Qorvo

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 28, 2020
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
(Address of principal executive office)

27409-9421
(Zip Code)

(336) 664-1233
Registrant’s telephone number, including area code

Title of each class
Common Stock, $0.0001 par value

Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)
QRVO

Name of each exchange on which registered
The Nasdaq Stock Market LLC

the registrant

the Securities

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 every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files). Yes Í No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Í Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. Í
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No Í
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately
$8,484,359,696 as of September 28, 2019. 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.

As of May 12, 2020, there were 114,734,210 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
The registrant has incorporated by reference into Part III of this report certain portions of its proxy statement for its 2020 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 28, 2020.

QORVO, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED MARCH 28, 2020

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.

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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 1, “Business,” Item 1A, “Risk
Factors” and Item 7, “Management’s Discussion and
Financial Condition and Results of
Analysis of
Operations.”
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 the use of terms such as “may,” “will,” “should,”
“could,” “expect,” “plan,” “anticipate,” “believe,”
“potential,”
“estimate,”
“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, including due to the numerous risks and
uncertainties summarized in Item 1A, “Risk Factors”
in this report. We do not intend to update any of these
forward-looking statements or publicly announce the
results of any revisions to these forward-looking
the
statements, other
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

ITEM 1. BUSINESS.

Company Overview
Qorvo® is a leader
in the development and
commercialization of technologies and products for
wireless and wired connectivity. We combine a broad
portfolio of innovative radio frequency (“RF”) solutions,
highly
technologies,
systems-level expertise and global manufacturing
scale to supply a diverse set of customers a broad
range of products that enable a more connected
world.

semiconductor

differentiated

Our design expertise and manufacturing capabilities
span multiple semiconductor process technologies.
Our primary wafer fabrication facilities are in North
Carolina, Oregon and Texas, and our primary assembly
and test facilities are in China, Costa Rica, Germany
and Texas. We also source multiple products and
materials through external suppliers. We operate
design, sales and other manufacturing facilities
throughout Asia, Europe and North America.

We have two reportable segments: Mobile Products
(“MP”) and Infrastructure and Defense Products
(“IDP”). MP is a global supplier of cellular, ultra-wide

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

band (“UWB”) and Wi-Fi solutions for a variety of high-
including smartphones, wearables,
volume markets,
tablets and Internet of Things (“IoT”)
laptops,
applications.
IDP is a global supplier of RF,
system-on-a-chip (“SoC”) and power management
solutions for wireless infrastructure, defense, smart
home, automotive and other IoT applications. Our MP
segment supplies consumer products with a shorter
life cycle, to a small set of large global customers. Our
IDP segment supplies a diverse portfolio of products,
that generally have longer life cycles, to a broad base
of customers.

During fiscal 2020, we made the following strategic
acquisitions to expand our product offerings and
design capabilities and to extend our reach into new
markets:
‰ Active-Semi
fabless
management solutions;

(“Active-Semi”), a
power

Inc.
programmable

International,

‰ Cavendish Kinetics Limited (“Cavendish”), a supplier
high-performance RF microelectromechanical
for RF switching

technology

supplier

of

of
system (“MEMS”)
applications;

Inc.

‰ Custom MMIC Design Services,

(“Custom
MMIC”), a fabless provider of gallium arsenide
(“GaAs”) and gallium nitride (“GaN”) monolithic
microwave integrated circuits (“MMICs”) for defense
and aerospace applications; and,

‰ Decawave Limited (“Decawave”), a leader in UWB
technology and provider of UWB solutions for mobile,
automotive and IoT applications.

Qorvo was incorporated in Delaware in 2013. Our
principal executive office is located at 7628 Thorndike
Road, Greensboro, North Carolina 27409-9421 and
our telephone number is (336) 664-1233.

Industry Trends
There is growing global demand for ubiquitous,
always-on connectivity. Total mobile data traffic
continues to grow as smartphones, laptops, and other
mobile devices are used increasingly to access the
internet, stream videos, interact on social media and
access other services. 5G is expected to enhance how
we connect, communicate and transact business. 5G
will
data
enable
signal
throughput,
machine-to-machine connectivity on a massive scale.
Existing applications will be transformed, and new
applications will be developed.

increase
and

capacity,

improve

network

latency

reduce

With each application, demand is increasing for RF
solutions that improve performance, reduce product
footprint, enhance network efficiency and ensure data
security. In mobile devices, the deployment of 5G, the
addition of Multiple-Input/Multiple-Output
(“MIMO”)
architectures and new carrier aggregation (“CA”) band
combinations increase device complexity. To address
this, Qorvo is integrating a broad portfolio of
technologies and advancing the state-of-the-art
in
functional integration. In consumer IoT, the increasing
demand for secure and accurate location and data

3

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

demand

In infrastructure,
driving
is

communication services is driving demand for our
UWB technology, which enables real-time, highly
accurate and reliable local area precision-location
the deployment of 5G
services.
networks
high
for Qorvo’s
performance communications infrastructure solutions,
including our GaN high power amplifiers and GaAs
front-end modules
and
(“FEMs”).
aerospace, the trend toward phased array radar, the
shift to higher frequencies and the sharing of existing
frequency bands with cellular communications are
expanding the demand for Qorvo’s capabilities.

defense

In

efficient RF solutions that
expand coverage in a compact form factor.

increase capacity and

Defense and Aerospace
Within the defense and aerospace markets, we focus
primarily on high-power phased array radar, electronic
warfare (EW) and communications systems. We
engage directly with the U.S. government to develop
next-generation
packaging
semi-conductor
technologies. We are a leading supplier of RF products
and compound semiconductor
foundry services to
defense primes and other global defense and
aerospace customers.

and

Markets
Our business is diversified primarily across the
following end markets: mobile devices; cellular base
stations; defense and aerospace; Wi-Fi customer
premises
automotive
connectivity;
power management
applications.

equipment;
and

various

home;

smart

largest market, mobile

Mobile Devices
Our
includes
smartphones, wearables, laptops, tablets and other
devices. This market is characterized by increasing
demand for data throughput,
the transition to 5G
cellular
technology and the proliferation of new
communication and location-based services.

devices,

The transition to 5G involves advanced RF modulation
across a wide range of
including
sub-6 GHz and millimeter wave. This introduces new
challenges related to wider bandwidth, signal integrity,
efficiency and overall system complexity.

frequency bands,

To enable secure precision-location services, mobile
devices are adopting UWB technology, given its
superior location accuracy, security, throughput, and
latency versus other short-range technologies.

Mobile device customers increasingly need compact
RF solutions that improve signal quality, extend battery
life and enhance the end-user experience. By
leveraging our
technology leadership, systems-level
expertise and advanced packaging capabilities, we
deliver high-performance discrete and highly integrated
RF solutions to our customers.

Cellular Base Stations
We support top-tier global cellular base station original
equipment manufacturers (“OEMs”) with a broad
portfolio of RF solutions across frequency bands.
Requirements for higher
throughput and broader
coverage are fueling the expansion of the global base
station network,
including the migration to 5G
networks. OEMs are deploying 5G frequency bands
(referred to as sub-6 GHz and millimeter wave) that
have wider
channel bandwidths, and they are
architecting radios that utilize massive MIMO active
antenna array technology, increasing the number of RF
transmit and receive channels by factors of 16 times,
up to 256 times. These 5G networks require highly

4

Wi-Fi Customer Premises Equipment
Wi-Fi customer premises equipment (“CPE”) includes
routers, gateways and enterprise infrastructure. In this
market, consumer and enterprise customers want
broader coverage and faster and more reliable
connectivity enabling video streaming, augmented/
virtual reality and other services, often in high density
user environments. The Wi-Fi
industry is migrating
from 802.11ac to 802.11ax, also known as Wi-Fi 6.
Wi-Fi is adopting higher order MIMO architectures, up
to 8x8, to maximize range and capacity. With each
new standard
a
corresponding increase in the requirements for more
complex RF front end solutions.

architecture,

there

and

is

or

through

functions,

enhancing

Smart Home
Smart home systems can be connected wirelessly
allowing remote access and control of
various
convenience,
household
entertainment, security and comfort. Smart home
devices can be controlled through a computer,
smartphone
peer-to-peer
connection such as a voice-enabled remote control.
They use industry-standard technologies, such as
Bluetooth® Low Energy, Zigbee, Thread and Connected
Home over IP, or CHIP, to link to a central gateway
that accesses the internet via Wi-Fi. Smart home
customers prefer standards-agnostic, multi-protocol
enable
products
coexistence of multiple radios in a compact
form
factor.

battery

extend

direct

that

and

life

a

vehicle-to-vehicle

Automotive
Next-generation wireless technologies are enabling
new use cases in automotive wireless connectivity,
including
and
autonomous driving. These new use cases require
complex RF solutions spanning multiple protocols,
including GPS, satellite radio, Long-Term Evolution
(“LTE”), Wi-Fi, 5G (sub-6 GHz and millimeter wave) and
UWB. In automotive applications, UWB enables more
secure access than current technologies.

communications

Power Management
Power efficiency is a core requirement in electronics.
To enhance efficiency, extend battery life and protect

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

the environment, power
tools are moving from
gasoline and brushed DC motors to battery powered
brushless motors. Also, data storage is transitioning
from hard drives to solid state drives. Power
management solutions provide customers digital
control of analog power, whether controlling brushless
DC motors or managing power delivery
for end
equipment.

spectrum to expand network capacity and extend
coverage. Our Spatium® line of solid-state, high-power
products provide highly reliable, efficient broadband
solutions for complex EW applications across a broad
frequency spectrum. Our recent acquisition of Custom
MMIC combines their portfolio of low noise amplifiers,
mixers, phase shifters, switches, multipliers and
attenuators with our product offerings.

Other Markets
Qorvo competes in several smaller markets, including
broadband cable, point-to-point radio and Very Small
Aperture Terminal (“VSAT”) applications. In broadband
cable, we increase the bandwidth to the home by
supporting DOCSIS 3.1 and the evolving DOCSIS 4.0
standard. Qorvo’s UWB technology offers secure
precision-location
association,
navigation and location for a range of IoT applications
across markets.

services,

enabling

Products
Qorvo’s
products
complexity, shrink
customers’ most critical RF challenges.

improve
reduce
performance,
form factors and solve our

Mobile Devices
Our products include highly
integrated modules
incorporating switches, power amplifiers (“PAs”),
filters and duplexers (“S-PADs”), antenna tuners, RF
power management
integrated circuits, multimode/
multi-band PAs and transmit modules, antenna-
plexers, discrete filters and duplexers, discrete
switches and UWB system solutions.

highly

products

integrated

Our most
utilize
sophisticated packaging capabilities to integrate high-
including bulk acoustic
performance components,
temperature-compensated
wave
surface acoustic wave (“TC-SAW”) filters, silicon on
insulator (“SOI”) switches and low noise amplifiers
(“LNAs”), and advanced GaAs PAs.

(“BAW”)

filters,

We also offer envelope tracking power management
solutions, antenna control solutions and UWB system
solutions supporting secure, low power, location and
communication services.

Cellular Base Stations
Our integrated solutions for massive MIMO systems
include switch-LNA modules, variable gain amplifiers
and integrated PA Doherty modules. Our GaAs and SOI
solutions offer differentiated low noise performance,
while our GaN PAs target higher frequency bands and
combine high linearity and efficiency with low power
consumption.

Defense and Aerospace
Our products for defense radar applications bring new
capabilities to detect and neutralize threats against
infantry, aircrew and shipboard forces. Our PAs power
phased array radars and our premium filters enable
interference-free connections and optimize frequency

Wi-Fi Customer Premises Equipment
In Wi-Fi, we offer PAs, switches, LNAs and BAW filters.
We integrate combinations of these into RF front end
modules.

Smart Home
Qorvo offers multi-standard SOCs (Zigbee, Bluetooth®
Low Energy, Thread) consisting of SoC hardware,
firmware and application software. To augment the
SoC, we also offer various configurations of advanced
filtering and amplification as well as Wi-Fi 6 FEMs.

Automotive
We provide a variety of automotive RF connectivity
products, including BAW filters, LNAs, switches, PAs
and LTE front end solutions. We also supply
complementary metal oxide semiconductor (“CMOS”)-
based UWB chip and module system solutions. Our
products meet or exceed automotive AEC-Q100 quality
and reliability standards, and we supply the leading
automotive OEMs,
tier-1 suppliers and chipset
vendors.

Power Management
We supply Power Application Controllers (PACs®) and
ICs that significantly
programmable analog power
reduce solution size and cost,
improve system
reliability, and shorten system development time. Our
products manage voltages from 1.8V to 600V and
power up to 4,000 Watts.

and

advanced

technologies

Research and Development
We invest in research and development (“R&D”) to
develop
products
necessary to serve our markets. 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 functional
density, performance, size and cost of our products.
We also have R&D resources associated with the
development of new products for broader market
applications. Our R&D efforts require us to focus on
both continuous improvement in our processes for
design and manufacture as well as new innovation in
fundamental areas like materials, software and
technologies,
firmware,
simulation and modeling, systems architecture, circuit
design, device packaging, module integration and test.

semiconductor

process

We have developed several generations of GaAs, GaN,
BAW and surface acoustic wave (“SAW”) process
technologies that we manufacture internally. We invest

5

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

in these technologies to improve device performance,
reduce die size and reduce manufacturing costs. We
technologies in
also help develop and qualify
for
cooperation with key suppliers,
including SOI
switches and tuners, silicon germanium (SiGe)
for
amplifiers, and CMOS for power management devices
and SoC solutions. We combine these technologies
with our proprietary design methods,
intellectual
property
(“IP”) and other expertise to improve
performance, increase integration and reduce the size
and cost of our products.

and

qualify

develop

advanced

packaging
We
technologies to 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.

The

isolated

processes.

Raw Materials
We purchase numerous raw materials, passive
components and substrates for our products and
has
industry
manufacturing
various
experienced
for
including
components in the past 12 months,
capacitors. These shortages are being addressed by
suppliers adding additional capacity as we build in
flexibility to our supply chain by adding suppliers and
by designing in alternate capacitors to use in our
products.

shortages

For our GaAs and GaN manufacturing operations, we
use several raw materials, including GaAs and GaN on
silicon carbide wafers.
filter
For our acoustic
raw
manufacturing operations, we use several
materials, including wafers made from silicon, lithium
niobate or lithium tantalate.

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
in some cases in
obtaining supply commitments,
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
sites
suppliers’
are
geographically diversified (with our
largest volume
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

Qorvo is currently experiencing isolated supply-chain
the recent novel coronavirus
issues caused by
(COVID-19) outbreak. While this is a dynamic situation

6

impacting the entire industry, we have a broadly
diversified supply base and our operations are not
currently materially impacted.

Manufacturing
We are a manufacturer of BAW, GaN, GaAs, SAW,
TC-SAW and silicon products. 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 internally or
outsourced.

fabrication facilities for

the
We operate wafer
production of BAW, GaN, GaAs, SAW and TC-SAW
wafers in Greensboro, North Carolina; Hillsboro,
Oregon; and Richardson, Texas. We also use multiple
silicon-based process technologies,
including SOI,
SiGe and CMOS, which are principally sourced from
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, wire bond and wafer-level
packaging (“WLP”) technologies. Additionally, we use
external suppliers for
these and other packaging
technologies.

die.

called

testing

components

the end of

the semiconductor manufacturing
At
process, we regularly conduct wafer
level tests to
verify individual circuit performance. These tests could
include electrical
through
validation, RF
designed frequency bands, as well as visual defect
inspection. The wafers are then separated into
individual
For module
products, the next step is assembly, during which the
die and other components are placed on high-density
connectivity
interconnect
between the die and the components. This populated
substrate is formed into a module. Next, the products
are tested for RF performance and prepared for
through a tape and reel process. We
shipment
primarily use internal assembly facilities in China,
Costa Rica, Germany, and the U.S., and we also utilize
external
also manufacture large
volumes of WLP die and discrete filters that our
customers directly assemble into their products.

suppliers. We

substrates

provide

to

factors,

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

control

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

sensitive

contaminants,

Integrated circuits and filter products are highly
and
complex
semiconductor fabrication requires highly controlled,
clean 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
circuit patterns onto the wafers.

The

internal

self-audits.

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
ISO 9001
continuous
standard is based on a number of quality management
principles including a strong customer
the
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.

incorporates

standard

specific

focus,

upon

and

for

an

Customers
We design, develop, manufacture and market products
for leading U.S. and international OEMs and original
design manufacturers (“ODMs”). We also collaborate
with leading reference design partners.

We provide our products to our largest end customer,
Apple Inc. (“Apple”), through sales to multiple contract
manufacturers, which in the aggregate accounted for
33%, 32%, and 36% of total revenue in fiscal years
2020, 2019 and 2018,
respectively. Huawei
Technologies Co., Ltd. and affiliates (“Huawei”)
accounted for 10%, 15% and 8% of our total revenue
in fiscal years 2020, 2019 and 2018, respectively.
These customers primarily purchase RF solutions for a
variety of mobile devices.

Some of our sales to overseas customers are subject
to export licenses or other restrictions imposed by the
U.S. Department of Commerce (see Risk Factors in
Part I, Item 1A set forth in this report).

Sales and Marketing
We sell our products worldwide directly to customers
as well as through a network of U.S. 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

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

support

internal sales and marketing organization that
is
responsible for key account management, application
engineering
and
advertising literature, and technical presentations for
industry conferences. Our sales and customer support
centers are located near our customers throughout the
world.

customers,

sales

for

Our website contains extensive product information
and includes an online store where customers can
learn about our products, download product catalogs,
order product samples and request evaluation boards.
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
to help anticipate future
strong technical support
product
customer
needs
experience.

enhance

their

and

Backlog and Seasonality
Our sales are the result of standard purchase orders
or specific agreements with customers. 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.

we

have

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

experienced

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

MP competes primarily with Broadcom Limited; Murata
Manufacturing Co., Ltd.; Qualcomm Technologies, Inc.;
and Skyworks Solutions, Inc. IDP competes primarily
with Analog Devices,
Inc.; M/A-COM
Technology Solutions, Inc.; NXP Semiconductors N.V.;
Inc.; STMicroelectronics N.V.;
Silicon Laboratories,

Inc.; Cree,

7

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Skyworks Solutions,
Device Innovations.

Inc.; and Sumitomo Electric

to those employees whose responsibilities

only
require access to the information.

and

positions

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

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 IP rights to the same
extent as U.S. laws. We have approximately 1,973
patents that expire from 2020 to 2040. We also
continue to acquire patents through acquisitions or
direct prosecution efforts and engage in licensing
transactions to secure the right to use third-parties’
patents. In view of our rapid innovation and product
pace
development
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 on any particular patent or other IP right.
As we expand our products and offerings, we also
seek to expand our patent prosecution efforts to cover
such products.

comparative

and

the

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

8

Employees
On March 28, 2020, we had more than 7,900
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. Some of our employees in Germany and
the Netherlands are represented by internal works
councils and some of our employees in China are
represented by a labor union. As of March 28, 2020,
approximately 12% of our global workforce was
represented by a works council or labor union. We
have never experienced any work stoppage, and we
believe that our current employee relations are good.

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 process. We pretreat and dispose of
our wastewater from our manufacturing facilities to
requirements. Our
meet
regulatory
hazardous waste is sent
licensed and
permitted disposal facilities. State agencies require us
to report storage and emissions of environmentally
hazardous materials,
retained
and
appropriate personnel to help ensure compliance with
all applicable environmental regulations. We believe
that costs arising from existing environmental laws will
not have a material adverse effect on our financial
position or results of operations.

to only

exceed

have

we

or

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 test 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

products

our

For

(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.

the costs to comply with applicable
Historically,
environmental regulations have not been material, and
we currently do not expect the costs of complying with
existing environmental regulations to have a material
adverse effect on our liquidity, capital resources or
financial condition in fiscal 2021.

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 iXBRL 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

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

“Exchange Act”) as soon as reasonably practicable
after we electronically file these reports with, or
furnish them to,
the United States Securities and
Exchange 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

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.

In addition, the SEC maintains an Internet site that
contains reports, proxy and information statements,
file
information regarding issuers that
and other
electronically with the SEC at http://www.sec.gov.

9

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

ITEM 1A. RISK FACTORS.

You should carefully consider
the risks described
below in addition to the other information contained in
this report before making an investment decision with
to any of our securities. Our business,
respect
financial condition or results of operations could be
materially impacted by any of these risks. The risks
and uncertainties described below are not the only
ones we face. Additional risks not currently known to
us, or other factors not perceived by us to present
significant risks to our business at this time, may
impair our business operations, financial condition, or
results of operations.

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 recession or slowing
growth 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;

that

‰ 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;
‰ our ability

integrate into our
business, and realize the expected benefits of, our
recent and any future acquisitions and strategic
investments; and

to successfully

‰ our ability to utilize our capacity efficiently or to
acquire additional capacity in response to customer
demand.

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

factors.

