraging
takeover attempts in the future.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Our operating results could vary as a result of the
methods, estimates and judgments we use in applying
our accounting policies.
The methods, estimates and judgments we use in
applying our accounting policies have a significant
results of operations (see “Critical
impact on our
Accounting Policies and Estimates” in Part II, Item 7 of
this report). Such methods, estimates and judgments
are, by their nature, subject
risks,
uncertainties and assumptions, and factors may arise
lead us to change our methods,
over
estimates and judgments that could significantly affect
our results of operations.

to substantial

time that

Decisions we make about the scope of our future
operations could affect our future financial results.
From time to time,
changes in the business
environment have led us to change the scope of our
operations or business, which has resulted in
restructuring and asset impairment charges, and this
could occur in the future. The amount and timing of
such charges can be difficult to predict. Factors that
contribute to the amount and timing of such charges
include:
‰ the timing and execution of plans and programs that
are subject to local labor law requirements, including
consultation with appropriate work councils;

‰ changes in assumptions related to severance and

post-retirement costs;

‰ the timing of future divestitures and the amount and
type of proceeds realized from such divestitures; and
‰ changes in the fair value of certain long-lived assets

and goodwill.

Changes in our effective tax rate may impact our
results of operations.
We are subject
to taxation in China, Germany,
Singapore, the U.S. and numerous other foreign taxing
jurisdictions. Our effective tax rate is subject
to
fluctuations as it is impacted by a number of factors,
including the following:
‰ changes in our overall profitability and the amount of
profit determined to be earned and taxed in
jurisdictions with differing statutory tax rates;

‰ the resolution of issues arising from tax audits with
various tax authorities, including those described in
Note 12 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report;
‰ changes in the valuation of either our gross deferred

tax assets or gross deferred tax liabilities;

‰ adjustments to income taxes upon finalization of

various tax returns;

‰ changes
purposes;

in expenses not deductible for

tax

‰ changes in available tax credits;
‰ changes in tax laws or the interpretation of such tax
laws, and changes in generally accepted accounting
principles; and

‰ a future decision to repatriate non-U.S. earnings for
which we have not previously provided country
withholding taxes incurred upon repatriation.

21

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Any significant
increase in our
rates could reduce net income for future periods.

future effective tax

and

2024

December

Changes in the favorable tax status of our subsidiaries
in Costa Rica and Singapore would have an adverse
impact on our operating results.
Our subsidiaries in Costa Rica and Singapore have
been granted tax holidays that effectively minimize our
tax expense and that are expected to be effective
through March
2021,
In their efforts to deal with budget
respectively.
deficits, governments around the world are focusing
on increasing tax revenues through increased audits
and, potentially, increased tax rates for corporations.
As part of this effort, governments continue to review
their policies on granting tax holidays.
In February
2017, Singapore enacted legislation that will exclude
from our
and Expansion
Incentive grant the benefit of the reduced tax rate for
Intellectual Property income earned after June 30,
2021. Future changes in the status of either
tax
holiday could have a negative effect on our net income
in future years.

existing Development

22,

the U.S.

The impact of new U.S. tax legislation is uncertain and
could have a material adverse impact on our cash
flows and results of operations.
On December
enacted
2017,
comprehensive tax legislation, commonly referred to
as the Tax Cuts and Jobs Act (the “Tax Act”), which
includes a number of changes to U.S. tax laws that
impact us, including a reduction in the U.S. federal
corporate tax rate from 35% to 21%, a one-time
mandatory deemed repatriation tax on earnings of
certain foreign subsidiaries that were previously tax
deferred, and a new minimum tax on certain foreign
earnings. Based on our current analysis of
the
changes enacted by the Tax Act, it will continue to
have a significant impact on our results of operations.

estimates

calculations,

law, significant

the provisions of

The Tax Act
requires complex computations to be
performed that were not previously required under U.S.
judgments to be made in
tax
the Tax Act,
interpretation of
significant
the
and
in
preparation and analysis of information not previously
regularly produced. The United States
relevant or
Treasury Department, the Internal Revenue Service,
and other standard-setting bodies could interpret or
issue guidance on how provisions of the Tax Act will
be applied or otherwise administered that is different
interpretation. As we complete our
from our initial
analysis of the Tax Act, review all information, collect
and prepare necessary data, and interpret any
additional
the initial
guidance, we may adjust
provisional amounts that we have recorded, which
could have a material adverse effect on our results of
operations or financial condition.

22

The Organisation for Economic Co-operation and
Development Base Erosion and Profit Shifting initiative
on tax policy and enacted laws in the countries in
which we operate could increase our tax obligations.
Many countries are beginning to implement legislation
and other guidance to align their international tax rules
with the Organisation for Economic Co-operation’s
Base Erosion and Profit Shifting recommendations and
action plan, which aim to standardize and modernize
global corporate tax policy, including changes to cross-
border tax, transfer pricing documentation rules, and
nexus-based tax incentive practices. If these changes
are adopted by countries in which we do business, our
tax obligations in these countries could increase.
Furthermore, as a result of the heightened scrutiny of
corporate taxation policies, prior decisions by tax
authorities regarding treatments and positions of
corporate
to
enforcement activities, and legislative investigation
and inquiry, which could also result in changes in tax
policies or prior
tax rulings. Any such changes in
policies or rulings may also increase our effective tax
rate or result in the taxes we previously paid being
financial
to change, which may harm our
subject
position and results of operations.

income

subject

taxes

could

be

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our corporate headquarters (leased) and our MP
headquarters (owned) are in Greensboro, North
Carolina, where we also have a six-inch wafer
production facility (owned), a design and prototyping
facility (leased) and other
leased office space to
perform certain test and design operations. Our IDP
headquarters is in Richardson, Texas (leased) and
includes office space and design operations. We also
have wafer fabrication facilities in Richardson, Texas
(owned) and Farmers Branch, Texas (owned).
In
Hillsboro, Oregon, we have a single facility (owned)
fabrication
that
facility. We also have wafer fabrication facilities in
Apopka, Florida (owned) and Bend, Oregon (leased).

includes office space and a wafer

We have module assembly and test
facilities in
Beijing, China (the building is owned and we hold a
land-use right for the land) and Dezhou, China (the
building is leased and we hold a land-use right for the
land). In the fourth quarter of fiscal 2018, we signed a
definitive lease for an additional manufacturing facility
in Beijing, China, where we expect to start production
beginning in fiscal 2020. We have a filter assembly
and test facility in Heredia, Costa Rica (owned). We
also have an assembly and test site in Richardson,
Texas (owned) for custom products for our aerospace
and defense business and a packaging and test
facility in Nuremberg, Germany (leased).

We maintain numerous design centers and sales and
customer support centers in leased offices located
throughout Asia, Europe and North America.

We believe our properties have been well-maintained,
are in sound operating condition and contain all
equipment and facilities necessary to operate at
present levels. While we believe all our facilities are
suitable and adequate for our present purposes, we
continually evaluate our business and facilities and
may decide to expand, add or dispose of facilities in
the future. We do not identify or allocate assets by
operating segment. For
information on long-lived
tangible assets by country, see Note 16 of the Notes
to the Consolidated Financial Statements in Part II,
Item 8 of this report.

ITEM 3.

LEGAL PROCEEDINGS.

the heading “Legal
See the information under
Matters” in Note 10 of the Notes to the Consolidated
Financial Statements set forth in Part II, Item 8 of this
report.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON

EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.

Our common stock is traded on the Nasdaq Global
Select Market under the symbol “QRVO.” The table
below shows the high and low sales prices of our
common stock for each of the quarters in the fiscal
years ended March 31, 2018 and April 1, 2017, as
reported by The Nasdaq Stock Market LLC. As of
May 11, 2018, there were 775 holders of record of
our common stock. This number does not include the
beneficial owners of unexchanged stock certificates
related to the Business Combination or the additional
beneficial owners of our common stock who held their
shares in street name as of that date.

Fiscal Year Ended March 31, 2018
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Fiscal Year Ended April 1, 2017
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

High

Low

$79.34 $63.03
62.68
64.53
65.56

76.47
81.20
86.84

High

Low

$58.30 $43.79
50.45
48.28
52.12

64.80
59.12
69.71

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

We have never declared or paid cash dividends on our
common stock. Although we currently intend to retain
our earnings for use in our business and to
repurchase our common stock, our future dividend
policy with respect to our common stock may change
and will depend on our earnings, capital requirements,
debt covenants and other factors deemed relevant by
our Board of Directors.

23

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

PERFORMANCE GRAPH

COMPARISON OF 39 MONTH CUMULATIVE TOTAL RETURN*
Among Qorvo, Inc., the Nasdaq Composite lndex,
the S&P 500 Index and the Nasdaq Electronic Components Index

$250

$200

$150

$100

$50

191.99

153.56

137.24

100.07

$0
1/2/15

3/28/15

4/2/16

4/1/17

3/31/18

Qorvo, Inc.

S&P 500

Nasdaq Composite

Nasdaq Electronic Components

*$100 invested on 1/2/15 in stock and 12/31/14 in index, including reinvestment of dividends.
Fiscal year ending March 31. Indexes calculated on month-end basis.

Total Return Index for:
Qorvo, Inc.
Nasdaq Composite
S&P 500
Nasdaq Electronic Components

January 2,
2015

March 28,
2015

April 2,
2016

April 1,
2017

March 31,
2018

100.00
100.00
100.00
100.00

112.61
103.60
100.95
100.94

72.19
104.64
102.75
98.56

97.39
127.64
120.39
140.56

100.07
153.56
137.24
191.99

Notes:
A. The index level for all series assumes that $100.00 was invested in our common stock and each index on January 2, 2015, the

registration date of our common stock under Rule 12g-3(c) of the Exchange Act.

B.The lines represent monthly index levels derived from compounded daily returns, assuming reinvestment of all dividends.
C.The indexes are reweighted daily using the market capitalization on the previous trading day.
D.If the month end is not a trading day, the preceding trading day is used.
E. Qorvo, Inc. was added to the S&P 500 Index on June 12, 2015.

Purchases of Equity Securities

Total number
of shares
purchased
(in thousands)
—
—
615

Average
price paid
per share
$ —
$ —
$82.87

Total number of
shares purchased as
part of publicly
announced plans or
programs (in
thousands)
—
—
615

Approximate dollar value
of shares that may yet
be purchased under the
plans or programs
$213.1 million
$213.1 million
$162.1 million

615

$82.87

615

$162.1 million

Period
December 31, 2017 to January 27, 2018
January 28, 2018 to February 24, 2018
February 25, 2018 to March 31, 2018

Total

24

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

On November 3, 2016, our Board of Directors authorized a share repurchase program to repurchase up to
$500.0 million of our outstanding stock. 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 we
repurchase our shares, the number of shares and the timing of any repurchases will depend on general market
conditions, regulatory requirements, alternative investment opportunities and other considerations. The program
does not require us 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. See Note 15 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report for a further discussion of our share repurchase program.

25

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

ITEM 6. SELECTED FINANCIAL DATA.

The selected financial data set forth below for the fiscal years indicated were derived from our audited consolidated
financial statements. The information should be read in conjunction with our consolidated financial statements and
with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing in Item 7
of this report.

2018

2017

Fiscal Year

2016

2015(2)

2014

Revenue
Operating costs and expenses:

Cost of goods sold
Research and development
Selling, general and administrative
Other operating expense

$2,973,536

(In thousands, except per share data)
$2,610,726

$3,032,574

$1,710,966 $1,148,231

1,826,570
445,103
527,751
103,830(13)

1,897,062
470,836
545,588

1,561,173
448,763
534,099

1,021,658
257,494
249,886

743,304
197,269
151,404

31,029(10)

54,723(6)

59,462(3)

28,913(1)

Total operating costs and expenses

2,903,254

2,944,515

2,598,758

1,588,500

1,120,890

Income from operations
Interest expense
Interest income
Other (expense) income

Income (loss) before income taxes
Income tax (expense) benefit

Net (loss) income

Net (loss) income per share:

Basic

Diluted

Weighted average shares of common stock

outstanding
Basic

Diluted

Cash and cash equivalents
Short-term investments
Working capital
Total assets
Long-term debt and capital lease obligations,

less current portion

Stockholders’ equity

70,282
(59,548)(14)
7,017
(606)

17,145
(57,433)(15)

88,059
(58,879)(11)
1,212
(3,087)

27,305
(43,863)(12)

11,968
(23,316)(7)
2,068
6,418

(2,862)
(25,983)(8)

122,466
(1,421)
450
(254)

121,241

75,062(4)

27,341
(5,983)
179
2,336

23,873
(11,231)

$ (40,288)

$ (16,558)

$ (28,845)

$ 196,303 $

12,642

$

$

(0.32)

(0.32)

$

$

(0.13)

(0.13)

$

$

(0.20)

(0.20)

$

$

2.17 $

2.11 $

0.18

0.18

126,946

126,946

127,121

127,121

141,937

141,937

90,477

93,211

70,499

72,019

As of Fiscal Year End

2018

2017

2016

2015(2)

2014

$ 926,037
—
1,402,526
6,381,519

$ 545,463
—
1,042,777
6,522,323

$ 425,881
186,808
1,135,409(9)
6,596,819

$ 299,814 $ 171,898
72,067
317,445
920,312

244,830
1,174,795
6,892,379(5)

983,290
4,775,564

989,154
4,896,722

988,130(7)

4,999,672

—
6,173,160

18
676,351

(1) Other operating expense for fiscal 2014 includes the impairment of intangible assets of $11.3 million and restructuring expenses of $11.1 million, as

well as acquisition-related expenses of $5.1 million.

(2) As a result of the Business Combination, which was completed on January 1, 2015, fiscal 2015 results include the results of TriQuint as of March 28,

2015 and for the period of January 1, 2015 through March 28, 2015.

(3) Other operating expense for fiscal 2015 includes acquisition and integration-related expenses of $43.5 million and restructuring expenses of

$12.4 million.

(4)

Income tax benefit for fiscal 2015 includes the effects of the income tax benefit generated by the reduction in the valuation allowance against domestic
deferred tax assets.

(5) Total assets for fiscal 2015 include goodwill and intangible assets totaling approximately $4,430.7 million associated with the Business Combination.

(6) Other operating expense for fiscal 2016 includes integration-related expenses of $26.5 million and restructuring expenses of $10.2 million (see Note 6

and Note 11 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(7) During fiscal 2016, we issued the Notes and recorded $25.8 million of related interest expense, which was offset by $5.2 million of capitalized interest

(see Note 8 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(8)

Income tax expense for fiscal 2016 includes the effects of the income tax expense generated by the increase in the valuation allowance against
domestic state deferred tax assets (see Note 12 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(9) ASU 2015-17 “Balance Sheet Classification of Deferred Taxes” was adopted in fiscal 2016, prospectively, which required deferred tax assets and
deferred tax liabilities to be presented as non-current in a classified balance sheet. Prior periods presented were not retrospectively adjusted (see Note
12 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(10) Other operating expense for fiscal 2017 includes integration-related expenses of $16.9 million and restructuring expenses of $2.1 million (see Note 6

and Note 11 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(11) During fiscal 2017, we recorded $69.9 million of interest expense related to the Notes, which was offset by $13.6 million of capitalized interest (see

Note 8 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(12) Income tax expense for fiscal 2017 includes the effects of the increase in our unrecognized tax benefits and the unfavorable impact of losses arising in

countries with low tax rates (see Note 12 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

26

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

(13) Other operating expense for fiscal 2018 includes integration-related expenses of $6.2 million and restructuring expenses of $67.7 million (see Note 6

and Note 11 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(14) During fiscal 2018, we recorded $70.5 million of interest expense primarily related to the Notes, which was offset by $13.6 million of capitalized

interest (see Note 8 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

(15) Income tax expense for fiscal 2018 includes the effects from the enactment of the Tax Act, including the one-time transition tax on certain unrepatriated
earnings of foreign subsidiaries (the “Transitional Repatriation Tax”) expense, which was partially offset by the benefit from remeasuring deferred taxes
for the decrease in the U.S. corporate tax rate from 35% to 21% (see Note 12 of the Notes to the Consolidated Financial Statements set forth in Part II,
Item 8 of this report).

27

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

ITEM 7. MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

of

or

by

These

1995.

implied

“predict,”

expressed

“estimate,”

This Annual Report on Form 10-K includes “forward-
looking statements” within the meaning of the safe
harbor provisions of the Private Securities Litigation
Reform Act
forward-looking
statements include, but are not limited to, statements
about our plans, objectives,
representations and
contentions, and are not historical facts and typically
are identified by use of terms such as “may,” “will,”
“should,” “could,” “expect,” “plan,” “anticipate,”
“believe,”
“potential,”
“continue” and similar words, although some forward-
looking statements are expressed differently. You
should be aware that the forward-looking statements
included herein represent management’s current
judgment and expectations, but our actual results,
events and performance could differ materially from
those
forward-looking
statements. We do not intend to update any of these
forward-looking statements or publicly announce the
results of any revisions to these forward-looking
statements, other
than as is required under U.S.
federal securities laws. Our business is subject to
numerous risks and uncertainties,
including those
relating to fluctuations in our operating results, our
dependence on a few large customers for a
substantial portion of our revenue, a loss of revenue if
contracts with the United States government or
defense and aerospace contractors are canceled or
innovative
to
delayed,
technologies, our ability to bring new products to
market and achieve design wins, the efficient and
successful operation of our wafer fabrication and other
facilities, our ability to adjust production capacity in a
timely fashion in response to changes in demand for
in manufacturing yields,
our products,
industry overcapacity,
forecasts
and corresponding inventory and manufacturing costs,
dependence on third parties, our dependence on
international sales and operations, our ability to
attract and retain skilled personnel and develop
leaders, the possibility that future acquisitions may
dilute our stockholders’ ownership and cause us to
liabilities,
incur
fluctuations in the price of our common stock, our
ability to protect our intellectual property, claims of
intellectual property infringement and other lawsuits,
security breaches and other similar disruptions
information, and the impact of
compromising our
government and stringent environmental regulations.
These and other risks and uncertainties, which are
described in more detail under Item 1A, “Risk Factors”
in this Annual Report on Form 10-K and in other
reports and statements that we file with the SEC,
could cause actual results and developments to be
materially different from those expressed or implied by
any of these forward-looking statements.

inaccurate product

implement

contingent

variability

assume

ability

debt

and

our

28

The following discussion should be read in conjunction
with, and is qualified in its entirety by reference to, our
audited consolidated financial statements,
including
the notes thereto.

OVERVIEW

Company
On February 22, 2014, RFMD and TriQuint entered
into the Merger Agreement, which provided for the
combination of RFMD and TriQuint in a merger of
equals and resulted in the Business Combination
under a new holding company named Qorvo, Inc. The
transactions contemplated by the Merger Agreement
were consummated on January 1, 2015.

Qorvo® is a product and technology leader at the
forefront of the growing global demand for always-on
broadband connectivity. We combine a broad portfolio
of RF solutions, highly differentiated semiconductor
technologies, deep systems-level expertise and scale
manufacturing to supply a diverse group of customers
in expanding markets,
including smartphones and
other mobile devices, defense and aerospace, Wi-Fi
customer premises equipment, cellular base stations,
optical networks, automotive connectivity, and smart
home
our
products enable a broad range of
leading-edge
applications – from very-high-power wired and wireless
infrastructure solutions to ultra-low-power smart home
solutions. Our
products and technologies help
transform how people around the world access their
data,
transact commerce, and interact with their
communities.

applications. Within

these markets,

facilities,

(Category 1A)

Qorvo employs more than 8,300 people. We have
and
world-class manufacturing
our
fabrication facility in Richardson, Texas,
is a U.S.
for
DoD-accredited ‘Trusted Source’
GaAs, GaN and BAW technologies. Our design and
manufacturing expertise covers many semiconductor
process technologies, which we source both internally
and through external suppliers. Our primary wafer
fabrication facilities are in Florida, North Carolina,
Oregon and Texas, and our primary assembly and test
facilities are in China, Costa Rica, Germany and
Texas. We
and
manufacturing facilities throughout Asia, Europe and
North America.

operate

design,

sales

also

Business Segments
We design, develop, manufacture and market our
products to leading U.S. and international OEMs and
ODMs in the following operating segments:
‰ Mobile Products (MP) — MP is a leading global
supplier of cellular RF and Wi-Fi solutions into a
including smartphones,
variety of mobile devices,
notebook
and
cellular-based applications for the IoT. Mobile device
manufacturers and mobile network operators are
adopting new technologies to address the growing
demand for data-intensive, increasingly cloud-based

computers, wearables,

tablets,

available

standards

communications
utilize
to

distributed applications and for mobile devices with
smaller form factors, improved signal quality, less
talk and standby times. New
heat and longer
are
wireless
being
deployed
spectrum more
efficiently. Carrier aggregation is being implemented
to support wider bandwidths, increase data rates
and improve network performance. These trends
increase the complexity of smartphones,
require
more RF
content and place a premium on
integration, systems-level expertise,
performance,
and product and technology portfolio breadth, all of
which are MP strengths. We offer a comprehensive
product portfolio of BAW and SAW filters, PAs, LNAs,
switches, multimode multi-band PAs and transmit
modules, RF power management
ICs, diversity
receive modules, antenna switch modules, antenna
tuning and control solutions, modules incorporating
PADs and modules incorporating S-PADs.

high

applications

communication

‰ Infrastructure and Defense Products (IDP) — IDP is a
leading global supplier of RF solutions with a diverse
portfolio of solutions that “connect and protect,”
spanning communications and defense applications.
performance
include
These
defense systems such as radar, electronic warfare
and
customer
premises equipment for home and work, high speed
connectivity in LTE and 5G base stations, cloud
connectivity via data center communications and
telecom transport, automotive connectivity and other
IDP
IoT,
including smart home solutions. Our
products include GaAs and GaN PAs,
LNAs,
solutions,
switches,
premium BAW and SAW filter solutions and various
multi-chip and hybrid assemblies.

system-on-a-chip

systems, Wi-Fi

CMOS

As of March 31, 2018, our reportable segments are
MP and IDP. These business segments are based on
the organizational structure and information reviewed
by our Chief Executive Officer, who is our chief
operating decision maker (“CODM”), and are managed
separately based on the end markets and applications
they support. The CODM allocates resources and
evaluates the performance of each operating segment
primarily based on operating income and operating
revenue. For
income as a percentage of
financial
information about
the results of our operating
segments for each of the last three fiscal years, see
Note 16 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report.

Fiscal 2018 Management Summary
‰ Our

revenue decreased 1.9% in fiscal 2018 to
$2,973.5 million compared to $3,032.6 million in
fiscal 2017, primarily due to lower demand for our
cellular RF solutions in support of customers based
in China, partially offset by higher demand for our
defense and aerospace and Wi-Fi products as well
as higher demand for our cellular RF solutions in
support of our largest end customer.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

‰ Our gross margin for

fiscal 2018 was 38.6%
compared to 37.4% for fiscal 2017. Gross margin
was positively impacted by improved manufacturing
and test yields on certain high-volume products,
lower depreciation, favorable changes in product mix
within our cellular RF solutions and growth in
demand for our IDP products. This increase in gross
margin was partially offset by
factory
utilization, average selling price erosion and higher
intangible amortization.

lower

we

actions,

recorded

‰ Our operating income was $70.3 million in fiscal
2018 compared to $88.1 million in fiscal 2017. This
decrease was primarily due to one-time restructuring
charges, partially offset by lower personnel-related
costs as well as cost savings resulting from
restructuring initiatives described below and ongoing
efforts to optimize our product portfolio.

‰ During fiscal 2018, we initiated restructuring actions
to improve operating efficiencies. As a result of
approximately
these
$18.3 million of employee termination benefits and
adjusted the carrying value of certain held for sale
assets located in China and the U.S. to fair market
value (resulting in impairment charges totaling
approximately $46.3 million).

‰ Our net loss per diluted share was $0.32 for fiscal
2018 as compared to net loss per diluted share of
$0.13 for fiscal 2017.

‰ We generated positive cash flow from operations of
$852.5 million for
fiscal 2018 as compared to
$776.8 million for fiscal 2017. This year-over-year
increase was primarily due to changes in working
capital. The Tax Act did not have an impact on our
fiscal 2018 cash flows from operating activities.
‰ Capital expenditures totaled $269.8 million in fiscal
2018, as compared to $552.7 million in fiscal
2017.
period
expenditures were related to projects that increased
premium filter capacity and manufacturing cost
saving initiatives.

comparable

‰ The Tax Act, enacted during the third quarter of
fiscal 2018,
federal corporate
lowers the U.S.
income tax rate from 35% to 21% as of January 1,
2018, and implements a territorial tax system that
will allow the repatriation of future foreign earnings
without
income
tax. This tax law change resulted in a provisional tax
benefit of $39.1 million to reduce the U.S. deferred
tax assets and liabilities and a provisional
tax
expense of $116.4 million for a one-time transitional
deemed repatriation of our historical unremitted
foreign earnings.

incurring additional U.S.

‰ During fiscal 2018, we repurchased approximately
2.9 million shares of our common stock for
approximately $219.9 million.

federal

prior

year

The

29

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

RESULTS OF OPERATIONS

Consolidated
The following table presents a summary of our results of operations for fiscal years 2018, 2017 and 2016:

(In thousands, except percentages)

Dollars

% of
Revenue

Dollars

% of
Revenue

Dollars

% of
Revenue

2018

2017

2016

Revenue

Cost of goods sold

Gross profit

Research and development
Selling, general, and administrative
Other operating expense

$2,973,536
1,826,570

100.0% $3,032,574
1,897,062

61.4

100.0% $2,610,726
1,561,173

62.6

100.0%
59.8

1,146,966
445,103
527,751
103,830

38.6
15.0
17.7
3.5

1,135,512
470,836
545,588
31,029

37.4
15.5
18.0
1.0

1,049,553
448,763
534,099
54,723

40.2
17.2
20.4
2.1

Operating income

$

70,282

2.4% $

88,059

2.9%

11,968

0.5%

REVENUE
Our overall revenue decreased $59.0 million, or 1.9%,
in fiscal 2018 as compared to fiscal 2017, primarily
due to lower demand for our cellular RF solutions in
support of customers based in China, partially offset
by higher demand for our defense and aerospace and
Wi-Fi products as well as higher demand for our
cellular RF solutions in support of our largest end
customer.

Our overall
revenue increased $421.8 million, or
16.2%, in fiscal 2017 as compared to fiscal 2016,
primarily due to higher demand for our cellular RF
solutions in support of marquee smartphones and
customers based in China and higher sales of our
wireless infrastructure, defense and aerospace and
Wi-Fi products.

sales

through

to multiple

We provided our products to our largest end customer,
Apple,
contract
manufacturers, which in the aggregate accounted for
36%, 34% and 37% of total revenue in fiscal years
2018, 2017 and 2016,
respectively. Huawei
accounted for approximately 8%, 11% and 12% of our
total revenue in fiscal years 2018, 2017 and 2016,
respectively. These customers primarily purchase
cellular RF and Wi-Fi solutions offered by our MP
segment
including
for a variety of mobile devices,
smartphones, notebook computers, wearables, tablets
and cellular-based applications for the IoT.

International shipments amounted to $2,449.1 million
in fiscal 2018 (approximately 82% of
revenue)
compared to $2,565.5 million in fiscal 2017
(approximately 85% of revenue) and $2,304.4 million
in fiscal 2016 (approximately 88% of
revenue).
Shipments to Asia totaled $2,329.3 million in fiscal
2018 (approximately 78% of revenue) compared to
$2,441.1 million in fiscal 2017 (approximately 81% of
revenue) and $2,162.1 million in fiscal 2016
(approximately 83% of
revenue). We expect our
international and Asia shipments will remain relatively
stable at these historical levels.

30

on

certain

GROSS MARGIN
Our overall gross margin for fiscal 2018 was 38.6% as
compared to 37.4% in fiscal 2017. The increase was
primarily due to improved manufacturing and test
yields
lower
depreciation, favorable changes in product mix within
our cellular RF solutions and growth in demand for our
IDP products. This increase in gross margin was
factory utilization, average
partially offset by lower
selling
intangible
erosion
price
amortization.

high-volume

higher

parts,

and

Our overall gross margin for fiscal 2017 was 37.4% as
compared to 40.2% in fiscal 2016. Gross margin was
adversely impacted in fiscal 2017 by an unfavorable
change in product mix towards lower margin low-band
PAD modules, product cost reductions lagging normal
average selling price erosion, lower factory utilization
and unfavorable inventory adjustments primarily due to
lower
than expected manufacturing and assembly
yields on the low-band PAD modules in the second
quarter of fiscal 2017. The lower yield was associated
with the device packaging, not device functionality;
however, the impact was significant because the issue
was identified late in the production process. These
adverse factors were partially offset by
lower
intangible amortization, stock-based compensation
and other costs related to the Business Combination
in fiscal 2017 as compared to fiscal 2016.

OPERATING EXPENSES

fiscal

2018,

spending

Research and Development
In
decreased
R&D
$25.7 million, or 5.5%, as compared to fiscal 2017,
primarily due to lower personnel-related costs as well
as cost savings resulting from the ongoing efforts to
optimize our product portfolio and the restructuring
actions initiated in fiscal 2018.

In fiscal 2017, R&D spending increased $22.1 million,
or 4.9%, as compared to fiscal 2016, primarily driven
by costs associated with the design and development
and
of

high-performance

filter-based

products

GaN-based technologies and products. The increased
R&D expense was partially offset by lower stock-based
compensation expense.

Selling, General and Administrative
In fiscal 2018, selling, general and administrative
expense decreased $17.8 million, or 3.3%, as
compared to fiscal 2017, primarily due to lower
personnel-related costs as well as cost savings
resulting from the restructuring actions initiated in
fiscal 2018.