If our

10

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 a
variety of
largest MP customers
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

Our 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
If we are
equal or superior performing product.
unsuccessful
in achieving design wins, our revenue
and operating results will be adversely affected. Even
when a design win is achieved, our success is not
significant
assured. Design wins may
expenditures by us and typically precede volume
revenue by six to nine months or more. Many
customers seek a second source for all major

require

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
reductions and other
yield improvements,
to maintain
productivity enhancements in order
profitability. The actual value of a design win to us will
ultimately depend on the commercial success of our
customers’ products.

cost

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
for an aggregate of approximately 43%, 47% and 44%
of our revenue for fiscal years 2020, 2019 and 2018,
respectively.

customer

products

and

our

If demand for

our
results
demand for

The concentration of our
revenue with a relatively
small number of customers makes us particularly
dependent on factors, both positive and negative,
their
affecting those customers.
are
products
favorably
increases,
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.

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
programs,
United
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.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

The COVID-19 outbreak could materially adversely
affect our financial condition and results of operations.
COVID-19 has spread globally and has resulted in
authorities implementing numerous measures to try to
contain the virus, such as travel bans and restrictions,
quarantines, shelter in place orders, and shutdowns.
These measures have impacted and may further
impact our workforce and operations, the operations
of our customers, and those of our respective vendors
and suppliers. We have significant manufacturing
operations in the U.S. and China and both of these
countries have been affected by the outbreak and
have taken measures to try to contain it. There is
considerable uncertainty regarding such measures and
future measures, and restrictions on our
potential
access to our manufacturing facilities or on our
support operations or workforce, or similar limitations
for our vendors and suppliers, and restrictions or
disruptions of
reduced
closures, and
availability of air
increased border controls or closures, could limit our
capacity to meet customer demand and have a
material adverse effect on our financial condition and
results of operations.

transport, port

transportation,

such as

The outbreak has significantly increased economic and
demand uncertainty. The outbreak and continued
spread of COVID-19 will cause an economic slowdown,
and it is possible that the global economy worsens
further. The spread of COVID-19 has caused us to
modify our business practices (including employee
travel, employee work locations, and cancellation of
events and conferences), and we may take further
actions as may be required by government authorities
or that we determine are in the best interests of our
employees, customers, partners, and suppliers. There
is no certainty that such measures will be sufficient to
mitigate the risks posed by the virus, and our ability to
perform critical functions could be harmed.

The degree to which COVID-19 impacts our results will
depend on future developments, which are highly
uncertain and cannot be predicted, including, but not
limited to, the duration and spread of the outbreak, its
severity, the actions to contain the virus or treat its
impact, and how quickly and to what extent normal
economic and operating conditions can resume.

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.
the
COVID-19 outbreak has created heightened risk that
external suppliers may be unable to perform their
obligations to us or suffer financial distress due to the

Furthermore,

11

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

economic impact of the outbreak and the regulatory
measures that have been enacted by governments to
contain the virus.

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 with suppliers in the past. Quality or
reliability issues in our supply chain could negatively
affect our products, our reputation and our results of
operations.

on

depend

technical

distributors’

distributors. We

We face risks related to sales through distributors.
We sell a significant portion of our products through
third-party
these
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 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.

12

results,

A number of factors related to our facilities will affect
including the
our business and financial
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;
‰ 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.

issues

or water
public

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
the
(including
health
conditions,
COVID-19 outbreak), military actions, acts of terrorism,
political or
regulatory issues and other man-made
disasters or catastrophic events. Global climate
in certain natural disasters
change could result
occurring more frequently or with greater
intensity,
such as drought, wildfires, storms and flooding. We
carry commercial property damage and business
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. Furthermore, even if our own
operations are unaffected or recover quickly, if our

from these

events

could

customers cannot timely resume their own operations
due to a business disruption, natural disaster or
catastrophic event, they may reduce or cancel their
orders, which may adversely affect our
results of
operations.

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,
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 and variations 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 substrates and 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 include the following:
‰ writing off inventory;
‰ scrapping products that cannot be fixed;
‰ accepting returns of products that have been

shipped;

‰ providing product replacements at no charge;
‰ reimbursement of direct and indirect costs incurred
reworking their

by our customers in recalling or
products due to defects in our products;

‰ travel and personnel costs to investigate potential

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

product quality issues and to identify or confirm the
failure mechanism or root cause of product defects;
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.

these products until

We are subject to 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
our products may not materialize, or may be lower
than expected, manufacturing based on forecasts
subjects us to heightened risks of higher inventory
increased obsolescence and higher
carrying costs,
operating costs. These inventory risks are exacerbated
when our customers purchase indirectly
through
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
include the platform provider’s baseband and
that
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 as platform providers have worked to develop
more fully integrated solutions that include their own
RF technologies and components.

13

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

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
competitive RF
reference design,
technologies or their own RF solutions as a part of
their reference design and exclude our products from
the design, we are at a distinct
competitive
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.

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 test
facilities in multiple countries, and some of our
business activities are concentrated in Asia. 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, social and political

conditions and uncertainty;

‰ currency controls and fluctuations;
‰ formal or informal
doing-business
sanctions, tariffs and other related restrictions;

imposition of export, import or
trade

regulations,

‰ labor market conditions and workers’ rights affecting
those of our

our manufacturing operations or
customers or suppliers;

including

‰ disruptions

in
commodities trading markets;

capital

and

securities

and

‰ 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,
including the COVID-19 outbreak, which could
adversely affect our business and our customer
order patterns.

privacy,

and

to customers

Sales
located outside the U.S.
accounted for approximately 55% of our revenue in
fiscal 2020, of which approximately 34% and 5% were
attributable to sales to customers located in China
and Taiwan, respectively. We expect that revenue from

14

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,
countermeasures imposed by China in response, U.S.
export restrictions on sales of products to China and
other government actions that restrict or otherwise
adversely affect our ability to sell our products to
Chinese customers, could increase our manufacturing
costs and reduce our product sales in China and other
markets.

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, Europe
and Central America, 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
instances,
are,
operations
based
in
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,
the U.S. dollar
Renminbi and Singapore Dollar.
weakens compared to these and other currencies, our
operating expenses for
foreign operations will be
higher when remeasured back into U.S. dollars.

international

some

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. For many years, the Chinese
economy has experienced periods of rapid growth and
wide fluctuations in the rate of inflation. In response
to these factors, the Chinese government has, from
time to time, adopted measures to regulate growth
and to contain inflation, including currency controls
and measures designed to restrict credit, control
prices or set currency exchange rates. Such actions in
the future, as well as other changes in Chinese laws
and regulations,
including actions in furtherance of
China’s stated policy of reducing its dependence on
foreign semiconductor manufacturers, could increase
the cost of doing business in China,
the
emergence of Chinese-based competitors, decrease
the demand for our products in China, or reduce the
supply of critical materials for our products, which
could have a material adverse effect on our business
and results of operations.

foster

foreign

electronic

legislative or

governments may

Changes in government trade policies, including the
imposition of tariffs and export restrictions, could limit
our ability to sell our products to certain customers,
which may materially adversely affect our sales and
results of operations.
take
or
The U.S.
administrative,
regulatory action that
could materially interfere with our ability to sell
products in certain countries, particularly in China. For
example, between July 2018 and June 2019,
the
the United States Trade Representative
Office of
lists,
imposed 25% tariffs on specified product
certain
including
and
components
totaling approximately $250 billion in
equipment,
In response, China imposed or
Chinese imports.
proposed new or higher tariffs on U.S. products. The
U.S. government also imposed 15% tariffs on an
additional $120 billion of Chinese imports, with China
imposing retaliatory tariffs. While the imposition of
these tariffs did not have a direct, material adverse
impact on our business during fiscal year 2020, the
direct and indirect effects of
tariffs and other
restrictive trade policies are difficult to measure and
are only one part of a larger U.S./China economic and
trade policy disagreement. For example, imposition of
tariffs on our customers’ products that are imported
from China to the U.S. could harm sales of such
products, which would harm our business. We cannot
predict what further actions may ultimately be taken
with respect to tariffs or trade relations between the
U.S. and China or other countries, what products may
be subject to such actions, or what actions may be
taken by the other countries in retaliation.

Furthermore, we have experienced restrictions on our
ability to sell products to certain foreign customers
where sales of products require export licenses or are
prohibited by government action. The U.S. government
has in the past
restrictions that
issued export
effectively banned American companies from selling
products to ZTE Corporation, one of our customers,
and in May 2019, the Bureau of Industry (BIS) and
Security of the U.S. Department of Commerce added
Huawei Technologies Co., Ltd. and over 100 of its
affiliates to the “Entity List” maintained by the
Department. Huawei accounted for 10%, 15% and 8%
of our total revenue during fiscal years 2020, 2019
respectively. While we subsequently
and 2018,
restarted shipments to Huawei of certain products
from outside the U.S. that are not subject to the
Export Administration Regulations (EAR), and while we
have also applied for a license to ship other products
that are subject to the EAR, as required by the rules
governing the Entity List, our sales to Huawei will
continue to be impacted by trade restrictions.

As of the date of this report, we are unable to predict
the scope and duration of
restrictions
imposed on Huawei and the corresponding future
effects on our business. Even if such restrictions are
lifted, any financial or other penalties or continuing
export restrictions imposed on Huawei could have a

the export

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

continuing negative impact on our future revenue and
In addition, Huawei or other
results of operations.
foreign customers affected by future U.S. government
sanctions or threats of sanctions may respond by
developing their own solutions to replace our products
or by adopting our foreign competitors’ solutions.

Moreover, U.S. government actions targeting exports
of certain technologies to China are becoming more
pervasive. For example, in 2018, the U.S. adopted
new laws designed to address concerns about the
export of emerging and foundational technologies to
China. In addition, in May 2019, an executive order
was issued that invoked national emergency economic
powers to implement a framework to regulate the
acquisition or transfer of information communications
technology
imposed undue
national security risks. These actions could lead to
additional restrictions on the export of products that
including
include or enable certain technologies,
products we provide to China-based customers.

in transactions that

The loss or temporary loss of Huawei or other foreign
customers or the imposition of restrictions on our
ability to sell products to such customers as a result
of tariffs, export restrictions or other U.S. regulatory
actions could materially adversely affect our sales,
business and results of operations.

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
Increased competition from any source
products.
could adversely affect our operating results through
lower prices for our products, reduced demand for our
products,
losses of existing design slots with key
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,

15

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

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,
which makes
future
requirements for production capacity and avoid
periods of overcapacity. Fluctuations in the growth rate
of
industry capacity relative to the growth rate in
demand for our products also can lead to overcapacity
and contribute to cyclicality in the semiconductor
market.

estimate

difficult

to

it

trends and demand well

Capacity expansion projects have long lead times and
require capital commitments based on forecasted
product
in advance of
production orders from customers. In recent years, we
have made significant capital investments to expand
our premium filter capacity to address forecasted
future demand patterns.
these
capacity additions exceeded the near-term demand
requirements, leading to overcapacity situations and
underutilization of our manufacturing facilities.

In certain cases,

during

periods

experienced

As many of our manufacturing costs are fixed, these
costs cannot be reduced in proportion to the reduced
revenues
of
underutilization. Underutilization of our manufacturing
facilities can adversely affect our gross margin and
other operating results. If demand for our products
experiences a prolonged decrease, we may be
required to close or idle facilities and write down our
long-lived assets or shorten the useful
lives of
underutilized assets and accelerate depreciation,
which would increase our expenses. For example, to
address manufacturing overcapacity,
in the third
quarter of
fiscal 2019 we commenced a phased
closure of a SAW filter manufacturing facility in Florida
and a transfer of production to our North Carolina
facility, which was completed in fiscal 2020. Also, in
the fourth quarter of fiscal 2019, we announced the
temporary idling of a BAW manufacturing facility in
Texas. These actions resulted in impairment charges,
restructuring
accelerated depreciation and other
related charges and 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 (as amended, the “Credit
includes a
Agreement”).
The Credit Agreement
$300.0 million revolving credit
facility, which is
available for working capital, capital expenditures and
other corporate purposes. The Credit Agreement
and
conditions,
contains
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.

covenants

various

16

We may not be able to generate sufficient cash to
service all of our debt, including our 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 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. On June 17,
2019, the Company drew $100.0 million of the Term
Loan. The delayed draw availability period for
the
remaining $200.0 million of the Term Loan expired on
December 31, 2019. We may request one or more
additional tranches of term loans or increases in the
facility, up to an aggregate of
revolving credit
$300.0 million and subject
to securing additional
funding commitments from the existing or new
lenders.

the

“2015

Indenture”).

In November 2015, we issued $550.0 million
aggregate principal amount of 7.00% Senior Notes
due 2025 (the “2025 Notes”) pursuant
to an
indenture dated as of November 19, 2015 (as
We
supplemented,
subsequently completed the repurchase of all but
$23.4 million of the 2025 Notes. Additionally, in July
2018, August 2018 and March 2019, we issued
$500.0 million, $130.0 million and $270.0 million,
respectively, aggregate principal amount of 5.50%
Senior Notes due 2026 (the “2026 Notes”) pursuant
to an indenture dated as of July 16, 2018 (as
supplemented, the “2018 Indenture”). In September
2019 and December 2019, we issued $350.0 million
and $200.0 million, respectively, aggregate principal
amount of 4.375% Senior Notes due 2029 (the “2029
Notes” and together with the 2025 Notes and the
2026 Notes, the “Notes”) pursuant to an indenture
dated as of September 30, 2019 (as supplemented,
the “2019 Indenture” and together with the 2015
Indenture and the 2018 Indenture, the “Indentures”).

to
Our ability to make scheduled payments on or
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 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. These alternative measures may
not be successful and may not permit us to meet our

and

debt

other

service

scheduled
obligations.
Additionally, the Credit Agreement and the Indentures
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 at 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.

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 Indentures
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, or terms that are acceptable to us. If our debt
is in default for any reason, our business, financial
condition and results of operations could be materially
In addition, complying with
and adversely affected.
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

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

our business strategy and compete against companies
that are not subject to such restrictions.

be

The price of our common stock has recently been and
may in the future be volatile.
The price of our common stock, which is traded on the
Nasdaq Global Select Market, has been and may
continue
to wide
to
fluctuations.
In addition, the trading volume of our
common stock may fluctuate and cause significant
price variations to occur. Some of the factors that
could cause fluctuations in the stock price or trading
volume of our common stock include:
‰ general market
economic

subject

volatile

and

and

and
including market

political
conditions in the

conditions,
semiconductor industry;

‰ actual or expected variations in quarterly operating

results;

‰ pandemics and similar major health concerns,

including the COVID-19 outbreak;

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

the stock market

in general

risk,

Damage to our reputation or brand could negatively
impact our business, financial condition and results of
operations.
Our reputation is a critical factor in our relationships
with customers, employees, governments, suppliers
and other stakeholders. If we fail to address issues
that give rise to reputational
including those
described throughout this “Risk Factors” section, we
could significantly harm our reputation and our brand.
reputation may also be damaged by how we
Our
respond to corporate crises. Corporate crises can
arise from catastrophic events as well as from
incidents involving product quality, security, or safety
or
issues;
misconduct or legal noncompliance; internal control
failures; corporate governance issues; data or privacy
breaches; workplace safety incidents; environmental
illegal or
the use of our products for
incidents;

allegations

unethical

behavior

of

17

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

objectionable applications; media statements;
the
conduct of our suppliers or representatives; and other
issues or incidents that, whether actual or perceived,
result in adverse publicity. If we fail to respond quickly
and effectively to address such crises, the ensuing
negative public reaction could significantly harm our
reputation and our brands and could lead to litigation
or subject us to regulatory actions or
restrictions.
Damage to our
reputation could harm customer
relations, reduce demand for our products, reduce
investor confidence in us, adversely affect our stock
price, and may also limit our ability to be seen as an
employer of choice when competing for highly skilled
reputation and
employees. Moreover,
and
brands may
expensive.

time-consuming

repairing our

difficult,

be

We may have fluctuations in the amount and
frequency of our stock repurchases.
We are not obligated to make repurchases under our
stock repurchase program and the program may be
modified, suspended or terminated at any time without
notice.
The amount and timing of our stock
repurchases may vary based on a number of factors,
including our priorities regarding the use of our cash
such
acquisitions,
investments
restrictions under securities laws and existing debt
agreements,
the availability of attractive financing
sources and the optimization of our capital structure,
as well as changes in our cash flows, tax laws and the
market price of our common stock.

capital

and

as

and

offer

growth

potential

acquisitions

technical capabilities, or

Our recent and future acquisitions and other strategic
investments, could fail to achieve our financial or
strategic objectives, disrupt our ongoing business, and
adversely impact our results of operations.
As part of our business strategy and as demonstrated
in our recent acquisitions, we expect to continue to
review
strategic
investments that could complement our current
product offerings, augment our market coverage or
that may
enhance our
otherwise
or margin improvement
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:
‰ failure to complete a transaction in a timely manner,
inability to obtain required
if at all, due to our
government or other approvals, IP disputes or other
litigation, difficulty in obtaining financing on terms
acceptable to us, or other unforeseen factors;

operations

and

of

18

‰ controls, processes, and procedures of an acquired
business may not adequately ensure compliance
with laws and regulations, and we may fail to identify
compliance issues or liabilities;

‰ unanticipated costs, capital expenditures or working

capital requirements;

‰ 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;

‰ disruption of our ongoing operations;
‰ 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.

Moreover, our resources are limited and our decision
to pursue a transaction has opportunity costs;
accordingly, if we pursue a particular transaction, we
may need to forgo the prospect of entering into other
transactions that could help us achieve our financial
or strategic objectives. Any of these risks could have a
material adverse effect on our business, results of
operations,
flows,
particularly in the case of a large acquisition.

condition,

financial

cash

or

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. Travel bans, difficulties obtaining visas and
other restrictions on international travel could make it
more difficult to effectively manage our international
operations, operate as a global company or service
international customer base. Changes in the
our
interpretation and application of employment-related

is limited.

laws to our workforce practices may also result in
increased operating costs and less flexibility in how
we meet our changing workforce needs. 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.

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
misappropriation or infringement of our technology and
products. Although we intend to vigorously defend our
intellectual property rights, we may not be able to
technology.
prevent misappropriation
Additionally,
to
able
independently develop non-infringing technologies that
are substantially equivalent or superior to ours.

competitors may

our

our

be

of

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.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

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
consultants,
strategic partners and other third parties. We also
design our computer networks and implement various
procedures
to
restrict
dissemination of our proprietary information.

information by entering

unauthorized

employees,

access

with

our

to

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
or
misappropriate
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

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
competitive position,
in a loss of customer
confidence in the adequacy of our threat mitigation
and detection processes and procedures, cause us to
incur significant costs to remedy the damages caused
by the incident, and divert management and other
resources. We routinely implement 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

of management

and

key

19

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

and

technology
otherwise
adversely affect our internal operations and reputation
or degrade our financial results and stock price.

resources,

other

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
business process software applications providers and
other vendors that have access to sensitive data,
could result in damage to our reputation, disruption of
increased
our
business and security costs or costs related to
defending legal claims.

third-party service providers,

significantly

activities,

business

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
recalls could materially and adversely
and product
affect our financial condition and results of operations.

potential

warranty

issues.

quality

The

In

addition,

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 has adopted the General
Data Protection Regulation (“GDPR”), which requires
companies to comply with rules 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
the
revenue.
4% of worldwide
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
or
could
proceedings against us by governmental entities or
others.

regulatory

inquiries

audits,

result

in

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.

20

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
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 compliance with applicable laws and regulations.

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
requirements
legal
policies
requirements.
and
increases
non-compliance
customer
relationships and harm our business.

that
Compliance with
operating

applicable
these
expenses,
affect

adversely

policies,

exceed

which

often

can

our

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. We
may face challenges with government regulators and
our customers and suppliers if we are unable to
sufficiently make any required determination that the
metals used in our products are conflict free.

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,
preventing or rendering more difficult, a change in
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.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

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.

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
over
lead us to change our methods,
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 adversely impact
our results of operations.
to taxation in China, Germany,
We are subject
Singapore, the U.S. and numerous other foreign taxing
is
jurisdictions.

effective

rate

Our

tax

21

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

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 13 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; and
‰ changes in tax laws, domestic and foreign, or the
interpretation of such tax laws, and changes in
generally accepted accounting principles.

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

future effective tax

Changes in the favorable tax status of our subsidiaries
in Singapore and Costa Rica would have an adverse
impact on our operating results.
Our subsidiaries in Singapore and Costa Rica have
been granted tax holidays that effectively minimize our
tax expense and that are expected to be effective
through December 2021 and December 2027,
respectively.
In their efforts to deal with budget
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
and Expansion
from our
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

In 2017,

The enactment of international or domestic tax
legislation, or changes in regulatory guidance, may
adversely impact our results of operations.
reform, base-erosion efforts, and
Corporate tax
increased tax
transparency continue to be high
priorities in many tax jurisdictions in which we have
business operations.
the U.S. enacted
comprehensive tax legislation, commonly referred to
as the Tax Cuts and Jobs Act (the “Tax Act”), which
included a number of changes to U.S. tax laws that
impacted us, including the one-time transition tax on
certain unrepatriated earnings of foreign subsidiaries
(the “Transitional Repatriation Tax”) and the Global
Intangible Low-Taxed Income (“GILTI”) provisions. In
addition, other countries are beginning to implement
legislation
their
tax rules with the Organisation for
international

guidance

other

align

and

to

22

tax

incentive

Economic Co-operation and Development’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 documentations rules, and
Legislative
nexus-based
changes, interpretations and guidance, and changes
in prior tax rulings and decisions by tax authorities
regarding treatments and positions of corporate
income taxes resulting from these initiatives, could
increase our effective tax rate and result in taxes we
previously paid being subject to change, which may
adversely impact our financial position and results of
operations.

practices.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

(1) a wafer

in Bend, Oregon,

IDP headquarters (owned)

Our corporate headquarters (leased) and our MP
headquarters (owned) are in Greensboro, North
Carolina, and our
is in
Richardson, Texas. In the U.S., we have the following
production facilities:
fabrication facility
(owned) in Greensboro, North Carolina, (2) a wafer
fabrication facility (leased)
(3) a
wafer fabrication facility (owned) in Hillsboro, Oregon,
and (4) a facility (owned) in Richardson, Texas for
wafer
fabrication, assembly and test. During fiscal
2020, our wafer fabrication facility (owned) in Farmers
Branch, Texas, was idled and the wafer fabrication
operations in our Apopka, Florida facility (owned) were
consolidated into our Greensboro, North Carolina
facility.
Florida facility has been
repurposed solely as a research and development
center.