In fiscal 2017, selling, general, and administrative
expense increased $11.5 million, or 2.2%, as
compared to fiscal 2016, primarily due to higher
personnel-related costs, partially offset by lower stock-
based compensation expense.

In

fiscal 2018, we

Other Operating Expense
In fiscal 2018, other operating expense was
$103.8 million.
initiated
restructuring actions to improve operating efficiencies,
and, as a result of
these actions, we recorded
approximately $18.3 million of employee termination
benefits and adjusted the carrying value of certain
held for sale assets located in China and the U.S. to
fair market value (resulting in impairment charges
totaling approximately $46.3 million, pursuant
to
Accounting Standards Codification (“ASC”) 360,
“Property, Plant, and Equipment”). In fiscal 2018, we
also recorded integration costs and restructuring costs
of $6.2 million and $2.6 million,
respectively,
associated with the Business Combination, as well as
$24.3 million of start-up costs related to new
processes and operations in both existing and new
facilities.

including

integration

In fiscal 2017, other operating expense was
of
$31.0 million,
$16.9 million and restructuring costs of $2.0 million
associated with the Business Combination, as well as
$9.7 million of start-up costs related to new
processes and operations in both existing and new
facilities.

costs

including

integration

In fiscal 2016, other operating expense was
$54.7 million,
of
$26.5 million and restructuring costs of $10.1 million
(including stock-based compensation) associated with
the Business Combination, as well as $14.1 million of
start-up
and
to
related
operations in both existing and new facilities.

new processes

costs

costs

OPERATING INCOME
Our overall operating income was $70.3 million for
fiscal 2018 as compared to $88.1 million for fiscal
2017. This decrease was primarily due to one-time
restructuring
lower
personnel-related costs as well as cost savings
resulting from the restructuring initiative and ongoing
efforts to optimize our product portfolio.

charges,

partially

offset

by

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Our overall operating income was $88.1 million for
fiscal 2017 as compared to $12.0 million for fiscal
2016. This increase was primarily due to higher gross
profit
intangible
amortization, stock-based compensation and other
costs related to the Business Combination, partially
offset by lower gross margin.

revenue and lower

from higher

Segment Product Revenue, Operating Income
and Operating Income as a Percentage of
Revenue

Mobile Products

(In thousands, except
percentages)

Revenue
Operating income
Operating income as a

% of revenue

Fiscal Year

2018

2017

2016

$2,181,161
$ 549,574

$2,384,041
$ 554,001

$2,083,334
$ 591,751

25.2%

23.2%

28.4%

MP revenue decreased $202.9 million, or 8.5%, in
fiscal 2018 as compared to fiscal 2017 primarily due
to lower demand for our cellular RF solutions in
support of customers based in China, partially offset
by higher demand for our cellular RF solutions in
support of our largest end customer.

The increase in MP operating income as a percentage
of revenue in fiscal 2018 as compared to fiscal 2017
was primarily due to higher gross margin and lower
operating expense. Gross margin increased primarily
due to favorable changes in product mix within our
cellular RF solutions, lower depreciation and improved
manufacturing and test yields on certain high-volume
parts. This increase in gross margin was partially
offset by average selling price erosion and lower
factory utilization. Operating expense decreased
primarily due to lower personnel-related costs as well
as cost savings resulting from restructuring actions
that were initiated during fiscal 2018 to improve
operating efficiencies and ongoing efforts to optimize
our product portfolio.

MP revenue increased $300.7 million, or 14.4%, in
fiscal 2017 as compared to fiscal 2016, primarily due
to higher demand for our cellular RF solutions in
support of marquee smartphones and customers
based in China.

low-band

PAD modules,

The decrease in MP operating income as a percentage
of revenue in fiscal 2017 as compared to fiscal 2016
was primarily due to lower gross margin. Gross margin
was adversely
impacted in fiscal 2017 by an
unfavorable change in product mix towards lower
margin
cost
reductions lagging normal average selling price
factory utilization, and unfavorable
erosion,
inventory adjustments, primarily due to lower
than
yields on the
expected manufacturing assembly
low-band PAD modules in the second quarter of fiscal
2017. The lower yield was associated with the device
packaging, not device functionality, however,
the
impact was significant because the issue was
identified late in the production process.

product

lower

31

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Infrastructure and Defense Products

OTHER (EXPENSE) INCOME AND INCOME TAXES

(In thousands, except
percentages)

Revenue
Operating income
Operating income as a % of

revenue

Fiscal Year

Fiscal Year

2018

2017

2016

(In thousands)

2018

2017

2016

$788,495
$235,719

$644,653
$152,539

$523,512
$108,370

29.9%

23.7%

20.7%

Interest expense
Interest income
Other (expense) income
Income tax expense

$(59,548) $(58,879) $(23,316)
2,068
6,418
(25,983)

7,017
(606)
(57,433)

1,212
(3,087)
(43,863)

IDP revenue increased $143.8 million, or 22.3%, in
fiscal 2018 as compared to fiscal 2017, primarily due
to higher demand for our defense and aerospace and
Wi-Fi products.

IDP operating income increased $83.2 million, or
54.5%, in fiscal 2018 as compared to fiscal 2017,
primarily due to higher demand for our defense and
aerospace and Wi-Fi products.

IDP revenue increased $121.1 million, or 23.1%, in
fiscal 2017 as compared to fiscal 2016, primarily due
to higher sales of our wireless infrastructure, defense
and aerospace and Wi-Fi products.

The increase in IDP operating income as a percentage
of revenue in fiscal 2017 as compared to fiscal 2016
from increased
was driven by higher gross profit
revenue,
favorable factory utilization and lower
unfavorable inventory adjustments. This increase in
gross profit was partially offset by higher personnel-
related expenses.

See Note 16 of
the Notes to the Consolidated
Financial Statements set forth in Part II, Item 8 of this
report
for a reconciliation of segment operating
income to the consolidated operating income for fiscal
years 2018, 2017 and 2016.

CHANGE IN ESTIMATE
During the first quarter of fiscal 2018, we changed our
lives of
accounting estimate for the expected useful
certain machinery and equipment. We evaluated our
current asset base and reassessed the estimated
useful
lives of certain machinery and equipment in
connection with the implementation of several capital
including the migration of certain SAW
projects,
processes from 4-inch to 6-inch toolsets and certain
BAW processes from 6-inch to 8-inch toolsets. Based
on our ability to re-use equipment across generations
of process technologies and historical usage trends,
we determined that
lives for
certain machinery and equipment should be increased
by up to three years to reflect more closely the
estimated economic lives of
those assets. This
change in estimate was applied prospectively effective
for the first quarter of fiscal 2018 and resulted in a
decrease in depreciation expense of $59.7 million for
fiscal 2018. This decrease in depreciation expense for
fiscal 2018 resulted in the following: (1) an increase
in income from operations of $47.4 million; (2) an
increase in net
(3) an
improvement in earnings per share of $0.34; and (4) a
reduction in inventory of $12.3 million.

income of $44.1 million;

the expected useful

32

Interest expense
We recognized $70.5 million, $69.9 million and
$25.8 million of interest expense in fiscal years 2018,
2017 and 2016, respectively, primarily related to the
$1.0 billion of senior notes that were issued in the
third quarter of fiscal 2016. Interest expense in the
preceding table for fiscal years 2018, 2017 and 2016
is net of capitalized interest of $13.6 million,
$13.6 million and $5.2 million, respectively.

Other (expense) income
Other expense in fiscal 2018 of approximately
$0.6 million was related primarily to a net loss from
foreign currency offset by a gain on investments. The
foreign currency loss was driven primarily by the
depreciation of the U.S. dollar against the Euro and
Singapore Dollar as well as by the changes in the local
currency denominated balance sheet accounts. Other
expense in fiscal 2017 of approximately $3.1 million
was related primarily to a net
loss from foreign
loss was driven
currency. The foreign currency
primarily by the appreciation of the U.S. dollar against
the Renminbi as well as by the changes in the local
currency denominated balance sheet accounts.
In
fiscal 2016, we recognized other income primarily due
to a gain from the sale of equity securities.

Income tax expense
Income tax expense for fiscal 2018 was $57.4 million,
which was primarily comprised of tax expense related
to the net $77.3 million provisional impact of the Tax
Act, international operations generating pre-tax book
income and an increase in gross unrecognized tax
benefits, offset by tax benefits related to tax credits
and domestic and international operations generating
pre-tax book losses. For fiscal 2018, this resulted in
an annual effective tax rate of 335.0%.

The impact of the Tax Act resulted in a provisional net
tax expense of $77.3 million in fiscal 2018. This was
comprised of a provisional transitional repatriation tax
expense of $116.4 million, offset by a provisional
deferred tax benefit of $39.1 million from the
remeasurement of U.S. deferred tax assets and
liabilities. Both the tax charge and the tax benefit
represent provisional amounts based on current best
estimates.

Income tax expense for fiscal 2017 was $43.9 million,
which was primarily comprised of tax expense related
to domestic and international operations generating
pre-tax book income and an increase in gross
unrecognized tax benefits, offset by tax benefits
related to tax credits and international operations

generating pre-tax book losses. For fiscal 2017, this
resulted in an annual effective tax rate of 160.6%.

Income tax expense for fiscal 2016 was $26.0 million,
which was primarily comprised of tax expense related
to international operations, an increase in gross
unrecognized tax benefits and a $25.1 million
increase in the valuation allowance against domestic
state tax net operating loss and credit deferred tax
assets and foreign net operating loss deferred tax
assets, offset by tax benefits arising from domestic
operations and tax credits. For
this
resulted in an annual effective tax rate of (908.0)%.

fiscal 2016,

A valuation allowance has been established against
deferred tax assets in the taxing jurisdictions where,
based upon the positive and negative evidence
available, it is more likely than not that the related
deferred tax assets will not be realized. Realization is
dependent upon generating future income in the taxing
jurisdictions in which the operating loss carryovers,
credit carryovers, depreciable tax basis, and other
deferred tax assets exist. Management reevaluates
the ability to realize the benefit of these deferred tax
assets on a quarterly basis. As of the end of fiscal
years 2018, 2017 and 2016, the valuation allowance
against domestic and foreign deferred tax assets was
$42.8 million, $33.1 million, and $34.7 million,
respectively.

See Note 12 of the Consolidated Financial Statements
in Part
for additional
information regarding income taxes.

Item 8 of

this report

II,

STOCK-BASED COMPENSATION

Under Financial Accounting Standards Board (“FASB”)
ASC 718, “Compensation – Stock Compensation,”
stock-based compensation cost is measured at the
grant date, based on the estimated fair value of the
award using an option pricing model for stock options
(Black-Scholes) and market price for restricted stock
units, and is recognized as expense over
the
employee’s requisite service period.

total

remaining unearned
As of March 31, 2018,
compensation cost
related to unvested restricted
stock units and options was $72.8 million, which will
the weighted-average remaining
be amortized over
service period of approximately 1.2 years.

LIQUIDITY AND CAPITAL RESOURCES

Cash generated by operations is our primary source of
liquidity. As of March 31, 2018, we had working
capital of approximately $1,402.5 million, including
$926.0 million in cash and cash equivalents,
compared to working capital of $1,042.8 million,
including $545.5 million in cash and cash equivalents,
as of April 1, 2017.

Our $926.0 million of total cash and cash equivalents
includes approximately
as of March 31, 2018,
$292.9 million held by our foreign subsidiaries, of

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

which $190.8 million is held by Qorvo International
Pte. Ltd. in Singapore. If the undistributed earnings of
our foreign subsidiaries are needed in the U.S., we
may be required to accrue and pay state income and/
or foreign local withholding taxes to repatriate these
earnings. Our current plans are to permanently
reinvest
foreign
the undistributed earnings of our
subsidiaries, except
the earnings of Qorvo
International Pte. Ltd.

for

Credit Agreement
On December 5, 2017, we and certain of our material
domestic subsidiaries (the “Guarantors”) entered into
a five-year unsecured senior credit facility with Bank of
America, N.A., as administrative agent, swing line
lender, and L/C issuer, and a syndicate of lenders
(the “Credit Agreement”). On the same date,
in
connection with the execution of the Credit Agreement,
we terminated our prior credit agreement, dated
April 7, 2015.

The Credit Agreement includes a senior delayed draw
term loan of up to $400.0 million (the “Term Loan”)
and a $300.0 million revolving line of credit
(the
“Revolving Facility”, together with the Term Loan, the
“Credit Facility”). In December 2017, $100.0 million
of the Term Loan was funded and this amount was
subsequently repaid in March 2018. The remainder of
the Term Loan is available, at our discretion, in up to
two draws prior to June 5, 2018. 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. We may request at any time that
the Credit Facility be increased by an amount not to
exceed $300.0 million. The Credit Facility is available
to finance working capital, capital expenditures and
other corporate purposes. Our obligations under the
Credit Agreement are jointly and severally guaranteed
by the Guarantors. Outstanding amounts are due in
full on the maturity date of December 5, 2022 (with
amounts borrowed under the swing line option due in
full no later than ten business days after such loan is
made). We had no outstanding amounts under the
Credit Facility as of March 31, 2018.

information about

See Note 8 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report for
the Credit Agreement,
further
including applicable interest
rates and financial
covenants. As of March 31, 2018, we were in
compliance with all the financial covenants under the
Credit Agreement.

Stock Repurchases
On November 5, 2015, our Board of Directors
authorized a share repurchase program to repurchase
up to $1.0 billion of our outstanding common stock
through November 4, 2016. On February 16, 2016, as
part of the $1.0 billion share repurchase program, we
entered into variable maturity accelerated share
repurchase (“ASR”) agreements (a $250.0 million
collared agreement and a $250.0 million uncollared

33

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

agreement) with Bank of America, N.A. For the upfront
in fiscal 2016, we
payment of $500.0 million,
received an aggregate of 10.0 million shares of our
common stock under
the ASR agreements. Final
settlements of the ASR agreements were completed
during the first quarter of fiscal 2017 with 0.4 million
shares received resulting in a total of 10.4 million
shares of our common stock repurchased under the
ASR agreements.

On November 3, 2016, our Board of Directors
authorized a share repurchase program to repurchase
up to $500.0 million of our outstanding stock. 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 we repurchase our shares, the
number of shares and the timing of any repurchases
will depend on general market conditions, regulatory
requirements, alternative investment opportunities
and other considerations. The program does not
require us 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. This program included approximately
$150.0 million authorized on the $1.0 billion
repurchase program that expired November 4, 2016.

We repurchased 2.9 million shares, 4.1 million shares
(inclusive of the 0.4 million shares received in final
settlement of the ASR agreement) and 24.3 million
shares (inclusive of the 10.0 million shares initially
received under the ASR agreement) of our common
stock during fiscal years 2018, 2017 and 2016,
respectively, at an aggregate cost of $219.9 million,
$209.4 million and $1,300.0 million, respectively, in
accordance with the share repurchase programs
described
2018,
future
$162.1 million
repurchases under our current share repurchase
program.

of March
available

As
remains

31,
for

above.

Cash Flows from Operating Activities
Operating activities in fiscal 2018 provided cash of
$852.5 million, compared to $776.8 million in fiscal
2017. This year-over-year increase was primarily due
to changes in working capital. The Tax Act did not have
fiscal 2018 cash flows from
an impact on our
operating activities.

Operating activities in fiscal 2017 provided cash of
$776.8 million, compared to $687.9 million in fiscal
2016. This year-over-year increase was due primarily
to improvement in working capital, partially offset by
lower
The
adjustments for non-cash items were lower due
primarily to stock-based compensation expense and
deferred taxes, partially offset by higher depreciation.

adjustments

non-cash

items.

for

Cash Flows from Investing Activities
Net cash used in investing activities in fiscal 2018
was $277.4 million, compared to $490.3 million in

34

fiscal 2017. This year-over-year decrease in cash used
in investing activities was primarily due to capital
expenditures incurred in fiscal 2017 that increased
premium filter capacity and manufacturing cost saving
initiatives.

Net cash used in investing activities in fiscal 2017
was $490.3 million, compared to $278.7 million in
fiscal 2016. This increase was primarily due to higher
capital expenditures related to projects for increasing
capacity and manufacturing cost
premium filter
savings initiatives and the acquisition of GreenPeak
Technologies, B.V. (“GreenPeak”), partially offset by
higher net proceeds from available-for-sale securities.

Cash Flows from Financing Activities
Net cash used in financing activities in fiscal 2018
was $196.8 million, compared to $165.7 million in
fiscal 2017. This year-over-year increase was primarily
due to higher share repurchase activity, higher tax
withholding paid on behalf of employees for restricted
stock units and debt payments.

Net cash used in financing activities in 2017 was
$165.7 million, compared to $283.0 million in fiscal
2016. This decrease was primarily due to lower share
repurchase activity, partially offset by
lower net
proceeds from borrowings.

Our future capital requirements may differ materially
from those currently anticipated and will depend on
many factors,
including market acceptance of and
demand for our products, acquisition opportunities,
technological advances and our
relationships with
suppliers and customers. Based on current and
projected levels of cash flow from operations, coupled
with our existing cash and cash equivalents and our
Credit Facility, we believe that we have sufficient
liquidity to meet both our short-term and long-term
cash requirements. However, if there is a significant
decrease in demand for our products, or if our revenue
grows faster than we anticipate, operating cash flows
may be insufficient to meet our needs.
If existing
resources and cash from operations are not sufficient
to meet our future requirements or if we perceive
conditions to be favorable, we may seek additional
debt or equity financing. Additional equity or debt
financing could be dilutive to holders of our common
stock. Further, we cannot be sure that additional
equity or debt financing, if required, will be available
on favorable terms, if at all.

IMPACT OF INFLATION
We do not believe that the effects of inflation had a
significant impact on our revenue or operating income
during fiscal years 2018, 2017 and 2016.

OFF-BALANCE SHEET ARRANGEMENTS
As of March 31, 2018, we had no off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of SEC
Regulation S-K.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

CONTRACTUAL OBLIGATIONS
The following table summarizes our significant contractual obligations and commitments (in thousands) as of
March 31, 2018, and the effect such obligations are expected to have on our liquidity and cash flows in future
periods.

Capital commitments(1)

Long-term debt obligations(2)

Capital lease(3)

Operating leases

Other purchase obligations and commitments(4)

Cross-licensing liability(5)

Deferred compensation(6)

Total

Payments Due By Period

Total
Payments

Fiscal
2019

Fiscal
2020-2021

Fiscal
2022-2023

Fiscal 2024
and thereafter

$

39,793

$ 39,200

$

— $

593

$

—

1,480,132

68,396

136,793

136,793

1,138,150

52,431

68,582

—

12,490

290,626

283,452

10,340

14,284

2,540

966

2,094

21,898

7,174

4,800

1,397

2,094

15,740

—

3,000

887

48,243

18,454

—

—

11,034

$1,956,188

$407,044

$174,156

$159,107

$1,215,881

(1) Capital commitments represent obligations for the construction or purchase of property and equipment. They were not recorded as liabilities on our

Consolidated Balance Sheet because we had not received the related goods or services as of March 31, 2018.

(2) Long-term debt obligations represent future cash payments of principal and interest over the life of the Notes, including anticipated interest payments not
recorded as liabilities on our Consolidated Balance Sheet as of March 31, 2018. Debt obligations are classified based on their stated maturity date, and
any future redemptions would impact our cash payments. See Note 8 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of
this report for further information.

(3) The capital lease obligation relates to a lease that was signed in the fourth quarter of fiscal 2018. This lease will allow us to consolidate several leased
facilities as well as provide additional manufacturing space in Beijing, China. The lease is not recorded on our Consolidated Balance Sheet as of
March 31, 2018, because the lease term is not expected to commence until fiscal 2020.

(4) Other purchase obligations and commitments include payments due under various contracts as well as agreements to purchase materials and
manufacturing services. They are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or
services as of March 31, 2018.

(5) The cross-licensing liability represents payables under a cross-licensing agreement and are included in “Accrued liabilities” and “Other long-term

liabilities” in the Consolidated Balance Sheet as of March 31, 2018.

(6) Commitments for deferred compensation represent the liability under our Non-Qualified Deferred Compensation Plan. See Note 9 of the Notes to the

Consolidated Financial Statements set forth in Part II, Item 8 of this report for further information.

Other Contractual Obligations
As of March 31, 2018, in addition to the amounts
shown in the contractual obligations table above, we
had $127.4 million of unrecognized income tax
benefits and accrued interest, of which $18.3 million
had been recorded as a liability. We are uncertain as
to if, or when, such amounts may be settled.

As discussed in Note 9 of
the Notes to the
Consolidated Financial Statements set forth in Part II,
Item 8 of this report, we have two pension plans in
Germany with a combined benefit obligation of
approximately $12.7 million as of March 31, 2018.
Pension benefit payments are not
included in the
schedule above because they are not available for all
periods presented. Pension benefit payments were
approximately $0.2 million in fiscal 2018 and are
expected to be approximately $0.3 million in fiscal
2019.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements
requires management to use judgment and estimates.
The level of uncertainty in estimates and assumptions
increases with the length of time until the underlying
transactions are completed. Actual results could differ
from those estimates. The accounting policies that are
most critical
in the preparation of our consolidated
financial statements are those that are both important
financial condition and
to the presentation of our

results of operations and require significant judgment
and estimates on the part of management. Our critical
accounting policies are reviewed periodically with the
Audit Committee of the Board of Directors. We also
have other policies that we consider key accounting
policies, however,
these policies typically do not
require us to make estimates or judgments that are
difficult or subjective (see Note 1 of the Notes to the
Consolidated Financial Statements set forth in Part II,
Item 8 of this report).

The valuation of

Inventory Reserves.
inventory
requires us to estimate obsolete or excess inventory.
The determination of obsolete or excess inventory
requires us to estimate the future demand for our
products within specific time horizons, generally 12 to
24 months. The estimates of future demand that we
use in the valuation of
inventory reserves are the
same as those used in our revenue forecasts and are
also consistent with the estimates used in our
manufacturing plans to enable consistency between
inventory valuations and build decisions. Product-
specific facts and circumstances reviewed in the
inventory valuation process include a review of the
customer base, market conditions, and customer
acceptance of our products and technologies, as well
as an assessment of the selling price in relation to
the product cost.

Historically, inventory reserves have fluctuated as new
technologies have been introduced and customers’

35

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

demand has shifted. Inventory reserves had an impact
on margins of less than 2% in fiscal years 2018, 2017
and 2016.

Property and Equipment. Periodically, we evaluate the
period over which we expect to recover the economic
value of our property and equipment, considering
factors such as changes in machinery and equipment
technology, our ability to re-use equipment across
generations of process technology and historical
usage trends. When we determine that the useful lives
of assets are shorter or longer than we had originally
estimated, we adjust the rate of depreciation to reflect
the revised useful lives of the assets.

We assess property and equipment for impairment
when events or changes in circumstances indicate
that the carrying value of the assets or the asset
grouping may not be recoverable. Factors that we
consider in deciding when to perform an impairment
review include an adverse change in our use of the
assets or an expectation that the assets will be sold
or otherwise disposed. We assess the recoverability of
the assets held for use by comparing the projected
undiscounted net cash flows associated with the
related asset or group of assets over their remaining
estimated useful lives against their respective carrying
amounts. Assets identified as “held for sale” are
recorded at the lesser of their carrying value or their
fair market value less costs to sell. Impairment, if any,
is based on the excess of the carrying amount over
the fair value of
those assets. The process of
evaluating property and equipment for impairment is
highly subjective and requires significant judgment as
we are required to make assumptions about items
such as future demand for our products and industry
trends.

license. The value of our

Goodwill and Intangible Assets. Goodwill is recorded
when the purchase price paid for a business exceeds
the estimated fair value of the net identified tangible
and intangible assets acquired.
Intangibles are
recorded when such assets are acquired by purchase
including
or
goodwill, could be impacted by future adverse changes
(i) any future declines in our operating
such as:
results;
technology
company stocks, including the value of our common
stock; (iii) a prolonged or more significant slowdown in
the worldwide economy or the semiconductor industry;
or (iv)
failure to meet the performance projections
included in our forecasts of future operating results.

(ii) a decline in the value of

intangibles,

fair

are

also

recent

required

test, we

We have the option to perform a qualitative
assessment (commonly referred to as “step zero”) to
further quantitative analysis for
determine whether
impairment of goodwill or
indefinite-lived intangible
assets is necessary. In performing step zero for our
to make
impairment
assumptions and judgments, including the evaluation
of macroeconomic conditions as related to our
business, industry and market trends, and the overall
future financial performance of our reporting units and
future opportunities in the markets in which they
operate. We
value
consider
calculations of our indefinite-lived intangible assets
and reporting units as well as cost factors such as
changes in raw materials, labor or other costs. If the
step zero analysis indicates that it is more likely than
not that the fair value of a reporting unit or indefinite-
lived asset is less than its respective carrying value
including
then we would perform an
this
additional quantitative analysis. For goodwill,
involves a two-step process. The first step compares
the fair value of
including its
goodwill, to its carrying value. If the carrying value of
the reporting unit exceeds its fair value, then the
second step of the process is performed to determine
the amount of impairment. The second step compares
the implied fair value of the reporting unit’s goodwill to
the carrying value of
the goodwill. An impairment
charge is recognized for the amount the carrying value
of the reporting unit’s goodwill exceeds its implied fair
value.

the reporting unit,

goodwill,

For indefinite-lived intangible assets, the quantitative
analysis compares the carrying value of the asset to
its fair value and an impairment charge is recognized
for the amount its carrying value exceeds its fair value.

factors.

of market

Determining the fair value of reporting units, indefinite-
lived intangible assets and implied fair value of a
reporting unit’s goodwill
is reliant upon estimated
future revenues, profitability and cash flows and
consideration
Assumptions,
judgments and estimates are complex, subjective and
can be affected by a variety of
including
external
factors such as industry and economic
trends, and internal factors such as changes in our
business strategy or our internal forecasts. Although
we believe the assumptions, judgments and estimates
we have made have been reasonable and appropriate,
different assumptions, judgments and estimates could
materially affect our results of operations.

factors,

We account for goodwill and indefinite-lived intangible
assets in accordance with the FASB’s guidance, which
requires annual testing for impairment or whenever
events or circumstances make it more likely than not
that an impairment may have occurred. We perform
our annual
impairment tests on the first day of the
fourth quarter in each fiscal year. Our indefinite-lived
intangible assets consist of in-process research and
development (“IPRD”).

from the synergies of

Goodwill
Goodwill is allocated to our reporting units based on
the expected benefit
the
business combinations generating the underlying
goodwill. For fiscal 2018, we performed a qualitative
assessment of the fair value of our reporting units
and, as a result of our analysis, we determined that
there were no indicators of impairment and no further
quantitative impairment test was deemed necessary.

36

performed

fiscal 2017, we

For
qualitative
assessment of the fair value of our reporting units
and, as a result of our analysis, we determined that
there were no indicators of impairment and no further
quantitative impairment test was deemed necessary.

a

For fiscal 2016, although there were no indicators of
impairment, we opted to bypass the qualitative
assessment and proceeded to perform fair value
assessments of our reporting units (the first step of
the quantitative impairment analysis) as the fair value
the reporting units had changed (due to the
of
Business Combination) since the last
time we
performed a quantitative analysis. The quantitative
assessments performed reaffirmed that there were no
indicators of impairment for fiscal 2016.

these

performing

quantitative

In
assessments,
consistent with our historical approach, we used both
the income and market approaches to estimate the fair
reporting units. The income approach
value of our
involves discounting future estimated cash flows. The
sum of the reporting unit cash flow projections was
compared to our market capitalization in a discounted
implied
cash flow framework to calculate an overall
internal
the
for
rate)
Company. Our market capitalization was adjusted to a
control basis assuming a reasonable control premium,
which resulted in an implied discount rate. This implied
discount rate serves as a baseline for estimating the
specific discount rate for each reporting unit.

return (or discount

rate of

The discount rate used is the value-weighted average
of our estimated cost of equity and debt (“cost of
capital”) derived using both known and estimated
customary market metrics. Our weighted average cost
of capital is adjusted for each reporting unit to reflect
a risk factor, if necessary, for each reporting unit. We
perform sensitivity tests with respect to growth rates
and discount rates used in the income approach. We
believe the income approach is appropriate because it
provides a fair value estimate based upon the
respective
long-term
unit’s
operations and cash flow performance.

expected

reporting

We considered historical
rates and current market
conditions when determining the discount and growth
rates used in our analysis. For
the
material assumptions used for the income approach
were eight years of projected net cash flows and a
long-term growth rate of 3% for both the MP and IDP
reporting units. A discount rate of 15% and 16% was
used for the MP and IDP reporting units, respectively.

fiscal 2016,

In applying the market approach, valuation multiples
are derived from historical and projected operating
data of selected guideline companies, which are
evaluated and adjusted, if necessary, based on the
strengths and weaknesses of
the reporting unit
relative to the selected guideline companies. The
valuation multiples are then applied to the appropriate
historical and/or projected operating data of
the
reporting unit to arrive at an indication of fair value.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

with

We believe the market approach is appropriate
because it provides a fair value using multiples from
companies
economic
operations
and
characteristics similar
to its reporting units. We
weighted the results of the income approach and the
results of the market approach at 50% each and for
the MP and IDP reporting units, concluded that the fair
value of the reporting units was determined to be
substantially in excess of the carrying value, and as
such, no further analysis was warranted.