The Apopka,

Outside of the U.S., we have the following primary
production facilities: (1) a module assembly and test
facility (the building is owned and we hold a land-use
right for the land), in Beijing, China, (2) a module
assembly and test facility (the building is leased and
we hold a land-use right
in Dezhou,
China, (3) a filter assembly and test facility (owned) in
Heredia, Costa Rica, and (4) a packaging and test
facility (leased) in Nuremberg, Germany.

the land)

for

In the fourth quarter of
fiscal 2018, we signed a
definitive lease for an assembly and test facility in
Beijing, China, which we expect to start utilizing in
fiscal 2021. This lease will allow us to consolidate
several leased facilities in Beijing, China.

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. The majority of our production facilities are
shared by our operating segments.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

ITEM 3.

LEGAL PROCEEDINGS.

PART II

See the information under
the heading “Legal
Matters” in Note 11 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.

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.” As of
May 12, 2020, there were 685 holders of record of
our common stock.

23

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

PERFORMANCE GRAPH

COMPARISON OF 5 YEAR 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

201.16

166.22

138.47

101.78

$0
3/28/15

4/2/16

4/1/17

3/31/18

3/30/19

3/28/20

Qorvo, Inc.

S&P 500

NASDAQ Composite

NASDAQ Electronic Components

*$100 invested on 3/28/15 in stock or 3/31/15 index, including reinvestment of dividends.
Indexes calculated on months-end basis.

Copyright© 2020 Standard & Poor’s, a division of S&P Global. All rights reserved.

March 28,
2015

April 2,
2016

April 1,
2017

March 31,
2018

March 30,
2019

March 28,
2020

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

64.10

86.48

100.00
90.48 101.78
100.00 100.55 123.56 149.21 165.07 166.22
100.00 101.78 119.26 135.95 148.86 138.47
97.64 139.98 191.49 191.98 201.16
100.00

88.86

Notes:
A. The index level for all series assumes that $100.00 was invested in our common stock and each index on March 28, 2015.
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.

Issuer Purchases of Equity Securities

Total number
of shares
purchased
(in thousands)
101
112
1,124

Average
price paid
per share
$114.61
$109.21
$ 90.04

Total number of
shares purchased as
part of publicly
announced plans or
programs
(in thousands)
101
112
1,124

Approximate dollar value
of shares that may yet
be purchased under the
plans or programs
$879.3 million
$867.0 million
$765.9 million

1,337

$ 93.51

1,337

$765.9 million

Period
December 29, 2019 to January 25, 2020
January 26, 2020 to February 22, 2020
February 23, 2020 to March 28, 2020

Total

24

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

On October 31, 2019, the Company announced that its Board of Directors authorized a new share repurchase
the Company’s outstanding common stock, which included
program to repurchase up to $1.0 billion of
approximately $117.0 million authorized under the prior program which was terminated concurrent with the new
authorization. Under this program, share repurchases are made in accordance with applicable securities laws on
the open market or in privately negotiated transactions. The extent to which the Company repurchases its shares,
the number of shares and the timing of any repurchases depends on general market conditions, regulatory
requirements, alternative investment opportunities and other considerations. The program does not require the
Company to repurchase a minimum number of shares, does not have a fixed term, and may be modified,
suspended or terminated at any time without prior notice. See Note 16 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 2020

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.

(In thousands, except per share data)
Revenue
Operating costs and expenses:

2020

2019

Fiscal Year
2018

2017

2016

$3,239,141

$3,090,325

$2,973,536

$3,032,574

$2,610,726

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

1,917,378
484,414
343,569

1,895,142
450,482
476,074

70,564(16)

52,161(11)

1,826,570
445,103
527,751
103,830(8)

1,897,062
470,836
545,588

1,561,173
448,763
534,099

31,029(5)

54,723(1)

Total operating costs and expenses

2,815,925

2,873,859

2,903,254

2,944,515

2,598,758

Operating income
Interest expense
Interest income
Other income (expense)

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

423,216
(60,392)(17)
12,066
20,199(18)

395,089
(60,764)(19)

216,466
(43,963)(12)
10,971
(91,682)(13)

70,282
(59,548)(9)
7,017
(606)

91,792
41,333(14)

17,145
(57,433)(10)

88,059
(58,879)(6)
1,212
(3,087)

27,305
(43,863)(7)

Net income (loss)

$ 334,325

$ 133,125

$

$

2.86

2.80

$

$

1.07

1.05

$

$

$

(40,288) $

(16,558)

(0.32) $

(0.32) $

(0.13)

(0.13)

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

(2,862)
(25,983)(3)

(28,845)

(0.20)

(0.20)

$

$

$

Net income (loss) 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 finance lease
obligations, less current portion

Stockholders’ equity

117,007

119,293

124,534

127,356

126,946

126,946

127,121

127,121

141,937

141,937

2020

2019

As of Fiscal Year End
2018

2017

2016

$ 714,939
459
1,151,499
6,560,682

$ 711,035
901
1,249,227
5,808,024

$ 926,037
—
1,402,526
6,381,519

$ 545,463
—
1,042,777
6,522,323

$ 425,881
186,808
1,135,409(4)
6,596,819

1,567,231(20)
4,292,665

920,935(15)

4,359,679

983,290
4,775,564

989,154
4,896,722

988,130(2)

4,999,672

Other operating expense for fiscal 2016 includes integration related expenses of $26.5 million and restructuring related charges of
$10.2 million.

During fiscal 2016, we issued $450.0 million aggregate principal amount of 6.75% Senior Notes due 2023 (the “2023 Notes”) and
the 2025 Notes. We recorded $28.5 million of interest expense primarily related to the 2023 Notes and the 2025 Notes, which was
partially offset by $5.2 million of capitalized interest.

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.

Accounting Standards Update 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” was adopted
in fiscal 2016 which required deferred tax assets and deferred tax liabilities to be presented as non-current in a classified balance
sheet.

Other operating expense for fiscal 2017 includes integration related expenses of $16.9 million and restructuring related charges of
$2.1 million.

During fiscal 2017, we recorded $72.5 million of interest expense primarily related to the 2023 Notes and the 2025 Notes, which
was partially offset by $13.6 million of capitalized interest.

Income tax expense for fiscal 2017 includes the effects of the increase in our unrecognized tax benefits.

Other operating expense for fiscal 2018 includes integration related expenses of $6.2 million and restructuring related charges of
$67.7 million (see Note 12 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

1

2

3

4

5

6

7

8

26

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

9

During fiscal 2018, we recorded $73.2 million of interest expense primarily related to the 2023 Notes and the 2025 Notes, which
was partially offset by $13.6 million of capitalized interest (see Note 9 of the Notes to the Consolidated Financial Statements set
forth in Part II, Item 8 of this report).

10 Income tax expense for fiscal 2018 includes the effects from the enactment of the Tax Act, including the one-time Transitional
Repatriation Tax, 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 13 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this
report).

11 Other operating expense for fiscal 2019 includes restructuring related charges of $29.4 million (see Note 12 of the Notes to the

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

12 During fiscal 2019, we issued the 2026 Notes and recorded $52.8 million of interest expense primarily related to the 2023 Notes,
the 2025 Notes and the 2026 Notes, which was partially offset by $8.8 million of capitalized interest (see Note 9 of the Notes to
the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

13 During fiscal 2019, we recorded a loss on debt extinguishment of $90.2 million related to the repurchases of the 2023 Notes and

the 2025 Notes (see Note 9 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

14 Income tax benefit for fiscal 2019 includes the effects of the Tax Act measurement period adjustments, including revisions to the
provisional one-time Transitional Repatriation Tax and the remeasurement of deferred tax assets, tax benefits associated with
finalization of federal and international tax returns, and the recognition of previously unrecognized tax benefits (see Note 13 of the
Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).

15 During fiscal 2019, we repurchased $444.5 million of the 2023 Notes and $525.1 million of the 2025 Notes and issued a total of
$900.0 million aggregate principal amount of the 2026 Notes (see Note 9 of the Notes to the Consolidated Financial Statements
set forth in Part II, Item 8 of this report).

16 Other operating expense for fiscal 2020 includes acquisition and integration related expenses of $50.9 million and restructuring
related charges of $13.4 million (see Note 5 and Note 12 of the Notes to the Consolidated Financial Statements set forth in Part II,
Item 8 of this report).

17 During fiscal 2020, we recorded $66.0 million of interest expense primarily related to the 2026 Notes and the 2029 Notes, which
was partially offset by $5.6 million of capitalized interest (see Note 9 of the Notes to the Consolidated Financial Statements set
forth in Part II, Item 8 of this report).

18 During fiscal 2020, we recorded a gain of $43.0 million related to the remeasurement of our previously held equity interest in
Cavendish in connection with our purchase of the remaining issued and outstanding capital of the entity (see Note 5 of the Notes to
the Consolidated Financial Statements set forth in Part II, Item 8 of this report). During fiscal 2020, we recorded an impairment of
$18.3 million on an equity investment without a readily determinable fair value (see Note 7 of the Notes to the Consolidated
Financial Statements set forth in Part II, Item 8 of this report).

19 Income tax expense for fiscal 2020 includes the effects associated with the release of our permanent reinvestment assertion on
certain unrepatriated foreign earnings previously subject to U.S. federal taxation (see Note 13 of the Notes to the Consolidated
Financial Statements set forth in Part II, Item 8 of this report).

20 During fiscal 2020, we issued $550.0 million aggregate principal amount of the 2029 Notes and drew $100.0 million of the Term

Loan (see Note 9 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 2020

ITEM 7. MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

The following discussion should be read in conjunction
with, and is qualified in its entirety by reference to, our
including
audited consolidated financial statements,
the notes thereto, set forth in Part II, Item 8 of this
report.

MP is a global supplier of cellular, UWB and Wi-Fi
solutions for a variety of high-volume markets,
including smartphones, wearables,
tablets
and IoT applications.

laptops,

IDP is a global supplier of RF, SoC and power
management solutions for wireless infrastructure,
defense, smart home, automotive and other
IoT
applications.

OVERVIEW

Company
Qorvo® is a leader
in the development and
commercialization of technologies and products for
wireless and wired connectivity. We combine a broad
RF
portfolio
highly
differentiated semiconductor
technologies, systems-
level expertise and global manufacturing scale to
supply a diverse set of customers a broad range of
products that enable a more connected world.

innovative

solutions,

of

by

the

impacted

During the fourth quarter of fiscal 2020, our customer
demand, supply chain and global operations were
modestly
COVID-19
outbreak. However, the potential duration and future
impact of the outbreak on the global economy and on
our business are difficult to predict and cannot be
estimated with any degree of certainty; the outbreak
has resulted in significant disruption of global financial
markets, increases in levels of unemployment, and
economic uncertainty, which may adversely affect our
business, and may
lead to significant negative
impacts on customer spending, demand for our
products, the ability of our customers to pay, our
financial condition and the financial condition of our
suppliers, and our access to external sources of
financing
capital
to
expenditures.

operations

fund

and

our

We remain committed to protecting the health and
safety of our employees in all locations, and we are
working to ensure our compliance with government-
imposed restrictions while also maintaining business
continuity. Qorvo has implemented multiple protocols
in its facilities worldwide, including increased cleaning
and sanitation procedures, pre-shift
temperature
screenings, and enhanced use of personal protective
In addition, Qorvo has taken steps to
equipment.
effectively
including
implement social distancing,
rotating shifts and remote-work options whenever
possible.

Business Segments
We design, develop, manufacture and market our
products to U.S. and international OEMs and ODMs in
two operating segments, which are also our reportable
segments: Mobile Products (“MP”) and Infrastructure
and Defense Products (“IDP”).

28

on

are

based

business

segments

These
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 reportable segment primarily
based on non-GAAP operating income. For
financial
information about the results of our reportable operating
segments for each of the last three fiscal years, see
Note 17 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report.

Fiscal 2020 Management Summary
‰ Revenue

increased 4.8% in

fiscal 2020 to
$3,239.1 million, compared to $3,090.3 million in
fiscal 2019, primarily due to higher demand for our
mobile products in support of customers based in
China, a Korea-based customer and our largest end
customer, partially offset by lower demand for our
base station products as a result of
trade
restrictions.

and

expense

amortization

‰ Gross margin for fiscal 2020 was 40.8%, compared
to 38.7% in fiscal 2019. This increase was primarily
lower
due to favorable changes in product mix,
intangible
lower
manufacturing costs, partially offset by average
selling price erosion and lower factory utilization.
‰ Operating income was $423.2 million in fiscal 2020,
compared to $216.5 million in fiscal 2019. This
increase was primarily due to lower
intangible
amortization expense, higher gross margin and
higher revenue, partially offset by higher acquisition
and integration costs.

‰ Net income per diluted share was $2.80 for fiscal
2020, compared to net income per diluted share of
$1.05 for fiscal 2019.

‰ Cash flow from operations was $945.6 million for
fiscal 2020, compared to $810.4 million for fiscal
2019. This year-over-year increase was primarily due
to favorable changes in working capital driven by
improvements in days sales outstanding and
improved inventory management in fiscal 2020.

‰ Capital expenditures were $164.1 million in fiscal
2020, compared to $220.9 million in fiscal 2019.
Our capital expenditures in fiscal 2020 included
strategic investments in premium filter capacity and
GaN technology capabilities.

‰ We completed the acquisitions of Active-Semi,
Cavendish, Custom MMIC and Decawave for a total
of $946.0 million, net of cash acquired, and incurred
acquisition and integration related charges of
$55.1
post-combination
(primarily
compensation expense and third-party fees). Upon
our acquisition of Cavendish, our previously held
equity interest was remeasured, which resulted in
the recognition of a gain of $43.0 million.

million

RESULTS OF OPERATIONS

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

‰ We recognized an impairment of $18.3 million on an
equity investment without a readily determinable fair
value.

‰ We issued $550.0 million aggregate principal
amount of the 2029 Notes and drew $100.0 million
of the Term Loan.

‰ We repurchased approximately 6.4 million shares of
our common stock for approximately $515.1 million.

Consolidated
The table below presents a summary of our results of operations for fiscal years 2020 and 2019. See Part II, Item
7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report
on Form 10-K for the fiscal year ended March 30, 2019, filed with the SEC on May 17, 2019, for a summary of our
results of operations for the fiscal year ended March 31, 2018, which is incorporated by reference herein.

(In thousands, except percentages)
Revenue

Cost of goods sold

Gross profit

Research and development
Selling, general and administrative
Other operating expense

2020

2019

Increase (Decrease)

Dollars

% of
Revenue

Dollars

% of
Revenue

Dollars

Percentage
Change

$3,239,141
1,917,378

100.0% $3,090,325
1,895,142

59.2

100.0% $ 148,816
22,236

61.3

1,321,763
484,414
343,569
70,564

40.8
14.9
10.6
2.2

1,195,183
450,482
476,074
52,161

38.7
14.6
15.4
1.7

126,580
33,932
(132,505)
18,403

4.8%
1.2

10.6
7.5
(27.8)
35.3

Operating income

$ 423,216

13.1% $ 216,466

7.0% $ 206,750

95.5%

REVENUE

GROSS MARGIN

Revenue increased primarily due to higher demand for
our mobile products in support of customers based in
China, a Korea-based customer and our largest end
customer, partially offset by lower demand for our
base station products as a result of trade restrictions.

Gross margin increased primarily due to favorable
changes in product mix, lower intangible amortization
expense and lower manufacturing costs, partially
offset by average selling price erosion and lower
factory utilization.

sales

through

to multiple

We provided our products to our largest end customer
(Apple)
contract
manufacturers, which in the aggregate accounted for
33% and 32% of total revenue in fiscal years 2020
and 2019,
respectively. Huawei accounted for
approximately 10% and 15% of total revenue in fiscal
years 2020 and 2019, respectively. These customers
primarily purchase RF solutions for a variety of mobile
devices.

Our sales to Huawei have been and will continue to be
impacted by trade restrictions (see Note 2 of the
Notes to the Consolidated Financial Statements set
forth in Part II, Item 8 of this report).

International shipments amounted to $1,770.8 million
in fiscal 2020 (approximately 55% of
revenue)
compared to $1,710.8 million in fiscal 2019
(approximately 55% of revenue). Shipments to Asia
totaled $1,616.4 million in fiscal 2020 (approximately
50% of
revenue) compared to $1,554.6 million in
fiscal 2019 (approximately 50% of revenue).

OPERATING EXPENSES

Research and Development
R&D spending increased primarily due to higher
personnel related costs.

Selling, General and Administrative
Selling, general and administrative expense decreased
primarily due to lower intangible amortization expense.

Other Operating Expense
In fiscal 2020, we recognized $50.9 million of
expense related to the acquisitions of Active-Semi,
Cavendish, Custom MMIC and Decawave (see Note 5
of the Notes to the Consolidated Financial Statements
set forth in Part II, Item 8 of this report for information
on business acquisitions).
In fiscal 2020, we also
recorded restructuring related charges of $13.4 million
related to employee termination benefits and other
exit costs as a result of restructuring actions (see
Note 12 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 of this report for
information on restructuring actions).

29

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

In fiscal 2019, we recognized $15.9 million of asset
impairment charges (to adjust the carrying value of
certain property and equipment to reflect fair value)
and $13.5 million of
restructuring related charges
(primarily employee termination benefits) as a result of
restructuring actions (see Note 12 of the Notes to the

Consolidated Financial Statements set forth in Part II,
Item 8 of this report for information on restructuring
actions).
recorded
$18.0 million of start-up costs related to new
processes and operations in existing facilities.

2019, we

fiscal

also

In

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

MP revenue increased primarily due to higher demand
for our mobile products in support of customers based
in China, a Korea-based customer and our largest end
customer, partially offset by lower shipments to
Huawei.

Infrastructure and Defense Products

(In thousands, except percentages)
Revenue
Operating income
Operating income as a % of revenue

IDP revenue decreased primarily due to lower demand
for our base station products as a result of trade
restrictions and lower demand for our Wi-Fi products,
partially offset by sales of our programmable power
management products as a result of the acquisition of
Active-Semi.

IDP operating income decreased primarily due to
higher operating expenses, lower gross margin and
lower revenue. The increase in operating expenses
was primarily due to higher personnel costs and the
addition of Active-Semi expenses. Gross margin was
negatively
factory utilization,
inventory charges and average selling price erosion.

impacted by

lower

the Notes to the Consolidated
See Note 17 of
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 2020, 2019 and 2018.

OTHER (EXPENSE) INCOME AND INCOME TAXES

(In thousands)
Interest expense
Interest income
Other income (expense)
Income tax (expense) benefit

Fiscal Year

2020

2019

$(60,392) $(43,963)
10,971
(91,682)
41,333

12,066
20,199
(60,764)

30

Fiscal Year

Increase

2020

2019

Dollars

Percentage
Change

$2,397,740 $2,197,660
558,990

715,514

$200,080
156,524

9.1%

28.0

29.8%

25.4%

MP operating income increased primarily due to higher
revenue and higher gross margin. Gross margin was
positively impacted by favorable changes in product
mix and lower manufacturing costs, partially offset by
average selling price erosion and lower
factory
utilization.

Fiscal Year

Decrease

2020

2019

Dollars

Percentage
Change

$841,401
145,295

$892,665
267,304

$ (51,264)
(122,009)

(5.7)%

(45.6)

17.3%

29.9%

Interest expense
We recognized $66.0 million of interest expense in
fiscal 2020 primarily related to the 2026 Notes and
the 2029 Notes. We recognized $52.8 million of
interest expense in fiscal 2019 primarily related to the
2023 Notes, the 2025 Notes and the 2026 Notes.
Interest expense in the preceding table for fiscal years
2020 and 2019 is net of capitalized interest of
$5.6 million and $8.8 million, respectively.

Other income (expense)
During fiscal 2020 we recorded a gain of $43.0 million
related to the remeasurement of our previously held
equity interest in Cavendish in connection with our
purchase of the remaining issued and outstanding
capital of the entity (see Note 5 of the Notes to the
Consolidated Financial Statements set forth in Part II,
information regarding the
Item 8 for additional
Cavendish
fiscal 2020 we
recorded an impairment of $18.3 million on an equity
investment without a readily determinable fair value
(see Note 7 of the Notes to the Consolidated Financial
Statements set forth in Part II, Item 8 for additional
information regarding our investments).

acquisition). During

During fiscal 2019 we recorded a loss on debt
extinguishment of $90.2 million (see Note 9 of the
Notes to the Consolidated Financial Statements set
information
Item 8 for additional
forth in Part
regarding our debt extinguishment activity).