Under the income approach, the following indicates
the sensitivity of key assumptions utilized in the
assessment. A one percentage point decrease in the
discount rate would have increased the fair value of
the MP and IDP reporting units by approximately
$660.0 million and $140.0 million, respectively, while
a one percentage point increase in the discount rate
would have decreased the fair value of the MP and IDP
reporting units by approximately $560.0 million and
$110.0 million, respectively. A one percentage point
decrease in the long-term growth rate would have
decreased the fair value of the MP and IDP reporting
units
and
$50.0 million, respectively, while a one percentage
point increase in the long-term growth rate would have
increased the fair value of the MP and IDP reporting
units
and
approximately
$70.0 million, respectively.

$290.0 million

$340.0 million

approximately

by

by

impairment. The fair value of

Intangible Assets with Indefinite Lives
In fiscal 2015, as a result of
the Business
Combination, we recorded IPRD of $470.0 million.
IPRD was recorded at fair value as of the date of
acquisition as an indefinite-lived intangible asset until
the associated
the completion or abandonment of
R&D efforts or
the
acquired IPRD was determined based on an income
approach using the “excess earnings method,” which
estimated the value of
the intangible assets by
discounting the future projected earnings of the asset
to present value as of
the valuation date. Upon
completion of development, acquired IPRD assets are
transferred to finite-lived intangible assets and
amortized over their useful
lives. During fiscal years
2018, 2017 and 2016, we completed and transferred
into
approximately
$37.0 million, $220.0 million and $203.0 million,
respectively, of
IPRD. We performed a qualitative
assessment of the remaining IPRD of $10.0 million
during fiscal 2018 and concluded that IPRD was not
impaired.

technology

developed

Intangible Assets with Definite Lives
Intangible assets are recorded when such assets are
acquired by purchase or license. Finite-lived intangible
licenses,
assets consist primarily of
customer
relationships, developed technology and
trade names resulting from business combinations
and are subject to amortization.

technology

Technology licenses are recorded at cost and are
amortized on a straight-line basis over the lesser of

37

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

the estimated useful life of the technology or the term
of the license agreement, ranging from approximately
five to eight years.

The fair value of customer
relationships acquired
during fiscal years 2013, 2015 and 2017 was
determined based on an income approach using the
“with and without method,” in which the value of the
asset is determined by the difference in discounted
cash flows of the profitability of the Company “with”
the Company
the asset and the profitability of
“without” the asset. Customer
relationships are
amortized on a straight-line basis over the estimated
useful life, ranging from three to ten years.

The fair value of developed technology acquired during
fiscal years 2013, 2015 and 2017 was determined
based on an income approach using the “excess
earnings method,” which estimated the value of the
intangible assets by discounting the future projected
the
earnings of
valuation date. Developed technology is amortized on
a straight-line basis over the estimated useful
life,
ranging from three to six years.

to present value as of

the asset

The fair value of trade names acquired in fiscal years
2015 and 2017 was determined based on an income
approach using the “relief from royalty method,” in
which the value of
is determined by
discounting the future projected cash flows generated
from the trade name’s estimated royalties. Trade
names are amortized on a straight-line basis over the
estimated useful life of two to three years.

the asset

value of

The fair
the non-compete agreements
acquired in fiscal 2017 was determined based on an
income approach using the “incremental
income
method” over the useful life of two years.

We regularly review identified intangible assets to
determine if facts and circumstances indicate that the
useful life has changed from the original estimate or
that the carrying amount of the assets may not be
recoverable. If such facts and circumstances exist, we
identified intangible
assess the recoverability of
assets by comparing the projected undiscounted net
cash flows associated with the related asset or group
of assets over
their
respective carrying amounts. Impairments, if any, are
based on the excess of the carrying amount over the
fair value of those assets and occur in the period in
which the impairment determination was made.

remaining lives against

their

Revenue Recognition. Net
revenue is generated
principally from sales of semiconductor products. We
recognize revenue from product sales when the
fundamental criteria are met, such as the time at
which the title and risk and rewards of product
ownership are transferred to the customer, price and
terms are fixed or determinable, no significant vendor
obligation exists and collection of
the resulting
receivable is reasonably assured.

Sales of products are generally made through either
representatives or
our sales force, manufacturers’

38

through a distribution network. Revenue from the
majority of our products is recognized upon shipment
of the product to the customer from a Company-owned
or third-party location. Some revenue is recognized
upon receipt of the shipment by the customer. We
have limited rebate programs offering price protection
to certain distributors. These rebates represented
approximately 5% of net revenue in fiscal 2018 and
can be reasonably estimated based on specific criteria
included in the rebate agreements and other known
factors at the time. We reduce revenue and record
reserves for product returns and allowances for price
protection, stock rotation, and scrap allowance based
on historical experience or specific identification
the
depending
arrangement.

contractual

terms

the

on

of

contracts for R&D work,

We also recognize a portion of our net revenue through
other agreements such as non-recurring engineering
income,
fees,
intellectual property
revenue, and service
revenue. These agreements are collectively less than
1% of our consolidated annual revenue. Revenue from
these agreements is recognized when the service is
completed or upon certain milestones, as provided for
in the agreements.

royalty

(“IP”)

Revenue from certain contracts is recognized on the
percentage of completion method based on the costs
incurred to date and the total contract amount, plus
the contractual fee. If these contracts experience cost
overruns,
the percentage of completion method is
used to determine revenue recognition. Revenue from
fixed price contracts is recognized when the required
deliverable is satisfied.

Royalty income is recognized based on a percentage
of sales of the relevant product reported by licensees
during the period.

In addition, we license or sell our
rights to use
portions of our IP portfolio, which includes certain
patent rights useful in the manufacture and sales of
certain products. IP revenue recognition is dependent
on the terms of each agreement. We will recognize IP
the IP if we have no
revenue upon delivery of
substantive future obligation to perform under
the
arrangement. We will defer recognition of IP revenue
where future performance obligations are required to
earn the revenue or the revenue is not guaranteed.
Revenue from services is recognized during the period
that the service is performed.

circumstances

Accounts receivable are recorded for all revenue items
listed above and do not bear interest. We evaluate the
collectability of accounts receivable based on a
combination of factors. In cases where we are aware
of
specific
that may
its financial obligations
customer’s ability to meet
after the original sale, we will record an allowance
against amounts due, and thereby
reduce the
receivable to the amount we reasonably believe will be
collected. For all other customers, we recognize
allowances for doubtful accounts based on the length

impair

a

of time the receivables are past due, industry and
the current business
concentrations,
geographic
environment and our historical experience.

Our terms and conditions do not give our customers a
right of return associated with the original sale of our
products. However, we will authorize sales returns
under certain circumstances, which include perceived
quality problems,
returns and like-kind
exchanges. We evaluate our estimate of returns by
analyzing all types of returns and the timing of such
returns in relation to the original sale. Reserves are
adjusted to reflect changes in the estimated returns
versus the original sale of product.

courtesy

In determining income for

Income Taxes.
financial
statement purposes, we must make certain estimates
and judgments in the calculation of tax expense, the
resultant tax liabilities, and in the recoverability of
deferred tax assets that arise from temporary
differences between the tax and financial statement
recognition of revenue and expense.

As part of our financial process, we assess on a tax
jurisdictional basis the likelihood that our deferred tax
assets can be recovered. If recovery is not more likely
than not (a likelihood of less than 50 percent), the
provision for taxes must be increased by recording a
reserve in the form of a valuation allowance for the
to
deferred tax assets that are estimated not
ultimately be recoverable.
In this process, certain
relevant criteria are evaluated including: the amount of
income or loss in prior years, the existence of deferred
tax liabilities that can be used to absorb deferred tax
assets, the taxable income in prior carryback years
that can be used to absorb net operating losses and
credit carrybacks, future expected taxable income, and
prudent and feasible tax planning strategies. Changes
conditions, U.S. or
in taxable income, market
international tax laws, and other factors may change
our judgment regarding whether we will be able to
realize the deferred tax assets. These changes, if any,
may require material adjustments to the net deferred
tax assets and an accompanying reduction or increase
in income tax expense which will
in a
corresponding increase or decrease in net income in
the period when such determinations are made. See
Note 12 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report for
additional
information regarding changes in the
valuation allowance and net deferred tax assets.

result

tax

As part of our financial process, we also assess the
likelihood that our
reporting positions will
ultimately be sustained. To the extent it is determined
it is more likely than not (a likelihood of more than 50
percent) that some portion or all of a tax reporting
position will ultimately not be recognized and
sustained, a provision for unrecognized tax benefit is
provided by either reducing the applicable deferred tax
asset or accruing an income tax liability. Our judgment
reporting
regarding the sustainability of our
positions may change in the future due to changes in

tax

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

U.S. or international tax laws and other factors. These
changes, if any, may require material adjustments to
the related deferred tax assets or accrued income tax
liabilities and an accompanying reduction or increase
in income tax expense which will
in a
corresponding increase or decrease in net income in
the period when such determinations are made. See
Note 12 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report for
additional
information regarding our uncertain tax
positions and the amount of unrecognized tax
benefits.

result

RECENT ACCOUNTING PRONOUNCEMENTS

subsequent measurement

Accounting Pronouncements Not Yet Effective
In January 2017,
the FASB issued Accounting
Standards Update (“ASU”) 2017-04, “Intangibles-
Goodwill and Other (Topic 350): Simplifying the Test
for Goodwill Impairment.” The new guidance simplifies
the
by
eliminating the second step from the quantitative
goodwill impairment test. We will continue to have the
option to perform a qualitative assessment
to
determine if a quantitative goodwill impairment test is
necessary. The new standard will become effective for
us beginning in fiscal 2021 with early adoption
permitted. We do not believe it will have a significant
impact on our consolidated financial statements.

goodwill

of

In January 2017,
the FASB issued ASU 2017-01,
“Business Combinations (Topic 805): Clarifying the
Definition of a Business.” The new guidance clarifies
the definition of a business and provides further
guidance for evaluating whether a transaction will be
accounted for as an acquisition of an asset or a
business. The new standard will become effective for
us beginning in the first quarter of fiscal 2019 with
early adoption permitted. The update should be
applied prospectively. We do not believe it will have a
significant
consolidated financial
statements.

impact on our

the FASB issued ASU 2016-15,
In August 2016,
“Statement of Cash Flows (Topic 230): Classification
of Certain Cash Receipts and Cash Payments
(a consensus of the FASB’s Emerging Issues Task
Force).” The new guidance addresses eight specific
cash flow issues with the objective of reducing the
existing diversity in practice. The new standard will
become effective for us beginning in the first quarter
fiscal 2019. We do not believe it will have a
of
consolidated financial
significant
statements.

impact on our

of

Credit

In June 2016,
the FASB issued ASU 2016-13,
“Financial Instruments — Credit Losses (Topic 326):
Financial
Measurement
Instruments.” The new guidance requires entities to
use
loss
a
expected
methodology
to measure impairments of certain
financial instruments. It also modifies the impairment
for available-for-sale debt securities and
model

lifetime

Losses

current

credit

on

39

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

provides for a simplified accounting model
for
purchased financial assets with credit deterioration
since their origination. The new standard will become
effective for us beginning in the first quarter of fiscal
2021 with early adoption permitted. We do not believe
it will have a significant impact on our consolidated
financial statements.

and

In February 2016, the FASB issued ASU 2016-02,
“Leases (Topic 842).” The new guidance requires
lessees to recognize a right-of-use asset and a lease
leases with a term longer than 12
liability for all
including those previously described as
months,
operating
leases. Consistent with current U.S.
generally accepted accounting principles (“GAAP”), the
of
recognition, measurement,
expenses and cash flows arising from a lease by a
lessee will primarily depend on its classification as a
finance or operating lease. The new guidance will
become effective for us in the first quarter of fiscal
the right-of-use
2020. We expect
assets and lease liabilities,
leases previously
described as operating leases, to be the present value
of our forecasted future lease commitments. We are
continuing to assess the overall impacts of the new
standard, including the discount rate to be applied in
these valuations.

the valuation of

presentation

for

In January 2016,
the FASB issued ASU 2016-01,
“Financial Instruments — Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and
Financial Liabilities.” The new guidance will affect the
accounting for equity investments, financial liabilities
measured under the fair value option and presentation
and disclosure requirements for financial instruments.
In addition, the FASB clarified guidance related to the
assessment of valuation allowances when recognizing
deferred tax assets related to unrealized losses on
available-for-sale debt securities. The new standard is
effective for us beginning in the first quarter of fiscal
2019. We do not believe it will have a significant
impact on our consolidated financial statements.

several

amendments

the FASB issued ASU 2014-09,
In May 2014,
“Revenue from Contracts with Customers (Topic
606),” with
subsequently
issued. The new guidance provides an updated
framework for
resulting in a
revenue recognition,
to be applied by reporting
single revenue model
companies under U.S. GAAP. Under the new model,
recognition of
revenue occurs when a customer
obtains control of promised goods or services in an
amount that reflects the consideration to which the
entity expects to be entitled in exchange for those
goods or services. Additional disclosures will be
required regarding the nature, amount,
timing and
uncertainty of cash flows. We will adopt the standard
in the first quarter of fiscal 2019 using the modified
retrospective approach, under which the cumulative
effect of adoption is recognized at the date of initial
application. We have evaluated the impact of
the
standard and do not anticipate that the adoption of
impact on our
this standard will have a material

40

financial

statements.

consolidated
are
implementing changes to our accounting policies,
internal controls and disclosures to support the new
standard, however, we do not expect these changes to
be material.

We

Accounting Pronouncements Recently Adopted
In March 2018,
the FASB issued ASU 2018-05,
“Income Taxes (Topic 740): Amendments to SEC
Paragraphs Pursuant to SEC Staff Accounting Bulletin
No. 118.” The amendments incorporate into the ASC
the recent SEC guidance related to the income tax
accounting implications of the Tax Act. See Note 12 of
the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this report for additional information.

2017,
FASB
the
“Compensation — Stock

issued
ASU
In
May
Compensation
2017-09,
(Topic 718): Scope of Modification Accounting.” The
new guidance clarifies when modification accounting in
Topic 718 should be applied to changes to the terms
or conditions of a share-based payment award. We
elected to early-adopt the standard in the first quarter
of fiscal 2018 with no impact on our consolidated
financial statements.

cash

FASB

2016,

issued

In November
ASU
the
2016-18, “Statement of Cash Flows (Topic 230):
Restricted Cash (a consensus of the FASB Emerging
Issues Task Force).” The new guidance requires that
restricted cash and restricted cash equivalents be
included in
equivalents when
reconciling the beginning-of-period and end-of-period
total amounts shown in the statement of cash flows.
We adopted the provisions of ASU 2016-18 in the
second quarter of fiscal 2018 using the retrospective
transition method. The adjustment
to reclassify
restricted cash for each period presented was less
than $1.0 million.

cash

and

the

FASB

2016,

issued

October

ASU
In
2016-16, “Income Taxes (Topic 740),
Intra-Entity
Transfers of Assets Other Than Inventory.” The new
guidance requires an entity to recognize the income
tax consequences of an intra-entity transfer of an
asset, other than inventory, when the transfer occurs.
We elected to early-adopt the standard in the first
quarter of fiscal 2018 using the modified retrospective
method (which resulted in a cumulative adjustment to
retained earnings of $1.2 million as of the beginning
of the period of adoption). During fiscal 2018, we
recognized a tax expense of $6.9 million related to
transfers of intra-entity assets.

FASB

2016,

issued

In March
ASU
the
2016-09, “Compensation — Stock Compensation
(Topic 718): Improvements to Employee Share-Based
Payment Accounting.” The new guidance simplifies
share-based
certain
payment
tax
consequences, forfeitures, classification of awards on
the balance sheet and presentation on the statement
of cash flows, and became effective for us in the first

transactions,

accounting

including

aspects

income

for

of

quarter of fiscal 2018. We recognized a cumulative-
effect adjustment to reduce our accumulated deficit
by $36.7 million with a corresponding increase to
deferred tax assets for
the federal and state net
operating losses attributable to excess tax benefits
that had not been previously recognized. All excess tax
benefits and deficiencies in the current and future
periods will be recognized as income tax expense in
our Consolidated Statement of Operations in the
reporting period in which they occur. This will result in
increased volatility in our effective tax rate. During
fiscal 2018, we recognized a discrete tax benefit
of $12.2 million related to the excess tax benefits
from stock-based compensation. We also elected to
prospectively adopt the provision that requires excess
tax benefits to be presented within operating activities
in the statement of cash flows and no prior periods
have been restated as a result of the adoption. We
continued our existing practice of estimating expected
forfeitures in determining compensation cost.

the

2016,

issued

ASU
FASB
In March
“Investments-Equity Method and Joint
2016-07,
Ventures (Topic 323): Simplifying the Transition to the
Equity Method of Accounting.” The new guidance
eliminates the requirement to retrospectively apply the
equity method of accounting when an investment
previously accounted for under the cost basis qualifies
for the equity method of accounting. We adopted ASU
2016-07 in the first quarter of fiscal 2018 with no
impact on our consolidated financial results.

July

FASB

2015,

issued

Inventory.”

In
the
ASU
2015-11, “Inventory
(Topic 330): Simplifying the
Measurement of
The new guidance
changes the measurement principle for inventory from
the lower of cost or market to the lower of cost and
net
realizable value. ASU 2015-11 defines net
realizable value as the estimated selling price in the
less
ordinary
reasonably
business
predictable costs to completion,
transportation, or
disposal. We adopted ASU 2015-11 in the first quarter
of
impact on our
consolidated financial statements.

fiscal 2018 with no significant

course

of

ITEM 7A. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

Financial Risk Management
We are exposed to financial market risks, including
changes in interest rates, currency exchange rates
and certain commodity prices. The overall objective of
our financial risk management program is to seek a
reduction in the potential negative earnings effects
from changes in interest rates, foreign exchange rates
and commodity prices arising from our business
activities. We manage these financial exposures
through operational means and by using various
financial instruments. These practices may change as
economic conditions change.

Interest Rates
The interest rates under our Credit Agreement are
variable, however, since we have no outstanding

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

balances under
interest
March 31, 2018.

the Credit Agreement,

there is no
rate risk related to this facility as of

Currency Exchange Rates
results are affected by
As a global company, our
movements in currency exchange rates. Our exposure
may increase or decrease over time as our foreign
business levels fluctuate in the countries where we
have operations, and these changes could have a
material impact on our financial results. The functional
currency for most of our international operations is the
U.S. dollar. We have foreign operations in Asia, Costa
Rica and Europe, and a substantial portion of our
revenue is derived from sales to customers outside
the U.S. Our
revenue is primarily
denominated in U.S. dollars. Operating expenses and
items related to our foreign-
certain working capital
in
based
instances,
are,
operations
foreign currencies and
denominated in the local
therefore are affected by changes in the U.S. dollar
exchange rate in relation to foreign currencies, such
as the Costa Rican Colon, Euro, Pound Sterling,
Renminbi and Singapore Dollar.
the U.S. dollar
weakens compared to these and other currencies, our
operating expenses for
foreign operations will be
higher when remeasured back into U.S. dollars. We
seek to manage our foreign exchange risk in part
through operational means.

international

some

If

For fiscal 2018, we incurred a foreign currency loss of
$2.8 million as compared to a loss of $3.2 million in
fiscal 2017, which is recorded in “Other (expense)
income.”

financial

instrument holdings,

Our
including foreign
receivables, cash and payables at March 31, 2018,
were analyzed to determine their sensitivity to foreign
exchange rate changes. In this sensitivity analysis, we
assumed that
the change in one currency’s rate
relative to the U.S. dollar would not have an effect on
other currencies’ rates relative to the U.S. dollar. All
other factors were held constant. If the U.S. dollar
declined in value 10% in relation to the re-measured
foreign currency instruments, our net income would
have decreased by approximately $2.7 million. If the
U.S. dollar increased in value 10% in relation to the
re-measured foreign currency instruments, our net
income would have increased by approximately
$2.2 million.

commodities. We

Commodity Prices
We routinely use precious metals in the manufacture
of our products. Supplies for such commodities may
from time to time become restricted, or general
market factors and conditions may affect the pricing of
such
active
reclamation process to capture any unused gold.
While we continue to attempt to mitigate the risk of
similar increases in commodities-related costs, there
can be no assurance that we will be able to
successfully safeguard against potential short-term
and long-term commodity price fluctuations.

have

also

an

41

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Page

43

44

45

46

47

48

82

42

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

CONSOLIDATED BALANCE SHEETS

(In thousands)

ASSETS
Current assets:

Cash and cash equivalents (Notes 1 & 3)
Accounts receivable, less allowance of $134 and $58 as of March 31, 2018 and

April 1, 2017, respectively

Inventories (Notes 1 & 4)
Prepaid expenses
Other receivables (Note 1)
Other current assets (Notes 1 & 9)

Total current assets
Property and equipment, net (Notes 1 & 5)
Goodwill (Notes 1, 6 & 7)
Intangible assets, net (Notes 1, 6 & 7)
Long-term investments (Notes 1 & 3)
Other non-current assets (Notes 9 & 12)
Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable
Accrued liabilities (Notes 1, 9, 10, & 11)
Other current liabilities (Note 12)

Total current liabilities
Long-term debt (Note 8)
Deferred tax liabilities (Note 12)
Other long-term liabilities (Notes 9, 10, 11 & 12)

Total liabilities
Commitments and contingent liabilities (Note 10)
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; 126,322 and 126,464 shares issued and outstanding at March 31,
2018 and April 1, 2017, respectively

Accumulated other comprehensive loss, net of tax
Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

March 31,
2018

April 1,
2017

$ 926,037 $ 545,463

345,957
472,292
23,909
44,795
30,815
1,843,805
1,374,112
2,173,889
860,336
63,765
65,612

357,948
430,454
36,229
65,247
26,264
1,461,605
1,391,932
2,173,914
1,400,563
35,494
58,815
$6,381,519 $6,522,323

$ 213,193 $ 216,246
170,584
31,998

167,182
60,904

441,279
983,290
63,084
118,302

418,828
989,154
131,511
86,108

1,605,955

1,625,601

—

—

5,237,085
(2,752)
(458,769)

5,357,394
(4,306)
(456,366)

4,775,564

4,896,722

$6,381,519 $6,522,323

See accompanying notes.

43

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Year

(In thousands, except per share data)

Revenue

Cost of goods sold

Gross profit

Operating expenses:

Research and development

Selling, general and administrative

Other operating expense (Notes 6 & 11)

Total operating expenses

Income from operations

Interest expense (Note 8)

Interest income

Other (expense) income

Income (loss) before income taxes

Income tax expense (Note 12)

Net loss

Net loss per share (Note 13):

Basic

Diluted

Weighted average shares of common stock outstanding (Note 13):

Basic

Diluted

2018

2017

2016

$2,973,536 $3,032,574 $2,610,726

1,826,570

1,897,062

1,561,173

1,146,966

1,135,512

1,049,553

445,103

527,751

103,830

470,836

545,588

31,029

448,763

534,099

54,723

1,076,684

1,047,453

1,037,585

70,282

88,059

11,968

(59,548)

(58,879)

(23,316)

7,017

(606)

1,212

(3,087)

2,068

6,418

$

17,145 $

27,305 $

(2,862)

(57,433)

(43,863)

(25,983)

$ (40,288) $

(16,558) $

(28,845)

$

$

(0.32) $

(0.13) $

(0.20)

(0.32) $

(0.13) $

(0.20)

126,946

127,121

141,937

126,946

127,121

141,937

See accompanying notes.

44

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Fiscal Year

(In thousands)

Net loss

Total comprehensive loss:

Unrealized gain on marketable securities, net of tax

Change in pension liability, net of tax

Foreign currency translation adjustment, including intra-entity foreign
currency transactions that are of a long-term-investment nature

Reclassification adjustments, net of tax:

Recognized gain on marketable securities

Foreign currency gain recognized and included in net loss

Amortization of pension actuarial loss

Other comprehensive income (loss)

Total comprehensive loss

2018

2017

2016

$(40,288) $(16,558) $(28,845)

204

476

53

742

(339)

1,153

1,276

(1,014)

(89)

—

(581)

179

—

—

127

(4,994)

—

179

1,554

(1,173)

(3,009)

$(38,734) $(17,731) $(31,854)

See accompanying notes.

45

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

March 28, 2015

Net loss
Other comprehensive loss
Exercise of stock options and vesting of restricted stock units, net of

Common Stock

Shares

Amount

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total

149,059

$ 6,584,247

$ (124)

$(410,963)

$ 6,173,160

—
—

—
—

—
(3,009)

(28,845)
—

(28,845)
(3,009)

shares withheld for employee taxes

2,156

4,406

—

—

4,406

shares withheld for employee taxes

2,484

16,832

—

Issuance of common stock in connection with employee stock

purchase plan

Tax benefit from exercised stock options
Repurchase of common stock, including transaction costs
Stock-based compensation expense

Balance, April 2, 2016

Net loss

Other comprehensive loss
Exercise of stock options and vesting of restricted stock units, net of

Issuance of common stock in connection with employee stock

purchase plan

Tax deficiency from exercised stock options
Repurchase of common stock, including transaction costs
Stock-based compensation expense

Balance, April 1, 2017

Net loss

Other comprehensive income
Exercise of stock options and vesting of restricted stock units, net of

429
—
(24,258)
—
127,386

17,967
636
(1,300,009)
135,366
$ 5,442,613

—
—
—
—
$(3,133)

—
—
—
—
$(439,808)

17,967
636
(1,300,009)
135,366
$ 4,999,672

—

—

—

—

(1,173)

—

(16,558)

(16,558)

—

—

(1,173)

16,832

678
—
(4,084)
—
126,464

25,640
(56)
(209,357)
81,722
$ 5,357,394

—
—
—
—
$(4,306)

—
—
—
—
$(456,366)

25,640
(56)
(209,357)
81,722
$ 4,896,722

—

—

—

—

—

(40,288)

(40,288)

1,554

—

—
—
—
—
—

—

—

—
36,684
1,201
—
—

1,554

4,735

28,064
36,684
1,201
(219,907)
66,799

shares withheld for employee taxes

2,246

4,735

Issuance of common stock in connection with employee stock

purchase plan

Cumulative-effect adoption of ASU 2016-09
Cumulative-effect adoption of ASU 2016-16
Repurchase of common stock, including transaction costs
Stock-based compensation expense

541
—
—
(2,929)
—

28,064
—
—
(219,907)
66,799

Balance, March 31, 2018

126,322

$ 5,237,085

$(2,752)

$(458,769)

$ 4,775,564

See accompanying notes.

46

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Year

(In thousands)

Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation
Intangible assets amortization (Note 7)
Amortization of debt issuance cost and other non-cash items
Excess tax benefit from exercises of stock options
Deferred income taxes
Foreign currency adjustments
Loss (income) on investments and other assets, net (Note 11)
Stock-based compensation expense
Changes in operating assets and liabilities:

Accounts receivable, net
Inventories
Prepaid expenses and other current and non-current assets
Accounts payable
Accrued liabilities
Income tax payable/(recoverable)
Other assets and liabilities

2018

2017

2016

$ (40,288) $ (16,558) $

(28,845)

174,425
539,790
1,858
—
(32,248)
953
49,177
68,158

12,906
(41,887)
28,310
38,952
(2,623)
50,801
4,236

209,825
494,752
1,709
(65)
(28,027)
(36)
5,478
88,845

(36,873)
(6,442)
20,285
(1,035)
26,866
13,414
4,682

180,362
494,589
112
(935)
(12,189)
1,705
(4,705)
139,516

36,682
(84,116)
(28,871)
(461)
3,862
4,300
(13,079)

Net cash provided by operating activities

852,520

776,820

687,927

Investing activities:

Purchase of property and equipment
Purchase of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Purchase of business, net of cash acquired (Note 6)
Other investing

Net cash used in investing activities

Financing activities:

Repurchase of common stock, including transaction costs
Proceeds from debt issuances
Payment of debt
Debt issuance costs
Proceeds from the issuance of common stock
Tax withholding paid on behalf of employees for restricted stock units
Excess tax benefit from exercises of stock options
Other financing

Net cash used in financing activities
Effect of exchange rate changes on cash

Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of the period

(552,702)
(269,835)
(469)
—
—
186,793
— (117,994)
(5,976)

(7,574)

(315,624)
(340,527)
390,009
—
(12,572)

(277,409)

(490,348)

(278,714)

(219,907)
100,000
(107,729)
(1,916)
57,412
(24,708)
—
—

(196,848)
2,360

380,623
545,779

(209,357)
—
—
—
59,148
(15,516)
65
10

(165,650)
(1,105)

119,717
426,062

Cash, cash equivalents and restricted cash at the end of the period

$ 926,402

$ 545,779

Supplemental disclosure of cash flow information:
Cash paid during the year for interest

Cash paid during the year for income taxes

Non-cash investing and financing information:
Capital expenditure adjustments included in liabilities

$ 70,208

$ 71,171

$ 41,478

$ 52,656

$ 31,769

$ 75,340

See accompanying notes.

(1,300,009)
1,175,000
(175,000)
(13,588)
51,875
(22,168)
935
(29)

(282,984)
(294)

125,935
300,127

426,062

2,164

34,942

33,548

$

$

$

$

47

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements
March 31, 2018

1.

THE COMPANY AND ITS SIGNIFICANT
ACCOUNTING POLICIES

On February 22, 2014, RF Micro Devices,
Inc.
(“RFMD”) and TriQuint Semiconductor, Inc. (“TriQuint”)
entered into an Agreement and Plan of Merger and
Reorganization (as subsequently amended on July 15,
the
2014,
the “Merger Agreement”) providing for
business combination of RFMD and TriQuint
(the
“Business Combination”) under a new holding
company named Qorvo, Inc. The stockholders of both
RFMD and TriQuint approved the Merger Agreement at
each company’s special meeting of stockholders on
September 5, 2014. During the third quarter of fiscal
regulatory approvals were
2015, all necessary
received to complete the Business Combination. The
Business Combination closed on January 1, 2015
(fourth quarter of fiscal 2015). For financial reporting
and accounting purposes, RFMD was the acquirer of
TriQuint.

highly

differentiated

The Company is a product and technology leader at
the growing global demand for
the forefront of
always-on broadband connectivity.
The Company
combines a broad portfolio of radio frequency (“RF”)
solutions,
semiconductor
technologies, deep systems-level expertise and scale
manufacturing to supply a diverse group of customers
including smartphones and
in expanding markets,
other mobile devices, defense and aerospace, Wi-Fi
customer premises equipment, cellular base stations,
optical networks, automotive connectivity, and smart
home
the
Company’s products enable a broad range of leading-
edge applications — from very-high-power wired and
wireless infrastructure solutions to ultra-low-power
smart home solutions. The Company’s products and
technologies help transform how people around the
world access their data,
transact commerce, and
interact with their communities.

applications. Within

these markets,

The Company’s design and manufacturing expertise
covers many semiconductor process technologies,
which it sources both internally and through external
suppliers. The Company’s primary wafer fabrication
facilities are located in Florida, North Carolina, Oregon
and Texas and its primary assembly and test facilities
are located in China, Costa Rica, Germany and Texas.
The
and
manufacturing facilities throughout Asia, Europe and
North America.

Company

operates

design,

sales

Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the
the Company and its wholly owned
accounts of
intercompany accounts
subsidiaries. All significant

48

have

been

eliminated

transactions

and
in
consolidation. Certain items in the fiscal years 2017
and 2016 financial statements have been reclassified
to conform to the fiscal 2018 presentation, such as
restricted
accordance with Accounting
Standards Update (“ASU”) 2016-18.

cash

in

Accounting Periods
The Company uses a 52- or 53-week fiscal year ending
on the Saturday closest to March 31 of each year. The
most recent three fiscal years ended on March 31,
2018, April 1, 2017, and April 2, 2016. Fiscal years
2018 and 2017 were 52-week years, and fiscal year
2016 was a 53-week year.

of

consolidated

Use of Estimates
The
financial
the
preparation
statements in conformity with accounting principles
generally accepted in the U.S. requires management
to make estimates and assumptions that affect the
amounts reported in the consolidated financial
statements and accompanying notes. The actual
results that
the Company experiences may differ
materially from its estimates. The Company makes
estimates for the returns reserve, rebates, allowance
inventory valuation including
for doubtful accounts,
reserves, warranty reserves,
income tax valuation,
current and deferred income taxes, uncertain tax
positions, non-marketable equity investments, other-
than-temporary impairments of investments, goodwill,
long-lived assets and other
financial statement
amounts on a regular basis and makes adjustments
based on historical experiences and expected future
conditions. Accounting estimates require difficult and
subjective judgments and actual results may differ
from the Company’s estimates.

During the first quarter of fiscal 2018, the Company
changed its accounting estimate for
the expected
useful lives of certain machinery and equipment. The
Company evaluated its asset base and reassessed
the estimated useful
lives of certain machinery and
equipment in connection with its implementation of
several capital projects,
including the migration of
certain surface acoustic wave (“SAW”) processes from
4-inch to 6-inch toolsets and certain bulk acoustic
wave (“BAW”) processes from 6-inch to 8-inch
toolsets. Based on its ability to re-use equipment
across generations of process technologies and
historical usage trends, the Company determined that
the expected useful
lives for certain machinery and
equipment should be increased by up to three years to
reflect more closely the estimated economic lives of
those assets. This change in estimate was applied
prospectively effective for the first quarter of fiscal
2018 and resulted in a decrease in depreciation
fiscal 2018. This
expense of $59.7 million for
decrease in depreciation expense for
fiscal 2018
resulted in the following: (1) an increase in income
from operations of $47.4 million; (2) an increase in
net income of $44.1 million; (3) an improvement in

Notes to Consolidated Financial Statements

earnings per share of $0.34; and (4) a reduction in
inventory of $12.3 million.

Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposit
accounts, money market funds, and other temporary,
highly-liquid investments with original maturities of
three months or less when purchased.

Investments
Investments available-for-sale at March 31, 2018 and
April 1, 2017 consisted of auction rate securities
(“ARS”). Available-for-sale investments with an original
maturity date greater than approximately three months
and less than one year are classified as current
investments. Available-for-sale investments with an
original maturity date exceeding one year are
classified as long-term.

Available-for-sale securities are carried at fair value
with the unrealized gains and losses, net of
tax,
reported in “Other comprehensive income (loss).” The
cost of securities sold is based on the specific
identification method and any realized gain or loss is
included in “Other (expense)
income.” The cost of
available-for-sale securities is adjusted for premiums
and discounts, with the amortization or accretion of
such amounts included as a portion of interest.

(i)

the Company intends to sell

is impaired,
the impairment

The Company assesses individual
investments for
impairment quarterly. Investments are impaired when
the fair value is less than the amortized cost. If an
the Company evaluates
investment
is other-than-temporary. A
whether
debt investment impairment is considered other-than-
temporary if
the
security, (ii) it is more likely than not that the Company
will be required to sell the security before recovery of
the entire amortized cost basis, or (iii) the Company
does not expect to recover the entire amortized cost
basis of
loss). Other-than-
temporary declines in the Company’s debt securities
are recognized as a loss in the statement of
operations if due to credit loss; all other losses on
debt securities are recorded in “Other comprehensive
income (loss).” The previous amortized cost basis
less the other-than-temporary impairment becomes
the new cost basis and is not adjusted for subsequent
recoveries in fair value.

the security (a credit

Inventories
Inventories are stated at the lower of cost or net
is based on standard cost,
realizable value (cost
cost).
which
The
actual
Company’s business is subject
to the risk of
technological and design changes. The Company
evaluates inventory levels quarterly against sales

approximates

average

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

risk.

In the event

forecasts on a product family basis to evaluate its
overall inventory risk. Reserves are adjusted to reflect
inventory values in excess of forecasted sales and
management’s analysis and assessment of overall
inventory
the Company sells
inventory that had been covered by a specific inventory
reserve, the sale is recorded at the actual selling price
and the related cost of goods sold is recorded at the
full
the reserve. Abnormal
production levels are charged to the income statement
in the period incurred rather than as a portion of
inventory cost.

inventory cost, net of

Product Warranty
The Company generally sells products with a limited
warranty on product quality. The Company accrues for
known warranty issues if a loss is probable and can
be reasonably estimated, and accrues for estimated
incurred but unidentified issues based on historical
activity. The accrual and the related expense for
known product warranty issues were not significant
during the periods presented. Due to product testing
and the short time typically between product shipment
and the detection and correction of product failures
the accrual and
and the historical rate of
related
but
expense
unidentified issues was not significant during the
periods presented.

losses,
estimated

incurred

for

Other Receivables
The Company
records miscellaneous non-product
receivables that are collectible within 12 months in
tax
such
“Other
receivables ($38.1 million as of March 31, 2018 and
$55.4 million as of April 1, 2017, which are reported
on a net basis), precious metal reclaims submitted for
payment and other miscellaneous items.

receivables,”

value-added

as

Property and Equipment
Property and equipment are stated at cost,
less
accumulated depreciation. Depreciation of property
is computed using the straight-line
and equipment
method over the estimated useful lives of the assets,
ranging from one year
to thirty-nine years. The
Company capitalizes interest on borrowings related to
eligible capital expenditures. Capitalized interest
is
added to the cost of qualified assets and depreciated
together with that asset cost. The Company’s assets
acquired
leasehold
improvements are amortized over the lesser of the
asset life or lease term (which is reasonably assured)
and included in depreciation. The Company records
capital-related government
earned as a
reduction to property and equipment and depreciates
such grants over the estimated useful
lives of the
associated assets.

capital

leases

grants

under

and

49

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

The Company periodically evaluates the period over
which it expects to recover the economic value of the
Company’s property and equipment,
considering
factors such as changes in machinery and equipment
technology,
the ability to re-use equipment across
generations of process technology and historical usage
trends. If the Company determines that the useful lives
of
than originally
estimated,
the rate of depreciation is adjusted to
reflect the revised useful lives of the assets.

its assets are shorter or

longer

The Company assesses property and equipment for
impairment when events or changes in circumstances
indicate that the carrying amount of its assets may not
be recoverable. Factors that are considered in
review
deciding when to perform an impairment
include an adverse change in the use of
the
Company’s assets or an expectation that the assets
will be sold or otherwise disposed. The Company
assesses the recoverability of the assets held for use
by comparing the projected undiscounted net cash
flows associated with the related asset or group of
remaining estimated useful
assets over
lives
against
respective carrying amounts. Assets
their
identified as “held for sale” are recorded at the lesser
of their carrying value or their fair market value less
costs to sell.
is based on the
excess of the carrying amount over the fair value of
those assets.

Impairment,

if any,

their

Goodwill and Intangible Assets
Goodwill is recorded when the purchase price paid for
a business exceeds the estimated fair value of the net
identified tangible and intangible assets acquired.
Intangibles are recorded when such assets are
acquired by purchase or license. The value of the
Company’s intangibles,
including goodwill, could be
impacted by future adverse changes such as: (i) any
future declines in the Company’s operating results;
(ii) a decline in the value of
technology company
stocks, including the value of the Company’s common
stock; (iii) a prolonged or more significant slowdown in
the worldwide economy or the semiconductor industry;
failure to meet the performance projections
or (iv)
included in the Company’s forecasts of
future
operating results.

The Company accounts for goodwill and indefinite-lived
intangible assets in accordance with the Financial
Accounting Standards Board (“FASB”) guidance, which
requires annual testing for impairment or whenever
events or circumstances make it more likely than not
that an impairment may have occurred. The Company
performs its annual impairment tests on the first day
of the fourth quarter in each fiscal year. Indefinite-lived
intangible assets consist of in-process research and
development (“IPRD”).

50

fair

value calculations of

future financial performance of

The Company has the option to perform a qualitative
assessment (commonly referred to as “step zero”) to
further quantitative analysis for
determine whether
impairment of goodwill or
indefinite-lived intangible
assets is necessary. In performing step zero for its
impairment test, the Company is required to make
assumptions and judgments, including the evaluation
of macroeconomic conditions as related to the
Company’s business, industry and market trends, and
the overall
the
Company’s reporting units and future opportunities in
the markets in which they operate. The Company also
considers recent
its
indefinite-lived intangible assets and reporting units as
well as cost factors such as changes in raw materials,
labor or other costs. If the step zero analysis indicates
that it is more likely than not that the fair value of a
reporting unit or indefinite-lived asset is less than its
respective carrying value including goodwill, then the
Company would perform an additional quantitative
analysis. For goodwill,
this involves a two-step
process. The first step compares the fair value of the
reporting unit, including its goodwill, to its carrying
the reporting unit
value.
exceeds its fair value, then the second step of the
process is performed to determine the amount of
impairment. The second step compares the implied
fair value of
to the
carrying value of the goodwill. An impairment charge is
recognized for the amount the carrying value of the
reporting unit’s goodwill exceeds its implied fair value.

the reporting unit’s goodwill

the carrying value of

If

of market

For indefinite-lived intangible assets, the quantitative
analysis compares the carrying value of the asset to
its fair value and an impairment charge is recognized
for the amount its carrying value exceeds its fair value.
Determining the fair value of reporting units, indefinite-
lived intangible assets and implied fair value of a
reporting unit’s goodwill
is reliant upon estimated
future revenues, profitability and cash flows and
consideration
Assumptions,
judgments and estimates are complex, subjective and
including
can be affected by a variety of
external
factors such as industry and economic
trends, and internal factors such as changes in the
Company’s business strategy or its internal forecasts.
Although the Company believes the assumptions,
judgments and estimates it has made have been
reasonable and appropriate, different assumptions,
judgments and estimates could materially affect its
results of operations.

factors.

factors,

Goodwill
Goodwill is allocated to the Company’s reporting units
based on the expected benefit from the synergies of
the business combinations generating the underlying
the Company’s
goodwill. As of March 31, 2018,

Notes to Consolidated Financial Statements

goodwill balance of $2,173.9 million is allocated
between its Mobile Products (“MP”) and Infrastructure
and Defense Products (“IDP”) reporting units. In fiscal
the Company completed
years 2018 and 2017,
qualitative assessments of
its
the fair value of
reporting units and concluded that goodwill was not
impaired.

For fiscal 2016, although there were no indicators of
impairment,
the Company opted to bypass the
qualitative assessment and proceeded to perform fair
value assessments of its reporting units (the first step
of the quantitative impairment analysis) as the fair
value of the reporting units had changed (due to the
Business Combination) since the last
time the
Company performed a quantitative analysis. The
quantitative assessments performed reaffirmed that
there were no indicators of
fiscal
2016.

impairment

for

these

performing

discounting

quantitative

assessments,
In
consistent with its historical approach, the Company
used both the income and market approaches to
its reporting units. The
estimate the fair value of
future
involves
approach
income
estimated cash flows. The sum of the reporting unit
cash flow projections was compared to the Company’s
market capitalization in a discounted cash flow
framework to calculate an overall implied internal rate
the Company. The
rate)
of
Company’s market capitalization was adjusted to a
control basis assuming a reasonable control premium,
which resulted in an implied discount
rate. This
implied discount
rate serves as a baseline for
estimating the specific discount rate for each reporting
unit.

return (or discount

for

The discount rate used is the value-weighted average
of the Company’s estimated cost of equity and debt
(“cost of capital”) derived using both known and
estimated customary market metrics. The Company’s
weighted average cost of capital is adjusted for each
reporting unit to reflect a risk factor, if necessary, for
each reporting unit. The Company performs sensitivity
tests with respect to growth rates and discount rates
used in the income approach. The Company believes
the income approach is appropriate because it
provides a fair value estimate based upon the
long-term
unit’s
respective
operations and cash flow performance.

expected

reporting

The Company considered historical rates and current
market conditions when determining the discount and
growth rates used in its analysis. For fiscal 2016, the
material assumptions used for the income approach
were eight years of projected net cash flows and a
long-term growth rate of 3% for both the MP and IDP
reporting units. A discount rate of 15% and 16% was
used for the MP and IDP reporting units, respectively.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

In applying the market approach, valuation multiples
are derived from historical and projected operating
data of selected guideline companies, which are
evaluated and adjusted, if necessary, based on the
strengths and weaknesses of
the reporting unit
relative to the selected guideline companies. The
valuation multiples are then applied to the appropriate
historical and/or projected operating data of
the
reporting unit to arrive at an indication of fair value.
The Company believes the market approach is
appropriate because it provides a fair value using
multiples
from companies with operations and
economic characteristics similar to its reporting units.
The Company weighted the results of
the income
approach and the results of the market approach at
50% each and for the MP and IDP reporting units,
concluded that the fair value of the reporting units was
determined to be substantially in excess of
the
carrying value, and as such, no further analysis was
warranted.

the income approach described above,

Under
the
following indicates the sensitivity of key assumptions
utilized in the assessment. A one percentage point
decrease in the discount rate would have increased
the fair value of the MP and IDP reporting units by
approximately $660.0 million and $140.0 million,
respectively, while a one percentage point increase in
the discount rate would have decreased the fair value
of the MP and IDP reporting units by approximately
$560.0 million and $110.0 million, respectively. A one
percentage point decrease in the long-term growth rate
would have decreased the fair value of the MP and IDP
reporting units by approximately $290.0 million and
$50.0 million, respectively, while a one percentage
point increase in the long-term growth rate would have
increased the fair value of the MP and IDP reporting
and
approximately
units
$70.0 million, respectively.

$340.0 million

by

recorded

the Company

Intangible Assets with Indefinite Lives
In fiscal 2015, as a result of
the Business
IPRD of
Combination,
$470.0 million. IPRD was recorded at fair value as of
the date of acquisition as an indefinite-lived intangible
asset until the completion or abandonment of the
associated research and development (“R&D”) efforts
or impairment. The fair value of the acquired IPRD was
determined based on an income approach using the
“excess earnings method,” which estimated the value
of
the intangible assets by discounting the future
projected earnings of the asset to present value as of
the valuation date. Upon completion of development,
acquired IPRD assets are transferred to finite-lived
intangible assets and amortized over their useful lives.
the
During fiscal years 2018, 2017 and 2016,

51

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

approximately

Company completed and transferred into developed
technology
million,
$220.0 million and $203.0 million, respectively, of
IPRD.
qualitative
assessment of the remaining IPRD of $10.0 million
during fiscal 2018 and concluded that IPRD was not
impaired.

performed

Company

$37.0

The

a

Intangible Assets with Definite Lives
Intangible assets are recorded when such assets are
acquired by purchase or license. Finite-lived intangible
assets consist primarily of
licenses,
customer
relationships, developed technology and
trade names resulting from business combinations
and are subject to amortization.

technology

Technology licenses are recorded at cost and are
amortized on a straight-line basis over the lesser of
the estimated useful life of the technology or the term
of the license agreement, ranging from approximately
five to eight years.

The fair value of customer
relationships acquired
during fiscal years 2013, 2015 and 2017 was
determined based on an income approach using the
“with and without method,” in which the value of the
asset is determined by the difference in discounted
cash flows of the profitability of the Company “with”
the Company
the asset and the profitability of
“without” the asset. Customer
relationships are
amortized on a straight-line basis over the estimated
useful life, ranging from three to ten years.

The fair value of developed technology acquired during
fiscal years 2013, 2015 and 2017 was determined
based on an income approach using the “excess
earnings method,” which estimated the value of the
intangible assets by discounting the future projected
the
earnings of
valuation date. Developed technology is amortized on
a straight-line basis over the estimated useful
life,
ranging from three to six years.

to present value as of

the asset

The fair value of trade names acquired in fiscal years
2015 and 2017 was determined based on an income
approach using the “relief from royalty method,” in
which the value of
is determined by
discounting the future projected cash flows generated
from the trade name’s estimated royalties. Trade
names are amortized on a straight-line basis over the
estimated useful life of two to three years.

the asset

The Company regularly reviews identified intangible
assets to determine if
facts and circumstances
indicate that the useful lives have changed from the
original estimate or that the carrying amount of the
assets may not be recoverable.
If such facts and
the Company assesses the
circumstances exist,

52

their

identified intangible assets by
recoverability of
comparing the projected undiscounted net cash flows
associated with the related asset or group of assets
over
respective
carrying amounts. Impairments, if any, are based on
the excess of the carrying amount over the fair value
of those assets and occur in the period in which the
impairment determination was made.

remaining lives against

their

Accrued Liabilities
The “Accrued liabilities” balance as of March 31,
2018
accrued
compensation and benefits of $96.7 million and
$98.7 million, respectively, and interest payable of
$23.1 million and $23.2 million, respectively.

includes

2017

April

and

1,

Revenue Recognition
The Company’s net revenue is generated principally
from sales of semiconductor products. The Company
recognizes revenue from product sales when the
fundamental criteria are met, such as the time at
which the title and risk and rewards of product
ownership are transferred to the customer, price and
terms are fixed or determinable, no significant vendor
obligation exists and collection of
the resulting
receivable is reasonably assured.

Company’s

Sales of products are generally made through either
force, manufacturers’
the
sales
representatives or
through a distribution network.
Revenue from the majority of the Company’s products
is recognized upon shipment of the product to the
customer
third-party
from a Company-owned or
location. Some revenue is recognized upon receipt of
the shipment by the customer. The Company has
limited rebate programs offering price protection to
certain distributors. These rebates represent less than
5% of net revenue and can be reasonably estimated
based on specific criteria included in the rebate
agreements and other known factors at the time. The
Company reduces revenue and records reserves for
product returns and allowances for price protection,
stock rotation, and scrap allowance based on
identification
historical
or
depending
the
of
arrangement.

experience
on

contractual

specific

terms

the

such

royalty

through

income,

agreements

its net
The Company also recognizes a portion of
revenue
as
other
non-recurring engineering fees, contracts for R&D
work,
(“IP”)
revenue, and service revenue. These agreements are
collectively less than 1% of consolidated annual
revenue. Revenue
is
recognized when the service is completed or upon
certain milestones, as provided for in the agreements.

intellectual property

from these

agreements

Notes to Consolidated Financial Statements

Revenue from certain contracts is recognized on the
percentage of completion method based on the costs
incurred to date and the total contract amount, plus
the contractual fee. If these contracts experience cost
overruns,
the percentage of completion method is
used to determine revenue recognition. Revenue from
fixed price contracts is recognized when the required
deliverable is satisfied.

Royalty income is recognized based on a percentage
of sales of the relevant product reported by licensees
during the period.

The Company additionally licenses or sells its rights to
use portions of its IP portfolio, which includes certain
patent rights useful in the manufacture and sales of
certain products. IP revenue recognition is dependent
on the terms of each agreement. The Company will
recognize IP revenue upon delivery of the IP if the
Company has no substantive future obligation to
the arrangement. The Company will
perform under
defer
future
IP revenue where
performance obligations are required to earn the
revenue or the revenue is not guaranteed. Revenue
from services is recognized during the period that the
service is performed.

recognition

of

to meet

Accounts receivable are recorded for all revenue items
listed above and do not bear interest. The Company
evaluates the collectability of accounts receivable
based on a combination of factors. In cases where the
Company is aware of circumstances that may impair a
its financial
specific customer’s ability
obligations subsequent
the
Company will record an allowance against amounts
due, and thereby reduce the receivable to the amount
the Company reasonably believes will be collected. For
all
recognizes
allowances for doubtful accounts based on the length
of time the receivables are past due, industry and
geographic
the current business
environment and the Company’s historical experience.

to the original sale,

concentrations,

the Company

customers,

other

its products. However,

The Company’s terms and conditions do not give its
customers a right of return associated with the original
sale of
the Company will
authorize sales returns under certain circumstances,
which include perceived quality problems, courtesy
The Company
returns and like-kind exchanges.
evaluates its estimate of returns by analyzing all types
of returns and the timing of such returns in relation to
the original sale. Reserves are adjusted to reflect
changes in the estimated returns versus the original
sale of product.

Shipping and Handling Cost
The Company recognizes amounts billed to a customer
in a sale transaction related to shipping and handling

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

as revenue. The costs incurred by the Company for
shipping and handling are classified as cost of goods
sold in the Consolidated Statements of Operations.

Research and Development
The Company charges all R&D costs to expense as
incurred.

Precious Metals Reclaim
The Company uses historical experience to estimate
the amount of reclaim on precious metals used in
manufacturing at the end of each period and states
the reclaim value at the lower of average cost or
market. The estimated value to be received from
precious metal reclaim is included in “Other current
assets” and reclaims submitted for payment are
included in “Other receivables” in the Consolidated
Balance Sheets.

Income Taxes
The Company accounts for income taxes under the
liability method, which requires recognition of deferred
tax assets and liabilities for the temporary differences
between the financial
reporting and tax basis of
tax carryforwards.
assets and liabilities and for
Deferred tax assets and liabilities for each tax
jurisdiction are measured using the enacted statutory
tax rates in effect
the years in which the
differences are expected to reverse. A valuation
allowance is provided against deferred tax assets to
the extent the Company determines it is more likely
than not that some portion or all of its deferred tax
assets will not be realized.

for

A more likely than not recognition threshold is required
to be met before the Company recognizes the benefit
of an income tax position in its financial statements.
The Company’s policy is to recognize accrued interest
and penalties, if incurred, on any unrecognized tax
benefits as a component of income tax expense.

It is the Company’s current intent and policy to invest
the earnings of foreign subsidiaries indefinitely outside
the U.S., except for Qorvo International Pte. Ltd. in
Singapore. Accordingly, the Company does not record
income taxes on
a deferred tax liability for U.S.
unremitted
foreign
foreign
subsidiaries.

earnings

other

of

Stock-Based Compensation
Under
FASB Accounting Standards Codification
(“ASC”) 718, “Compensation — Stock Compensation,”
stock-based compensation cost is measured at the
grant date, based on the estimated fair value of the
award using an option pricing model for stock options
(Black-Scholes) and market price for restricted stock
units, and is recognized as expense over
the
employee’s requisite service period.

53

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

total

remaining unearned
As of March 31, 2018,
compensation cost
related to unvested restricted
stock units and options was $72.8 million, which will
be amortized over
the weighted-average remaining
service period of approximately 1.2 years.

of

for

the

and

currency

liabilities

remainder

for most of

Foreign Currency Translation
The financial statements of foreign subsidiaries have
been translated into U.S. dollars in accordance with
FASB ASC 830, “Foreign Currency Matters.” The
functional currency
the Company’s
international operations is the U.S. dollar. The
functional
the
Company’s foreign subsidiaries is the local currency.
foreign
Assets
currencies are translated using the exchange rates on
the balance sheet dates. Revenues and expenses are
using
translated
rates
throughout
the year. Translation adjustments are
shown separately as a component of “Accumulated
other
comprehensive loss” within “Stockholders’
equity” in the Consolidated Balance Sheets. Foreign
currency transaction gains or
losses (transactions
denominated in a currency other than the functional
currency) are reported in “Other income (expense)” in
the Consolidated Statements of Operations.

denominated

exchange

average

the

in

the FASB issued ASU 2016-15,
In August 2016,
“Statement of Cash Flows (Topic 230): Classification
of Certain Cash Receipts and Cash Payments
(a consensus of the FASB’s Emerging Issues Task
Force).” The new guidance addresses eight specific
cash flow issues with the objective of reducing the
existing diversity in practice. The new standard will
become effective for the Company beginning in the
first quarter of fiscal 2019. The Company does not
believe it will have a significant
impact on its
consolidated financial statements.

of

on

credit

Credit

current

Losses

lifetime

the FASB issued ASU 2016-13,
In June 2016,
Instruments — Credit Losses (Topic 326):
“Financial
Measurement
Financial
Instruments.” The new guidance requires entities to
use
loss
a
expected
methodology
to measure impairments of certain
financial instruments. It also modifies the impairment
for available-for-sale debt securities and
model
provides for a simplified accounting model
for
purchased financial assets with credit deterioration
since their origination. The new standard will become
effective for the Company beginning in the first quarter
fiscal 2021 with early adoption permitted. The
of
Company does not believe it will have a significant
impact on its consolidated financial statements.

Recent Accounting Pronouncements

and

Other

(Topic

Accounting Pronouncements Not Yet Effective
the FASB issued ASU 2017-04,
In January 2017,
“Intangibles-Goodwill
350):
Simplifying the Test for Goodwill Impairment.” The new
guidance simplifies the subsequent measurement of
goodwill by eliminating the second step from the
quantitative goodwill
impairment test. The Company
will continue to have the option to perform a
qualitative assessment to determine if a quantitative
is necessary. The new
goodwill
standard will become effective for
the Company
beginning in fiscal 2021 with early adoption permitted.
The Company does not believe it will have a significant
impact on its consolidated financial statements.

impairment

test

In January 2017,
the FASB issued ASU 2017-01,
“Business Combinations (Topic 805): Clarifying the
Definition of a Business.” The new guidance clarifies
the definition of a business and provides further
guidance for evaluating whether a transaction will be
accounted for as an acquisition of an asset or a
business. The new standard will become effective for
the Company beginning in the first quarter of fiscal
2019 with early adoption permitted. The update
should be applied prospectively. The Company does
not believe it will have a significant impact on its
consolidated financial statements.

54

and

In February 2016, the FASB issued ASU 2016-02,
“Leases (Topic 842).” The new guidance requires
lessees to recognize a right-of-use asset and a lease
liability for all
leases with a term longer than 12
including those previously described as
months,
leases. Consistent with current U.S.
operating
generally accepted accounting principles (“GAAP”), the
recognition, measurement,
of
expenses and cash flows arising from a lease by a
lessee will primarily depend on its classification as a
finance or operating lease. The new guidance will
become effective for the Company in the first quarter
of fiscal 2020. The Company expects the valuation of
the right-of-use assets and lease liabilities, for leases
previously described as operating leases, to be the
present
lease
commitments. The Company is continuing to assess
the overall impacts of the new standard, including the
discount rate to be applied in these valuations.

presentation

forecasted

future

value

its

of

Instruments — Overall

the FASB issued ASU 2016-01,
In January 2016,
“Financial
(Subtopic 825-10):
Recognition and Measurement of Financial Assets and
Financial Liabilities.” The new guidance will affect the
accounting for equity investments, financial liabilities
measured under the fair value option and presentation
and disclosure requirements for financial instruments.
In addition, the FASB clarified guidance related to the
assessment of valuation allowances when recognizing

Notes to Consolidated Financial Statements

deferred tax assets related to unrealized losses on
available-for-sale debt securities. The new standard is
effective for the Company beginning in the first quarter
of fiscal 2019. The Company does not believe it will
have a significant impact on its consolidated financial
statements.

several

amendments

In May 2014,
the FASB issued ASU 2014-09,
“Revenue from Contracts with Customers (Topic
606),” with
subsequently
issued. The new guidance provides an updated
framework for
resulting in a
revenue recognition,
single revenue model
to be applied by reporting
companies under U.S. GAAP. Under the new model,
revenue occurs when a customer
recognition of
obtains control of promised goods or services in an
amount that reflects the consideration to which the
entity expects to be entitled in exchange for those
goods or services. Additional disclosures will be
timing and
required regarding the nature, amount,
uncertainty of cash flows. The Company will adopt the
standard in the first quarter of fiscal 2019 using the
modified retrospective approach, under which the
cumulative effect of adoption is recognized at the date
of initial application. The Company has evaluated the
impact of the standard and does not anticipate that
the adoption of this standard will have a material
impact on its consolidated financial statements. The
Company is implementing changes to its accounting
policies, internal controls and disclosures to support
the new standard; however, these changes are not
expected to be material.