II,

Income tax (expense) benefit
Income tax expense for fiscal 2020 was $60.8 million.
This was primarily comprised of tax expense related to
international operations
generating pre-tax book
income, the impact of the Tax Act’s GILTI provisions,
the reversal of the permanent reinvestment assertion
with regards to certain unrepatriated foreign earnings,
and an increase in gross unrecognized tax benefits,
related to domestic and
offset by a tax benefit
international operations
generating pre-tax book
losses and domestic tax credits. For fiscal 2020, this
resulted in an annual effective tax rate of 15.4%.

Income tax benefit for fiscal 2019 was $41.3 million.
This was primarily comprised of tax benefits related to
domestic and international operations generating
pre-tax book losses, tax credits, adjustments related
to provisional estimates for the impact of the Tax Act,
and a decrease in gross unrecognized tax benefits,
tax expenses related to international
offset by
operations generating pre-tax book income and tax
expense related to the GILTI
fiscal
2019, this resulted in an annual effective tax rate of
(45.0)%.

inclusions. For

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 2020 and 2019,
the valuation allowance
against domestic and foreign deferred tax assets was
$35.3 million and $40.4 million, respectively.

See Note 13 of
the Notes to the Consolidated
Financial Statements set forth in Part II, Item 8 of this
report
information regarding income
taxes.

for additional

STOCK-BASED COMPENSATION

Financial

Standards

Under
Board
Accounting
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
for stock options (Black-
an option pricing model
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 28, 2020,
compensation cost
related to unvested restricted
stock units was $87.4 million, which will be amortized
over the weighted-average remaining service period of
approximately 1.3 years.

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

LIQUIDITY AND CAPITAL RESOURCES

Cash generated by operations is our primary source of
liquidity. As of March 28, 2020, we had working
capital of approximately $1,151.5 million, including
$714.9 million in cash and cash equivalents,
compared to working capital of $1,249.2 million,
including $711.0 million in cash and cash equivalents,
as of March 30, 2019.

Our $714.9 million of total cash and cash equivalents
includes approximately
as of March 28, 2020,
$345.3 million held by our foreign subsidiaries, of
which $266.4 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 pay state income and/or foreign
local withholding taxes to repatriate these earnings.

At this time, we are not able to estimate the long-term
impact of the COVID-19 outbreak on our business,
financial condition, results of operations, and/or cash
flow. We believe we have sufficient liquidity available
from operating cash flow, cash on hand, and
availability under our revolving credit facility. However,
as the situation evolves, we will continue to assess
our liquidity needs, evaluate available alternatives and
take appropriate actions.

The

such

Credit

capacity,

agent
Agent”).

Credit Agreement
On December 5, 2017, we and certain of our material
domestic subsidiaries (the “Guarantors”) entered into
the Credit Agreement with Bank of America, N.A., as
administrative
the
(in
Agreement
“Administrative
included the Term Loan and a $300.0 million senior
revolving line of credit (the “Revolving Facility”).
In
addition, we may request one or more additional
tranches of term loans or increases in the Revolving
Facility, up to an aggregate of $300.0 million and
subject to securing additional funding commitments
from the existing or new lenders (the “Incremental
Facility”, and collectively with the Term Loan and the
Revolving Facility, the “Credit Facility”). On the closing
date, $100.0 million of the Term Loan was funded
(and was subsequently repaid in March 2018). On
June 17, 2019, we drew $100.0 million of the Term
the
Loan. The delayed draw availability period for
remaining $200.0 million of the Term Loan expired on
December 31, 2019. The Revolving Facility includes a
$25.0 million sublimit for the issuance of standby
letters of credit and a $10.0 million sublimit for swing
line loans. The Credit Facility is available to finance
working
capital expenditures and other
corporate purposes. Outstanding amounts are due in
full on the maturity date of 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. During fiscal 2020, there
were no borrowings under the Revolving Facility.

capital,

31

Cash Flows from Financing Activities
Net cash provided by financing activities in fiscal 2020
was $165.6 million, compared to net cash used in
financing activities of $776.7 million in fiscal 2019. In
fiscal 2019, cash disbursed in connection with the
retirement of all of the 2023 Notes and a majority of
the 2025 Notes was partially offset by cash proceeds
received from the issuance of the 2026 Notes. During
fiscal
of
received
$559.0 million from the issuance of the 2029 Notes
and $100.0 million from the draw on the Term Loan.

2020, we

proceeds

cash

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 2020 and 2019. However, there
can be no assurance that our business will not be
affected by inflation in the future.

OFF-BALANCE SHEET ARRANGEMENTS

As of March 28, 2020, 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 2020

information about

See Note 9 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 28, 2020, we were in
compliance with all the financial covenants under the
Credit Agreement.

which

stock,

common

Stock Repurchases
On October 31, 2019, we announced that our Board
of Directors authorized a new share repurchase
program to repurchase up to $1.0 billion of our
included
outstanding
approximately $117.0 million authorized under
the
prior program which was terminated concurrent with
the new authorization. Under
this program, share
repurchases are made in accordance with applicable
securities laws on the open market or in privately
negotiated transactions. The extent
to which we
repurchase our shares, the number of shares and the
timing of any repurchases depends on general market
conditions,
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.

requirements,

regulatory

We repurchased 6.4 million shares, 9.1 million shares
and 2.9 million shares of our common stock during
fiscal years 2020, 2019 and 2018, respectively, at an
aggregate cost of $515.1 million, $638.1 million and
$219.9 million, respectively, in accordance with the
current and prior share repurchase programs. As of
March 28, 2020, $765.9 million remains available for
future
share
under
repurchases
repurchase program.

current

our

Cash Flows from Operating Activities
Operating activities in fiscal 2020 provided cash of
$945.6 million, compared to $810.4 million in fiscal
2019. This year-over-year increase was primarily due
to favorable changes in working capital driven by
improvements in days sales outstanding and improved
inventory management in fiscal 2020.

Cash Flows from Investing Activities
Net cash used in investing activities in fiscal 2020
was $1,105.7 million, compared to $247.6 million in
fiscal 2019. This year-over-year increase was primarily
due to the acquisitions of Active-Semi, Cavendish,
Custom MMIC and Decawave in fiscal 2020.

32

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations and commitments (in thousands) as of
March 28, 2020, and the effect such obligations are expected to have on our liquidity and cash flows in future
periods.

Total
Payments

Payments Due By Period
Fiscal
2022-2023

Fiscal
2024-2025

Fiscal
2021

Fiscal 2026
and thereafter

Capital commitments(1)
Long-term debt obligations(2)
Finance leases(3)
Operating leases
Purchase obligations(4)
Cross-licensing liability(5)
Deferred compensation(6)

Total

$

53,357 $ 53,052 $

305 $

— $

2,152,023
59,877
86,126
264,971
5,400
19,398

84,610
1,829
21,586
245,982
2,400
892

247,269
2,312
23,891
15,262
3,000
1,251

150,402
2,312
13,455
3,727
—
713

—
1,669,742
53,424
27,194
—
—
16,542

$2,641,152 $410,351 $293,290 $170,609

$1,766,902

(1) Capital commitments represent obligations for the purchase of property and equipment, a majority of which are not recorded as

liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of March 28, 2020.

(2) Long-term debt obligations represent future cash payments of principal and interest over the life of the 2025 Notes, the 2026 Notes,
the 2029 Notes and the Term Loan, including anticipated interest payments not recorded as liabilities on our Consolidated Balance
Sheet as of March 28, 2020. Debt obligations are classified based on their stated maturity date, and any future redemptions would
impact our cash payments. See Note 9 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this
report for further information.

(3) The finance lease obligation primarily relates to a lease that was signed in fiscal 2018 for an assembly and test facility in Beijing,
China. This lease will allow us to consolidate several leased facilities in Beijing, China. The lease is not recorded on our Consolidated
Balance Sheet as of March 28, 2020 because the lease term is not expected to commence until fiscal 2021.

(4) Purchase obligations represent payments due related to the purchase of materials and manufacturing services, a majority of which
are not recorded as liabilities on our Consolidated Balance Sheet because we had not received the related goods or services as of
March 28, 2020.

(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 28, 2020.

(6) Commitments for deferred compensation represent the liability under our Non-Qualified Deferred Compensation Plan. See Note 10 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 28, 2020, in addition to the amounts
shown in the contractual obligations table above, we
have $124.6 million of unrecognized income tax
benefits and accrued interest and penalties, of which
$19.4 million has been recorded as a liability. We are
uncertain as to if, or when, such amounts may be
settled. We also have an obligation related to the
Transitional Repatriation Tax. We have elected to pay
the remaining obligation of $5.6 million, which has
been recorded as a liability, over eight years.

As discussed in Note 10 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 $12.3 million as of March 28, 2020.
included in the
Pension benefit payments are not
schedule above because they are not available for all
periods presented. Pension benefit payments were
approximately $0.2 million in fiscal 2020 and are
expected to be approximately $0.3 million in fiscal
2021.

SUPPLEMENTAL PARENT AND GUARANTOR
FINANCIAL INFORMATION

In accordance with the Indentures, our obligations
the Notes are fully and unconditionally
under
guaranteed on a joint and several unsecured basis by
the Guarantors, each of which is 100% owned, directly
or indirectly, by Qorvo, Inc. (“Parent”). A Guarantor can
be released in certain customary circumstances. Our
other U.S. subsidiaries and our non-U.S. subsidiaries
do not guarantee the Notes (such subsidiaries are
referred to as the “Non-Guarantors”).

following

presents

summarized

financial
The
information for the Parent and the Guarantors on a
combined basis as of and for the periods indicated,
after eliminating (i)
intercompany transactions and
balances among the Parent and Guarantors, and
(ii) equity earnings from, and investments in, any
Non-Guarantor. The summarized financial information
may not necessarily be indicative of
the financial
position and results of operations had the combined
Parent and Guarantors operated independently from
the Non-Guarantors.

33

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Summarized Balance Sheet

(in thousands)
Current assets(1)
Non-current assets
Current liabilities
Long-term liabilities(2)

March 28,
2020

$1,112,828
$2,346,759
$ 253,324
$1,901,756

(1) Includes

current

receivable

from Non-Guarantors

$484.2 million.

(2) Includes

non-current

payable

to Non-Guarantors

$249.9 million.

of

of

Summarized Statement of Operations

(in thousands)
Revenue
Gross profit
Net loss

Fiscal
Year 2020

$ 981,845
$ 108,096
$(254,769)

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
in the preparation of our consolidated
most critical
financial statements are those that are both important
to the presentation of our
financial condition and
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’
demand has shifted. Inventory reserves had an impact

34

on margins of less than 2% in fiscal years 2020 and
2019.

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
group 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 and used 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.

Business Acquisitions. We record goodwill when the
consideration paid for a business acquisition exceeds
the estimated fair value of the net identified tangible
and intangible assets acquired. Goodwill is assigned
to our reporting unit that is expected to benefit from
the synergies of the business combination.

A number of assumptions, estimates and judgments
are used in determining the fair value of acquired
assets and liabilities, particularly with respect to the
intangible assets acquired. The valuation of intangible
assets requires our use of valuation techniques such
as the income approach. The income approach
includes management’s estimation of
future cash
flows (including expected revenue growth rates and
profitability), the underlying product or technology life
cycles and the discount rates applied to future cash
flows.

Further judgment is required in estimating the fair
values of deferred tax assets and liabilities, uncertain
tax positions and tax-related valuation allowances,
which are initially estimated as of the acquisition date,
as well as inventory, property and equipment,
pre-existing liabilities or legal claims, deferred revenue
and contingent consideration, each as may be
applicable.

While we use our best estimates and assumptions to
value assets acquired and liabilities
accurately
assumed at the acquisition date as well as contingent
consideration, where applicable, our estimates are
inherently uncertain and subject to refinement. As a
result, during the measurement period, which may be
up to one year from the acquisition date, we may
record adjustments to the assets acquired and
liabilities assumed with the corresponding offset to
goodwill. Upon the conclusion of the measurement
period or final determination of the values of assets
acquired or liabilities assumed, whichever comes first,
any subsequent adjustments are recognized in our
Consolidated Statements of Operations.

annual

perform an

Goodwill. We
impairment
assessment of goodwill at the reporting unit level on
the first day of the fourth quarter in each fiscal year, or
more frequently if indicators of potential
impairment
exist. Reporting units, as defined by ASC 350,
“Intangibles — Goodwill and Other,” may be operating
segments as a whole or an operation one level below
an operating segment, referred to as a component.
We have determined that our reporting units are our
two operating and reportable segments, MP and IDP.

In accordance with ASC 350, we may assess
qualitative factors to determine whether it is more
likely than not that the fair value of a reporting unit is
less than its carrying value, including goodwill.

In performing a qualitative assessment, we consider
(i) our overall historical and projected future operating
results, (ii) if there was a significant decline in our
stock price for a sustained period, (iii) if there was a
significant change in our market capitalization relative
to our net book value, and (iv) if there was a prolonged
or more significant slowdown in the worldwide
economy of the semiconductor industry, as well as
other
relevant events and factors affecting the
reporting unit. If we assess these qualitative factors
and conclude that it is more likely than not that the
fair value of a reporting unit is less than its carrying
amount, or if we decide not to perform a qualitative
assessment, then a quantitative impairment test is
performed.

In fiscal
years 2019 and 2018, we completed
qualitative assessments and concluded that based on
the relevant facts and circumstances, it was more
likely than not that each reporting unit’s fair value
exceeded its related carrying value and no further
impairment testing was required.

a

fiscal 2020, we

performed
test. Our quantitative impairment

quantitative
In
impairment
test
considered both the income approach and the market
approach to estimate each reporting unit’s fair value.
Under the income approach, the fair value of each
reporting unit
is based on the present value of
estimated future cash flows. Cash flow projections are
based on our estimates of revenue growth rates and
operating margins, taking into consideration industry

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

the relevant

and market conditions. The discount
rate used to
determine the present value of future cash flows is
based on the weighted-average cost of capital
adjusted for
risk associated with
business-specific characteristics and the uncertainty
related to the business’s ability to execute on the
projected cash flows. The market approach estimates
fair value based on market multiples of revenue and
earnings derived from comparable publicly traded
companies with similar operating and investment
characteristics. The resulting fair value, based on the
income and market approaches, is then compared to
the carrying value to determine if
is
necessary.

impairment

As a result of the quantitative analysis performed in
fiscal 2020, it was determined that the fair value of
each of our
reporting units substantially exceeded
their carrying values. As the assumptions used in the
income approach and market approach can have a
material impact on the fair value determinations, we
performed a sensitivity analysis of key assumptions
used in the assessment and determined that a one
percentage point increase in the discount rate along
with a one percentage point decrease in the long-term
growth rate would not
in an impairment of
result
goodwill for either reporting unit and their fair values
substantially exceeded their carrying values.

of

development,

relationships,

IPRD assets

trade names,

Identified Intangible Assets. We amortize finite-lived
intangible assets (including developed technology,
customer
technology
licenses and backlog) over their estimated useful life.
In-process research and development (“IPRD”) assets
represent the fair value of incomplete R&D projects
that had not reached technological feasibility as of the
date of the acquisition; initially, these are classified
as IPRD and are not subject to amortization. Upon
are
completion
transferred to developed technology and are amortized
over their useful lives. The asset balances relating to
abandoned projects are impaired and expensed to
R&D. We perform a quarterly review of significant
facts and
intangible assets to determine whether
factors such as
circumstances (including external
industry and economic trends and internal
factors
such as changes in our business strategy and
forecasts) indicate that the carrying amount of the
assets may not be recoverable.
If such facts and
circumstances exist, we assess the recoverability of
identified intangible assets by comparing the projected
undiscounted net cash flows associated with the
related asset or group of assets over their remaining
lives against
respective carrying amounts.
Impairments, if any, are based on the excess of the
carrying amounts over the fair value of those assets
in the period in which the impairment
and occur
determination was made.

their

Revenue Recognition. We generate revenue primarily
from the sale of semiconductor products, either
to a distributor, or at
directly to a customer or
completion of a consignment process. Revenue is

35

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

is

from our

recognized

recognized when control of the promised goods or
services is transferred to our customers, in an amount
that reflects the consideration we expect to be entitled
in exchange for those goods or services. A majority of
our revenue is recognized at a point in time, either on
shipment or delivery of the product, depending on
individual customer terms and conditions. Revenue
from sales to our distributors is recognized upon
shipment of the product to the distributors (sell-in).
Revenue
consignment
programs at a point in time when the products are
pulled from consignment inventory by the customer.
Revenue recognized for products and services over-
time is immaterial (less than 2% of overall revenue).
We apply a five-step approach as defined in ASC 606,
“Revenue
in
determining the amount and timing of revenue to be
recognized:
the contract with a
customer; (2) identifying the performance obligations
in the contract; (3) determining the transaction price;
(4) allocating the transaction price to the performance
obligations in the contract; and (5) recognizing revenue
when the corresponding performance obligation is
satisfied.

from Contracts with Customers,”

identifying

(1)

Sales agreements are in place with certain customers
and contain terms and conditions with respect
to
payment, delivery, warranty and supply, but typically do
not require minimum purchase commitments. In the
absence of a sales agreement, our standard terms
and conditions apply. We consider a customer’s
purchase order, which is governed by a sales
agreement or our standard terms and conditions, to
be the contract with the customer.

or

to

determine

Our pricing terms are negotiated independently, on a
stand-alone basis.
In determining the transaction
price, we evaluate whether the price is subject to a
net
the
adjustment
refund
consideration to which we expect
to be entitled.
Variable consideration in the form of rebate programs
is offered to certain customers, including distributors.
A majority of these rebates are accrued and classified
as a contra accounts receivable and represent less
than 5% of net
revenue. We determine variable
consideration by estimating the most likely amount of
consideration we expect to receive from the customer.
Our terms and conditions do not give our customers a
right of return associated with the original sale of our
products. However, we may authorize sales returns
under certain circumstances, which include courtesy
returns and like-kind exchanges. Sales returns are
classified as a refund liability. We reduce revenue and
record reserves for product returns and allowances,
rebate programs and scrap allowance based on
identification
historical
or
the
of
depending
arrangement.

experience
on

contractual

specific

terms

the

Our accounts receivable balance is from contracts with
customers and represents our unconditional right to
receive consideration from our customers. Payments

36

are due upon completion of
the performance
obligation and subsequent invoicing. Substantially all
payments are collected within our standard terms,
which do not include any financing components. To
date, there have been no material impairment losses
on accounts receivable. Contract assets and contract
liabilities recorded on the Consolidated Balance
Sheets were immaterial as of March 28, 2020 and
March 30, 2019.

We invoice customers upon shipment and recognize
revenues in accordance with delivery terms. As of
March 28, 2020, we had $37.8 million in remaining
unsatisfied performance obligations with an original
duration greater than one year, of which the majority is
expected to be recognized as income over the next 12
months.

We include shipping charges billed to customers in
“Revenue” and include the related shipping costs in
“Cost of goods sold” in the Consolidated Statements
government
of Operations.
authorities
transactions,
on
including tariffs, value-added and excise taxes, are
Consolidated
from revenue
excluded
Statements of Operations.

Taxes assessed by
revenue-producing

the

in

contracts

customers.

We incur commission expense that is incremental to
obtaining
Sales
with
commissions (which are recorded in the “Selling,
general and administrative” expense line item in the
Consolidated Statements of Operations) are expensed
when incurred because such commissions are not
owed until
the performance obligation is satisfied,
which coincides with the end of the contract term, and
therefore no remaining period exists over which to
amortize the commissions.

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 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
deferred tax assets that are estimated not
to
In this process, certain
ultimately be recoverable.
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
in taxable income, market
conditions, U.S. or
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 13 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

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Interest Rate Risk
We are exposed to interest rate risk via the terms of
our Credit Facility, which is comprised of a Term Loan
and Revolving Facility with interest rates (see Note 9
of the Notes to the Consolidated Financial Statements
this report). The
set
outstanding balance related to the Credit Facility as of
March 28, 2020 was $100.0 million. A potential
change in the associated interest
rates would be
immaterial to the results of our operations.

forth in Part

Item 8 of

II,

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
regarding the sustainability of our
reporting
positions may change in the future due to changes in
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 13 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

tax

RECENT ACCOUNTING PRONOUNCEMENTS

a

of

description

accounting
For
pronouncements, including those recently adopted and
not yet effective, see Note 1 of the Notes to the
Consolidated Financial Statements set forth in Part II,
Item 8 of this report.

recent

ITEM 7A. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

financial

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

Foreign Currency Exchange Rate Risk
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,
Central America and Europe, and a substantial portion
of our revenue is derived from sales to customers
outside the U.S. Our international revenue is primarily
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
foreign operations will be
operating expenses for
higher when remeasured back into U.S. dollars. We
seek to manage our foreign currency exchange risk in
part through operational means.

some

If

For fiscal 2020, we incurred a foreign currency loss of
$2.2 million as compared to a loss of $2.1 million in
fiscal 2019, which is recorded in “Other
income
(expense).”

financial

instrument holdings,

including foreign
Our
receivables, cash and payables at March 28, 2020,
were analyzed to determine their sensitivity to foreign
exchange rate changes. In this sensitivity analysis, we
the change in one currency’s rate
assumed that
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 $2.8 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
$2.3 million.