Accounting Pronouncements Recently Adopted
In March 2018,
the FASB issued ASU 2018-05,
“Income Taxes (Topic 740): Amendments to SEC
Paragraphs Pursuant to SEC Staff Accounting Bulletin
No. 118.” The amendments incorporate into the ASC
the recent SEC guidance related to the income tax
accounting implications of the Tax Cuts and Jobs Act
(the “Tax Act”). See Note 12 for further disclosures.

FASB
the
2017,
“Compensation — Stock

ASU
issued
May
In
Compensation
2017-09,
(Topic 718): Scope of Modification Accounting.” The
new guidance clarifies when modification accounting in
Topic 718 should be applied to changes to the terms
or conditions of a share-based payment award. The
Company elected to early-adopt the standard in the
first quarter of
fiscal 2018 with no impact on its
consolidated financial statements.

FASB

2016,

In November
ASU
the
2016-18, “Statement of Cash Flows (Topic 230):
Restricted Cash (a consensus of the FASB Emerging
Issues Task Force).” The new guidance requires that
restricted cash and restricted cash equivalents be

issued

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

and

cash

cash

equivalents when
included in
reconciling the beginning-of-period and end-of-period
total amounts shown in the statement of cash flows.
The Company adopted the provisions of ASU 2016-18
in the second quarter of
fiscal 2018 using the
to
retrospective transition method. The adjustment
reclassify restricted cash for each period presented
was less than $1.0 million.

the

FASB

2016,

issued

October

In
ASU
Intra-Entity
2016-16, “Income Taxes (Topic 740),
Transfers of Assets Other Than Inventory.” The new
guidance requires an entity to recognize the income
tax consequences of an intra-entity transfer of an
asset, other than inventory, when the transfer occurs.
The Company elected to early-adopt the standard in
the first quarter of fiscal 2018 using the modified
retrospective method (which resulted in a cumulative
adjustment to retained earnings of $1.2 million as of
the beginning of the period of adoption). During fiscal
recognized a tax expense
2018,
of $6.9 million related to transfers of
intra-entity
assets.

the Company

of

for

the

deficit

2016,

income

aspects

including

accounting

accumulated

transactions,

FASB
“Compensation — Stock

ASU
issued
In March
Compensation
2016-09,
(Topic 718): Improvements to Employee Share-Based
Payment Accounting.” The new guidance simplifies
share-based
certain
payment
tax
consequences, forfeitures, classification of awards on
the balance sheet and presentation on the statement
of cash flows, and became effective for the Company
fiscal 2018. The Company
in the first quarter of
recognized a cumulative-effect adjustment to reduce
the Company’s
by $36.7
million with a corresponding increase to deferred tax
assets for the federal and state net operating losses
attributable to excess tax benefits that had not been
previously recognized. All excess tax benefits and
deficiencies in the current and future periods will be
recognized as income tax expense in the Company’s
Consolidated Statement of Operations in the reporting
period in which they occur. This will result in increased
volatility in the Company’s effective tax rate. During
fiscal 2018, the Company recognized a discrete tax
benefit of $12.2 million related to the excess tax
The
benefits
Company also elected to prospectively adopt
the
provision that
requires excess tax benefits to be
presented within operating activities in the statement
of cash flows and no prior periods have been restated
as a result of
the adoption. The Company has
continued its existing practice of estimating expected
forfeitures in determining compensation cost.

from stock-based

compensation.

55

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

FASB

2016,

issued
and

ASU
the
In March
Joint
“Investments-Equity Method
2016-07,
Ventures (Topic 323): Simplifying the Transition to the
Equity Method of Accounting.” The new guidance
eliminates the requirement to retrospectively apply the
equity method of accounting when an investment
previously accounted for under the cost basis qualifies
for
the equity method of accounting. The Company
adopted ASU 2016-07 in the first quarter of fiscal 2018
with no impact on its consolidated financial results.

July

FASB

2015,

issued

Inventory.”

the
ASU
In
(Topic 330): Simplifying the
2015-11, “Inventory
Measurement of
The new guidance
changes the measurement principle for inventory from
the lower of cost or market to the lower of cost and
net
realizable value. ASU 2015-11 defines net
realizable value as the estimated selling price in the
less
ordinary
reasonably
business
transportation, or
predictable costs to completion,
disposal. The Company adopted ASU 2015-11 in the
first quarter of fiscal 2018 with no significant impact
on its consolidated financial statements.

course

of

2. CONCENTRATIONS OF CREDIT RISK

The Company’s principal financial instrument subject
to potential concentration of credit risk is accounts
receivable, which is unsecured. The Company provides
an allowance for doubtful accounts equal to estimated
losses expected to be incurred in the collection of
accounts receivable. The Company has adopted credit
policies and standards intended to accommodate
industry growth and inherent risk and it believes that
credit risks are moderated by the financial stability of
its major customers, conservative payment terms and
the Company’s strict credit policies.

from significant

Revenue
representing 10% or more of
respective periods, are summarized as follows:

customers,

revenue for

those
the

Fiscal Year
2017

2016

2018

Apple Inc. (“Apple”)
Huawei Technologies Co., Ltd.

36%
8%

34%
11%

37%
12%

The Company provided its products to Apple through
sales to multiple contract manufacturers.

These customers primarily purchase cellular RF and
Wi-Fi solutions offered by the Company’s MP segment
for a variety of mobile devices, including smartphones,
notebook computers, wearables, tablets and cellular-
based applications for the Internet of Things (“IoT”).

Accounts receivable related to these customers (which
includes multiple contract manufacturers) accounted
for 26%, 40%, and 40% of the Company’s total net
accounts receivable balance as of March 31, 2018,
April 1, 2017 and April 2, 2016, respectively.

56

3.

INVESTMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS

Investments
The following is a summary of cash equivalents and
available-for-sale securities as of March 31, 2018 and
April 1, 2017 (in thousands):

March 31, 2018
Auction rate securities
Money market funds

April 1, 2017
Auction rate securities
Money market funds

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair
Value

Cost

$1,950
9

$1,959

$2,150
14

$2,164

$—
—

$—

$—
—

$—

$(107) $1,843
9

—

$(107) $1,852

$(429) $1,721
14

—

$(429) $1,735

The estimated fair value of available-for-sale securities
was based on the prevailing market values on
March 31, 2018 and April 1, 2017. The Company
determines the cost of an investment sold based on
the specific identification method.

The expected maturity distribution of cash equivalents
and available-for-sale debt securities is as follows (in
thousands):

Due in less than one year
Due after ten years

March 31, 2018

April 1, 2017

Estimated
Fair Value Cost

Estimated
Fair Value

Cost

$

9 $

9 $

14 $

1,950

1,843

2,150

14
1,721

Total investments in debt securities

$1,959 $1,852 $2,164 $1,735

Other Investments
As of March 31, 2018, the Company had invested
$45.0 million to acquire shares of Series F Preferred
Stock of Cavendish Kinetics Limited, a private limited
company incorporated in England and Wales. This
investment
is accounted for as a cost method
investment and classified in “Long-term investments”
in the Consolidated Balance Sheets.

Fair Value of Financial Instruments
Marketable securities are measured at fair value and
recorded in “Cash and cash equivalents” and “Long-
term investments”
in the Consolidated Balance
Sheets, and the related unrealized gains and losses
are included in “Accumulated other comprehensive
loss,” a component of stockholders’ equity, net of tax.

Notes to Consolidated Financial Statements

Recurring Fair Value Measurements
The fair value of the financial assets and liabilities
measured at
fair value on a recurring basis was
determined using the following levels of inputs as of
March 31, 2018 and April 1, 2017 (in thousands):

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

4.

INVENTORIES

The components of inventories, net of reserves, are
as follows (in thousands):

Quoted Prices In
Active Markets For
Identical Assets
(Level 1)

Total

Significant
Other
Observable
Inputs
(Level 2)

Raw materials
Work in process
Finished goods

Total inventories

March 31, 2018 April 1, 2017

$110,389
221,137
140,766

$472,292

$ 92,282
198,339
139,833

$430,454

March 31, 2018

Assets

Money market funds
Auction rate securities(1)
Invested funds in deferred
compensation plan(2)

Total assets measured

at fair value

Liabilities

Deferred compensation plan

$

9
1,843

$

9
—

$ —
1,843

14,284

14,284

—

$16,136

$14,293

$1,843

obligation(2)

$14,284

$14,284

$ —

Total liabilities measured

at fair value

$14,284

$14,284

$ —

April 1, 2017

Assets

Money market funds
Auction rate securities(1)
Invested funds in deferred
compensation plan(2)

Total assets measured

at fair value

Liabilities

Deferred compensation plan

$

14
1,721

$

14
—

$ —
1,721

10,237

10,237

—

$11,972

$10,251

$1,721

obligation(2)

$10,237

$10,237

$ —

Total liabilities measured

at fair value

$10,237

$10,237

$ —

(1) Auction rate securities are debt instruments with interest rates that
reset through periodic short-term auctions. The Company’s Level 2
ARS are valued based on quoted prices for
identical or similar
instruments in markets that are not active.

(2) The 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 asset deferred by the participants in the “Other
current assets” and “Other non-current assets” line items of
its
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 Consolidated Balance Sheets.

the
As of March 31, 2018 and April 1, 2017,
Company did not have any Level 3 assets or liabilities.

assets,

non-financial

Nonrecurring Fair Value Measurements
as
The Company’s
intangible assets and property and equipment, are
measured at fair value when there is an indicator of
impairment, and recorded at fair value only when an
impairment charge is recognized. See Note 11 for
information on impairment of property and
further
equipment.

such

5. PROPERTY AND EQUIPMENT

The components of property and equipment are as
follows (in thousands):

Land
Building and leasehold

improvements

Machinery and
equipment

Less accumulated
depreciation

Construction in progress

Total property and
equipment, net

March 31, 2018 April 1, 2017

$

23,778

$

25,025

389,234

384,784

1,660,138

2,073,150

1,659,404

2,069,213

(911,910)

(981,328)

1,161,240
212,872

1,087,885
304,047

$1,374,112

$1,391,932

6. BUSINESS ACQUISITIONS

of

GreenPeak

Technologies,

Acquisition of GreenPeak Technologies, B.V.
the Company completed the
During fiscal 2017,
B.V.
acquisition
(“GreenPeak”), a leader in ultra-low power, short RF
communication technology. The acquisition expanded
the Company’s offerings to include integrated RF
solutions and systems-on-a-chip (“SoCs”)
the
connected home. The Company acquired 100% of the
outstanding equity securities of GreenPeak for a
purchase price of $118.1 million, net of cash acquired
of $0.7 million. The total purchase price was allocated
to GreenPeak’s assets and liabilities based upon fair
values as determined by the Company and resulted in
goodwill of $38.2 million. The measurement period
(up to one year from the acquisition date pursuant to
ASC Topic 805 “Business Combinations”) related to
the acquisition of GreenPeak was concluded during
the first quarter of fiscal 2018.

for

Other Fair Value Disclosures
The carrying values of cash and cash equivalents,
accounts receivable, accounts payable and other
accrued liabilities approximate fair values because of
the
these
instruments. See Note 8 for the fair value of the
Company’s long-term debt.

short-term maturities

relatively

of

The GreenPeak acquisition resulted in an increase in
intangible assets of $82.1 million.
The more
significant intangible assets acquired were developed
technology of $74.2 million (which is being amortized
over 7 years)
of
$5.6 million (which is being amortized over 3 years).

relationships

customer

and

57

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

Business Combination between RFMD and TriQuint
Effective January 1, 2015, pursuant to the Merger
Agreement, RFMD and TriQuint completed a strategic
combination of their respective businesses through
the “merger of equals” Business Combination. Based
on an evaluation of the provisions of FASB ASC Topic
was
805,
determined to be the acquirer
for accounting
purposes.

Combinations,”

“Business

RFMD

The initial allocation to goodwill of $2,036.7 million
represented the excess of the purchase price over the
fair value of assets acquired and liabilities assumed,
which amount was allocated to the Company’s MP
($1,745.5 million) and IDP
operating
segment
($291.2 million). During the
operating segment
measurement period (which was concluded during the
third
of
fiscal 2016),
$3.8 million and $1.1 million were made to reduce
goodwill and increase property and equipment and
deferred taxes, respectively. Goodwill recognized from
the Business Combination is not deductible for
income tax purposes.

adjustments

quarter

of

of

The Business Combination resulted in an increase in
intangible assets of $2,394.0 million. The more
significant intangible assets acquired were developed
technology
customer
$610.0 million
relationships of $1,220.0 million (which are both
being amortized over periods between 4 and 6 years)
and IPRD of $470.0 million, of which $460.0 million
has been completed as of March 31, 2018 and
transferred to finite-lived intangible assets (which are
being amortized over periods between 4 and 6 years).

and

associated

the
During fiscal years 2018, 2017 and 2016,
Company incurred integration costs of approximately
$6.2 million, $16.9 million, and $26.5 million,
respectively,
Business
Combination. During fiscal years 2018, 2017 and
2016, the Company incurred restructuring costs of
approximately $2.6 million, $2.0 million,
and
$10.1 million,
respectively, associated with the
Business Combination.

with

the

The acquisition, integration and restructuring costs are
being expensed as incurred and are presented in the
Consolidated Statements of Operations as “Other
operating
further
information on the restructuring.

expense.” See Note 11 for

7. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for fiscal years 2017 and 2018, are as follows (in thousands):

Balance as of April 2, 2016(1)

GreenPeak acquisition

Balance as of April 1, 2017(1)

Mobile
Products

Infrastructure
and Defense
Products

Total

$1,751,503

384,194

$2,135,697

—

38,217

38,217

1,751,503

422,411

2,173,914

GreenPeak acquisition measurement adjustment

—

(25)

(25)

Balance as of March 31, 2018(1)

$1,751,503

$422,386

$2,173,889

(1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs of $621.6 million.

Goodwill
combinations generating the underlying goodwill.

is allocated to the reporting units that are expected to benefit from the synergies of the business

58

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

The following summarizes information regarding the
gross carrying amounts and accumulated amortization
of intangible assets (in thousands):

8. DEBT

Debt as of March 31, 2018 and April 1, 2017 is as
follows (in thousands):

March 31, 2018

April 1, 2017

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

Intangible Assets:

Customer

relationships $1,272,725 $ 936,175 $1,272,725 $ 656,688

Developed

technology

1,246,335

733,081 1,209,335

481,441

Trade names

29,391

29,377

29,353

21,912

Technology
licenses

Non-compete
agreement

IPRD

Total

12,379

11,904

13,346

11,711

1,026

10,000

983

N/A

1,026

47,000

470

N/A

$2,571,856 $1,711,520 $2,572,785 $1,172,222

During fiscal 2018, $37.0 million of IPRD assets were
completed, transferred to finite-lived intangible assets,
and are being amortized over their useful
lives of 4
years. As of March 31, 2018, the IPRD remaining
totaled approximately $10.0 million and is expected to
be completed during fiscal 2019 with estimated
remaining
approximately
costs
$1.0 million to $2.0 million.

complete

to

of

intangible assets amortization expense was
Total
$539.8 million, $494.8 million and $494.6 million in
fiscal years 2018, 2017 and 2016, respectively.

The following table provides the Company’s estimated
amortization expense for intangible assets based on
current amortization periods for the periods indicated
(in thousands):

Fiscal Year

2019
2020
2021
2022
2023

Estimated
Amortization
Expense

$455,000
207,000
155,000
28,000
12,000

March 31,
2018

April 1,
2017

6.75% Senior Notes due

2023

$444,464 $450,000

7.00% Senior Notes due

2025

Less unamortized issuance

548,500

550,000

costs
Total long-term debt

(9,674)

(10,846)
$983,290 $989,154

of

such

Bank

agent

America, N.A.,
capacity,

Credit Agreement
the
On December 5, 2017 (the “Closing Date”),
Company and certain of
its material domestic
subsidiaries (the “Guarantors”) entered into a five-year
unsecured senior credit facility pursuant to a credit
as
agreement with
administrative
the
(in
“Administrative Agent”), swing line lender and L/C
lenders (the “Credit
issuer, and a syndicate of
Agreement”). The Credit Agreement includes a senior
delayed draw term loan of up to $400.0 million (the
“Term Loan”) and a $300.0 million senior revolving
line of credit (the “Revolving Facility”, together with the
Term Loan, the “Credit Facility”). On the Closing Date,
$100.0 million of the Term Loan was funded (and was
subsequently
repaid in March 2018), with the
remainder available, at the discretion of the Company,
to June 5, 2018. The
in up to two draws prior
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
Company may request, at its option and at any time,
that the Credit Facility be increased by an amount not
to exceed $300.0 million, subject
to securing
additional funding commitments from the existing or
new lenders. The Credit Facility is available to finance
capital expenditures and other
working
corporate purposes. The Company’s obligations under
the Credit Agreement are jointly and severally
guaranteed by the Guarantors. Upon execution of the
Credit Agreement, the Company terminated its prior
credit agreement, dated as of April 7, 2015, as
amended, with Bank
thus
of
terminating and releasing the Company’s obligations
and guarantees of certain of its subsidiaries under
that agreement. During fiscal 2018, there were no
borrowings under the Revolving Facility. The Company
had no outstanding amounts under the Credit Facility
as of March 31, 2018.

America, N.A.,

capital,

the Company’s option,

At
the Credit
Agreement bear interest at (i) the Applicable Rate (as

loans under

59

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

two,

three, six or

interest at a rate equal

defined in the Credit Agreement) plus the Eurodollar
Rate (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 of the Administrative Agent, or (c) the Eurodollar
Base Rate plus 1.0% (the “Base Rate”). All swingline
loans will bear
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,
twelve
months, as selected by the Company. The Applicable
Rate for Eurodollar Rate loans ranges from 1.125%
per annum to 1.375% per annum. The Applicable Rate
for Base Rate loans ranges from 0.125% per annum
to 0.375% per annum. Interest for Eurodollar Rate
loans will be payable at the end of each applicable
interest period or at three-month intervals,
if such
for
interest period exceeds three months.
Base Rate loans will be payable quarterly in arrears.
The Company will pay a letter of credit fee equal to the
Applicable Rate multiplied by
the daily amount
available to be drawn under any letter of credit, a
fronting fee, and any customary documentary and
processing charges for any letter of credit
issued
under the Credit Agreement. Interest paid on the Term
Loan during fiscal 2018 was $0.7 million.

Interest

and

the end of any fiscal quarter of

The Credit Agreement contains various conditions,
covenants
representations with which the
Company must comply in order to borrow funds and to
avoid an event of default,
including the following
financial covenants that the Company must maintain:
(i) a consolidated leverage ratio not to exceed 3.0 to
1.0 as of
the
Company, provided that in connection with a permitted
the
acquisition
Company’s maximum consolidated leverage ratio may
increase on two occasions during the term of the
Credit Facility to 3.5 to 1.0 for four consecutive fiscal
quarters, beginning with the fiscal quarter in which
such acquisition occurs and (ii) an interest coverage
ratio not to be less than 3.0 to 1.0 as of the end of
any fiscal quarter of the Company. As of March 31,
2018, the Company was in compliance with these
covenants.

of $300.0 million,

excess

in

in the exercise of

The Credit Agreement also contains customary events
of default. The occurrence of an event of default can
result
remedies including an
increase in the applicable rate of interest by 2.00%,
termination of undrawn commitments under the Credit
Facility, declaration that all outstanding loans are due
and payable and requiring cash collateral deposits in
respect of outstanding letters of credit. Outstanding
amounts are due in full on the maturity date of

60

December 5, 2022 (with amounts borrowed under the
swingline option due in full no later than ten business
days after such loan is made), subject to scheduled
amortization of the Term Loan principal as set forth in
the Credit Agreement prior to the maturity date.

Senior Notes
On November 19, 2015, the Company completed an
offering of $450.0 million aggregate principal amount
of its 6.75% senior notes due December 1, 2023 (the
“2023 Notes”) and $550.0 million aggregate principal
amount of its 7.00% senior notes due December 1,
2025 (the “2025 Notes” and, together with the 2023
Notes, the “Notes”). The Notes were sold in the U.S.
to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the
“Securities Act”), and outside the U.S. pursuant to
Regulation S under the Securities Act. The Notes were
to an indenture dated as of
issued pursuant
November 19, 2015 (the “Indenture”) containing
customary events of default,
including payment
default, failure to provide certain notices and certain
provisions related to bankruptcy events. The Indenture
also contains customary negative covenants.

On September 19, 2016, the Company completed an
exchange offer, in which all of the 2023 Notes and
substantially all of the 2025 Notes were exchanged
for new notes that have been registered under the
Securities Act.

At any time prior to December 1, 2018, the Company
may redeem all or part of the 2023 Notes, at a
redemption price equal to their principal amount, plus
a “make whole” premium as of the redemption date,
and accrued and unpaid interest. In addition, at any
time prior to December 1, 2018, the Company may
redeem up to 35% of the original aggregate principal
amount of the 2023 Notes with the proceeds of one
or more equity offerings, at a redemption price equal
to 106.75%, plus accrued and unpaid interest.
Furthermore, at any time on or after December 1,
2018, the Company may redeem the 2023 Notes, in
whole or in part, at once or over time, at the specified
redemption prices set
forth in the Indenture plus
accrued and unpaid interest thereon to the redemption
date (subject to the rights of holders of record on the
relevant record date to receive interest due on the
relevant interest payment date). In March 2018, the
Company repurchased $5.5 million of the 2023 Notes
at a redemption price of 107.50% plus accrued and
unpaid interest.

At any time prior to December 1, 2020, the Company
may redeem all or part of the 2025 Notes, at a
redemption price equal to their principal amount, plus
a “make whole” premium as of the redemption date,

Notes to Consolidated Financial Statements

and accrued and unpaid interest. In addition, at any
time prior to December 1, 2018, the Company may
redeem up to 35% of the original aggregate principal
amount of the 2025 Notes with the proceeds of one
or more equity offerings, at a redemption price equal
to 107.00%, plus accrued and unpaid interest.
Furthermore, at any time on or after December 1,
2020, the Company may redeem the 2025 Notes, in
whole or in part, at once or over time, at the specified
forth in the Indenture plus
redemption prices set
accrued and unpaid interest thereon to the redemption
date (subject to the rights of holders of record on the
relevant record date to receive interest due on the
relevant interest payment date). In March 2018, the
Company repurchased $1.5 million of the 2025 Notes
at a redemption price of 109.50% plus accrued and
unpaid interest.

Interest is payable on June 1 and December 1 of each
year on the 2023 Notes at a rate of 6.75% per annum
and on the 2025 Notes at a rate of 7.00% per annum.
Interest paid on the Notes during fiscal 2018 and
fiscal 2017 was $68.9 million and $71.2 million,
respectively.

carrying

(compared

The 2023 Notes and the 2025 Notes are traded over
the counter, and their fair values as of March 31,
and $596.5 million,
2018 of $474.5 million
of
to
respectively
$444.5 million and $548.5 million, respectively) were
estimated based upon the values of their last trade at
the end of the period. The fair values of the 2023
Notes and the 2025 Notes were $489.4 million and
respectively (compared to carrying
$607.8 million,
values of $450.0 million and $550.0 million,
respectively), as of April 1, 2017.

values

fiscal

2018,

the Company

Interest Expense
During
recognized
$70.5 million of interest expense related to the Notes
and the Term Loan, which was offset by $13.6 million
of
interest capitalized to property and equipment.
During fiscal 2017 and fiscal 2016, the Company
recognized
$25.8 million,
respectively, of interest expense related to the Notes,
which was partially offset by $13.6 million and
interest capitalized to
$5.2 million, respectively, of
property and equipment.

$69.9 million

and

9. RETIREMENT BENEFIT PLANS

offers

Company

Defined Contribution Plans
The
retirement
contribution plans to eligible employees in the U.S.
and certain other countries. Eligible employees in
certain countries outside of the U.S. are eligible to
participate in stakeholder or national pension plans

tax-beneficial

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

with differing eligibility and contributory requirements
based on local and national
regulations. U.S.
employees are eligible to participate in the Company’s
fully qualified 401(k) plan 30 days after their date of
hire. An employee may invest pretax earnings in the
limits (as
401(k) plan up to the maximum legal
defined by Federal regulations). Employer contributions
to the 401(k) plan are made at the discretion of the
Company’s Board of Directors. Employees
are
immediately vested in their own contributions as well
as employer matching contributions.

In total,
the Company contributed $14.0 million,
$11.5 million and $11.7 million to its domestic and
foreign defined contribution plans during fiscal years
2018, 2017 and 2016, respectively.

$4.0 million

program with

Defined Benefit Pension Plans
The Company maintains two qualified defined benefit
pension plans for its subsidiaries located in Germany.
the plans is funded through a self-paid
One of
reinsurance
and
$3.3 million of assets valued as of March 31, 2018
and April 1, 2017, respectively. Assets of the funded
plan are included in “Other non-current assets” in the
Consolidated Balance Sheets. The net periodic benefit
obligations of both plans were $12.7 million and
$11.4 million as of March 31, 2018 and April 1,
respectively, which is included in “Accrued
2017,
liabilities” and “Other
long-term liabilities” in the
Consolidated Balance Sheets. The assumptions used
in calculating the benefit obligations for the plans are
dependent on the local economic conditions and were
measured as of March 31, 2018 and April 1, 2017.
The net periodic benefit costs were approximately
$0.7 million, $0.6 million and $0.8 million for fiscal
years 2018, 2017 and 2016, respectively.

Non-Qualified Deferred Compensation Plan
Certain employees and members of
the Board of
Directors are eligible to participate in the Company’s
Non-Qualified Deferred Compensation Plan (“NQDC
Plan”). The NQDC Plan provides eligible participants
the opportunity
to defer and invest a specified
percentage of their cash compensation. The NQDC
Plan is a non-qualified plan that is maintained in a
trust. The amount of compensation to be
rabbi
deferred by each participant is based on their own
elections and is adjusted for any investment changes
deferred
that
the
compensation obligation and the fair value of
investments held in the rabbi trust were $14.3 million
and $10.2 million as of March 31, 2018 and April 1,
2017, respectively. The current portion of the deferred
compensation obligation and fair value of the assets
trust were $1.0 million and
held in the rabbi

participant

directs.

The

the

61

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

$0.7 million as of March 31, 2018 and April 1, 2017,
respectively, and are included in “Other current
assets” and “Accrued liabilities” in the Consolidated
Balance Sheets. The non-current portion of
the
deferred compensation obligation and fair value of the
assets held in the rabbi trust were $13.3 million and
$9.5 million as of March 31, 2018 and April 1, 2017,
respectively, and are included in “Other non-current
assets” and “Other
long-term liabilities” in the
Consolidated Balance Sheets.

10. COMMITMENTS AND CONTINGENT LIABILITIES

The

amortization

rate rent escalations,

The Company leases certain of its corporate, wafer
fabrication and other facilities from multiple third-party
real estate developers. The operating leases expire at
various dates through 2034, and some of
these
leases have renewal options, with the longest ranging
up to two, ten-year periods. Several of these leases
rent
also include market
holidays, and leasehold improvement incentives, all of
which are recognized to expense on a straight-line
basis.
leasehold
improvements made either at the inception of the
lease or during the lease term is amortized over the
lesser of the remaining life of the lease term (including
renewals that are reasonably assured) or the useful
life of the asset. The Company also leases various
machinery and equipment and office equipment under
non-cancelable operating leases. The remaining terms
of these operating leases range from less than one
year to approximately four years. As of March 31,
2018,
future minimum lease payments
related to facility and equipment operating leases was
approximately $68.6 million.

the total

period

of

fiscal 2018, the Company
In the fourth quarter of
entered into a capital
lease for a facility in Beijing,
China that will allow the Company to consolidate
several leased facilities as well as provide additional
manufacturing space. The lease term is expected to
commence in fiscal 2020 and therefore is not
recorded on the Consolidated Balance Sheet as of
March 31, 2018. The initial term of the lease is five
years. The lease includes multiple renewal options,
and the maximum lease term cannot exceed 30 years.

62

Minimum future lease payments under non-cancelable
operating and capital leases as of March 31, 2018,
are as follows (in thousands):

Fiscal Year

2019

2020

2021

2022

2023

Operating
Leases

Capital
Lease

Total

$12,490

$

0

$ 12,490

11,429

10,469

8,577

7,163

1,047

1,047

1,047

1,047

12,476

11,516

9,624

8,210

Thereafter

18,454

48,243

66,697

Total minimum

lease payments

$68,582

$52,431

$121,013

covering
Rent expense under operating leases,
facilities
approximately
$16.3 million, $14.8 million, and $14.2 million for
fiscal years 2018, 2017 and 2016, respectively.

equipment,

was

and

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
them to reflect ongoing
accruals and adjusts
legal
negotiations, settlements,
counsel and other relevant information. To the extent
new information is obtained and the Company’s views
on
suits,
outcomes
the
assessments,
legal proceedings
change, changes in the Company’s accrued liabilities
would be recorded in the period in which such
determination is made.

rulings, advice of

investigations or

probable

claims,

of

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.
These actions, when finally concluded and determined,
in the opinion of management, have a
will not,
the Company’s
upon
adverse
material
consolidated
of
results
or
position
operations.

financial

effect

11. RESTRUCTURING

the

fiscal

2018,

Company

During
recorded
approximately $67.7 million of restructuring expenses
in “Other operating expense” in the Consolidated
Statements of Operations, related to actions initiated
in fiscal 2018 to improve operating efficiencies and
actions initiated in fiscal 2015 as a result of the
Business Combination.

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

the

fiscal

2018,

Company

these actions,

initiated
During
restructuring actions to improve operating efficiencies,
and, as a result of
recorded
approximately $18.3 million of employee termination
benefits. As a result of this restructuring plan, in the
the Company also
fiscal 2018,
fourth quarter of
adjusted the carrying value of certain of its held for
sale assets located in China and the U.S. to fair
market value (resulting in impairment charges totaling
approximately $46.3 million, pursuant to ASC 360).
The fair value of the assets is based on quotes from
third parties.
The Company expects to record
approximately $0.9 million of additional restructuring
charges in fiscal 2019 primarily associated with
employee termination benefits.

termination

During fiscal years 2018, 2017 and 2016,
the
Company recorded restructuring expenses (including
employee
stock-based
compensation and ongoing expenses related to exited
leased facilities) of approximately $2.7 million,
$2.1 million and $10.2 million, respectively, primarily
as a result of the Business Combination. See Note 6
for further information on the Business Combination.

benefits,

As of March 31, 2018 and April 1, 2017, restructuring
obligations relating to employee termination benefits
totaled $6.1 million and $1.6 million, respectively,
and are included in “Accrued liabilities” in the
Consolidated Balance Sheets. As of March 31, 2018
and April 1, 2017, restructuring obligations relating to
lease
and
totaled
$2.1 million,
respectively, and are included in
“Accrued liabilities” and “Other long-term liabilities” in
the Consolidated Balance Sheets.

$2.6 million

obligations

12.

INCOME TAXES

On December 22, 2017, the Tax Act was signed into
law in the U.S. The Tax Act significantly revises the
future ongoing U.S. corporate income tax by, among
other things, lowering U.S. corporate income tax rates,
providing full expensing for investments in new and
used qualified property made after September 27,
2017, and implementing a territorial tax system. Due
to the timing of the Company’s fiscal year, the lower
corporate income tax rate will be phased in, resulting
in a U.S. statutory federal rate of approximately 31.5%
for our fiscal year ended March 31, 2018, and 21% for
subsequent fiscal years. The Tax Act implements a
territorial
federal
tax system that eliminates U.S.
income taxes on dividends from 10% owned foreign
subsidiaries, but limits the ability to credit certain
foreign taxes that existed prior to enactment of the
Tax Act. In connection with the transition to the new
territorial
tax system, a one-time transition tax on
certain unrepatriated earnings of foreign subsidiaries

is being imposed (the “Transitional Repatriation Tax”),
which is payable over eight years. In addition, the Tax
Act includes two new U.S. tax base erosion provisions,
the Global
Intangible Low-Taxed Income (“GILTI”)
provisions and the Base-Erosion and Anti-Abuse Tax
(“BEAT”) provisions, which become effective for the
Company in fiscal 2019.

is incomplete, but

in reasonable detail

The SEC issued Staff Accounting Bulletin No. 118
(“SAB 118”) to address the appropriate accounting
treatment when a registrant does not have the
necessary information available, prepared, or analyzed
(including computations)
to
complete the accounting for certain income tax effects
of the Tax Act. SAB 118 allows for a measurement
period of up to one year after the enactment date of
the Tax Act to finalize the recording of the related tax
impacts. In the interim periods, provisional amounts
are to be recorded where the income tax effect can be
reasonably estimated. The Company’s accounting for
the Tax Act
the Company has
recorded the provisional estimates discussed below
and will finalize and record any resulting adjustments
within the one-year measurement period. The final
transitional impacts of the Tax Act may differ from the
below provisional estimates, possibly materially, due
legislation by states with
to, among other
evolving
respect
technical
Act;
the
legislative action to
interpretations of the Tax Act;
address questions that arise because of the Tax Act;
clarification of the application of accounting standards
for income taxes or related interpretations in response
to the Tax Act; or updates or changes to provisional
amounts the Company has utilized to calculate the
transitional impacts, including impacts from changes
to current year earnings and tax liabilities, deferred tax
assets and liabilities, earnings and profits at foreign
subsidiaries, tax pools at foreign subsidiaries, foreign
tax credits and foreign exchange rates.

things:
Tax

to

The impact of the Tax Act resulted in a provisional tax
expense of $77.3 million in fiscal 2018. This was
comprised of a provisional Transitional Repatriation
Tax expense of $116.4 million, offset by a provisional
deferred tax benefit of $39.1 million from the
remeasurement of U.S. deferred tax assets and
liabilities. Both the tax charge and the tax benefit
represent provisional amounts and the Company’s
current best estimates.

The Transitional Repatriation Tax is a one-time tax on
accumulated and current earnings and profits (“E&P”)
of foreign companies with U.S. owners that have not
previously been subjected to tax in the U.S. A portion
of the E&P is subject to a tax rate of 15.5% and the
remainder to 8%. To determine the amount of the
the Company must
Transitional Repatriation Tax,

63

its deferred taxes (the “deferred
measurement of
method”). The Company has not yet completed its
analysis of the GILTI tax rules and is not yet able to
reasonably estimate the effect of this provision or
make the accounting policy election. As a result, the
Company has not made any provisional adjustments
related to potential GILTI
financial
statements and has not made a policy decision
regarding whether to record deferred taxes for GILTI.

in its

tax

in

of

for

their

impacts

investments

Beginning in calendar year 2018, the Tax Act provides
a 100% deduction for dividends received from
10-percent owned foreign corporations by U.S.
corporate stockholders, subject to a one-year holding
period. Although dividend income is now exempt from
U.S. federal tax in the hands of the U.S. corporate
stockholders, companies must still apply the guidance
of ASC 740-30-25-18 to account
the tax
consequences of outside basis differences and other
non-U.S.
tax
subsidiaries. While the Company has accrued the
Transitional Repatriation
deemed
repatriated earnings that were previously indefinitely
reinvested,
it currently intends to only repatriate
amounts where no additional withholding taxes will be
The Company has
imposed on a distribution.
determined that Singapore does not
impose a
withholding tax on dividends and no longer takes the
position that earnings are permanently reinvested for
our operating subsidiary in Singapore. With respect to
its other foreign subsidiaries, the Company continues
to account for them as permanently reinvested while it
continues to evaluate the impacts of the Tax Act on its
operations in accordance with guidance issued under
SAB 118.

Tax

the

on

Income (loss) before income taxes consists of the
following components (in thousands):

Fiscal Year
2017

2018

2016

United States

$(151,083) $ 2,439

$(35,923)

Foreign

Total

168,228

24,866

33,061

$ 17,145

$27,305

$ (2,862)

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

determine for each foreign company in which it has a
direct or
indirect ownership interest, among other
factors, the amount of post-1986 E&P of its foreign
subsidiaries, as well as the amount of non-U.S.
income taxes paid on such earnings. The Company
the
was able to make a reasonable estimate of
Transitional Repatriation Tax on its wholly owned
foreign subsidiaries and has recorded a provisional
Transitional Repatriation Tax expense of $116.4
million as a component of
income tax
provision. No reasonable estimate has been made
with respect to direct and indirect investments in other
foreign companies. The Company is continuing to
gather
and
guidance to complete the accounting with respect to
its calculation of E&P, non-U.S. income taxes paid,
and the portion taxable at the 15.5% tax rate.

information

its current

additional

analyze

and

The Tax Act allows the tax liability arising from the
to be paid on an
Transitional Repatriation Tax
installment basis over eight years,
resulting in a
provisional
increase in the long-term tax liability
account included in “Other long-term liabilities” in the
Company’s Consolidated Balance Sheets.

The deferred tax assets and liabilities of the Company
are impacted by the Tax Act. The reduction in the U.S.
federal corporate tax rate from 35% to 21% for tax
years beginning after December 31, 2017, requires
the Company to remeasure its deferred tax assets and
liabilities. The Company has evaluated this change
and recorded a decrease to net deferred tax liabilities
with a corresponding increase to deferred tax benefit
of $39.1 million. In addition, the full expensing of
investments in qualified property after September 27,
2017,
impacts the calculation of deferred tax
balances. The provisional amount for full expensing
requires further analysis to determine which fixed
assets placed in service after September 27, 2017,
meet the qualification requirements. The Company is
still in the process of evaluating the state tax impact
on
valuation
balances,
from the full expensing provision and
allowances,
other provisions of the Tax Act.

including

deferred

tax

GILTI creates a new requirement that certain income
earned by foreign subsidiaries must be currently
included in the gross income of the U.S. stockholder.
Due to the complexity of the new GILTI tax rules, the
Company continues to evaluate this provision of the
Tax Act and the application of ASC 740, “Income
Taxes.” Under U.S. GAAP, the Company is allowed to
either:
choice
make
(1) treating taxes due on future U.S.
inclusions in
taxable income related to GILTI as a current-period
expense when incurred (the “period cost method”) or
factoring such amounts into the Company’s
(2)

accounting

policy

an

of

64

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

The components of the income tax provision are as follows (in thousands):

Current (expense) benefit:
Federal
State
Foreign

Deferred benefit (expense):
Federal
State(1)
Foreign

Total

2018

Fiscal Year
2017

2016

$(28,168)
(229)
(61,284)

$(23,835)
(476)
(47,579)

$ (4,285)
(541)
(33,346)

(89,681)

(71,890)

(38,172)

$ 11,817
253
20,178

$ 2,762
3,659
21,606

$ 27,794
(31,229)
15,624

32,248

28,027

12,189

$(57,433)

$(43,863)

$(25,983)

(1) In fiscal 2016, the state deferred tax expense included a $31.0 million income tax expense related to an increase in the valuation allowance for the

deferred tax asset related to state net operating losses and tax credits.

A reconciliation of the provision for income taxes to income tax expense computed by applying the statutory federal
income tax rate to pre-tax income (loss) for fiscal years 2018, 2017 and 2016 is as follows (dollars in thousands):

Income tax (expense) benefit at statutory

federal rate

$

(5,407)

31.54% $ (9,557)

35.00% $ 1,002

35.00%

2018

Fiscal Year
2017

2016

Amount

Percentage Amount

Percentage Amount

Percentage

(Increase) decrease resulting from:
State benefit (provision), net of federal

(provision) benefit

Tax credits
Effect of changes in income tax rate applied to

net deferred tax assets
Foreign tax rate difference
Foreign permanent differences
Change in valuation allowance
Stock-based compensation
Tax reserve adjustments
Deemed dividend
U.S. Tax Toll Charge
Intra-entity transfer
Other income tax (expense) benefit

474

(2.77)
38,054 (221.95)

(662)
15,352

2.42
(56.22)

(1,320)
15,459

(46.14)
540.21

39,168 (228.45)
21,829 (127.32)
15.15
(2,598)
9.52
(1,632)
(57.88)
9,924
(29,188) 170.24
29.73
(116,419) 679.03
40.09
(1.94)

(6,873)
333

(5,098)

1,163
(11,298)
(8,432)
1,363
(3,228)
(21,789)
(6,989)
—
—
214

(4.26)
41.38
30.88
(4.99)
11.82
79.80
25.60
—
—
(0.79)

(2,716)
4,114
(1,700)
(25,120)
(5,362)
(8,699)
(3,984)
—
—
2,343

(94.92)
143.77
(59.40)
(877.84)
(187.37)
(303.99)
(139.21)
—
—
81.89

$ (57,433) 334.99% $(43,863) 160.64% $(25,983)

(908.00)%

65

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts
of assets and liabilities for
reporting
purposes and the basis used for income tax purposes.
The deferred income tax assets and liabilities are
measured in each taxing jurisdiction using the enacted
tax rates and laws that will be in effect when the
differences are expected to reverse.

financial

Significant components of the Company’s net deferred
income taxes are as follows (in thousands):

established based upon management’s opinion that it
is more likely than not (a likelihood of more than 50
percent) that the benefit of these deferred tax assets
may not be realized. Realization is dependent upon
generating future income in the taxing jurisdictions in
which the operating loss carryovers, credit carryovers,
depreciable tax basis and other tax deferred assets
exist. Management reevaluates the ability to realize
the benefit of the deferred tax assets of the Company
on a quarterly basis.

Deferred income tax assets:

Inventory reserve
Equity compensation
Net operating loss carry-

forwards

Research and other credits
Employee benefits
Other deferred assets

Total deferred income tax

assets
Valuation allowance

Total deferred income tax
assets, net of valuation
allowance

Deferred income tax liabilities:
Amortization and purchase

accounting basis
difference

Accumulated depreciation/

Fiscal Year

2018

2017

$

9,894 $ 15,599
83,333

37,724

50,128
39,513
12,842
16,620

40,575
92,793
13,247
23,355

166,721
(42,787)

268,902
(33,104)

$ 123,934 $ 235,798

$(101,261) $(258,422)

basis difference

(63,363)

(91,337)

Total deferred income tax

liabilities

(164,624)

(349,759)

Net deferred income tax

liabilities

$ (40,690) $(113,961)

Amounts included in the
Consolidated Balance
Sheets:
Non-current assets
Non-current liabilities

Net deferred income tax

22,394
(63,084)

17,550
(131,511)

liabilities

$ (40,690) $(113,961)

The Company has recorded a $42.8 million and a
$33.1 million valuation allowance against the U.S.
deferred tax assets and deferred tax assets at foreign
subsidiaries as of March 31, 2018, and April 1, 2017,
allowances were
respectively.

valuation

These

66

The valuation allowance against deferred tax assets
increased by $9.7 million in fiscal 2018. The increase
was comprised of a $6.8 million increase resulting
from tax rate changes, primarily the federal
rate
changes enacted in the Tax Act, a $1.9 million
increase in the state deferred tax for net operating
losses and tax credits, a $1.0 million increase for
deferred tax assets for net operating losses at other
foreign subsidiaries and a $0.5 million increase in the
valuation allowance for state tax credits due to the
adoption of ASU 2016-09. It was partially offset by a
$0.5 million decrease in valuation allowance for
federal deferred tax assets for foreign tax credits. At
fiscal 2018, a $2.0 million valuation
the end of
allowance remained against deferred tax assets at
foreign subsidiaries and a $40.8 million
other
valuation
domestic
deferred tax assets as management has determined it
is more likely than not that the related deferred tax
assets will not be realized.

allowance

remained

against

The valuation allowance against deferred tax assets
decreased by $1.6 million in fiscal 2017. The
decrease was comprised of a $5.2 million decrease in
the valuation allowance for foreign deferred tax assets
primarily resulting from the removal of the valuation
allowance at a China manufacturing subsidiary as
management has determined it is more likely than not
that the related deferred tax assets will be realized.
The decrease was offset by a $2.8 million increase in
the valuation allowance for federal deferred tax assets
for foreign tax credits and state deferred tax assets
for net operating losses and tax credits, as well as a
$0.8 million increase for deferred tax assets for net
operating losses at other foreign subsidiaries. At the
end of fiscal 2017, a $0.8 million valuation allowance
remained against deferred tax assets at other foreign
subsidiaries and a $32.3 million valuation allowance
remained against domestic deferred tax assets as
management determined it was more likely than not
that the related deferred tax assets would not be
realized.

fiscal

During
China
manufacturing subsidiary, which operates as a cost
plus manufacturer for another Qorvo subsidiary, exited

Company’s

2017,

the

Notes to Consolidated Financial Statements

its start-up operational phase and generated sufficient
income to substantially offset the losses earned in
prior years. The balance of the cumulative pre-tax book
loss was expected to be offset by income in the first
half of fiscal 2018 as production at the assembly and
test facility continued to increase as the Company
reduced its dependence on outside assembly and test
subcontractors. After evaluating the positive and
negative evidence, management determined that
it
was more likely than not that the deferred tax assets
of
this China manufacturing subsidiary would be
realized and a valuation allowance would not be
provided as of the end of fiscal 2017.

The valuation allowance against deferred tax assets
increased by $20.9 million in fiscal 2016. The
increase was comprised of a $20.2 million increase in
the valuation allowance for state deferred tax assets
for net operating losses and tax credits, a $5.0 million
increase in the valuation allowance for foreign net
operating loss deferred tax assets, and a $4.3 million
decrease in the valuation allowance related to a
deferred tax asset recorded in the initial purchase
price accounting for the Business Combination. The
Business Combination adjustment
related to a
deferred tax asset which was recorded during fiscal
2015 in the initial purchase price accounting with a
full valuation allowance, but which deferred tax asset
was determined in fiscal 2016 to not exist as of the
acquisition date. Accordingly,
that
deferred tax asset was removed along with the
offsetting deferred tax asset valuation allowance. At
the end of
fiscal 2016, a $5.2 million valuation
foreign deferred tax
allowance remained against
assets and a $29.5 million valuation allowance
remained against domestic deferred tax assets as
management determined it was more likely than not
that the related deferred tax assets would not be
realized, effectively
increasing the domestic net
deferred tax liabilities.

in fiscal 2016,

During fiscal 2016, North Carolina enacted legislation
to reduce the corporate income tax rate from 5% to 4%
and phase-in over a three-year period a move to a
single sales factor apportionment methodology.
In
addition, the Company underwent operational changes
to leverage existing resources and capabilities of its
Singapore subsidiary and consolidate operations and
responsibilities associated with its foreign back-end
manufacturing operations and foreign customers in
that Singapore subsidiary. Together
these changes
resulted in a significant decrease in the amount of
future taxable income expected to be allocated to
North Carolina and other states in which the net
operating loss and tax credit carryovers existed. As a
result, it was no longer more likely than not that the
deferred tax assets related to those state net

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

operating loss and tax credit carryovers for which a
valuation allowance was being provided will be used
before they expire. The deferred tax asset for foreign
net operating losses primarily related to the China
subsidiary which owns the internal assembly and test
facility that became operational during fiscal 2016 and
had incurred losses since inception.

As of March 31, 2018, the Company had federal loss
carryovers of approximately $305.0 million that expire
in fiscal years 2020 to 2038 if unused and state
losses of approximately $147.3 million that expire in
fiscal years 2019 to 2038 if unused. Federal research
credits of $54.9 million, and state credits of
$58.7 million may expire in fiscal years 2019 to 2038
and 2019 to 2033, respectively. Foreign losses in the
Netherlands of approximately $7.8 million expire in
fiscal years 2019 to 2027. Included in the amounts
above are certain net operating losses and other tax
conjunction with
attribute
acquisitions in the current and prior years. The
utilization of acquired domestic assets is subject to
certain
under
Section 382 of the Internal Revenue Code of 1986, as
amended (the “Code”) and similar state income tax
provisions.

limitations

acquired

required

assets

annual

as

in

in

its

increase

investments

The Company has continued to expand its operations
and
numerous
international jurisdictions. These activities expose the
Company to taxation in multiple foreign jurisdictions. It
is management’s opinion that current and future
undistributed foreign earnings will be permanently
of Qorvo
reinvested,
International Pte. Ltd., our operating subsidiary in
Singapore. No provision for U.S. federal, state income
taxes and foreign local withholding taxes has been
foreign
made with respect
to any of
to estimate the
is not practical
subsidiaries.
additional tax that would be incurred, if any, if the
permanently reinvested earnings were repatriated.

the other

earnings

except

the

for

It

respectively.

The Company has foreign subsidiaries with tax holiday
agreements in Costa Rica and Singapore. These tax
holiday agreements have varying rates and expire in
March 2024 and December 2021,
In
February 2017, Singapore enacted legislation that will
exclude from the Company’s existing Development
the
and Expansion Incentive grant
reduced tax rate for
intellectual property income
earned after June 30, 2021. Incentives from these
countries are subject to the Company meeting certain
employment and investment requirements. Income tax
expense decreased by $7.9 million (approximately
$0.06 per basic and diluted share impact) in fiscal
2018 and $2.7 million (approximately $0.02 per basic
and diluted share impact) in fiscal 2017 as a result of
these agreements.

the benefit of

67

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

The Company’s gross unrecognized tax benefits
totaled $122.8 million as of March 31, 2018,
$90.6 million as of April 1, 2017, and $69.1 million
as of April 2, 2016. Of these amounts, $118.7 million
(net of federal benefit of state taxes), $84.4 million
and
(net
$64.2 million (net of federal benefit of state taxes) as
of March 31, 2018, April 1, 2017, and April 2, 2016,
respectively, represent the amounts of unrecognized
tax benefits that,
the
if
effective tax rate in each of the fiscal years.

recognized, would impact

federal

benefit

taxes)

state

of

of

A reconciliation of fiscal 2016 through fiscal 2018
beginning and ending amount of gross unrecognized
tax benefits is as follows (in thousands):

Fiscal Year
2017

2018

2016

Beginning balance

$ 90,615

$69,052

$59,397

Additions based on

positions related to
current year

Additions for tax

26,431

20,036

9,374

positions in prior years

5,844

1,878

2,723

Reductions for tax

positions in prior years

(67)

(29)

(1,973)

Expiration of statute of

limitations

Ending balance

—

(322)

(469)

$122,823

$90,615

$69,052

It is the Company’s policy to recognize interest and
penalties related to uncertain tax positions as a
component of income tax expense. During fiscal years
the Company recognized
2018, 2017 and 2016,
$(2.5) million, $2.1 million and $1.6 million,
respectively, of
interest and penalties related to
uncertain tax positions. Accrued interest and penalties
totaled
related
$4.6 million, $7.1 million and $5.0 million as of
March 31, 2018, April 1, 2017, and April 2, 2016,
respectively.

unrecognized

benefits

tax

to

The unrecognized tax benefits of $122.8 million and
accrued interest and penalties of $4.6 million at the
end of fiscal 2018 are recorded on the Consolidated
Balance Sheet as an $18.3 million long-term liability,
with the balance reducing the carrying value of the
gross deferred tax assets.

Within the next 12 months, the Company believes it is
reasonably possible that only a minimal amount of
gross unrecognized tax benefits will be reduced as a
result of reductions for tax positions taken in prior
years where the only uncertainty was related to the
timing of the tax deduction.

Income
and
$31.7 million as of March 31, 2018, and April 1,

of $60.0 million

payable

taxes

68

respectively, are included in “Other current
2017,
liabilities” in the Consolidated Balance Sheets. Long
term income taxes payable of $24.2 million as of
March 31, 2018, are included in “Other long-term
liabilities” in the Consolidated Balance Sheets.

tax return for

RFMD’s fiscal 2015 and TriQuint’s calendar 2014
federal, North Carolina, and California tax returns and
subsequent tax years remain open for examination.
The federal
the short period ended
January 1, 2015 for RFMD is currently under
examination by the Internal Revenue Service, and the
Singapore tax return for calendar year 2012 is
currently under examination by the Singapore tax
authorities. An examination by taxing authorities of the
Company’s China subsidiary in Beijing of its calendar
year 2013 through 2015 tax returns was completed in
fiscal 2018 with minimal adjustments and returns for
subsequent tax years remain open for examination. An
examination by the German taxing authorities of the
returns for calendar years 2013 through 2015 was
with minimal
completed
adjustments and returns for subsequent
tax years
remain open for examination. Tax attributes (including
net operating loss and credit carryovers) arising in
earlier fiscal years remain open to adjustment.

during

2017

fiscal

13. NET LOSS PER SHARE

The following table sets forth the computation of basic
and diluted net loss per share (in thousands, except
per share data):

For Fiscal Year
2017

2016

2018

Numerator:

Numerator for basic and

diluted net loss per share
— net loss available to
common stockholders

Denominator:

Denominator for basic net

loss per share —
weighted average shares

Effect of dilutive securities:

$ (40,288) $ (16,558) $ (28,845)

126,946

127,121

141,937

Stock-based awards

—

—

—

Denominator for diluted net

loss per share — adjusted
weighted average shares
and assumed conversions

126,946

127,121

141,937

Basic net loss per share

Diluted net loss per share

$

$

(0.32) $

(0.13) $

(0.20)

(0.32) $

(0.13) $

(0.20)

In the computation of diluted net loss per share for
fiscal years 2018, 2017 and 2016, approximately
3.7 million shares, 4.8 million shares and 5.0 million
shares,
respectively, were excluded because the
effect of their inclusion would have been anti-dilutive.

Notes to Consolidated Financial Statements

14. STOCK-BASED COMPENSATION

Summary of Stock Option Plans

2003 Stock Incentive Plan — RF Micro Devices, Inc.
The 2003 Stock Incentive Plan (the “2003 Plan”) was
approved by the Company’s stockholders on July 22,
2003, and the Company was permitted to grant stock
options and other types of equity incentive awards,
such as stock appreciation rights,
restricted stock
awards, performance shares and performance units,
under
the 2003 Plan. No further awards can be
granted under this plan.

the Company’s

2006 annual meeting

2006 Directors’ Stock Option Plan — RF Micro
Devices, Inc.
At
of
stockholders, stockholders of the Company adopted
the 2006 Directors’ Stock Option Plan, which replaced
the Non-Employee Directors’ Stock Option Plan and
reserved an additional 0.3 million shares of common
stock for issuance to non-employee directors. Under
the terms of this plan, non-employee directors were
entitled to receive options to acquire shares of
common stock. No further awards can be granted
under this plan.

of

the

upon

closing

1996 Stock Incentive Program — TriQuint
Semiconductor, Inc.
Effective
the Business
Combination, the Company assumed the TriQuint, Inc.
1996 Stock Incentive Program (the “TriQuint 1996
Stock Incentive Program”), originally adopted by
TriQuint. The TriQuint 1996 Stock Incentive Program
provided for the grant of incentive and non-qualified
stock options to officers, outside directors and other
employees of TriQuint or any parent or subsidiary. The
TriQuint 1996 Stock Incentive Program was amended
in 2002 to provide that options granted thereunder
must have an exercise price per share no less
than 100% of the fair market value of the share price
on the grant date. In 2005, the TriQuint 1996 Stock
Incentive Program was further amended to extend the
term of the program to 2015 and permit the award of
stock
restricted
appreciation
and
performance units in addition to the grant of stock
options. In addition, the amendment provided specific
performance criteria that the plan administrator may
use to establish performance objectives. The terms of
each grant under the TriQuint 1996 Stock Incentive
Program could not exceed ten years. No further
awards can be granted under this program.

stock
performance

units,
shares

restricted

rights,

stock,

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

of

the

upon

closing

2008 Inducement Award Plan — TriQuint
Semiconductor, Inc.
Effective
the Business
Combination, the Company assumed the sponsorship
of the TriQuint, Inc. 2008 Inducement Award Plan (the
“TriQuint 2008 Inducement Award Plan”), originally
adopted by TriQuint. The TriQuint 2008 Inducement
Award Plan provided for
the grant of nonstatutory
stock options, restricted stock, restricted stock units,
stock appreciation rights and other stock or cash
awards to employees of TriQuint or any parent or
subsidiary. The options granted thereunder were
required to have an exercise price per share no less
than 100% of the fair market value per share on the
date of grant. The terms of each grant under the plan
could not exceed ten years. No further awards can be
granted under this plan.

of

the

upon

closing

2009 and 2012 Incentive Plans — TriQuint
Semiconductor, Inc.
Effective
the Business
Combination, the Company assumed the TriQuint, Inc.
2009 Incentive Plan and TriQuint, Inc. 2012 Incentive
Plan (the “TriQuint Incentive Plans”), originally adopted
by TriQuint. The TriQuint Incentive Plans provided for
the grant of stock options,
restricted stock units,
stock appreciation rights and other stock or cash
awards to employees, officers, directors, consultants,
agents, advisors and independent contractors of
TriQuint and its subsidiaries and affiliates. The options
granted thereunder were required to have an exercise
price per share no less than 100% of the fair market
value per share on the date of grant. The terms of
each grant under the TriQuint Incentive Plans could not
exceed ten years. No further awards can be granted
under these plans.

in

connection

2012 Stock Incentive Plan — Qorvo, Inc.
The Company currently grants stock options and
restricted stock units to employees and directors
the 2012 Stock Incentive Plan (the “2012
under
the Company’s
Plan”), which was approved by
stockholders on August 16, 2012, assumed by the
the
Company
Business
with
Combination and reapproved by
the Company’s
stockholders on August 8, 2017 for purposes of
Section 162(m) of the Code. Under the 2012 Plan, the
Company is permitted to grant stock options and other
types of equity incentive awards, such as stock
appreciation
awards,
performance shares and performance units. The
maximum number of shares issuable under the 2012
Plan may not exceed the sum of
(a) 4.3 million
shares, plus (b) any shares of common stock
(i) remaining available for issuance as of the effective
date of the 2012 Plan under the Company’s prior

restricted

rights,

stock

69

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

plans and (ii) subject to an award granted under a
prior plan, which awards are forfeited, canceled,
terminated, expire or
lapse for any reason. As of
March 31, 2018, 3.6 million shares were available for
issuance under the 2012 Plan. The aggregate number
to performance-based restricted
of shares subject
stock units awarded for fiscal 2018 under the 2012
Plan was 0.2 million shares.

of

the

upon

closing

agents,

advisors

the grant of stock options,

2013 Incentive Plan — Qorvo, Inc.
Effective
the Business
Combination, the Company assumed the TriQuint, Inc.
2013 Incentive Plan (the “2013 Incentive Plan”),
originally adopted by TriQuint, allowing Qorvo to issue
this plan. The 2013 Incentive Plan
awards under
replaces the TriQuint 2012 Incentive Plan and
provides for
restricted
stock units, stock appreciation rights and other stock
or cash awards to employees, officers, directors,
independent
consultants,
contractors of TriQuint and its subsidiaries and
to the Business
affiliates who were such prior
the
Combination or who become employed by
the
the closing of
its affiliates after
Company or
Business Combination. Former employees, officers
and directors of RFMD are not eligible for awards
under the 2013 Incentive Plan. The options granted
thereunder must have an exercise price per share no
less than 100% of the fair market value per share on
the date of grant. The terms of each grant under the
2013 Incentive Plan may not exceed ten years. As of
March 31, 2018, 2.4 million shares were available for
issuance under the 2013 Incentive Plan.

and

inducement

2015 Inducement Stock Plan — Qorvo, Inc.
The 2015 Inducement Stock Plan (the “2015
Inducement Plan”) provides for the grant of equity
to
awards to persons as a material
become employees of the Company or its affiliates.
The plan provides for
the grant of stock options,
restricted stock units, stock appreciation rights and
other stock-based awards. The maximum number of
shares issuable under the 2015 Inducement Plan may
not exceed the sum of (a) 0.3 million shares, plus
(b) any shares of common stock (i) remaining available
for issuance as of the effective date of the 2015
the TriQuint 2008
Inducement Stock Plan under
Inducement Award Plan and (ii) subject to an award
granted under the TriQuint 2008 Inducement Award
Plan,
canceled,
are
terminated, expire or lapse for any reason. No awards
were made under the 2015 Inducement Plan in fiscal
years 2018, 2017 or 2016. As of March 31, 2018,
0.3 million shares were available for issuance under
the 2015 Inducement Plan.

forfeited,

awards

which

70

regular

Employee Stock Purchase Plan — Qorvo, Inc.
Effective upon closing of the Business Combination,
the Company assumed the TriQuint Employee Stock
Purchase Plan (“ESPP”), which is intended to qualify
as an “employee stock purchase plan” under
full-time
the Code. All
Section 423 of
employees of the Company (including officers) and all
other employees who meet the eligibility requirements
of the plan may participate in the ESPP. The ESPP
provides eligible employees an opportunity to acquire
the Company’s common stock at 85.0% of the lower
the Company’s
of
common stock on the first or
last day of each
six-month purchase period. At March 31, 2018,
4.6 million shares were available for future issuance
under
this plan. The Company makes no cash
contributions to the ESPP, but bears the expenses of
its administration. The Company issued 0.5 million,
0.7 million and 0.4 million shares under the ESPP in
fiscal years 2018, 2017 and 2016, respectively.

the closing price per share of

to the market price of

For fiscal years 2018, 2017 and 2016, the primary
stock-based awards and their general terms and
conditions are as follows:
Stock options are granted to employees with an
exercise price equal
the
Company’s stock at the date of grant, generally vest
over a four-year period from the grant date, and
generally expire 10 years from the grant date.
Restricted stock units granted by the Company in
fiscal years 2018, 2017 and 2016 are either service-
based, performance and service-based, or based on
return. Service-based restricted
total stockholder
stock units generally vest over a four-year period from
the grant date. Performance and service-based
restricted stock units are earned based on Company
performance of stated metrics during the fiscal year
and, if earned, generally vest one-half when earned
and the balance over two years. Restricted stock units
based on total stockholder return are earned based
the Company in
upon total stockholder
return of a
comparison to the total stockholder
benchmark index and can be earned over one-, two-
and three-year performance periods. In fiscal 2018,
each non-employee director was eligible to receive an
annual grant of restricted stock units.

return of

to

subject

The options and restricted stock units granted to
certain officers of the Company generally will, in the
event of the officer’s termination other than for cause
and
certain
agreements in favor of the Company, continue to vest
pursuant to the same vesting schedule as if the officer
had remained an employee of
the Company and,
as a result,
these awards are expensed at grant
In fiscal 2018, stock-based compensation of
date.

executing

officer

the

Notes to Consolidated Financial Statements

$20.5 million was recognized upon the grant of
0.3 million restricted share units to certain officers of
the Company.