37

commodities. We

Commodity Price Risk
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
active
such
reclamation process to capture any unused gold.
While we attempt to mitigate the risk of 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

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Equity Price Risk
Our marketable equity investments in publicly traded
companies are subject to equity market price risk.
Accordingly, a fluctuation in the price of each equity
security could have an adverse impact on the fair
value of our investments. As of March 28, 2020, our
equity investments were immaterial (see Note 7 of the
Notes to the Consolidated Financial Statements set
forth in Part II, Item 8 of this report).

38

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firms

Page

40

41

42

43

44

45

72

39

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

ASSETS
Current assets:

March 28,
2020

March 30,
2019

Cash and cash equivalents
Accounts receivable, less allowance of $55 and $40 as of March 28, 2020 and

$ 714,939 $ 711,035

March 30, 2019, respectively

Inventories
Prepaid expenses
Other receivables
Other current assets

Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Long-term investments
Other non-current assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable
Accrued liabilities
Current portion of long-term debt
Other current liabilities

Total current liabilities
Long-term debt
Other long-term liabilities

Total liabilities
Commitments and contingent liabilities (Note 11)
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; 114,625 and 119,063 shares issued and outstanding at March 28,
2020 and March 30, 2019, respectively

Accumulated other comprehensive income (loss), net of tax
Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

367,172
517,198
37,872
15,016
38,305
1,690,502
1,259,203
2,614,274
808,892
22,515
165,296

378,172
511,793
25,766
21,934
36,141
1,684,841
1,366,513
2,173,889
408,210
97,786
76,785

$6,560,682 $5,808,024

$ 246,954 $ 233,307
160,516
80
41,711

217,801
6,893
67,355

539,003
1,567,231
161,783

435,614
920,935
91,796

2,268,017

1,448,345

—

—

4,290,377
2,288
—

4,687,455
(6,624)
(321,152)

4,292,665

4,359,679

$6,560,682 $5,808,024

See accompanying notes.

40

CONSOLIDATED STATEMENTS OF OPERATIONS

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

(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

Total operating expenses

Operating income

Interest expense

Interest income

Other income (expense)

Income before income taxes

Income tax (expense) benefit

Net income (loss)

Net income (loss) per share:

Basic

Diluted

Weighted average shares of common stock outstanding:

Basic

Diluted

2020

Fiscal Year
2019

2018

$3,239,141 $3,090,325 $2,973,536

1,917,378

1,895,142

1,826,570

1,321,763

1,195,183

1,146,966

484,414

343,569

70,564

450,482

476,074

52,161

445,103

527,751

103,830

898,547

978,717

1,076,684

423,216

216,466

70,282

(60,392)

(43,963)

(59,548)

12,066

20,199

10,971

(91,682)

7,017

(606)

395,089

91,792

17,145

(60,764)

41,333

(57,433)

$ 334,325 $ 133,125 $

(40,288)

$

$

2.86 $

1.07 $

(0.32)

2.80 $

1.05 $

(0.32)

117,007

124,534

126,946

119,293

127,356

126,946

See accompanying notes.

41

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Net income (loss)

Total comprehensive income (loss):

2020

Fiscal Year
2019

2018

$334,325 $133,125 $(40,288)

Unrealized gain on available-for-sale debt 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

—

501

85

(651)

204

476

7,923

(3,396)

1,276

Reclassification adjustments, net of tax:

Foreign currency loss (gain) recognized and included in net income (loss)

Amortization of pension actuarial loss

Other comprehensive income (loss)

Total comprehensive income (loss)

353

135

—

90

(581)

179

8,912

(3,872)

1,554

$343,237 $129,253 $(38,734)

See accompanying notes.

42

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

(In thousands)

Balance, April 1, 2017

Net loss
Other comprehensive income
Exercise of stock options and vesting of restricted
stock units, net of shares withheld for employee
taxes

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

Balance, March 31, 2018

Net income
Other comprehensive loss
Exercise of stock options and vesting of restricted
stock units, net of shares withheld for employee
taxes

Issuance of common stock in connection with

employee stock purchase plan

Cumulative-effect adoption of ASU 2014-09
Repurchase of common stock, including transaction

costs

Stock-based compensation

Balance, March 30, 2019

Net income
Other comprehensive income
Exercise of stock options and vesting of restricted
stock units, net of shares withheld for employee
taxes

Issuance of common stock in connection with

employee stock purchase plan

Cumulative-effect adoption of ASU 2016-02
Repurchase of common stock, including transaction

costs

Stock-based compensation
Other

Balance, March 28, 2020

Common Stock

Shares

Amount

Accumulated
Other
Comprehensive
Income (Loss)

Accumulated
Deficit

Total

126,464

$5,357,394

$(4,306)

$(456,366) $4,896,722

—
—

—
—

—
1,554

(40,288)
—

(40,288)
1,554

2,246

4,735

541
—
—

28,064
—
—

(2,929)
—

(219,907)
66,799

—

—
—
—

—
—

—

4,735

—
36,684
1,201

28,064
36,684
1,201

—
—

(219,907)
66,799

126,322

$5,237,085

$(2,752)

$(458,769) $4,775,564

—
—

—
—

—
(3,872)

133,125
—

133,125
(3,872)

1,368

(10,833)

468
—

26,817
—

(9,095)
—

(638,074)
72,460

—

—
—

—
—

—

(10,833)

—
4,492

26,817
4,492

—
—

(638,074)
72,460

119,063

$4,687,455

$(6,624)

$(321,152) $4,359,679

—
—

—
—

—
8,912

334,325
—

334,325
8,912

1,551

(974)

452
—

28,657
—

(6,441)
—
—

(501,868)
77,107
—

—

—
—

—
—
—

—

—
69

(974)

28,657
69

(13,263)
—
21

(515,131)
77,107
21

114,625

$4,290,377

$ 2,288

$

— $4,292,665

See accompanying notes.

43

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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

$

334,325 $ 133,125 $ (40,288)

2020

Fiscal Year

2019

2018

activities:
Depreciation
Intangible assets amortization
Loss on debt extinguishment
Deferred income taxes
Foreign currency adjustments
Gain on Cavendish investment
Loss on impairment of equity investment
Asset impairment
Stock-based compensation expense
Other, net
Changes in operating assets and liabilities:

Accounts receivable, net
Inventories
Prepaid expenses and other current and non-current assets
Accounts payable
Accrued liabilities
Income taxes payable and receivable
Other liabilities

Net cash provided by operating activities

Investing activities:

Purchase of property and equipment
Purchase of available-for-sale debt securities
Proceeds from sales and maturities of available-for-sale debt securities
Purchase of businesses, net of cash acquired
Other investing

Net cash used in investing activities

Financing activities:

Repurchase and payment of debt
Proceeds from borrowings and debt issuances
Repurchase of common stock, including transaction costs
Proceeds from the issuance of common stock
Tax withholding paid on behalf of employees for restricted stock units
Other financing

Net cash provided by (used in) financing activities
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 end of the period

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

221,632
247,299
—
(11,099)
(1,300)
(43,008)
18,339
1,057
75,978
10,178

21,029
10,252
(14,513)
15,425
48,670
12,935
(1,553)
945,646

(164,104)
—
1,950
(946,043)
2,455
(1,105,742)

208,646
454,451
90,201
(70,169)
(2,376)
—
—
15,901
71,580
5,087

(32,119)
(39,590)
13,343
15,167
(3,899)
(38,206)
(10,778)
810,364

(220,937)
(132,732)
133,132
—
(27,017)
(247,554)

— (1,050,680)
905,350
(638,074)
41,289
(24,835)
(9,714)

659,000
(515,131)
50,198
(21,791)
(6,717)

165,559
(1,233)

4,230
711,382

(776,664)
(1,166)

(215,020)
926,402

174,425
539,790
928
(32,248)
953
—
—
46,315
68,158
3,792

12,906
(41,887)
28,310
38,952
(2,623)
50,801
4,236
852,520

(269,835)
—
—
—
(7,574)
(277,409)

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

(196,848)
2,360

380,623
545,779

$

$

$

$

715,612 $ 711,382 $ 926,402

54,445 $

64,853 $ 70,208

55,513 $

69,453 $ 41,478

22,904 $

37,728 $ 31,769

See accompanying notes.

44

Qorvo, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 28, 2020

1.

THE COMPANY AND ITS SIGNIFICANT
ACCOUNTING POLICIES

Qorvo, Inc. was formed as the result of a business
combination (the “Business Combination”) of RF Micro
Devices, Inc. (“RFMD”) and TriQuint Semiconductor,
Inc. (“TriQuint”), which closed on January 1, 2015.

and wired

connectivity.

The Company is a leader in the development and
commercialization of technologies and products for
The Company
wireless
innovative radio
combines a broad portfolio of
frequency
differentiated
semiconductor technologies, systems-level expertise
and global manufacturing scale to supply diverse
customers a broad range of products that enable a
more connected world.

solutions,

(“RF”)

highly

The Company’s design expertise and manufacturing
capabilities span multiple semiconductor process
technologies. The Company’s primary wafer fabrication
facilities are located in North Carolina, Oregon and
Texas and its primary assembly and test facilities are
located in China, Costa Rica, Germany and Texas. The
Company
and
sources multiple
materials through external suppliers. The Company
operates design, sales and other manufacturing
facilities throughout Asia, Europe and North America.

products

also

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
and
in
been
consolidation. Certain items in the fiscal years 2019
and 2018 financial statements have been reclassified
to conform to the fiscal 2020 presentation.

transactions

eliminated

have

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 28,
2020, March 30, 2019 and March 31, 2018. Fiscal
years 2020, 2019 and 2018 were 52-week years.

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
reported amounts of assets, liabilities, revenue and
expenses, and the disclosure of contingent liabilities.
The Company evaluates its estimates on an ongoing
basis, including those related to revenue recognition,
product warranty obligations, valuation of inventories,
tax related contingencies, valuation of long-lived and

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

intangible assets, other contingencies and litigation,
among others. The Company generally bases its
estimates on historical experience, expected future
conditions and third-party evaluations. Accounting
estimates require difficult and subjective judgments
and actual results may differ from the Company’s
estimates, particularly in light of
the uncertainty
relating to the impact of the recent novel coronavirus
(COVID-19) outbreak. Certain accounting estimates
that generally require consideration of expected future
conditions were assessed by taking into account
anticipated impacts from the COVID-19 outbreak as of
March 28, 2020 and through the date of this Annual
Report on Form 10-K using reasonably available
information as of those dates.

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.

tax,

Investments
The Company’s available-for-sale debt securities
(consisting of auction rate securities in fiscal 2019)
are carried at fair value with the changes in unrealized
gains and losses, net of
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
income (expense).” The cost of available-for-sale debt
securities is adjusted for premiums and discounts,
with the amortization or accretion of such amounts
interest. Available-for-sale
included as a portion of
debt securities with an original maturity date greater
than three months and less than one year are
classified as current
investments. Available-for-sale
securities with an original maturity date
debt
exceeding one year are classified as long-term.

Marketable equity securities consist of common stock
in publicly-traded companies and are carried at fair
value with both the realized and unrealized gains and
income (expense).” Fair
losses reported in “Other
values
are
publicly-traded
determined using quoted prices in active markets. The
marketable equity securities are classified as short-
term based on their highly liquid nature and are
recorded in “Other current assets” in the Consolidated
Balance Sheets.

securities

equity

of

The Company invests in limited partnerships which are
accounted for using the equity method. These equity
method investments are classified as “Long-term
investments” in the Consolidated Balance Sheets. The
Company records its share of the financial results of
the limited partnerships in “Other income (expense)”
in the Company’s Consolidated Statements of
Operations.

The Company also invests in privately-held companies
for which the fair value of the investment is not readily
determinable. These equity investments without a

45

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

readily determinable fair value are measured at cost
less impairment, adjusted for any
changes in
observable prices, and are classified as “Long-term
investments” in the Consolidated Balance Sheets. The
Company assesses these investments for impairment
on a quarterly basis and considers both qualitative
and quantitative factors that may have a significant
impact on the investee’s fair value. Qualitative factors
considered include the investee’s financial condition
and business outlook, market for technology and other
relevant events and factors affecting the investee.
Investments are impaired when their fair value is less
than their carrying value.

its

The

valuation

Company

technique.

Fair Value Measurement
The Company measures and reports certain financial
assets and liabilities on a recurring basis. Fair value is
the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction
the measurement
between market participants at
date.
financial
instruments carried at fair value into a three-level fair
value hierarchy, based on the priority of inputs to the
three-level
respective
hierarchy for fair value measurement is described as
follows:
‰ Level 1—includes instruments for which inputs are
quoted prices in active markets for identical assets
or liabilities that the Company has the ability to
access.

categorizes

‰ Level 2—includes instruments for which the inputs
are other than quoted prices that are observable for
the asset or liability, either directly or indirectly, and
fair value can be determined through the use of
models or other valuation methodologies that do not
require significant
judgment since the inputs are
corroborated by readily observable data.

The

‰ Level 3—includes

are

based

instruments

the
valuations
are
unobservable and significant to the overall fair value
measurement. These inputs are supported by little
the use of
or no market activity and reflect
significant management judgment.

for which
that

inputs

on

The Company also holds assets whose fair value is
measured and recorded on a nonrecurring basis.
These assets include equity method investments,
equity investments without a readily determinable fair
value, and certain non-financial assets, such as
intangible assets and property and equipment. See
Note 7 for further information on equity investments
without a readily determinable fair value and Note 12
for further information on impairment of property and
equipment.

The carrying values of cash and cash equivalents,
accounts receivable, accounts payable and other

46

relatively

accrued liabilities approximate fair values because of
the
these
of
instruments. See Note 9 for
further disclosures
related to the fair value of the Company’s long-term
debt.

short-term maturities

average

approximates

Inventories
Inventories are stated at the lower of cost or net
is based on standard cost,
realizable value (cost
which
The
actual
cost).
to the risk of
Company’s business is subject
technological and design changes. The Company
evaluates inventory levels quarterly against sales
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 “Cost of goods sold”
in the period incurred rather than as a portion of
inventory cost.

inventory cost, net of

In the event

risk.

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 also not significant during the
periods presented.

losses,
estimated

incurred

for

Property and Equipment
Property and equipment are stated at cost,
less
accumulated depreciation. Depreciation of property
and equipment
is computed using the straight-line
method over the estimated useful lives of the assets,
ranging from one year
to 39 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
under finance leases and 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

Notes to Consolidated Financial Statements

government grants earned as a reduction to property
and equipment and depreciates such grants over the
estimated useful lives of the associated assets.

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
If the Company determines that the
usage trends.
lives of its assets are shorter or longer than
useful
the rate of depreciation is
originally estimated,
adjusted to reflect
the
assets.

the revised useful

lives of

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 and
used by comparing the projected undiscounted net
cash flows associated with the related asset or group
of assets over their remaining estimated useful lives
respective carrying amounts. Assets
against
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

Leases
The Company determines that a contract contains a
lease at lease inception if the contract conveys the
right to control the use of an identified asset for a
period of
In
evaluating whether the right to control an identified
asset exists, the Company assesses whether it has
the right to direct the use of the identified asset and
obtain substantially all of the economic benefit from
the use of the identified asset.

time in exchange for consideration.

Right-of-use assets and liabilities are recognized at the
lease commencement date based on the present
value of lease payments over the lease term. The
Company uses its estimated incremental borrowing
rate in determining the present value of
lease
payments considering the term of the lease, which is
derived from information available at
the lease
commencement date. The lease term includes renewal
options when it is reasonably certain that the option
will be exercised and excludes termination options. To
the Company’s agreements have
the extent

that

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

the Company

includes
variable lease payments,
variable lease payments that depend on an index or a
rate and excludes those that depend on facts or
circumstances occurring after
the commencement
date, other than the passage of time.

Business Acquisitions
The Company records goodwill when the consideration
paid for a business acquisition exceeds the estimated
fair value of the net identified tangible and intangible
assets acquired. Goodwill
is assigned to the
Company’s reporting unit that is expected to benefit
from the synergies of the business combination.

A number of assumptions, estimates and judgments
are used in determining the fair value of acquired
assets and liabilities, particularly with respect to the
intangible assets acquired. The valuation of intangible
assets requires the Company
to use valuation
techniques such as the income approach. The income
approach includes management’s estimation of future
cash flows (including expected revenue growth rates
and profitability), the underlying product or technology
life cycles and the discount rates applied to future
cash flows.

Judgment is also required in estimating the fair values
of deferred tax assets and liabilities, uncertain tax
positions and tax-related valuation allowances, which
are initially estimated as of the acquisition date, as
well as inventory, property and equipment, pre-existing
liabilities or
legal claims, deferred revenue and
contingent consideration, each as may be applicable.

applicable,

consideration, where

While the Company uses its best estimates and
assumptions to accurately value assets acquired and
liabilities assumed at the acquisition date as well as
contingent
the
Company’s estimates are inherently uncertain and
subject
to refinement. As a result, during the
measurement period, which may be up to one year
from the acquisition date, the Company may record
adjustments to the assets acquired and liabilities
assumed with the corresponding offset to goodwill.
Upon the conclusion of the measurement period or
final determination of the values of assets acquired or
liabilities assumed, whichever
comes first, any
subsequent adjustments are recognized in the
Consolidated Statements of Operations.

an

performs

Goodwill
impairment
The Company
assessment of goodwill at the reporting unit level on
the first day of the fourth quarter in each fiscal year, or
impairment
more frequently if indicators of potential
exist. Reporting units, as defined by
Financial
Accounting Standards Board (“FASB”) Accounting

annual

47

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

Standards Codification (“ASC”) 350, “Intangibles —
Goodwill and Other,” may be operating segments as a
whole or an operation one level below an operating
segment, referred to as a component. The Company has
determined that its reporting units are its two operating
and reportable segments, Mobile Products (“MP”) and
Infrastructure and Defense Products (“IDP”).

In accordance with ASC 350,
the Company may
assess qualitative factors to determine whether it is
more likely than not that the fair value of a reporting
unit is less than its carrying value, including goodwill.

In performing a qualitative assessment, the Company
considers (i) its overall historical and projected future
operating results, (ii) if there was a significant decline
in the Company’s stock price for a sustained period,
(iii) if there was a significant change in the Company’s
market capitalization relative to its net book value,
and (iv) if there was a prolonged or more significant
the
of
in
slowdown
semiconductor
relevant
events and factors affecting the reporting unit. If the
Company assesses these qualitative factors and
concludes that it is more likely than not that the fair
value of a reporting unit
is less than its carrying
amount, or if the Company decides not to perform a
qualitative
quantitative
impairment test is performed.

economy
the worldwide
industry, as well as other

assessment,

then

a

years 2019 and 2018,

In fiscal
the Company
completed qualitative assessments and concluded
that based on the relevant facts and circumstances, it
was more likely than not that each reporting unit’s fair
value exceeded its related carrying value and no
further impairment testing was required.

The

test.

Company’s

In fiscal 2020, the Company performed a quantitative
quantitative
impairment
impairment test considered both the income approach
and the market approach to estimate each reporting
unit’s fair value. Under the income approach, the fair
value of each reporting unit is based on the present
value of estimated future cash flows. Cash flow
projections are based on the Company’s estimates of
revenue growth rates and operating margins, taking
into consideration industry and market conditions. The
discount rate used to determine the present value of
future cash flows is based on the weighted-average
cost of
risk
associated with business-specific characteristics and
the uncertainty related to the business’s ability to
execute on the projected cash flows. The market
approach estimates fair value based on market
multiples of
revenue and earnings derived from
comparable publicly traded companies with similar
The
operating

capital adjusted for

characteristics.

the relevant

investment

and

48

resulting fair value, based on the income and market
approaches, is then compared to the carrying value to
determine if impairment is necessary.

As a result of the quantitative analysis performed in
fiscal 2020, it was determined that the fair value of
each of the Company’s reporting units substantially
exceeded their carrying values. As the assumptions
used in the income approach and market approach
can have a material
value
determinations, the Company performed a sensitivity
analysis of key assumptions used in the assessment
and determined that a one percentage point increase
in the discount rate along with a one percentage point
decrease in the long-term growth rate would not result
in an impairment of goodwill for either reporting unit
and their
fair values substantially exceeded their
carrying values.

impact on the fair

developed

technology,

Identified Intangible Assets
The Company amortizes finite-lived intangible assets
(including
customer
relationships, trade names, technology licenses and
life. In-process
backlog) over their estimated useful
research and development (“IPRD”) assets represent
the fair value of incomplete research and development
(“R&D”) projects that had not reached technological
feasibility as of the date of the acquisition and are
initially not subject to amortization. Upon completion
of development,
IPRD assets are transferred to
developed technology and are amortized over their
useful lives. The asset balances relating to abandoned
projects are impaired and expensed to R&D. The
Company performs a quarterly review of significant
facts and
intangible assets to determine whether
factors such as
circumstances (including external
industry and economic trends and internal
factors
such as changes in the Company’s business strategy
and forecasts) indicate that the carrying amount of the
assets may not be recoverable.
If such facts and
circumstances exist,
the Company assesses the
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 amounts over the fair value
of those assets and occur in the period in which the
impairment determination was made.

remaining lives against

their

their

Accrued Liabilities
The “Accrued liabilities” balance as of March 28,
2020 and March 30, 2019,
includes accrued
compensation and benefits of $126.1 million and
$93.2 million, respectively, and interest payable of
$22.8 million and $11.2 million, respectively.