Stock-Based Compensation
Under ASC 718, stock-based compensation cost is
measured at the grant date, based on the estimated
fair value of the award using an option pricing model
for stock options (Black-Scholes) and market price for
restricted stock units, and is recognized as expense
over the employee’s requisite service period. ASC 718
covers a wide range of stock-based compensation
arrangements including stock options, restricted share
plans, performance-based awards, share appreciation
rights and employee stock purchase plans.

in

the Consolidated Statements

Total pre-tax stock-based compensation expense
recognized
of
Operations was $68.2 million for fiscal 2018, net of
fiscal years
expense capitalized into inventory. For
2017 and 2016,
the total pre-tax stock-based
compensation expense recognized was $88.8 million
and $139.5 million,
respectively, net of expense
capitalized into inventory.

A summary of activity of the Company’s director and
employee stock option plans follows:

Weighted-
Average
Remaining
Contractual
Term
(in years)

Weighted-
Average
Exercise
Price

Aggregate
Intrinsic
Value
(in thousands)

Shares
(in thousands)

Outstanding as of
April 1, 2017

Granted

Exercised
Canceled
Forfeited

Outstanding as of
March 31, 2018

Vested and

expected to
vest as of
March 31, 2018

Options

exercisable as of
March 31, 2018

4,177

$19.72

—

(1,544)
(5)
(5)

—

$19.07
$41.86
$19.99

2,623

$20.06

3.64

$132,217

2,623

$20.06

3.64

$132,216

2,597

$19.79

3.64

$131,585

The aggregate intrinsic value in the table above
represents the total pre-tax intrinsic value, based upon
the Company’s closing stock price of $70.45 as of
March 29, 2018 (the last business day prior to the
fiscal year end on March 31, 2018), that would have
been received by the option holders had all option
holders with in-the-money options exercised their
options as of that date. As of March 31, 2018, total
remaining unearned compensation cost
related to
unvested option awards was $0.3 million, which will

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

be amortized over
service period of approximately 0.5 years.

the weighted-average remaining

The fair value of each option award is estimated on
the date of grant using a Black-Scholes option-pricing
model based on the assumptions noted in the
following tables:

Expected volatility

Expected dividend yield

Expected term (in years)

Risk-free interest rate
Weighted-average grant-date fair

value of options granted during
the period

Fiscal Year
2017

2016

2018

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

42.8%

0.0%

5.7

1.6%

N/A

N/A

$32.62

The total
intrinsic value of options exercised during
fiscal 2018, was $87.8 million. For fiscal years 2017
and 2016,
intrinsic value of options
exercised was $81.0 million and $74.9 million,
respectively.

the total

Cash received from the exercise of stock options and
from participation in the employee stock purchase
plan (excluding accrued unremitted employee funds)
was approximately $57.5 million for fiscal 2018 and is
reflected in cash flows from financing activities in the
Consolidated Statements
The
Company settles employee stock options with newly
issued shares of the Company’s common stock.

of Cash

Flows.

The Company used the implied volatility of market-
traded options on the Company’s common stock for
the expected volatility assumption input to the Black-
Scholes option-pricing model, consistent with the
guidance in ASC 718. The selection of
implied
volatility data to estimate expected volatility was
based upon the availability of actively-traded options
on the Company’s common stock and the Company’s
assessment
is more
implied
representative of future common stock price trends
than historical volatility.

volatility

that

The dividend yield assumption is based on the
Company’s history and expectation of future dividend
payouts and may be subject to change in the future.
The Company has never paid a dividend.

of

life

stock

expected

employee

The
options
represents the weighted-average period that the stock
options are expected to remain outstanding. The
Company’s method of calculating the expected term of
an option assumes that all outstanding options will be
exercised at the midpoint of the current date and full
contractual term, combined with the average life of all
options that have been exercised or canceled. The

71

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

Company believes that this method provides a better
estimate of the future expected life based on analysis
of historical exercise behavioral data.

The risk-free interest rate assumption is based upon
observed interest rates appropriate for the terms of
the Company’s employee stock options.

if actual

ASC 718 requires forfeitures to be estimated at the
time of grant and revised, if necessary, in subsequent
periods
from those
estimates. Based upon historical pre-vesting forfeiture
experience,
the Company assumed an annualized
forfeiture rate of 1.6% for both stock options and
restricted stock units.

forfeitures differ

The following activity has occurred with respect to
restricted stock unit awards:

Shares
(in thousands)

2,375

998

(1,059)

(127)

Weighted-Average
Grant-Date
Fair Value

$53.00

68.67

50.30

57.73

Balance at April 1,

2017

Granted

Vested

Forfeited

Balance at March 31,

2018

2,187

$59.46

total

remaining unearned
As of March 31, 2018,
compensation cost
related to unvested restricted
stock units was $72.5 million, which will be amortized
over the weighted-average remaining service period of
approximately 1.2 years.

fair value of

The total
restricted stock units that
vested during fiscal 2018 was $73.2 million, based
upon the fair market value of the Company’s common
stock on the vesting date. For fiscal years 2017 and
2016, the total fair value of restricted stock units that
vested was $46.1 million and $60.2 million,
respectively.

15. STOCKHOLDERS’ EQUITY

outstanding

Stock Repurchase
On November 5, 2015, the Company announced that
its Board of Directors authorized a share repurchase
the
program to repurchase up to $1.0 billion of
Company’s
through
November 4, 2016. On February 16, 2016, as part of
the
the $1.0 billion share repurchase program,
Company entered into variable maturity accelerated
(a
share
$250.0 million
a
$250.0 million uncollared agreement) with Bank of
of
the
America,

agreements

repurchase

agreement

common

payment

collared

(“ASR”)

upfront

stock

N.A.

and

For

72

(representing 80% of

its common stock under
(representing 50% of

the Company received 3.1 million
$500.0 million,
the collared
shares of
agreement
the shares the
Company would have repurchased assuming an
average share price of $40.78) and 4.9 million shares
of the Company’s common stock under the uncollared
agreement
the shares the
Company would have repurchased assuming an
average share price of $40.78). On March 10, 2016,
the Company received an additional 2.0 million shares
of its common stock under the collared agreement.
Final settlements of
the ASR agreements were
completed during the first quarter of fiscal 2017 with
0.4 million shares received resulting in a total of
10.4 million shares of the Company’s common stock
repurchased under the ASR agreements. The shares
were retired in the periods they were delivered, and
the upfront payment was accounted for as a reduction
to stockholders’ equity in the Consolidated Balance
in the period the payment was made. The
Sheet
Company reflected each ASR as a repurchase of
common stock in the period delivered for purposes of
calculating earnings per share.

On November 3, 2016, the Company announced that
its Board of Directors authorized a share repurchase
program to repurchase up to $500.0 million of the
Company’s outstanding stock. 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 will depend
on general market conditions, regulatory requirements,
and
alternative
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.
approximately
program included
$150.0 million authorized on the $1.0 billion
repurchase program that expired November 4, 2016.

opportunities

investment

The

The Company
repurchased 2.9 million shares,
4.1 million shares (inclusive of 0.4 million shares
received under the ASR agreement) and 24.3 million
shares (inclusive of 10.0 million shares received
under the ASR agreement) of its common stock during
fiscal years 2018, 2017 and 2016, respectively, at an
aggregate cost of $219.9 million, $209.4 million and
$1,300.0 million, respectively, in accordance with the
share repurchase programs described above. As of
March 31, 2018, $162.1 million remains available for
future
share
under
repurchases
repurchase program.

current

our

Notes to Consolidated Financial Statements

Common Stock Reserved For Future Issuance
At March 31, 2018, the Company had reserved a total
its authorized
of approximately 15.7 million of
405.0 million shares of common stock for
future
issuance as follows (in thousands):

Outstanding stock options under formal

directors’ and employees’ stock option
plans

Possible future issuance under Company

stock incentive plans

Employee stock purchase plan
Restricted stock-based units granted

Total shares reserved

2,623

6,254
4,594
2,187

15,658

16. OPERATING SEGMENT AND GEOGRAPHIC

INFORMATION

The Company’s operating segments as of March 31,
2018 are MP and IDP based on the organizational
structure and information reviewed by the Company’s
Chief Executive Officer, who is the Company’s chief
(“CODM”), and these
operating decision maker
segments are managed separately based on the end
markets and applications they support. The CODM
allocates resources and assesses the performance of
each operating segment primarily based on non-GAAP
operating income (loss) and non-GAAP operating
income (loss) as a percentage of revenue.

computers,

form factors,

MP is a leading global supplier of cellular RF and Wi-Fi
including
solutions for a variety of mobile devices,
smartphones,
wearables,
notebook
tablets, and cellular-based applications for the IoT.
Mobile device manufacturers and mobile network
operators are adopting new technologies to address
increasingly
the growing demand for data-intensive,
cloud-based distributed applications and for mobile
devices with smaller
improved signal
quality, less heat and longer talk and standby times.
New wireless communications standards are being
deployed to utilize available spectrum more efficiently.
Carrier aggregation is being implemented to support
wider bandwidths, increase data rates and improve
network performance. These trends increase the
complexity of smartphones, require more RF content
and place a premium on performance,
integration,
systems-level expertise, and product and technology
portfolio breadth, all of which are MP strengths. MP
offers a comprehensive product portfolio of BAW and
SAW filters, power amplifiers (“PAs”),
low noise
amplifiers (“LNAs”), switches, multimode multi-band
PAs and transmit modules, RF power management
integrated circuits, diversity receive modules, antenna
switch modules, antenna tuning and control solutions,

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

modules
modules incorporating switches, PAs and duplexers.

incorporating PAs

duplexers

and

and

such

premises

include
as

These
defense

applications
systems

IDP is a leading global supplier of RF solutions with a
diverse portfolio of solutions that “connect and
protect,” spanning communications and defense
high
applications.
performance
radar,
electronic warfare and communication systems, Wi-Fi
customer
and
work, high speed connectivity in Long-Term Evolution
and 5G base stations, cloud connectivity via data
center
telecom transport,
automotive connectivity and other IoT, including smart
home solutions. IDP products include high power GaAs
and GaN PAs, LNAs, switches, CMOS SoC solutions,
premium BAW and SAW filter solutions and various
multi-chip and hybrid assemblies.

communications

equipment

home

and

for

The “All other” category includes operating expenses
such as stock-based compensation, amortization of
intangible assets, acquisition and integration related
costs, restructuring and disposal costs, start-up costs,
(loss) gain on assets 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
information. The
segments using discrete asset
Company’s
record
do
segments
operating
intercompany revenue. The Company does not allocate
gains and losses from equity investments, interest
and other 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.

not

73

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

The following tables present details of the Company’s
reportable segments and a reconciliation of the “All
other” category (in thousands):

Revenue:

MP

IDP

2018

Fiscal Year
2017

2016

$2,181,161 $2,384,041 $2,083,334

788,495

644,653

523,512

assets is based on quotes from third parties. See
Note 11 for further information on the restructuring.

The consolidated financial statements include revenue
to
are
geographic
by
summarized as follows (in thousands):

customers

region

that

Fiscal Year

2018

2017

2016

All other(1)

3,880

3,880

3,880

Total revenue

$2,973,536 $3,032,574 $2,610,726

Revenue:
United States
International

$ 524,472
2,449,064

$ 467,031
2,565,543

$ 306,328
2,304,398

Income from
operations:

MP

IDP

$ 549,574 $ 554,001 $ 591,751

235,719

152,539

108,370

All other

(715,011)

(618,481)

(688,153)

Income from
operations

$

70,282 $

88,059 $

11,968

Interest expense

$ (59,548)$ (58,879)$ (23,316)

Interest income

Other (expense)

income

Income (loss) before

7,017

1,212

2,068

(606)

(3,087)

6,418

income taxes

$

17,145 $

27,305 $

(2,862)

(1) “All other” revenue relates to royalty income that is not allocated to

MP or IDP.

2018

Fiscal Year
2017

2016

Reconciliation of “All
other” category:
Stock-based

compensation
expense
Amortization of

$ (68,158) $ (88,845) $(139,516)

intangible assets

(539,362)

(494,387)

(494,589)

Acquisition and

integration related
costs

Restructuring charges
Start-up costs
Other (including loss
(gain) on assets
and other
miscellaneous
corporate
overhead)

Loss from operations

(10,561)
(21,406)
(24,271)

(25,391)
(1,696)
(9,694)

(26,503)
(4,235)
(14,110)

(51,253)

1,532

(9,200)

for “All other”

$(715,011) $(618,481) $(688,153)

As a result of restructuring actions initiated in fiscal
2018, the Company adjusted the carrying value of
certain of its held for sale assets located in China and
the U.S., and recorded impairment charges totaling
the
approximately $46.3 million. The fair value of

74

Revenue:

United States
Asia
Europe
Other

Fiscal Year
2017

2018

18%
78
3
1

15%
81
3
1

2016

12%
83
4
1

the Company’s revenue for

Sales, for geographic disclosure purposes, are based
on the “sold to” address of the customer. The “sold
to” address is not always an accurate representation
of the location of final consumption of the Company’s
fiscal
components. Of
2018, approximately 52% ($1,539.7 million) was from
customers in China and 19% ($564.8 million) from
customers in Taiwan. Of the Company’s revenue for
fiscal years 2017 and 2016, approximately 62%
($1,866.0 million) and 61% ($1,601.0 million),
respectively, was from customers in China and 13%
($398.4 million)
14% ($365.1 million),
respectively, was from customers in Taiwan.

and

The consolidated financial statements include the
following long-lived tangible asset amounts related to
operations of the Company by geographic region (in
thousands):

March 31,
2018

April 1,
2017

April 2,
2016

Long-lived tangible

assets:
United States
China
Other countries

$1,089,157 $1,082,754 $816,882
183,836
46,170

217,205
67,750

244,728
64,450

17. CONDENSED CONSOLIDATING FINANCIAL
INFORMATION
In accordance with the indenture governing the Notes,
the Company’s obligations under the Notes are fully
and unconditionally guaranteed on a joint and several
basis by each Guarantor, each of which is 100%
owned, directly or indirectly, by Qorvo, Inc. A Guarantor
can be released in certain customary circumstances.

Notes to Consolidated Financial Statements

The following presents the condensed consolidating
financial information separately for:

(i)

Parent Company, the issuer of the guaranteed
obligations;

(ii) Guarantor subsidiaries, on a combined basis, as

specified in the indenture;

(a)

and
to

(iii) Non-guarantor subsidiaries, on a combined basis;
eliminations
(iv) Consolidating
entries
representing
eliminate
adjustments
intercompany transactions between or among
Parent Company, the guarantor subsidiaries and
the non-guarantor subsidiaries,
(b) eliminate
intercompany profit in inventory, (c) eliminate the
investments in the Company’s subsidiaries and
(d) record consolidating entries; and
(v) The Company, on a consolidated basis.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

for

Each entity in the condensed consolidating financial
information follows the same accounting policies as
described in the consolidated financial statements,
the use by the Parent Company and
except
the equity method of
guarantor subsidiaries of
accounting
in
to
subsidiaries that are eliminated upon consolidation.
information may not necessarily be
The financial
indicative of
results of
the financial position,
operations, comprehensive (loss) income, and cash
guarantor or
flows, had the Parent Company,
non-guarantor subsidiaries operated as independent
entities.

ownership

interests

reflect

(in thousands)

ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, less allowance
Intercompany accounts and note receivable
Inventories
Prepaid expenses
Other receivables
Other current assets

Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Long-term investments
Long-term intercompany accounts and notes

receivable

Investment in subsidiaries
Other non-current assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Intercompany accounts and notes payable
Accrued liabilities
Other current liabilities

Total current liabilities
Long-term debt
Deferred tax liabilities
Long-term intercompany accounts and notes

payable

Other long-term liabilities

Total liabilities
Total stockholders’ equity

Condensed Consolidating Balance Sheet
March 31, 2018

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations and
Reclassifications Consolidated

$

— $ 629,314
76,863
—
272,409
—
154,651
—
17,530
—
5,959
—
29,627
—

— 1,186,353
— 1,085,255
— 1,121,941
395,317
—
1,847
—

$ 296,723
269,094
53,363
339,434
6,379
38,836
1,188

1,005,017
289,146
1,051,948
465,019
61,918

$

— $ 926,037
345,957
—
(325,772)
—
472,292
(21,793)
23,909
—
44,795
—
30,815
—

(347,565)
(289)
—
—
—

1,843,805
1,374,112
2,173,889
860,336
63,765

—
6,198,885
72,122

543,127
2,388,222
31,011

116,494
—
32,516

(659,621)
(8,587,107)
(70,037)

—
—
65,612

$6,271,007

$6,753,073

$3,022,058

$(9,664,619)

$6,381,519

$

— $
—
23,102
—

23,102
983,290
—

78,278
53,363
101,286
3,882

236,809
—
83,449

489,051

116,494

—

62,417

$ 134,915
272,409
43,163
57,022

$

— $ 213,193
—
167,182
60,904

(325,772)
(369)
—

507,509
—
16,366

54,076

55,885

(326,141)
—
(36,731)

441,279
983,290
63,084

(659,621)

—

—

118,302

1,495,443
4,775,564

499,169
6,253,904

633,836
2,388,222

(1,022,493)
(8,642,126)

1,605,955
4,775,564

Total liabilities and stockholders’ equity

$6,271,007

$6,753,073

$3,022,058

$(9,664,619)

$6,381,519

75

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

(in thousands)

ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, less allowance
Intercompany accounts and notes receivable
Inventories
Prepaid expenses
Other receivables
Other current assets

Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Long-term investments
Long-term intercompany accounts and notes

receivable

Investment in subsidiaries
Other non-current assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Intercompany accounts and notes payable
Accrued liabilities
Other current liabilities

Total current liabilities
Long-term debt
Deferred tax liabilities
Long-term intercompany accounts and notes

payable

Other long-term liabilities

Total liabilities
Total stockholders’ equity

Condensed Consolidating Balance Sheet
April 1, 2017

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations
and

Reclassifications Consolidated

$

— $ 226,186
57,874
—
392,075
—
131,225
—
29,032
—
7,239
—
25,534
—

—
869,165
— 1,078,761
— 1,121,941
599,618
—
25,971
—

$ 319,277
300,074
36,603
322,559
7,197
58,008
730

1,044,448
314,910
1,051,973
800,945
9,523

$

—
—
(428,678)
(23,330)
—
—
—

(452,008)
(1,739)
—
—
—

$ 545,463
357,948
—
430,454
36,229
65,247
26,264

1,461,605
1,391,932
2,173,914
1,400,563
35,494

—
6,142,568
84,153

447,613
2,596,172
33,249

138,398
—
24,746

(586,011)
(8,738,740)
(83,333)

—
—
58,815

$6,226,721

$6,772,490

$3,384,943

$(9,861,831)

$6,522,323

$

— $ 111,799
36,603
—
111,700
23,150
55
—

$ 104,447
392,075
35,734
31,943

23,150
989,154
—

317,695
—

260,157
—
171,284

138,398
35,014

564,199
—
43,560

129,918
51,094

1,329,999
4,896,722

604,853
6,167,637

788,771
2,596,172

$

—
(428,678)
—
—

(428,678)
—
(83,333)

(586,011)
—

(1,098,022)
(8,763,809)

$ 216,246
—
170,584
31,998

418,828
989,154
131,511

—
86,108

1,625,601
4,896,722

Total liabilities and stockholders’ equity

$6,226,721

$6,772,490

$3,384,943

$(9,861,831)

$6,522,323

76

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

(in thousands)

Revenue
Cost of goods sold

Gross profit
Operating expenses:
Research and development
Selling, general and administrative
Other operating expense

Total operating expenses

Income (loss) from operations
Interest expense
Interest income
Other (expense) income

Income (loss) before income taxes
Income tax expense
Income in subsidiaries

Net (loss) income

Comprehensive (loss) income

(in thousands)

Revenue
Cost of goods sold

Gross profit
Operating expenses:
Research and development
Selling, general and administrative
Other operating expense

Total operating expenses

Income (loss) from operations
Interest expense
Interest income
Other (expense) income

Income (loss) before income taxes
Income tax (expense) benefit
Income in subsidiaries

Net (loss) income

Comprehensive (loss) income

Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Fiscal Year 2018

Parent
Company

$

—
—

—

27,688
39,882
588

68,158

(68,158)
(58,133)
—
(929)

(127,220)
(26)
86,958

Guarantor
Subsidiaries

$1,137,783
828,496

Non-Guarantor
Subsidiaries

$2,689,676
1,723,829

Eliminations
and
Reclassifications

$(853,923)
(725,755)

Consolidated

2,973,536
1,826,570

309,287

965,847

(128,168)

1,146,966

54,663
248,601
89,454

392,718

(83,431)
(2,340)
2,696
973

(82,102)
(15,586)
183,319

382,109
349,739
13,463

745,311

220,536
(1,505)
6,751
(642)

225,140
(41,821)
—

(19,357)
(110,471)
325

(129,503)

1,335
2,430
(2,430)
(8)

1,327
—
(270,277)

445,103
527,751
103,830

1,076,684

70,282
(59,548)
7,017
(606)

17,145
(57,433)
—

$ (40,288)

$ (38,734)

$

$

85,631

$ 183,319

$(268,950)

$ (40,288)

87,654

$ 186,172

$(273,826)

$ (38,734)

Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Fiscal Year 2017

Guarantor
Subsidiaries

$1,316,576
979,190

Non-Guarantor
Subsidiaries

Eliminations
and
Reclassifications

$2,918,865
2,023,715

$(1,202,867)
(1,105,843)

Consolidated

3,032,574
1,897,062

337,386

895,150

(97,024)

1,135,512

40,918
253,531
16,065

310,514

26,872
(2,619)
4,457
426

29,136
(63,893)
68,718

416,869
370,812
8,409

796,090

99,060
(3,129)
759
(1,999)

94,691
(25,973)
—

(22,330)
(132,220)
6,555

470,836
545,588
31,029

(147,995)

1,047,453

50,971
4,213
(4,004)
(1,514)

49,666
—
(152,345)

$ (16,558)

$ (17,731)

$

$

33,961

34,014

$

$

68,718

67,492

$ (102,679)

$ (101,506)

$

$

Parent
Company

$

—
—

—

35,379
53,465
—

88,844

(88,844)
(57,344)
—
—

(146,188)
46,003
83,627

88,059
(58,879)
1,212
(3,087)

27,305
(43,863)
—

(16,558)

(17,731)

77

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Fiscal Year 2016

(in thousands)

Revenue
Cost of goods sold

Gross profit
Operating expenses:
Research and development
Selling, general and administrative
Other operating expense

Total operating expenses

Income (loss) from operations
Interest expense
Interest income
Other income (expense)

(Loss) income before income taxes
Income tax (expense) benefit
Income in subsidiaries

Parent
Company

$

—
—

—

67,158
72,358
—

139,516

(139,516)
(21,895)
—
—

(161,411)
44,014
88,552

Guarantor
Subsidiaries

$2,212,062
1,778,336

Non-Guarantor
Subsidiaries

Eliminations
and
Reclassifications

$2,762,150
2,060,702

$(2,363,486)
(2,277,865)

Consolidated

2,610,726
1,561,173

433,726

701,448

(85,621)

1,049,553

106,560
151,814
50,928

309,302

124,424
(2,419)
2,650
5,467

130,122
(49,751)
13,619

304,219
360,593
2,447

667,259

34,189
(3,029)
3,003
(298)

33,865
(20,246)
—

(29,174)
(50,666)
1,348

(78,492)

(7,129)
4,027
(3,585)
1,249

(5,438)
—
(102,171)

448,763
534,099
54,723

1,037,585

11,968
(23,316)
2,068
6,418

(2,862)
(25,983)
—

(28,845)

(31,854)

Net (loss) income

Comprehensive (loss) income

$ (28,845)

$ (31,854)

$

$

93,990

89,738

$

$

13,619

14,862

$ (107,609)

$ (104,600)

$

$

(in thousands)

Condensed Consolidating Statement of Cash Flows
Fiscal Year 2018

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations
and

Reclassifications Consolidated

Net cash provided by operating activities

$ 196,848

$ 165,883

$ 489,789

$

—

$ 852,520

Investing activities:

Purchase of property and equipment
Other investing
Net transactions with related parties

Net cash (used in) provided by investing activities
Financing activities:

Proceeds from debt issuances
Payment of debt
Debt issuance costs
Proceeds from the issuance of common stock
Repurchase of common stock, including

transaction costs

Tax withholding paid on behalf of employees for

restricted stock units

Net transactions with related parties

100,000
(107,729)
(1,916)
57,412

(219,907)

(24,708)
—

Net cash (used in) provided by financing activities

(196,848)

Effect of exchange rate changes on cash
Net increase (decrease) in cash, cash equivalents

and restricted cash

Cash, cash equivalents and restricted cash at the

beginning of the period

Cash, cash equivalents and restricted cash at the

—

—

—

— (226,860)
22,800
—
439,925
—

—

235,865

(42,975)
(30,374)
(24,100)

(97,449)

—
—
(415,825)

(269,835)
(7,574)
—

(415,825)

(277,409)

—
—
—
—

—

—
—
—
—

—

—
1,380

1,380

—

—
(417,205)

(417,205)

2,360

403,128

(22,505)

226,186

319,593

—
—
—
—

—

—
415,825

415,825

—

—

—

—

100,000
(107,729)
(1,916)
57,412

(219,907)

(24,708)
—

(196,848)

2,360

380,623

545,779

$ 926,402

end of the period

$

— $ 629,314

$ 297,088

$

78

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

(in thousands)

Condensed Consolidating Statement of Cash Flows
Fiscal Year 2017

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations and
Reclassifications Consolidated

Net cash provided by operating activities

$ 165,660

$ 175,988

$ 435,172

$ 776,820

Investing activities:

Purchase of available-for-sale securities
Proceeds from maturities and sales of

available-for-sale securities

Purchase of a business, net of cash

acquired

Purchase of property and equipment
Other investing
Net transactions with related parties

Net cash used in investing activities
Financing activities:

Excess tax benefit from exercises of stock

options

Proceeds from the issuance of common

stock

Repurchase of common stock, including

transaction costs

Tax withholding paid on behalf of employees

for restricted stock units

Other financing
Net transactions with related parties

Net cash (used in) provided by financing

—

—

—
—
—
—

—

65

59,148

(209,357)

(15,516)
—
—

Effect of exchange rate changes on cash
Net increase in cash, cash equivalents and

restricted cash

Cash, cash equivalents and restricted cash at

the beginning of the period

Cash, cash equivalents and restricted cash at

—

—

—

(469)

186,793

—
(424,175)
3,924
61,891

—

—

(117,994)
(128,527)
(9,900)
—

(172,036)

(256,421)

—

—

—

—
14
1,587

—

—

—

—

—
(4)
(63,478)

(63,482)

(1,105)

5,553

114,164

220,633

205,429

activities

(165,660)

1,601

the end of the period

$

— $ 226,186

$ 319,593

$

—

—

—
—
—
(61,891)

(61,891)

—

—

—

—
—
61,891

(469)

186,793

(117,994)
(552,702)
(5,976)
—

(490,348)

65

59,148

(209,357)

(15,516)
10
—

61,891

(165,650)

—

—

—

—

(1,105)

119,717

426,062

$ 545,779

79

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

Notes to Consolidated Financial Statements

(in thousands)

Parent
Company

Condensed Consolidating Statement of Cash Flows
Fiscal Year 2016
Non-guarantor
Subsidiaries

Guarantor
Subsidiaries

Eliminations and
Reclassifications Consolidated

Net cash provided by operating activities

$

282,955 $ 273,171

$131,801

$—

$

687,927

Investing activities:

Purchase of available-for-sale securities
Proceeds from maturities of available-for-sale

securities

Purchase of property and equipment
Other investing

Net cash used in investing activities
Financing activities:

— (340,527)

— 390,009
— (244,817)
(12,830)
—

(70,807)
258

— (208,165)

(70,549)

Proceeds from debt issuances
Payment of debt
Excess tax benefit from exercises of stock options
Debt issuance costs
Proceeds from the issuance of common stock
Repurchase of common stock, including

transaction costs

Tax withholding paid on behalf of employees for

restricted stock units

Other financing
Net transactions with related parties

1,175,000
(175,000)
935
(13,588)
51,875

(1,300,009)

(22,168)
—
—

Net cash (used in) provided by financing activities

(282,955)

Effect of exchange rate changes on cash
Net increase in cash, cash equivalents and

restricted cash

Cash, cash equivalents and restricted cash at the

beginning of the period

Cash, cash equivalents and restricted cash at the

—

—

—

—
—
—

—

—
57
1,192

1,249

—

—
—
—
—
—

—

—
(86)
(1,192)

(1,278)

(294)

66,255

59,680

— 154,378

145,749

—

—
—
—

—

—
—
—
—
—

—

—
—
—

—

—

—

—

(340,527)

390,009
(315,624)
(12,572)

(278,714)

1,175,000
(175,000)
935
(13,588)
51,875

(1,300,009)

(22,168)
(29)
—

(282,984)

(294)

125,935

300,127

end of the period

$

— $ 220,633

$205,429

$—

$

426,062

80

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2018

18. QUARTERLY FINANCIAL SUMMARY (UNAUDITED):

Fiscal 2018 Quarter

First

Second

Third

Fourth

(in thousands, except per share data)

Revenue
Gross profit
Net (loss) income
Net (loss) income per share:
Basic
Diluted

$640,831
236,377
(30,624)(1),(2),(3)

$821,583
321,022

35,919(1),(2),(3)

$845,739
336,927
(33,082)(1),(2),(3),(4)

$665,383
252,640
(12,501)(1),(2),(3),(5)

$
$

(0.24)
(0.24)

$
$

0.28
0.27

$
$

(0.26)
(0.26)

$
$

(0.10)
(0.10)

Fiscal 2017 Quarter

First

Second

Third

Fourth

(in thousands, except per share data)

Revenue
Gross profit
Net (loss) income
Net (loss) income per share:
Basic
Diluted

$698,537
276,475

$864,698
316,799

(5,675)(1),(2),(3)

11,847(1),(2),(3)

$826,347
310,642
(78,638)(1),(2),(3),(6)

$642,992
231,596

55,908(1),(2),(3),(7)

$
$

(0.04)
(0.04)

$
$

0.09
0.09

$
$

(0.62)
(0.62)

$
$

0.44
0.43

(1) The Company recorded integration related expenses of $1.5 million, $1.8 million, $1.7 million and $1.2 million in the first, second, third and fourth
quarters of fiscal 2018, respectively, associated with the Business Combination. The Company recorded integration related expenses of $5.3 million,
$5.0 million, $3.9 million and $2.7 million in the first, second, third and fourth quarters of fiscal 2017, respectively, associated with the Business
Combination (Note 6).

(2) The Company recorded restructuring expenses of $0.5 million, $10.5 million, $15.2 million and $41.5 million in the first, second, third and fourth
quarters of fiscal 2018, respectively. The Company recorded restructuring expenses of $0.8 million, $0.5 million, $0.4 million and $0.4 million in the
first, second, third and fourth quarters of fiscal 2017, respectively (Note 11).

(3) The Company recorded start-up expenses of $6.6 million, $7.2 million, $5.4 million and $5.1 million in the first, second, third and fourth quarters of
fiscal 2018, respectively. The Company recorded start-up expenses of $2.1 million, $2.0 million, $2.2 million and $3.4 million in the first, second, third
and fourth quarters of fiscal 2017, respectively.

(4) Income tax expense of $98.5 million for the third quarter of fiscal 2018 relates primarily to a discrete provisional tax expense related to the enactment of

the Tax Act (Note 12).

(5) Income tax benefit of $31.2 million for the fourth quarter of fiscal 2018 relates primarily to a discrete provisional benefit for adjustments to a third

quarter fiscal 2018 provisional estimate of the impact of the Tax Act (Note 12).

(6) Income tax expense of $123.2 million for the third quarter of fiscal 2017 relates primarily to the timing of income and loss recognition in the various tax

jurisdictions for the quarter (Note 12).

(7) Income tax benefit of $93.2 million for the fourth quarter of fiscal 2017 relates primarily to the timing of income and loss recognition in the various tax

jurisdictions for the quarter (Note 12).

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. Each quarter of fiscal 2018 and fiscal 2017 contained a comparable number of weeks (13 weeks).

81

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Qorvo, Inc.:

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Qorvo, Inc. and subsidiaries (the “Company”)
as of March 31, 2018 and April 1, 2017, the related consolidated statements of operations, comprehensive loss,
stockholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2018, and the
related notes (collectively, the consolidated financial statements).
In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of March 31, 2018 and
April 1, 2017, and the results of its operations and its cash flows for each of the years in the three-year period
ended March 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of March 31, 2018, based on criteria
established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated May 21, 2018 expressed an unqualified opinion
on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S.
the Securities and Exchange
Commission and the PCAOB.

federal securities laws and the applicable rules and regulations of

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2014.

Greensboro, North Carolina
May 21, 2018

82

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Qorvo, Inc.:

Opinion on Internal Control Over Financial Reporting
We have audited Qorvo, Inc.’s (the “Company”) internal control over financial reporting as of March 31, 2018,
based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of March 31, 2018, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated balance sheets of the Company as of March 31, 2018 and April 1, 2017, the
related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each
of the years in the three-year period ended March 31, 2018, and the related notes (collectively, the consolidated
financial statements), and our report dated May 21, 2018 expressed an unqualified opinion on those consolidated
financial statements.

Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or
the
company’s assets that could have a material effect on the financial statements.

timely detection of unauthorized acquisition, use, or disposition of

its inherent

Because of
reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

internal control over

limitations,

financial

Greensboro, North Carolina
May 21, 2018

/s/ KPMG LLP

83

for

the

preparation

internal
those

reporting
financial

the Exchange Act. Our

and
statements

under
internal control over
financial reporting is a process designed by and under
the supervision of our Chief Executive Officer and
Chief Financial Officer and effected by our board of
directors, management and other personnel,
to
provide reasonable assurance regarding the reliability
of
of
financial
external
consolidated
purposes in accordance with U.S. generally accepted
control over
accounting principles. Our
financial
and
policies
includes
reporting
procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of assets of
the Company, (2) provide reasonable assurance that
transactions are recorded as necessary to permit
preparation of consolidated financial statements for
external purposes in accordance with U.S. generally
accepted accounting principles and that receipts and
expenditures of the Company are being made only in
accordance with authorizations of management and
directors of the Company, and (3) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets
that could have a material effect on the consolidated
financial statements.

over

financial

reporting

control
31,

Management assessed the effectiveness of our
as of
internal
March
this
2018. Management
assessment on criteria for effective internal control
over financial reporting described in Internal Control-
Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations
Treadway
Commission (“COSO”).

based

the

of

the Company’s internal control over

Based on this assessment, management concluded
that
financial
reporting was effective as of March 31, 2018, based
on the criteria in the Internal Control-Integrated
Framework (2013) issued by the COSO.

an

KPMG LLP,
public
independent
accounting firm, has issued an unqualified opinion on
the effectiveness of the Company’s internal control
reporting, which is included in this
over
Annual Report on Form 10-K under Item 8.

registered

financial

(c) Changes in internal control over financial reporting

There were no changes in our Company’s internal
control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under
the Exchange Act)
during the quarter ended March 31, 2018 that have
materially affected, or are reasonably
to
internal control over financial
materially affect, our
reporting.

likely

ITEM 9B. OTHER INFORMATION.

Not applicable.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures

Disclosure controls and procedures refer to controls
and other procedures designed to ensure that
information required to be disclosed in the reports we
file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time
periods specified in the rules and forms of the SEC.
Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure
that information required to be disclosed by us in our
reports that we file or submit under the Exchange Act
is
our
management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely
decisions
In
designing and evaluating our disclosure controls and
procedures, our management
recognizes that any
controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance
of achieving the desired control objectives.

required disclosure.

regarding our

communicated

accumulated

and

to

the

controls

disclosure

Company’s

As of the end of the period covered by this report, the
Company’s management, including our Chief Executive
Officer and Chief Financial Officer, evaluated the
effectiveness of the Company’s disclosure controls
and procedures in accordance with Rule 13a-15 under
the Exchange Act. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded
that
and
procedures were effective, as of such date, to enable
the Company to record, process, summarize and
report in a timely manner the information that the
Company is required to disclose in its Exchange Act
reports. Our Chief Executive Officer and Chief Financial
Officer also concluded that the Company’s disclosure
controls and procedures were effective, as of the end
of the period covered by this report, in ensuring that
information required to be disclosed by the Company
in the reports that
the
Exchange Act is accumulated and communicated to
the Company’s management,
including our Chief
Executive Officer and Chief Financial Officer, as
appropriate,
to allow timely decisions regarding
required disclosure.

files or submits under

it

(b) Management’s assessment of internal control over
financial reporting

The Company’s management
is responsible for
establishing and maintaining adequate internal control
over financial reporting and for the assessment of the
financial
effectiveness
reporting as defined in Rules 13a-15(f) and 15d-15(f)

internal

control

over

of

84

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.

of

Information required by this Item may be found in our
for our 2018 Annual
definitive proxy statement
under
Stockholders
Meeting
captions
the
Officers,”
“Executive
Governance,”
“Corporate
“Proposal 1 — Election of Directors” and “Section
16(a) Beneficial Ownership Reporting Compliance,”
and the information therein is incorporated herein by
reference.

The Company has adopted its “Code of Business
Conduct and Ethics,” and a copy is posted on the
Company’s website at www.qorvo.com, on the
“Corporate Governance” tab under
the “Investor
Relations” page. In the event that we amend any of
the provisions of the Code of Business Conduct and
Ethics that requires disclosure under applicable law,
SEC rules or Nasdaq listing standards, we intend to
disclose such amendment on our website. Any waiver
of the Code of Business Conduct and Ethics for any
executive officer or director must be approved by the
Board and will be promptly disclosed, along with the
reasons for the waiver, as required by applicable law
or Nasdaq rules.

ITEM 11. EXECUTIVE COMPENSATION.

Information required by this Item may be found in our
definitive proxy statement for our 2018 Annual Meeting
“Executive
of Stockholders
Committee
Compensation”
Interlocks
the
and
and
information therein is incorporated herein by reference.

“Compensation

and
Insider

Participation,”

captions

under

the

ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.

Information required by this Item may be found in our
definitive proxy statement for our 2018 Annual Meeting
“Security
of Stockholders
and
Ownership
Plan
Management”
Information,”
is
incorporated herein by reference.

the
captions
Beneficial Owners
Compensation

under
Certain

“Equity
the

information

and
and

therein

of

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

Information required by this Item may be found in our
definitive proxy statement for our 2018 Annual Meeting
of Stockholders under the captions “Related Person
Transactions” and “Corporate Governance,” and the
information therein is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND

SERVICES.

Information required by this Item may be found in our
definitive proxy statement for our 2018 Annual Meeting
of Stockholders under the captions “Proposal 3 —
Ratification of Appointment of Independent Registered
Public Accounting Firm” and “Corporate Governance,”
and the information therein is incorporated herein by
reference.

85

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as part of this report:

(1) Financial Statements

i. Consolidated Balance Sheets as of March 31, 2018 and April 1, 2017.

ii. Consolidated Statements of Operations for fiscal years 2018, 2017 and 2016.

iii. Consolidated Statements of Comprehensive Loss for fiscal years 2018, 2017 and 2016.

iv. Consolidated Statements of Stockholders’ Equity for fiscal years 2018, 2017 and 2016.

v. Consolidated Statements of Cash Flows for fiscal years 2018, 2017 and 2016.

vi. Notes to Consolidated Financial Statements.

Reports of Independent Registered Public Accounting Firm.

(2) The financial statement schedules are not included in this item as they are either included within the
consolidated financial statements or the notes thereto in this Annual Report on Form 10-K or are inapplicable
and, therefore, have been omitted.

(3) The exhibits listed in the accompanying Exhibit Index are filed as a part of this Annual Report on Form
10-K.

(b) Exhibits.

See the Exhibit Index.

(c) Separate Financial Statements and Schedules.

None.

ITEM 16. FORM 10-K SUMMARY.

None.

86

Exhibit
No.

2.1

2.2

2.3

2.4

3.1

3.2

4.1

4.2

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

EXHIBIT INDEX

Description

Agreement and Plan of Merger and Reorganization dated February 22, 2014, by and among TriQuint
Semiconductor, Inc., RF Micro Devices, Inc. and Rocky Holding, Inc. (incorporated by reference to Exhibit
2.1 to Amendment No. 3 to the Company’s Registration Statement on Form S-4 filed with the SEC on
July 21, 2014 (File No. 333-195236))

First Amendment to Agreement and Plan of Merger and Reorganization, dated July 15, 2014, by and
among RF Micro Devices, Inc., TriQuint Semiconductor, Inc. and Rocky Holding, Inc. (incorporated by
reference to Exhibit 2.2 to Amendment No. 3 to the Company’s Registration Statement on Form S-4
filed with the SEC on July 21, 2014 (File No. 333-195236))

Contingent Acquisition Implementation Deed by and among TriQuint Semiconductor, Inc., Cavendish
Kinetics Limited and Certain Cavendish Shareholders, dated as of August 4, 2015 (incorporated by
reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q/A filed with the SEC on
April 26, 2016)+

Deed of Amendment relating to the Contingent Acquisition Implementation Deed between Qorvo US, Inc.
and Cavendish Kinetics Limited, dated July 31, 2017 (incorporated by reference to Exhibit 2.1 to the
Company’s Quarterly Report on Form 10-Q filed with the SEC on November 3, 2017)+

Amended and Restated Certificate of
Inc., as amended (incorporated by
reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on
February 3, 2015)

Incorporation of Qorvo,

Amended and Restated Bylaws of Qorvo, Inc., effective as of May 13, 2016 (incorporated by reference
to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 19, 2016)

Specimen Certificate of Common Stock of Qorvo, Inc. (incorporated by reference to Exhibit 4.1 to the
Company’s Annual Report on Form 10-K filed with the SEC on May 27, 2015)

Indenture, dated as of November 19, 2015, among Qorvo, Inc., the Guarantors party thereto and MUFG
Union Bank, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report
on Form 8-K filed with the SEC on November 19, 2015)

Qorvo, Inc. 2007 Employee Stock Purchase Plan (As Assumed and Amended by Qorvo, Inc., and as
further amended, effective February 8, 2017)(incorporated by reference to Exhibit 10.1 to the
Company’s Annual Report on Form 10-K filed with the SEC on May 23, 2017)*

Qorvo, Inc. 2013 Incentive Plan (As Assumed and Amended by Qorvo, Inc.) (incorporated by reference to
Exhibit 99.2 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5,
2015 (File No. 333-201357))*

Qorvo, Inc. 2012 Incentive Plan (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 99.3
to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File
No. 333-201357))*

Qorvo, Inc. 2009 Incentive Plan (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 99.4
to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File
No. 333-201357))*

Qorvo, Inc. 2008 Inducement Program (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit
99.5 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File
No. 333-201357))*

Qorvo, Inc. 1996 Stock Incentive Program (As Assumed by Qorvo, Inc.) (incorporated by reference to
Exhibit 99.6 to the Company’s Registration Statement on Form S-8 filed with the SEC on January 5,
2015 (File No. 333-201357))*

Qorvo, Inc. 2012 Stock Incentive Plan (As Assumed by Qorvo, Inc. and Amended and Restated Effective
January 1, 2015) (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement
on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))*

2003 Stock Incentive Plan of Qorvo, Inc. (As Assumed and Amended by Qorvo, Inc. Effective January 1,
2015) (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8
filed with the SEC on January 5, 2015 (File No. 333-201358))*

Qorvo, Inc. 2006 Directors Stock Option Plan (As Assumed by Qorvo, Inc. and Amended Effective
January 1, 2015) (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement
on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))*

10.10

Nonemployee Directors’ Stock Option Plan of Qorvo, Inc. (As Assumed by Qorvo, Inc. and Amended
Effective January 1, 2015) (incorporated by reference to Exhibit 99.4 to the Company’s Registration
Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))*

87

Qorvo, Inc. 2015 Inducement Stock Plan (incorporated by reference to Exhibit 99.5 to the Company’s
Registration Statement on Form S-8 filed with the SEC on January 5, 2015 (File No. 333-201358))*

Description

Inc. Form of

Qorvo,
Company’s Current Report on Form 8-K filed with the SEC on January 5, 2015)*

Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the

Qorvo, Inc. Form of Change in Control Agreement (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed with the SEC on February 10, 2015)*

Qorvo, Inc. Director Compensation Program, effective January 1, 2015 (incorporated by reference to
Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed with the SEC on May 27, 2015)*

Qorvo,
Inc. Nonqualified Deferred Compensation Plan (As Assumed and Amended and Restated
Effective January 1, 2015) (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report
on Form 10-K filed with the SEC on May 27, 2015)*

Qorvo, Inc. Cash Bonus Plan (As Assumed and Amended and Restated Effective January 1, 2015)
(incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed with the
SEC on May 27, 2015)*

Employment Agreement, dated as of November 12, 2008, between RF Micro Devices, Inc. and Robert A.
Bruggeworth (As Assumed by Qorvo, Inc.) (incorporated by reference to Exhibit 10.1 to RFMD’s Current
Report on Form 8-K filed with the SEC on November 14, 2008 (File No. 000-22511))*

Inc.
Wafer Supply Agreement, dated June 9, 2012, between RF Micro Devices,
(incorporated by reference to Exhibit 10.1 to RFMD’s Quarterly Report on Form 10-Q/A filed with the
SEC on January 3, 2013 (File No. 000-22511))

Inc. and IQE,

Credit Agreement, dated as of April 7, 2015, by and between Qorvo, Inc., certain of its material
domestic subsidiaries, Bank of America, N.A., as administrative agent, swing line lender and L/C
issuer, and a syndicate of lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed with the SEC on April 9, 2015)

First Amendment to Credit Agreement, dated as of June 5, 2015, by and between Qorvo, Inc., certain of
its material domestic subsidiaries, Bank of America, N.A., as administrative agent, swing line lender
and L/C issuer, and a syndicate of lenders (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed with the SEC on June 5, 2015)

Form of Stock Option Agreement (Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan
(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with
the SEC on August 5, 2015)*

Form of Restricted Stock Unit Agreement (Service-Based Award for Senior Officers) pursuant to the
Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’s
Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)*

Form of Restricted Stock Unit Agreement (Performance-Based and Service-Based Award for Senior
Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit
10.5 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)*

Form of Restricted Stock Unit Agreement (Performance-Based Award for Senior Officers (TSR)) pursuant
Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the
to the Qorvo,
Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)*

Qorvo, Inc. Severance Benefits Plan and Summary Plan Description (incorporated by reference to Exhibit
10.8 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2015)*

Second Amendment to Credit Agreement, dated as of November 12, 2015, by and between Qorvo, Inc.,
certain of its material domestic subsidiaries, Bank of America, N.A. as administrative agent, swing line
lender and L/C issuer, and a syndicate of lenders (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed with the SEC on November 13, 2015).

Form of Stock Option Agreement (Senior Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan
(incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K filed with the
SEC on May 31, 2016)*

Form of Restricted Stock Unit Agreement (Service-Based Award for Senior Officers) pursuant to the
Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.31 to the Company’s
Annual Report on Form 10-K filed with the SEC on May 31, 2016)*

Form of Restricted Stock Unit Agreement (Performance-Based and Service-Based Award for Senior
Officers) pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit
10.32 to the Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)*

Exhibit
No.

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

88

Exhibit
No.

10.30

10.31

10.32

10.33

10.34

10.35

10.36

Description

Form of Restricted Stock Unit Agreement (Performance-Based Award for Senior Officers (TSR)) pursuant
to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.33 to the
Company’s Annual Report on Form 10-K filed with the SEC on May 31, 2016)*

Form of Restricted Stock Unit Award Agreement (Director Annual/Supplemental RSU) pursuant to the
Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to the Company’s
Annual Report on Form 10-K filed with the SEC on May 31, 2016)*

Form of Restricted Stock Unit Award Agreement (Director Annual/Supplemental RSUs) (deferral election)
pursuant to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016)*

Qorvo, Inc. Cash Bonus Plan (As Amended and Restated Through June 9, 2016) (incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on
November 7, 2016)*

Qorvo, Inc. Director Compensation Program, effective August 3, 2016 (incorporated by reference to
Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7,
2016)*

Qorvo, Inc. Short-Term Incentive Plan (As Amended and Restated Through May 11, 2017) (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 17,
2017)*

the Borrower

Credit Agreement, dated as of December 5, 2017, by and among Qorvo, Inc., as the Borrower, certain
subsidiaries of
identified therein, as the Guarantors, Bank of America, N.A. as
Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders party thereto, and Wells
Fargo Bank, National Association, TD Bank, National Association, The Bank of Tokyo-Mitsubishi UFJ,
Ltd., PNC Bank, National Association, and Bank of the West, as Co-Syndication Agents (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on
December 6, 2017)

10.37

2018 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan, effective as
of April 1, 2018*

21

23.1

31.1

31.2

32.1

32.2

101

Subsidiaries of Qorvo, Inc.

Consent of Independent Registered Public Accounting Firm (KPMG LLP)

Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to Rule
13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002

Certification of Periodic Report by Mark J. Murphy, as Chief Financial Officer, pursuant to Rule 13a-14(a)
or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Periodic Report by Mark J. Murphy, as Chief Financial Officer, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The following materials from our Annual Report on Form 10-K for the fiscal year ended March 31, 2018,
formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of
March 31, 2018 and April 1, 2017, (ii) the Consolidated Statements of Operations for the fiscal years
(iii) the Consolidated Statements of
ended March 31, 2018, April 1, 2017, and April 2, 2016,
Stockholders’ Equity for the fiscal years ended March 31, 2018, April 1, 2017, and April 2, 2016, (iv)
the Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2018, April 1, 2017,
and April 2, 2016, and (v) the Notes to the Consolidated Financial Statements.

+ Confidential treatment has been granted with respect to certain portions of this Exhibit, which portions have been omitted and filed separately with the

SEC as part of an application for confidential treatment.

* Executive compensation plan or agreement

Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as
amended, is 001-36801. The SEC file number for RFMD is 000-22511.

89

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Date: May 21, 2018

Qorvo, Inc.

By:

/S/ ROBERT A. BRUGGEWORTH

Robert A. Bruggeworth
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Robert A. Bruggeworth and Mark J. Murphy and each of them, as true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all which said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated on May 21, 2018.

/S/ ROBERT A. BRUGGEWORTH

Name:
Title:

Robert A. Bruggeworth
President, Chief Executive Officer and Director
(Principal Executive Officer)

/S/ MARK J. MURPHY

/S/ GINA B. HARRISON

/S/ RALPH G. QUINSEY

/S/ DANIEL A. DILEO

/S/ JEFFERY R. GARDNER

/S/ CHARLES SCOTT GIBSON

/S/ JOHN R. HARDING

/S/ DAVID H. Y. HO

/S/ RODERICK D. NELSON

/S/ DR. WALDEN C. RHINES

/S/ SUSAN L. SPRADLEY

/S/ WALTER H. WILKINSON, JR.

90

Name: Mark J. Murphy
Title:

Chief Financial Officer
(Principal Financial Officer)

Name:
Title:

Gina B. Harrison
Vice President and Corporate Controller
(Principal Accounting Officer)

Name:
Title:

Ralph G. Quinsey
Chairman of the Board of Directors

Name:
Title:

Daniel A. DiLeo
Director

Name:
Title:

Jeffery R. Gardner
Director

Name:
Title:

Charles Scott Gibson
Director

Name:
Title:

John R. Harding
Director

Name:
Title:

David H. Y. Ho
Director

Name:
Title:

Roderick D. Nelson
Director

Name:
Title:

Dr. Walden C. Rhines
Director

Name:
Title:

Susan L. Spradley
Director

Name: Walter H. Wilkinson, Jr.
Title:

Director

[THIS PAGE INTENTIONALLY LEFT BLANK]

[THIS PAGE INTENTIONALLY LEFT BLANK]

Executive Officers

Robert A. Bruggeworth
President and Chief Executive Officer
Mark J. Murphy
Chief Financial Officer
Steven E. Creviston
President of Mobile Products
James L. Klein
President of Infrastructure and Defense Products
Gina B. Harrison
Vice President and Corporate Controller

Board of Directors

Ralph G. Quinsey 4
Chairman of the Board
Robert A. Bruggeworth 4
President and Chief Executive Officer of Qorvo
Daniel A. DiLeo 2, 4†
Principal of Daniel DiLeo, LLC
Jeffery R. Gardner 2†, 3
President and Chief Executive Officer of Brinks Home Security
C. Scott Gibson 2, 3
Chairman of Gibson Enterprises; Co-Founder and Former President
and Co-Chief Executive Officer of Sequent Computer Systems, Inc.
John R. Harding 1, 4
Co-Founder, President and Chief Executive Officer of eSilicon Corporation
David H. Y. Ho 1, 4
Chairman and Founder of Kiina Investment Ltd.
Roderick D. Nelson 2, 4 
Chief Executive Officer of Geoverse, LLC; Co-Founder and  
Principal of Tritech Sales and Services, LLC
Walden C. Rhines 1†, 3
President and Chief Executive Officer of Mentor, a Siemens Business
Susan L. Spradley 3, 4
Chief Executive Officer of Motion Intelligence 
Walter H. Wilkinson, Jr. 1, 3†
Founder of Kitty Hawk Capital

1. Compensation Committee 2. Audit Committee 3. Governance and Nominating Committee
4. Corporate Development Committee † Committee Chair

Corporate Information 

Corporate Headquarters 
7628 Thorndike Road
Greensboro, NC 27409

Stock Transfer Agent & Registrar
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
www.astfinancial.com
Phone: +1 718.921.8124   +1 800.937.5449

Annual Meeting
We hereby give notice that the Annual Meeting of Stockholders 
of Qorvo, Inc. will be held on Tuesday, August 7, 2018, at  
8:00 a.m. Eastern Daylight Time, at the offices of Womble Bond 
Dickinson (US) LLP, One Wells Fargo Center, Suite 3500,  
301 South College Street, Charlotte, North Carolina 28202.  
A notice of the meeting, form of proxy and proxy statement 
will be sent out on or about June 26, 2018. 

SEC Annual Report on Form 10-K
Additional copies of our fiscal 2018 Annual Report on Form 
10-K, as filed with the Securities and Exchange Commission, 
including the financial statements and the financial statement 
schedules but not including the exhibits contained therein, are 
available without charge upon written request, directed to:

Douglas DeLieto
Vice President of Investor Relations
Investor Relations Department
Qorvo, Inc.
7628 Thorndike Road
Greensboro, NC 27409
www.qorvo.com

We will furnish any exhibit to our fiscal 2018 Annual Report 
on Form 10-K upon receipt of payment for our reasonable 
expenses in furnishing such exhibit.

We have never declared or paid cash dividends on our common stock.  Although we currently intend to retain our earnings for use in our business, our future dividend policy with respect to our common stock
may change and will depend on our earnings, capital requirements, debt covenants and other factors deemed relevant by our Board of Directors.

This report includes “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are 
not limited to, statements about trends, our future plans, objectives and expectations.  Forward-looking statements typically are identified by the use of terms such as “may,” “will,” “should,” “could,” “expect,” 
“plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “forecast” and similar words.  Any forward-looking statements we make are subject to business, economic and other risks and 
uncertainties and actual results and events could differ materially from those expressed or implied by these forward-looking statements.  Please see the “Risk Factors” section of our Annual Report on Form 
10-K for examples of the risks and uncertainties that could cause actual results and events to differ from those expressed or implied by our forward-looking statements.  We do not intend to update any of these 
forward-looking statements or publicly announce any revisions to these forward-looking statements, other than as required under federal securities laws.

Qorvo and ALL AROUND YOU are registered trademarks of Qorvo, Inc. in the U.S. and in other countries.  All other trade names, trademarks and registered trademarks are the property of their respective owners.

©2018 Qorvo, Inc.