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Revenue Recognition
The Company generates revenue primarily from the
sale of semiconductor products, either directly to a
customer or to a distributor, or at completion of a
consignment process. Revenue is recognized when
the promised goods or services is
control of
transferred to the Company’s customers,
in an
amount that reflects the consideration to which the
Company expects to be entitled in exchange for those
the Company’s
goods or services. A majority of
revenue is recognized at a point in time, either on
shipment or delivery of the product, depending on
individual customer terms and conditions. Revenue
from sales to the Company’s distributors is recognized
to the distributors
the product
upon shipment of
(sell-in). Revenue is recognized from the Company’s
consignment programs at a point in time when the
products are pulled from consignment inventory by the
customer. Revenue recognized for products and
services over time is immaterial
(less than 2% of
overall
revenue). The Company applies a five-step
approach as defined in ASC 606, “Revenue from
Contracts with Customers,” in determining the amount
and timing of revenue to be recognized: (1) identifying
identifying the
the contract with a customer;
performance
contract;
in
(3) determining the transaction price; (4) allocating the
transaction price to the performance obligations in the
recognizing revenue when the
contract; and (5)
corresponding performance obligation is satisfied.

obligations

the

(2)

Sales agreements are in place with certain customers
and contain terms and conditions with respect
to
payment, delivery, warranty and supply, but typically do
not require minimum purchase commitments. In the
absence of a sales agreement,
the Company’s
standard terms and conditions apply. The Company
considers a customer’s purchase order, which is
governed by a sales agreement or the Company’s
standard terms and conditions, to be the contract with
the customer.

are

terms

pricing

to refund or adjustment

negotiated
The Company’s
independently, on a stand-alone basis. In determining
the transaction price, the Company evaluates whether
the price is subject
to
determine the net consideration to which the Company
expects to be entitled. Variable consideration in the
form of
rebate programs is offered to certain
customers, including distributors. A majority of these
rebates are accrued and classified as a contra
accounts receivable and represent less than 5% of net
revenue.
variable
consideration by estimating the most likely amount of
consideration it expects to receive from the customer.
The Company’s terms and conditions do not give its

determines

Company

The

include

courtesy

its products. However,

customers a right of return associated with the original
sale of
the Company may
authorize sales returns under certain circumstances,
which
like-kind
exchanges. Sales returns are classified as a refund
liability. The Company reduces revenue and records
reserves for product returns and allowances, rebate
programs and scrap allowance based on historical
experience or specific identification depending on the
contractual terms of the arrangement.

returns

and

of

the

due

and

customers

represents

are
obligation

customers. Payments
performance

The Company’s accounts receivable balance is from
contracts with
the
Company’s unconditional right to receive consideration
upon
from its
completion
and
subsequent invoicing. Substantially all payments are
collected within the Company’s standard terms, which
do not include any financing components. To date,
impairment losses on
there have been no material
accounts receivable. Contract assets and contract
liabilities recorded on the Consolidated Balance
Sheets were immaterial as of March 28, 2020 and
March 30, 2019.

The Company invoices customers upon shipment and
recognizes revenues in accordance with delivery
terms. As of March 28, 2020,
the Company had
$37.8 million in remaining unsatisfied performance
obligations with an original duration greater than one
year, of which the majority
is expected to be
recognized as income over the next 12 months.

The Company includes shipping charges billed to
customers in “Revenue” and includes the related
shipping costs in “Cost of goods sold” in the
Consolidated Statements
Taxes
assessed by government authorities on revenue-
producing transactions, including tariffs, value-added
and excise taxes, are excluded from revenue in the
Consolidated Statements of Operations.

of Operations.

is
The Company incurs commission expense that
to obtaining contracts with customers.
incremental
Sales commissions (which are recorded in the
“Selling, general and administrative” expense line
item in the Consolidated Statements of Operations)
are
such
incurred
because
the performance
commissions are not owed until
obligation is satisfied, which coincides with the end of
the contract term, and therefore no remaining period
exists over which to amortize the commissions.

expensed

when

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

49

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

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
reporting and tax basis of
between the financial
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.

is the Company’s current

It
intent and policy to
repatriate certain previously taxed earnings of foreign
subsidiaries from outside the U.S. Accordingly, the
Company recognizes a deferred tax liability for income
taxes on certain unremitted foreign earnings of foreign
subsidiaries. For earnings which remain permanently
reinvested,
to estimate the
additional tax that would be incurred, if any, if the
permanently reinvested earnings were repatriated.

is not practical

it

ASC

718,

Stock-Based Compensation
“Compensation — Stock
Under
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 28, 2020,
compensation cost
related to unvested restricted
stock units was $87.4 million, which will be amortized
over the weighted-average remaining service period of
approximately 1.3 years.

Foreign Currency Translation
The financial statements of foreign subsidiaries have
been translated into U.S. dollars in accordance with
ASC 830, “Foreign Currency Matters.” The functional
the Company’s international
currency for most of
operations is the U.S. dollar. The functional currency
for
foreign
subsidiaries is the local
currency. Assets and
liabilities denominated in foreign currencies are
translated using the exchange rates on the balance

the Company’s

remainder

the

of

50

sheet dates. Revenues and expenses are translated
using the average exchange rates throughout the year.
Translation adjustments are shown separately as a
component of “Accumulated other comprehensive
income (loss)” within “Stockholders’ equity” in the
currency
Consolidated Balance Sheets.
transaction gains or losses (transactions denominated
in a currency other than the functional currency) are
reported
the
income
Consolidated Statements of Operations.

(expense)”

Foreign

“Other

in

in

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Effective
In June 2016, the FASB issued Accounting Standards
Update (“ASU”) 2016-13, “Financial
Instruments —
Credit Losses (Topic 326): Measurement of Credit
Losses on Financial
Instruments,” which requires a
current lifetime expected credit loss methodology to
be used to measure impairments of accounts
receivable and other
financial assets. Using this
methodology will result in earlier recognition of losses
than under the current incurred loss approach, which
requires waiting to recognize a loss until it is probable
of being incurred. This standard will be effective for
the Company in the first quarter of fiscal 2021 and will
be adopted using the modified retrospective transition
method. Upon adoption, the standard is expected to
the Company’s accounting for credit
only impact
losses related to accounts receivable. In preparation
for the adoption of the new standard, the Company
has updated certain policies and related processes,
but does not expect the adoption of this new guidance
impact on its Consolidated
will have a material
Financial Statements.

Accounting Pronouncements Recently Adopted
In February 2016, the FASB issued ASU 2016-02,
“Leases (Topic 842),” with multiple amendments
subsequently issued. The new guidance required that
lease arrangements be presented on the lessee’s
balance sheet by recording a right-of-use asset and a
lease liability equal to the present value of the related
future minimum lease payments. The Company
adopted the standard in the first quarter of
fiscal
2020, using the modified retrospective approach
which permits lessees to recognize a cumulative-effect
adjustment to the opening balance of accumulated
deficit in the period of adoption. Upon adoption, the
of
Company
$70.7
of
a
$75.0 million. The difference between the right-of-use
asset and lease liability is primarily attributed to a
deferred rent liability which existed under ASC 840,
“Leases.”

right-of-use
lease

asset
liability

recorded

million

and

a

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

The Company elected the transition package of
practical expedients, under which the Company did not
have to reassess (1) whether any expired or existing
contracts are leases, or contain leases, (2) the lease
classification for any expired or existing leases, and
(3) initial direct costs for any existing leases. Further,
the Company elected the practical expedient not to
separate lease and non-lease components
for
substantially all of
leases and to
the combined lease and non-lease
account
components as a single lease component. In addition,
the Company made an accounting policy election to
exclude leases with an initial term of 12 months or
less from the balance sheet.

its classes of

for

The adoption of this standard resulted in a cumulative-
effect adjustment to accumulated deficit of less than
$0.1 million. This standard did not have a material
impact on the Consolidated Statements of Operations
or Consolidated Statements of Cash Flows. See Note
8 for further disclosures resulting from the adoption of
this new standard.

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

Apple Inc. (“Apple”)(1)
Huawei Technologies Co., Ltd.
and affiliates (“Huawei”)

Fiscal Year
2020
2019
2018
33% 32% 36%

10% 15%

8%

(1) The Company provided its products to Apple through sales to

multiple contract manufacturers.

These customers primarily purchase RF solutions for a
variety of mobile devices.

Accounts receivable related to these customers (which
includes multiple contract manufacturers) accounted
for 35%, 49% and 26% of the Company’s total net
accounts receivable balance as of March 28, 2020,
March 30, 2019 and March 31, 2018, respectively.

On May 16, 2019,
suspended
shipments of products to Huawei after the Bureau of

the Company

Industry and Security (BIS) of the U.S. Department of
Commerce added Huawei Technologies Co., Ltd. and
over 100 of
its affiliates to the BIS’s Entity
List. Subsequently, the Company restarted shipments
from outside the U.S. of certain products that are not
subject to the Export Administration Regulations (EAR)
to Huawei
in compliance with the BIS order. The
Company has also applied for a license to ship other
products that are subject to the EAR, as required by
the rules governing the Entity List. Sales to Huawei will
continue to be impacted by trade restrictions.

3.

INVENTORIES

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

March 28, 2020 March 30, 2019

Raw materials
Work in process
Finished goods

Total inventories

$112,671
291,028
113,499
$517,198

$118,608
272,469
120,716
$511,793

4. 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 28, 2020 March 30, 2019
25,996
$

25,842 $

404,075

416,209

2,145,511
2,575,428

2,025,110
2,467,315

(1,415,397)
1,160,031
99,172

(1,218,507)
1,248,808
117,705

$ 1,259,203 $ 1,366,513

5. BUSINESS ACQUISITIONS

During fiscal 2020,
the Company completed the
acquisitions of Active-Semi International, Inc. (“Active-
Semi”), Cavendish Kinetics Limited (“Cavendish”),
Custom MMIC Design Services, Inc. (“Custom MMIC”)
and Decawave Limited (“Decawave”). The goodwill
resulting from these acquisitions is attributed to
synergies and other benefits that are expected to be
generated from these transactions.

The operating results of these companies, which were
not material either individually or in the aggregate for
fiscal 2020, have been included in the Company’s
consolidated
their
acquisition dates.

statements

financial

as

of

51

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

Active-Semi International, Inc.
On May 6, 2019, the Company acquired all of the
outstanding equity interests of Active-Semi, a private
fabless supplier of programmable analog power
management solutions, for a total purchase price of
the
$307.9 million.
Company’s product offerings for existing customers
and new customers in power management markets.

acquisition

expanded

The

The purchase price was allocated based on the
the assets acquired and
estimated fair values of
liabilities assumed as follows (in thousands):

Net tangible assets(1)
Intangible assets
Goodwill
Deferred tax liability, net

$ 22,876
158,400
130,802
(4,184)

$307,894

(1) Includes cash acquired of $10.0 million.

The more significant
intangible assets acquired
included developed technology of $76.7 million,
customer relationships of $40.9 million and IPRD of
$40.6 million.

fair

values of

The
the Active-Semi developed
technology and IPRD acquired were determined based
on an income approach using the “excess earnings
method,” which estimated the values of the intangible
assets by discounting the future projected earnings of
the asset to present value as of the valuation date.
The acquired developed technology assets are being
amortized on a straight-line basis over their estimated
useful lives of 5 to 9 years.

During fiscal 2020, $31.0 million of IPRD assets were
completed, transferred to finite-lived intangible assets,
and are being amortized over their estimated useful
lives of 5 to 7 years. The IPRD remaining as of
March 28, 2020 is expected to be completed during
fiscal 2021 with remaining costs to complete of less
than $2.0 million.

The fair value of Active-Semi customer relationships
acquired 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 asset and the profitability
of the Company “without” the asset. These customer
relationships are being amortized on a straight-line
basis over their estimated useful lives of 5 years.

The Company will continue to evaluate certain assets,
liabilities and tax estimates over the measurement
period (up to one year from the acquisition date).
Goodwill
recognized from the acquisition of Active-
Semi is not deductible for income tax purposes.

52

the Company recorded post-
During fiscal 2020,
combination compensation expense as well as other
acquisition and integration related costs associated
with the acquisition of Active-Semi of $25.3 million
and $4.2 million in “Other operating expense” and
“Cost of goods sold,” respectively, in the Consolidated
Statement of Operations.

of

high-performance

Cavendish Kinetics Limited
As of September 28, 2019, the Company had an
investment in preferred shares in Cavendish, a private
supplier
RF
microelectromechanical system (“MEMS”) technology
for antenna tuning applications, with a carrying value
of $59.4 million. The Company accounted for this
investment as an equity investment without a readily
value using the measurement
determinable fair
alternative
321,
with
accordance
“Investments–Equity Securities.”

ASC

in

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

previously

the remaining equity interest

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

investment

equity

held

The purchase price was calculated as follows (in
thousands):

Cash consideration paid to Cavendish
Fair value of equity interest previously

held by the Company

Total purchase price

$198,385

102,383

$300,768

The purchase price was allocated based on the
estimated fair values of
the assets acquired and
liabilities assumed as follows (in thousands):

Net tangible assets(1)
Intangible assets
Goodwill
Deferred tax liability, net

(1) Includes cash acquired of $1.8 million.

$

97
206,350
100,845
(6,524)

$300,768

Notes to Consolidated Financial Statements

The most significant intangible asset acquired was
developed technology of $206.0 million. The fair value
of the Cavendish developed technology acquired was
determined based on an income approach using the
“excess earnings method,” which estimated the value
the intangible asset by discounting the future
of
projected earnings of the asset to present value as of
the valuation date. This developed technology is being
amortized on a straight-line basis over its estimated
useful life of 9 years.

The Company will continue to evaluate certain assets,
liabilities and tax estimates over the measurement
period (up to one year from the October 4, 2019
acquisition date). Goodwill
recognized from the
acquisition of Cavendish is not deductible for income
tax purposes.

During fiscal 2020,
the Company recorded post-
combination compensation expense as well as other
acquisition and integration related costs associated
with the acquisition of Cavendish totaling $3.8 million
in “Other operating expense” in the Consolidated
Statement of Operations.

of

high-performance

Custom MMIC Design Services, Inc.
On February 6, 2020, the Company acquired all of the
outstanding equity interests of Custom MMIC, a
supplier
gallium arsenide
(“GaAs”) and gallium nitride (“GaN”) monolithic
microwave integrated circuits (“MMICs”) for defense,
aerospace and commercial applications, for a total
purchase price of $91.7 million. The acquisition
expands the Company’s millimeter wave (“mmWave”)
capabilities for product offerings in defense and
commercial markets.

purchase

price was

of $86.0 million

comprised
and

of
cash
The
consideration
contingent
consideration of up to $10.0 million which is payable
to the sellers in the first quarter of fiscal 2022 if
certain revenue targets are achieved over a one-year
period from the acquisition date. The estimated fair
value of the contingent consideration was $5.7 million
at both the acquisition date and at March 28, 2020
(and is included in “Other long-term liabilities” in the
Consolidated Balance Sheet). In subsequent reporting
periods, the contingent consideration liability will be
remeasured at fair value with changes recognized in
“Other operating expense.”

was

entered

agreement

In addition to the purchase price consideration, an
installment
for
$15.5 million which is payable to certain key
employees of Custom MMIC and is subject to their
continued employment over a three-year period from
the acquisition date. This amount is being recognized
as post-combination compensation expense over the
requisite service period.

into

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

The purchase price was allocated based on the
estimated fair values of
the assets acquired and
liabilities assumed as follows (in thousands):

Net tangible assets(1)
Intangible assets
Goodwill

$ 4,988
31,100
55,654
$91,742

(1) Includes cash acquired of $2.3 million.

The more significant intangible assets acquired were
customer relationships of $26.9 million. The fair value
of Custom MMIC customer
relationship intangibles
acquired was determined based on an income
approach using the “excess earnings method,” which
the intangible assets by
estimated the values of
discounting the future projected earnings of the asset
to present value as of
the valuation date. These
customer
relationships are being amortized on a
straight-line basis over their estimated useful lives of
10 years.

The Company will continue to evaluate certain assets,
liabilities and tax estimates over the measurement
period (up to one year from the acquisition date). All
goodwill recognized from the acquisition of Custom
MMIC is deductible for income tax purposes.

During fiscal 2020,
the Company recorded post-
combination compensation expense as well as other
acquisition and integration related costs associated
with the acquisition of Custom MMIC totaling
$9.4 million in “Other operating expense” in the
Consolidated Statement of Operations.

Decawave Limited
On February 21, 2020, the Company acquired all of
the outstanding equity interests of Decawave, a
pioneer in ultra-wide band (“UWB”) technology and
provider of UWB solutions for mobile, automotive and
for a total
Internet of Things (“IoT”) applications,
purchase
(of which
$374.7 million
of
$372.8 million was paid in cash as of year-end). The
acquisition expands the Company’s product offerings
of technology that enables real-time, highly accurate
and reliable local area precision-location services.

price

as

post-combination

In addition to the purchase price consideration, the
Company agreed to pay employees of Decawave total
compensation of $23.1 million, primarily subject to
their continued employment. This amount will be
recognized
compensation
expense over the period the employees provide the
required services. In fiscal 2020, $5.4 million was
in the
recorded in “Other operating expense”
Consolidated
and
Statement
$8.1 million and $9.6 million was recorded in “Prepaid
expenses”
assets”,
“Other
respectively, in the Consolidated Balance Sheet.

non-current

Operations

and

of

53

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

The purchase price was allocated based on the
estimated fair values of
the assets acquired and
liabilities assumed as follows (in thousands):

Net tangible assets(1)
Intangible assets
Goodwill
Deferred tax liability, net

$

304
246,060
149,703
(21,327)
$374,740

(1) Includes cash acquired of $5.0 million.

intangible assets acquired
The more significant
included developed technology of $235.0 million and
customer relationships of $10.0 million.

The fair value of the Decawave developed technology
acquired was determined based on an income
approach using the “excess earnings method,” which
estimated the values of
the intangible asset by
discounting the future projected earnings of the asset
to present value as of the valuation date. The acquired
developed technology asset is being amortized on a
straight-line basis over its estimated useful life of 7
years.

6. GOODWILL AND INTANGIBLE ASSETS

The fair value of Decawave customer relationships
acquired 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 asset and the profitability
of the Company “without” the asset. These customer
relationships are being amortized on a straight-line
basis over their estimated useful lives of 3 years.

The Company will continue to evaluate certain assets,
liabilities and tax estimates over the measurement
period (up to one year from the acquisition date).
Goodwill recognized from the acquisition of Decawave
is not deductible for income tax purposes.

During fiscal 2020,
the Company recorded post-
combination compensation expense of $5.4 million
(as discussed above) as well as other acquisition and
the
integration
acquisition of Decawave of $7.0 million in “Other
operating expense” in the Consolidated Statement of
Operations.

associated with

related

costs

The changes in the carrying amount of goodwill for fiscal 2020 are as follows (in thousands):

Balance as of March 30, 2019(1)
Active-Semi acquisition
Cavendish acquisition
Custom MMIC acquisition
Decawave acquisition
Effect of changes in foreign currency exchange rates(2)
Balance as of March 28, 2020(1)

Total

Mobile
Products

Infrastructure
and Defense
Products
$1,751,503 $422,386 $2,173,889
130,802
100,845
55,654
149,703
3,381
$2,005,432 $608,842 $2,614,274

— 130,802
—
— 55,654
—
—

149,703
3,381

100,845

(1) The Company’s goodwill balance is presented net of accumulated impairment losses and write-offs of $621.6 million.
(2) Represents the impact of foreign currency translation when goodwill is recorded in foreign entities whose functional currency is also

their local currency.

Goodwill
combinations generating the underlying goodwill.

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

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

March 28, 2020

March 30, 2019

Developed technology
Customer relationships
Technology licenses
Backlog
Trade names
Non-compete agreement
IPRD
Effect of changes in foreign currency exchange rates(1)

Total

Gross
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Accumulated
Amortization
$1,325,472 $ 652,400 $1,246,335 $ 960,793
346,799 1,272,725 1,161,735
13,026
14,704
—
—
29,391
29,391
1,026
1,026
N/A
10,000
—
—
$1,810,979 $1,002,087 $2,574,181 $2,165,971

463,772
3,271
1,600
1,200
—
9,600
6,064

2,327
267
283
—
N/A
11

(1) Represents the impact of foreign currency translation when intangibles are recorded in foreign entities whose functional currency is

also their local currency.

54

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Total intangible assets amortization expense was $247.3 million, $454.5 million and $539.8 million in fiscal years
2020, 2019 and 2018, 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
2021
2022
2023
2024
2025

Estimated
Amortization
Expense
$248,000
119,000
103,000
90,000
76,000

7.

INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Equity Investments Without a Readily Determinable Fair Value
On October 4, 2019, the Company completed its acquisition of the remaining issued and outstanding capital of
Cavendish. Prior to the acquisition date, the Company had accounted for its investment in Cavendish as an equity
investment without a readily determinable fair value and the investment was classified in “Long-term investments”
in the Consolidated Balance Sheets. See Note 5 for disclosures related to the acquisition of Cavendish.

During fiscal 2020, the Company recorded an impairment of $18.3 million on an equity investment without a readily
determinable fair value based on recent observable price changes present at the time. This amount is recorded in
“Other income (expense)” in the Consolidated Statement of Operations.

Fair Value of Financial Instruments
The fair value of the financial assets and liabilities measured on a recurring basis was determined using the
following levels of inputs as of March 28, 2020 and March 30, 2019 (in thousands):

March 28, 2020

Assets

Marketable equity securities
Invested funds in deferred compensation plan(1)
Total assets measured at fair value

Liabilities

Deferred compensation plan obligation(1)
Contingent earn-out liability(2)

Total liabilities measured at fair value

March 30, 2019

Assets

Money market funds
Marketable equity securities
Auction rate securities(3)
Invested funds in deferred compensation plan(1)
Total assets measured at fair value

Liabilities

Deferred compensation plan obligation(1)

Total liabilities measured at fair value

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

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$

459
19,398
$19,857

$19,398
—
$19,398

$

13
901
—
18,737
$19,651

$18,737
$18,737

$ —
—
$ —

$ —
—
$ —

$ —
—
1,950
—
$1,950

$ —
$ —

$ —
—
$ —

$ —
5,700
$5,700

$ —
—
—
—
$ —

$ —
$ —

Total

$

459
19,398
$19,857

$19,398
5,700
$25,098

$

13
901
1,950
18,737
$21,601

$18,737
$18,737

(1) The Company’s non-qualified deferred compensation plan provides eligible employees and members of the Board of Directors with the
opportunity to defer a specified percentage of their cash compensation. The Company includes the assets deferred by the participants in the
“Other current assets” and “Other non-current assets” line items of its 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.
(2) The Company recorded a contingent earn-out liability in conjunction with a recent acquisition (see Note 5 for disclosures related to

acquisitions). The fair value of this liability was estimated using an option pricing model.

(3) The Company’s Level 2 auction rate securities were debt instruments with interest rates that reset through periodic short-term
auctions and valued based on quoted prices for identical or similar instruments in markets that were not active. The Company sold
its auction rate securities at par value during fiscal 2020.

55

Finance Lease
In fiscal 2018, the Company entered into a finance
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 2021
and therefore is not recorded on the Consolidated
Balance Sheets as of March 28, 2020 and March 30,
2019. The lease has an initial term of five years and
includes multiple renewal options, with the maximum
lease term not to exceed 30 years. The total amount
expected to be paid over
the lease term is
$56.2 million.

Prior Fiscal Year Disclosures
As previously disclosed in the Company’s Annual
the fiscal year ended
Report on Form 10-K for
the previous lease
March 30, 2019 and under
future
the
accounting
non-cancelable minimum lease payments of
the
Company’s operating leases as of March 30, 2019
were as follows (in thousands):

aggregate

standard,

2020
2021
2022
2023
2024
Thereafter

Total minimum payments

$22,207
13,382
10,331
8,224
7,139
31,598
$92,881

covering
Rent expense under operating leases,
was
facilities
approximately $19.3 million and $16.3 million for
fiscal years 2019 and 2018, respectively, prior to the
adoption of the new lease accounting standard.

equipment,

and

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

8. LEASES

Operating Leases
The Company
its corporate,
leases certain of
manufacturing and other facilities from multiple third-
party real estate developers. The Company also
leases various machinery and office equipment. These
operating leases expire at various dates through
2036, and some of
these leases have renewal
options, with the longest ranging up to two, ten-year
periods.

Operating leases as of March 28, 2020 are

classified as follows (in thousands):
Other non-current assets
Other current liabilities
Other long-term liabilities

Details of operating leases for fiscal 2020 are as

follows (in thousands):
Operating lease expense
Short-term lease expense
Variable lease expense

Cash paid for amounts included in measurement

of lease liabilities:
Operating cash flows from operating leases
Operating lease assets obtained in exchange

for new lease liabilities

$65,107
$15,917
$58,077

$15,184
$ 6,878
$ 3,098

$16,504

$13,201

Weighted-average remaining lease term (years)
Weighted-average discount rate

7.8
4.06%

The aggregate future lease payments for operating
leases as of March 28, 2020 are as follows (in
thousands):

2021
2022
2023
2024
2025
Thereafter

Total lease payments

Less imputed interest

Present value of lease liabilities

$ 21,586
14,201
9,690
7,449
6,006
27,194
86,126
(12,132)
$ 73,994

56

Notes to Consolidated Financial Statements

9. DEBT

Debt as of March 28, 2020 and March 30, 2019 is as
follows (in thousands):

Term loan
7.00% senior notes due 2025
5.50% senior notes due 2026
4.375% senior notes due 2029
Finance leases
Less unamortized premium and

issuance costs, net

Less current portion of long-term

debt

March 28,
2020

$ 100,000
23,404
900,000
550,000
2,252

March 30,
2019

$

—
23,404
900,000
—
1,745

(1,532)

(4,134)

(6,893)

(80)

Total long-term debt

$1,567,231

$920,935

an

up

Facility,

aggregate

Credit Agreement
the Company and the
On December 5, 2017,
Guarantors entered into a five-year unsecured senior
credit facility pursuant to a credit agreement with Bank
of America, N.A., as administrative agent (in such
capacity, the “Administrative Agent”), swing line lender
lenders (the
and L/C issuer, and a syndicate of
“Credit Agreement”). The Credit Agreement included a
senior delayed draw term loan of up to $400.0 million
(the “Term Loan”) and a $300.0 million senior
In
revolving line of credit (the “Revolving Facility”).
addition,
the Company may request one or more
additional tranches of term loans or increases in the
Revolving
of
to
$300.0 million and subject
to securing additional
funding commitments from the existing or new lenders
(the “Incremental Facility”, and collectively with the
Term Loan and the Revolving Facility,
the “Credit
Facility”). On the closing date, $100.0 million of the
Term Loan was funded (and was subsequently repaid
in March 2018). On June 17, 2019, the Company
drew $100.0 million of the Term Loan. The delayed
period
draw
remaining
the
$200.0 million of
the Term Loan expired on
December 31, 2019. The Revolving Facility includes a
$25.0 million sublimit for the issuance of standby
letters of credit and a $10.0 million sublimit for swing
line loans. The Credit Facility is available to finance
working
capital expenditures and other
corporate purposes. Outstanding amounts are due in
full on the maturity date of 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. During fiscal 2020, there
were no borrowings under
the Revolving Facility.
Interest paid on the Term Loan during fiscal 2020 was
$2.4 million.

availability

capital,

for

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

loans under

the Company’s option,

interest at a rate equal

the Credit
At
Agreement bear interest at (i) the Applicable Rate (as
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
if such
interest period or at three-month intervals,
interest period exceeds three months.
for
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.

three, six or

Interest

two,

and

representations with which

The Credit Agreement contains various conditions,
covenants
the
Company must comply in order to borrow funds and to
including the following
avoid an event of default,
financial covenants that the Company must maintain:
(i) a consolidated leverage ratio not to exceed 3.0 to
1.0 as of the end of any fiscal quarter of the Company,
provided that in connection with a permitted acquisition
in excess of $300.0 million, the 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 28, 2020, the Company was in
compliance with these covenants.

The annual maturities of
March 28, 2020 are as follows (in thousands):

the Term Loan as of

Fiscal Year
2021
2022
2023

Maturities
6,250
$
5,000
88,750
$100,000

57

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

the Company

Senior Notes due 2023 and 2025
issued
On November 19, 2015,
$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”). The 2023 Notes were, and
the 2025 Notes are, senior unsecured obligations of
the Company and guaranteed, jointly and severally, by
certain of
the Company’s U.S. subsidiaries (the
“Guarantors”). The 2023 Notes and the 2025 Notes
were issued pursuant to an indenture dated as of
November 19, 2015 (the “2015 Indenture”), by and
among the Company, the Guarantors and MUFG Union
Bank, N.A., as trustee. The 2015 Indenture contains
customary events of default,
including payment
default, failure to provide certain notices and certain
provisions related to bankruptcy events.

Company

recognized

In fiscal years 2018 and 2019, the Company retired
all of the issued and outstanding 2023 Notes and
$526.6 million of the 2025 Notes. During fiscal 2019,
the
debt
extinguishment of $90.2 million (related to the
retirements of the 2023 Notes and the 2025 Notes)
as “Other expense” in the Company’s Consolidated
Statement of Operations. As of March 28, 2020, an
aggregate principal amount of $23.4 million of the
2025 Notes remained outstanding.

loss

on

a

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,
and accrued and unpaid interest. In addition, at any
time on or after December 1, 2020, the Company may
redeem the 2025 Notes, in whole or in part, at the
redemption prices specified in the 2015 Indenture,
plus accrued and unpaid interest.

With respect to the 2023 Notes, interest was payable
on June 1 and December 1 of each year at a rate of
6.75% per annum, and with respect to the 2025 Notes,
interest is payable on June 1 and December 1 of each
year at a rate of 7.00% per annum. Interest paid on the
2025 Notes during fiscal 2020 was $1.6 million and the
interest paid on the 2023 Notes and the 2025
total
years 2019 and 2018 was
Notes during fiscal
$46.5 million and $68.9 million, respectively.

Senior Notes due 2026
On July 16, 2018, the Company issued $500.0 million
aggregate principal amount of its 5.50% senior notes
due 2026 (the “Initial 2026 Notes”). On August 28,
2018 and March 5, 2019, the Company issued an
additional $130.0 million
and $270.0 million,
respectively, aggregate principal amount of such notes

58

(together, the “Additional 2026 Notes”, and together
with the Initial 2026 Notes, the “2026 Notes”). The
2026 Notes will mature on July 15, 2026, unless
earlier redeemed in accordance with their terms. The
2026 Notes are senior unsecured obligations of the
jointly and
Company and are initially guaranteed,
severally, by the Guarantors.

The Initial 2026 Notes were issued pursuant to an
indenture, dated as of July 16, 2018, by and among
the Company, the Guarantors and MUFG Union Bank,
N.A., as trustee, and the Additional 2026 Notes were
issued pursuant to supplemental indentures, dated as
of August 28, 2018 and March 5, 2019, respectively
(such
indentures,
The 2018
collectively,
Indenture contains customary events of default,
including payment default, exchange default, failure to
provide certain notices
thereunder and certain
provisions related to bankruptcy events and also
contains customary negative covenants.

and
supplemental
“2018 Indenture”).

indenture
the

At any time prior to July 15, 2021, the Company may
redeem all or part of the 2026 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 July 15, 2021, the Company may redeem up
to 35% of the original aggregate principal amount of
the 2026 Notes with the proceeds of one or more
equity offerings, at a redemption price equal
to 105.50% of the principal amount of the 2026 Notes
redeemed,
interest.
Furthermore, at any time on or after July 15, 2021,
the Company may redeem the 2026 Notes, in whole
or in part, at the redemption prices specified in the
2018 Indenture, plus accrued and unpaid interest.

accrued

unpaid

plus

and

In connection with the offering of the 2026 Notes, the
Company agreed to provide the holders of the 2026
Notes with an opportunity to exchange the 2026
Notes for registered notes having terms substantially
identical to the 2026 Notes. On June 25, 2019, the
Company completed the exchange offer, in which all of
the privately placed 2026 Notes were exchanged for
new notes that have been registered under
the
Securities Act of 1933, as amended.

Interest is payable on the 2026 Notes on January 15
and July 15 of each year at a rate of 5.50% per
annum. Interest paid on the 2026 Notes during fiscal
years 2020 and 2019 was $49.5 million and
$17.2 million, respectively.

Senior Notes due 2029
issued
On September 30, 2019,
$350.0 million aggregate principal amount of
its
4.375% senior notes due 2029 (the “Initial 2029

the Company

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes”). On December 20, 2019, the Company issued
an additional $200.0 million aggregate principal
amount of such notes (the “Additional 2029 Notes”,
and together with the Initial 2029 Notes, the “2029
Notes”). The 2029 Notes will mature on October 15,
2029, unless earlier redeemed in accordance with
their terms. The 2029 Notes are senior unsecured
obligations
initially
the Company
guaranteed, jointly and severally, by the Guarantors.

and

are

of

The Initial 2029 Notes were issued pursuant to an
indenture, dated as of September 30, 2019, by and
among the Company, the Guarantors and MUFG Union
Bank, N.A., as trustee, and the Additional 2029 Notes
indenture,
were issued pursuant to a supplemental
dated as of December 20, 2019 (such indenture and
supplemental
“2019
Indenture”). The 2019 Indenture contains customary
events of default, including payment default, exchange
default, failure to provide certain notices thereunder
and certain provisions related to bankruptcy events
and also contains customary negative covenants.

indenture,

together,

the

At any time prior to October 15, 2024, the Company
may redeem all or part of the 2029 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 October 15, 2024, the Company may
redeem up to 35% of the original aggregate principal
amount of the 2029 Notes with the proceeds of one
or more equity offerings, at a redemption price equal
to 104.375%, plus accrued and unpaid interest.
Furthermore, at any time on or after October 15,
2024, the Company may redeem the 2029 Notes, in
whole or in part, at the redemption prices specified in
the 2019 Indenture, plus accrued and unpaid interest.
The 2029 Notes have not been registered under the
Securities Act, or any state securities laws, and,
unless so registered, may not be offered or sold in the
United States absent
registration or an applicable
exemption from the registration requirements of the
Securities Act and applicable state securities laws.

In connection with the offering of the Initial 2029
Notes, the Company entered into a registration rights
agreement, dated as of September 30, 2019, by and
among the Company and the Guarantors, on the one
hand, and BofA Securities, Inc., as representative of
the initial purchasers of the Initial 2029 Notes, on the
other hand, and a substantially similar agreement,
dated as of December 20, 2019, with respect to the
the “Registration
Additional 2029 Notes (together,
Rights Agreements”).

the Registration Rights Agreements,

Under
the
Company and the Guarantors have agreed to use their
commercially reasonable efforts to (i) file with the SEC

(the

statement

registration

“Exchange Offer
a
Registration Statement”)
relating to the registered
exchange offer (the “Exchange Offer”) to exchange the
2029 Notes for a new series of
the Company’s
exchange notes having terms substantially identical in
all material respects to, and in the same aggregate
principal amount as, the 2029 Notes; (ii) cause the
Exchange Offer Registration Statement to be declared
effective by the SEC; and (iii) cause the Exchange
Offer to be consummated no later than the 360th day
after September 30, 2019 (or if such 360th day is not
a business day, the next succeeding business day).
The Company and the Guarantors have also agreed to
use their commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective
continuously and keep the Exchange Offer open for a
period of not less than the minimum period required
under applicable federal and state securities laws to
consummate the Exchange Offer.

file a shelf

Under certain circumstances, the Company and the
Guarantors have agreed to use their commercially
reasonable efforts to (i)
registration
statement relating to the resale of the 2029 Notes as
promptly as practicable, and (ii) cause the shelf
registration statement to be declared effective by the
SEC as promptly as practicable. The Company and the
Guarantors have also agreed to use their commercially
registration
reasonable efforts to keep the shelf
statement continuously effective until one year after
its effective date (or such shorter period that will
terminate when all the 2029 Notes covered thereby
have been sold pursuant thereto).

If the Company fails to meet any of these targets, the
annual interest rate on the 2029 Notes will increase
by 0.25% during the 90-day period following the
increase by an additional 0.25% for
default and will
each subsequent 90-day period during which the
default continues, up to a maximum additional interest
rate of 1.00% per year. If the Company cures the
default, the interest rate on the 2029 Notes will revert
to the original level.

Interest is payable on the 2029 Notes on April 15 and
October 15 of each year at a rate of 4.375% per
annum, commencing April 15, 2020.

Fair Value of Long-Term Debt
The Company’s long-term debt is carried at amortized
cost and is measured at
fair value quarterly for
disclosure purposes. The estimated fair value of the
2025 Notes as of March 28, 2020 and March 30,
2019 was $23.9 million
and $25.8 million,
respectively (compared to a carrying value of $23.4
million). The estimated fair value of the 2026 Notes
as of March 28, 2020 and March 30, 2019 was

59

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

respectively
$962.8 million and $929.3 million,
(compared to a carrying value of $900.0 million). The
estimated fair value of
the 2029 Notes as of
March 28, 2020 was $489.5 million (compared to a
carrying value of $550.0 million). The Company
considers its long-term debt to be Level 2 in the fair
value hierarchy. Fair values are estimated based on
quoted market
similar
instruments. The 2025 Notes, the 2026 Notes and
the 2029 Notes trade over the counter, and their fair
values were estimated based upon the value of their
last trade at the end of the period.

identical

prices

for

or

Since the Term Loan carries a variable interest rate
set at current market rates, the fair value of the Term
Loan approximated book value as of March 28, 2020.

fiscal

2020,

the Company

Interest Expense
During
recognized
$66.0 million of interest expense primarily related to
the 2026 Notes and the 2029 Notes, which was
partially offset by $5.6 million of interest capitalized to
property and equipment. During fiscal 2019,
the
Company recognized $52.8 million of interest expense
primarily related to the 2023 Notes, the 2025 Notes
and the 2026 Notes, which was partially offset by
$8.8 million of interest capitalized to property and
equipment. During
the Company
recognized $73.2 million of interest expense, primarily
related to the 2023 Notes and the 2025 Notes, which
was partially offset by $13.6 million of
interest
capitalized to property and equipment.

fiscal 2018,

10. RETIREMENT BENEFIT PLANS

offers

Company

tax-beneficial

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
with differing eligibility and contributory requirements
regulations. U.S.
based on local and national
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 $14.4 million,
$14.0 million and $14.0 million to its domestic and
foreign defined contribution plans during fiscal years
2020, 2019 and 2018, respectively.

60

Defined Benefit Pension Plans
The Company maintains two qualified defined benefit
pension plans for its subsidiaries located in Germany.
One of
the plans is funded through a self-paid
reinsurance program with assets valued at $3.6 million
as of March 28, 2020 and March 30, 2019 (included
in “Other non-current assets” in the Consolidated
Balance Sheets). The pension benefit obligations of
both plans were $12.3 million and $12.9 million as of
March 28, 2020 and March 30, 2019, respectively,
which is included in “Accrued 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 28, 2020 and March 30, 2019. The net periodic
benefit
approximately $0.6 million,
$0.5 million and $0.7 million for fiscal years 2020,
2019 and 2018, respectively.

costs were

the

The

directs.

participant

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 $19.4 million
and $18.7 million as of March 28, 2020 and
March 30, 2019, respectively. The current portion of
the deferred compensation obligation and fair value of
the assets held in the rabbi trust were $0.9 million
and $1.1 million as of March 28, 2020 and March 30,
2019, respectively, and are included in “Other current
assets” and “Accrued liabilities” in the Consolidated
the
Balance Sheets. The non-current portion of
deferred compensation obligation and fair value of the
assets held in the rabbi trust were $18.5 million and
$17.6 million as of March 28, 2020 and March 30,
2019,
respectively, and are included in “Other
non-current assets” and “Other long-term liabilities” in
the Consolidated Balance Sheets.

11. COMMITMENTS AND CONTINGENT LIABILITIES

Purchase Commitments
The
total
Company’s
approximately $318.3 million, a substantial majority of
which will be due within the next 12 months. Purchase
commitments include payments due for materials and

commitments

purchase

Notes to Consolidated Financial Statements

manufacturing services and commitments for
purchase of property and equipment.

the

Lease Commitments
See Note 8 for disclosures related to lease
commitments.

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
negotiations, settlements,
legal
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
material
adverse
of
results
or
position
consolidated
operations.

financial

effect

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

to reflect

equipment), impairment charges of $15.9 million (to
the carrying value of certain property and
adjust
equipment
value), employee
fair
its
termination benefits of $13.7 million and other exit
costs of $15.0 million. The Company expects to
approximately
expenses
record
$1.0 million for employee termination benefits and
other exit costs as a result of these actions.

additional

of

The fair value of the real property was derived based
input from
upon a market approach with substantial
investors,
market participants,
including brokers,
developers and appraisers. The fair value of
the
personal property was determined using a market
approach based upon quoted market prices from
auction data for comparable assets. Factors such as
age,
condition, capacity and manufacturer were
considered to adjust the auction price and determine
an orderly liquidation value of the personal property
assets. The significant inputs related to valuing these
assets are classified as Level 2 in the fair value
measurement hierarchy.

the

fiscal

2018,

Company

During
initiated
restructuring actions to improve operating efficiencies.
As a result of these actions (which are substantially
complete), in fiscal years 2020, 2019 and 2018, the
Company recorded cumulative restructuring related
and
charges
$0.2 million
employee
termination benefits and other exit costs, respectively.

of $46.3 million, $23.5 million

impairments,

asset

for

12. RESTRUCTURING

recorded restructuring

the
During fiscal years 2020, 2019 and 2018,
Company
related charges
totaling approximately $47.9 million, $50.7 million
and $67.7 million, respectively, related primarily to
(1) fiscal 2019 actions to reduce operating expenses
and improve manufacturing cost structure, (2) fiscal
2018 actions to improve operating efficiencies, and
(3) actions resulting from the Business Combination.

Primarily as a result of the Business Combination (see
Note 1), during fiscal years 2020, 2019 and 2018,
the Company recorded restructuring related charges
(including employee termination benefits and ongoing
expenses related to exited leased facilities) of
and
approximately
$2.7 million, respectively.

$0.3 million,

$1.3 million

the

cost

fiscal

2019,

improve

Company

its manufacturing

initiated
During
restructuring actions to reduce operating expenses
and
structure,
including the phased closure of a wafer fabrication
facility in Florida and idling production at a wafer
fabrication facility in Texas. As a result of
these
actions,
cumulative
Company
restructuring related charges of $92.0 million during
fiscal years 2020 and 2019,
including accelerated
depreciation of $47.4 million (to reflect changes in
certain property and
estimated useful

recorded

lives of

the

61

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

The following table summarizes the restructuring charges primarily resulting from these restructuring events (in
thousands):

One-time employee termination benefits
Contract termination and other associated costs
Accelerated depreciation

Total

One-time employee termination benefits
Contract termination and other associated costs
Asset impairment and accelerated depreciation

Total

One-time employee termination benefits
Contract termination and other associated costs
Asset impairment

Total

Cost of
Goods
Sold

$

—
8,365
26,061
$34,426

Cost of
Goods
Sold

$

—
—
21,346
$21,346

Cost of
Goods
Sold

$

$

—
—
—
—

Fiscal 2020
Other
Operating
Expense
$ 6,289
7,154
—
$13,443

Fiscal 2019
Other
Operating
Expense
$12,826
641
15,901
$29,368

Fiscal 2018
Other
Operating
Expense

$19,232
2,174
46,315
$67,721

Total
$ 6,289
15,519
26,061
$47,869

Total
$12,826
641
37,247
$50,714

Total
$19,232
2,174
46,315
$67,721

The following table summarizes the activity related to the Company’s restructuring liabilities for fiscal years 2019
and 2020 (in thousands):

Accrued restructuring balance as of March 31, 2018

Costs incurred and charged to expense
Cash payments
Non-cash activity

Accrued restructuring balance as of March 30, 2019

Costs incurred and charged to expense
Transfer to right-of-use asset
Cash payments
Non-cash activity

Accrued restructuring balance as of March 28, 2020

INCOME TAXES

13.
Income (loss) before income taxes consists of the
following components (in thousands):

2020

Fiscal Year
2019
$(226,005) $(297,975) $(151,083)
168,228
389,767
$ 395,089 $ 91,792 $ 17,145

621,094

2018

United States
Foreign
Total

62

One-Time
Employee
Termination
Benefits
$ 6,130
12,826
(11,968)
—
$ 6,988
6,289
—
(11,549)
—
$ 1,728

Asset
Impairment
and
Accelerated
Depreciation
—
$
37,247
—
(37,247)
—
26,061
—
—
(26,061)
—

$

$

Contract
Termination and
Other
Associated
Costs
$ 2,557
641
(1,572)
—
$ 1,626
15,519
(1,248)
(7,262)
(8,365)
270

$

Total
$ 8,687
50,714
(13,540)
(37,247)
$ 8,614
47,869
(1,248)
(18,811)
(34,426)
$ 1,998

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

2020

Fiscal Year
2019

2018

Current (expense) benefit:

Federal
State
Foreign

$ (6,705) $ 17,222 $(28,168)
(229)
(61,284)
(89,681)

(93)
(65,065)
(71,863)

209
(46,267)
(28,836)

Deferred benefit (expense):

Federal
State
Foreign

Total

4,603
(1,330)
11,099

$ 7,826 $ 55,833 $ 11,817
253
946
20,178
13,390
32,248
70,169
$(60,764) $ 41,333 $(57,433)

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

the Company recorded a net provisional

On December 22, 2017, the Tax Cuts and Jobs Act
(“Tax Act”) was signed into law in the U.S., lowering the
U.S. corporate income tax rate to 21% from 35%,
instituting a one-time transition tax on unrepatriated
foreign earnings (the “Transitional Repatriation Tax”),
and implementing a territorial tax system. During fiscal
tax
2018,
expense of $77.3 million for the estimated effects of the
Tax Act. In accordance with Staff Accounting Bulletin
No. 118, the Company completed its analysis of the
impact of the Tax Act during fiscal 2019 and recorded a
net discrete income tax benefit adjustment of
$17.0 million to the prior year provisional estimates. The
Global Intangible Low-Taxed Income (“GILTI”) provisions
became effective for the Company in fiscal 2019, at

which time the Company elected to treat taxes due on
future GILTI inclusions in U.S. taxable income as current-
period expense (the “period cost method”).

On March 27, 2020, the U.S. enacted the Coronavirus
Aid, Relief, and Economic Security Act (“CARES Act”)
to help provide relief as a result of the COVID-19
outbreak. Similarly, governments around the world
have enacted or implemented various forms of tax
relief to assist with the economic disruption in the
wake of COVID-19. The measures vary by jurisdiction,
but often include the ability to delay certain income tax
payments. As of March 28, 2020, the COVID-19 relief
impact on the
measures did not have a material
Company’s effective tax rate or other
income tax
accounts.

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 2020, 2019 and 2018 is as follows (dollars in thousands):

Income tax expense at statutory

federal rate

(Increase) decrease resulting from:
State benefit, net of federal expense
Tax credits
Effect of changes in income tax rate
applied to net deferred tax assets

Foreign tax rate difference
Foreign permanent differences and

related items

Change in valuation allowance
Expiration of state attributes
Stock-based compensation
Tax reserve adjustments
U.S. tax on foreign earnings, including

GILTI

U.S. Transitional Repatriation Tax
Intra-entity transfer
Permanent reinvestment assertion
Acquisition related adjustments
Other income tax (expense) benefit

2020

Fiscal Year
2019

2018

Amount

Percentage

Amount

Percentage

Amount

Percentage

$(82,969)

21.0%

$(19,276)

21.0%

$

(5,407)

31.5%

2,605
64,017

(0.7)
(16.2)

(2,269)
75,247

0.6
(19.0)

(5,446)
6,438
(5,165)
(1,707)
(13,973)

(81,916)
—
—
(6,814)
(7,257)
(1,555)

1.4
(1.6)
1.3
0.4
3.5

20.8
—
—
1.7
1.8
0.4

710
69,856

12,972
41,672

6,825
2,353
—
(7,694)
5,213

(76,215)
1,897
3,935
—
—
(915)

(0.8)
(76.1)

(14.1)
(45.4)

(7.4)
(2.6)
—
8.4
(5.7)

83.0
(2.1)
(4.3)
—
—
1.1

474
38,054

(2.8)
(221.9)

39,168
21,829

(228.4)
(127.3)

(2,598)
(1,632)
—
9,924
(29,188)

(5,098)
(116,419)
(6,873)
—
—
333

15.2
9.5
—
(57.9)
170.2

29.7
679.0
40.1
—
—
(1.9)

$(60,764)

15.4%

$ 41,333

(45.0)% $ (57,433)

335.0%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial 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.

63

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

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

Deferred income tax assets:

Inventory reserve

Equity compensation

Net operating loss carry-forwards

Research and other credits

Employee benefits

Lease liabilities

March 28,
2020

March 30,
2019

$ 10,114 $

8,588

18,817

71,928

106,958

12,606

16,456

27,380

13,744

95,640

13,070

—

Other deferred assets

3,559

19,457

Total deferred income tax assets

240,438

177,879

Valuation allowance

(35,280)

(40,433)

Total deferred income tax assets,

net of valuation allowance

$ 205,158 $ 137,446

Deferred income tax liabilities:

Amortization and purchase

accounting basis difference

$(107,517) $ (45,665)

Accumulated depreciation/basis

difference

(59,356)

(62,097)

Accrued tax on unremitted foreign

earnings

Right-of-use assets

Other deferred liabilities

(15,521)

(14,400)

(1,955)

—

—

—

Total deferred income tax liabilities

(198,749)

(107,762)

Net deferred income tax asset

$

6,409 $ 29,684

Amounts included in the

Consolidated Balance Sheets:

Other non-current assets

$ 45,754 $ 30,017

Other long-term liabilities

(39,345)

(333)

Net deferred income tax asset

$

6,409 $ 29,684

The Company has recorded a valuation allowance
against certain U.S. and foreign deferred tax assets as
of March 28, 2020 and March 30, 2019. These
valuation allowances were 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.

The valuation allowance against deferred tax assets
decreased by approximately $5.2 million in fiscal
2020. The decrease was comprised of a $7.9 million
decrease in the valuation allowance against state
deferred tax assets for net operating losses and
credits and a $2.7 million increase for the valuation
allowance against deferred tax assets for net
operating losses at foreign subsidiaries, $2.1 million

64

of which was due to purchase accounting related
adjustments. At the end of fiscal 2020, a $3.8 million
valuation allowance remained against deferred assets
at foreign subsidiaries and a $31.5 million valuation
allowance remained against state deferred tax assets.

The valuation allowance against deferred tax assets
decreased by $2.4 million in fiscal 2019. The
decrease was comprised of a $1.5 million decrease in
the valuation allowance against state deferred tax
assets for net operating losses and tax credits and a
$0.9 million decrease for
the valuation allowance
against deferred tax assets for net operating losses at
foreign subsidiaries. At
fiscal 2019, a
$1.1 million valuation allowance remained against
foreign subsidiaries and a
deferred tax assets at
$39.3 million valuation allowance remained against
state deferred tax assets.

the end of

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
enacted in the Tax Act, a $1.9 million increase in the
valuation allowance against state deferred tax assets
for net operating losses and tax credits, a $1.0 million
increase for the valuation allowance against deferred
tax assets for net operating losses at
foreign
subsidiaries and a $0.5 million increase in the
valuation allowance for state tax credits due to the
adoption of ASU 2016-09, “Compensation—Stock
Compensation
to
Employee Share-Based Payment Accounting.” It was
partially offset by a $0.5 million decrease in valuation
allowance for federal deferred tax assets for foreign
tax credits. At the end of fiscal 2018, a $2.0 million
valuation allowance remained against deferred tax
assets at foreign subsidiaries and a $40.8 million
domestic
valuation
deferred tax assets.

Improvements

allowance

remained

against

(Topic

718):

As of March 28, 2020, the Company had federal loss
carryovers of approximately $190.4 million that expire
in fiscal years 2021 to 2040 if unused and state
losses of approximately $281.1 million that expire in
fiscal years 2021 to 2040 if unused. Federal research
credits of $143.0 million, and state credits of
$64.1 million may expire in fiscal years 2030 to 2040
and 2021 to 2040, respectively. The Company had
foreign losses of $107.5 million, some of which may
expire in fiscal years 2021 to 2030 if unused.
Included in the amounts above are $397.5 million of
federal, state and foreign losses and $7.5 million of
tax credits related to acquisitions in the current year.
The utilization of acquired domestic assets is subject
to certain annual
limitations as required under
Section 382 of the Internal Revenue Code of 1986, as

Notes to Consolidated Financial Statements

amended (the “Code”) and similar state income tax
provisions.

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.
Management has concluded that
it can no longer
support an assertion that certain earnings which have
been subject to U.S. federal taxation at its foreign
subsidiaries are permanently reinvested. During the
second quarter of fiscal 2020, the Company updated
forecasts of cash balances and cash flow outside the
U.S. and began to implement a more centralized
the
approach to cash management. As a result,
Company recorded $6.8 million of tax expense during
fiscal 2020. In the third quarter of fiscal 2018, the
Company had previously
released its permanent
reinvestment assertion on its largest operating
subsidiary in Singapore, Qorvo International Pte. Ltd.
The remainder of the Company’s foreign earnings and
historic investments will continue to be permanently
reinvested to fund working capital requirements and
operations abroad. It is not practical to estimate the
additional tax that would be incurred, if any, if the
remainder of
the permanently reinvested earnings
were repatriated.

The Company has foreign subsidiaries with tax holiday
agreements in Singapore and Costa Rica. These tax
holiday agreements have varying rates and expire in
December 2021 and December 2027, respectively.
Incentives from these countries are subject to the
Company meeting certain employment and investment
requirements. The Company does not expect that the
Singapore legislation enacted in February 2017, which
will exclude from the Company’s existing Development
and Expansion Incentive grant
the
intellectual property income
reduced tax rate for
earned after June 30, 2021, will have an impact on
the Company.
Income tax expense decreased by
$62.9 million (an impact of approximately $0.54 and
$0.53 per basic and diluted share, respectively) in
fiscal 2020 and $34.6 million (an impact of
approximately $0.28 and $0.27 per basic and diluted
share, respectively) in fiscal 2019 as a result of these
agreements.

the benefit of

The Company’s gross unrecognized tax benefits
totaled $119.2 million as of March 28, 2020,
$103.2 million as of March 30, 2019, and
$122.8 million as of March 31, 2018. Of
these
federal benefit of
amounts, $114.8 million (net of
state taxes), $99.1 million (net of federal benefit of
state taxes) and $118.7 million (net of federal benefit
of state taxes) as of March 28, 2020, March 30,
2019, and March 31, 2018, respectively, represent

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

if
the amounts of unrecognized tax benefits that,
recognized, would impact the effective tax rate in each
of the fiscal years.

The Company’s gross unrecognized tax benefits
increased from $103.2 million as of March 30, 2019
to $119.2 million as of March 28, 2020, primarily due
to increases related to current year tax positions, the
effect of provision-to-return adjustments on prior year
business
positions,
purchase
combinations
accounting.

related
part

recognized

increases

to
of

and

as

A reconciliation of fiscal 2018 through fiscal 2020
beginning and ending amount of gross unrecognized
tax benefits is as follows (in thousands):

2020

Fiscal Year
2019

2018

Beginning balance

$103,178

$122,823

$ 90,615

Additions based on

positions related to
current year

Additions for tax

positions in prior
years

Reductions for tax
positions in prior
years

Expiration of statute

of limitations

Settlements

10,357

7,193

26,431

6,484

8,369

5,844

(69)

(24,932)

(67)

(728)

—

(6,972)

(3,303)

—

—

Ending balance

$119,222

$103,178

$122,823

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
2020, 2019 and 2018,
the Company recognized
$0.7 million, $(0.2) million and $(2.5) million,
respectively, of
interest and penalties related to
uncertain tax positions. Accrued interest and penalties
related
totaled
$5.4 million, $4.4 million and $4.6 million as of
March 28, 2020, March 30, 2019 and March 31,
2018, respectively.

unrecognized

benefits

tax

to

The unrecognized tax benefits of $119.2 million and
accrued interest and penalties of $5.4 million at the
end of fiscal 2020 are recorded on the Consolidated
Balance Sheet as a $19.4 million other
long-term
liability, with the balance reducing the carrying value of
the gross deferred tax assets.

Although it is not reasonably possible to estimate the
amount by which unrecognized tax benefits may
increase or decrease within the next 12 months due
to uncertainties regarding the timing of examinations
and the amount of settlements that may be paid, if

65

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

any, to tax authorities, the Company currently believes
it is reasonably possible that only a minimal amount
of gross unrecognized tax benefits will be reduced for
tax positions taken in prior years within the next 12
months.

taxes

payable

of $50.8 million

Income
and
$41.6 million as of March 28, 2020 and March 30,
respectively, are included in “Other current
2019,
liabilities”
in the Consolidated Balance Sheets.
and
Income
$6.2 million as of March 28, 2020 and March 30,
2019,
respectively, are included in “Other current
assets” in the Consolidated Balance Sheets. Long-
term income taxes payable of $5.6 million and
$5.7 million as of March 28, 2020 and March 30,

of $5.4 million

receivable

taxes

2019, respectively, which relates to the Transitional
Repatriation Tax which the Company has elected to
pay over eight years, is included in “Other long-term
liabilities” in the Consolidated Balance Sheets.

in

and

state

federal

income tax
Qorvo files a consolidated U.S.
return, as well as separate and combined income tax
international
returns
numerous
jurisdictions. Qorvo’s fiscal 2017 U.S.
federal and
state tax returns and subsequent tax years remain
open for examination, as well as all attributes brought
forward into those years. The Company is also subject
to examination by various international tax authorities.
The tax
to examination vary by
jurisdiction.

years subject

14. NET INCOME (LOSS) PER SHARE

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

Numerator:

Numerator for basic and diluted net income (loss) per share — net income

(loss) available to common stockholders

$334,325 $133,125 $ (40,288)

Denominator:

Denominator for basic net income (loss) per share — weighted average shares

117,007 124,534 126,946

2020

Fiscal Year
2019

2018

Effect of dilutive securities:

Stock-based awards

Denominator for diluted net income (loss) per share — adjusted weighted average

shares and assumed conversions

Basic net income (loss) per share

Diluted net income (loss) per share

fiscal

In the computation of diluted net income (loss) per
share for
years 2020, 2019 and 2018,
approximately 0.1 million shares, 0.3 million shares
and 3.7 million shares, respectively, were excluded
because the effect of their inclusion would have been
anti-dilutive.

15. STOCK-BASED COMPENSATION

Summary of Stock 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.

66

2,286

2,822

—

119,293 127,356 126,946

$

$

2.86 $

2.80 $

1.07 $

(0.32)

1.05 $

(0.32)

the Company’s

annual meeting

2006 Directors’ Stock Option Plan — RF Micro
Devices, Inc.
At
of
2006
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.

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

closing

upon

the

of

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

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.

the
Combination or who become employed by
Company or
the
the closing of
its affiliates after
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 28, 2020, 1.3 million shares were available for
issuance under the 2013 Incentive Plan.

in

rights,

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
Plan”), which was approved by
the Company’s
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
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 28, 2020, 2.9 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 2020 under the 2012
Plan was 0.2 million shares.

restricted

stock

of

the

upon

closing

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,
consultants,
independent
contractors of TriQuint and its subsidiaries and
to the Business
affiliates who were such prior

the grant of stock options,

advisors

agents,

and

inducement

2015 Inducement Stock Plan — Qorvo, Inc.
The 2015 Inducement Stock Plan (the “2015
Inducement Plan”) provides for the grant of equity
awards to persons as a material
to
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
Inducement Stock Plan under
the TriQuint 2008
Inducement Award Plan and (ii) subject to an award
granted under the TriQuint 2008 Inducement Award
canceled,
are
Plan,
terminated, expire or lapse for any reason. No awards
were made under the 2015 Inducement Plan in fiscal
years 2020, 2019 and 2018. As of March 28, 2020,
0.3 million shares were available for issuance under
the 2015 Inducement Plan.

forfeited,

awards

which

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
Section 423 of
full-time
the Code. All
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
of
the Company’s
last day of each
common stock on the first or
six-month purchase period. At March 28, 2020,
3.7 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
shares under the ESPP in fiscal years 2020, 2019
and 2018.

the closing price per share of

67

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

For fiscal years 2020, 2019 and 2018, the primary
stock-based awards and their general terms and
conditions are as follows:
Restricted stock units granted by the Company in
fiscal years 2020, 2019 and 2018 are either service-
based, performance and service-based, or based on
total stockholder
return. Service-based restricted
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
comparison to the total stockholder
return of a
benchmark index and can be earned over one-, two-
and three-year performance periods. Restricted stock
units granted to non-employee directors generally vest
over a one-year period from the grant date. In fiscal
2020, each non-employee director was eligible to
receive an annual grant of restricted stock units.

return of

to

the

officer

subject

executing

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 date. In
fiscal
of
$24.1 million was recognized upon the grant of
0.3 million restricted share units to certain officers of
the Company.

compensation

stock-based

2020,

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

Total pre-tax stock-based compensation expense
recognized
of
Operations was $76.0 million, $71.6 million and
$68.2 million, for fiscal years 2020, 2019 and 2018,
respectively, net of expense capitalized into inventory.

the Consolidated Statements

68

A summary of activity under 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 March 30,
2019

Granted

Exercised

Canceled

Forfeited

Outstanding as
of March 28,
2020

Vested and

expected to
vest as of
March 28,
2020

Options

exercisable
as of
March 28,
2020

1,886

$20.36

—

—

(917)

$22.70

(2)

—

$30.84

—

967

$18.11

2.37

$60,529

967

$18.11

2.37

$60,529

967

$18.11

2.37

$60,529

The aggregate intrinsic value in the table above
represents the total pre-tax intrinsic value, based upon
the Company’s closing stock price of $80.69 as of
March 27, 2020 (the last business day prior to the
fiscal year end on March 28, 2020), 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 28, 2020, there
was no remaining unearned compensation cost
related to unvested option awards.

The fair value of each option award is estimated on
the date of grant using a Black-Scholes option-pricing
model based on the expected volatility, dividend yield,
term and risk-free interest rate. There were no options
granted during fiscal years 2020, 2019 and 2018.

The total
intrinsic value of options exercised during
fiscal years 2020, 2019 and 2018 was $65.1 million,
$37.9 million and $87.8 million, respectively.

Cash received from the exercise of stock options and
from participation in the employee stock purchase
plan (excluding accrued unremitted employee funds)
was approximately $49.5 million for fiscal 2020 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.

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

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 1.4% for both stock options and
restricted stock units.

forfeitures differ

The following activity has occurred with respect to
restricted stock unit awards:

Weighted-Average
Grant-Date
Fair Value

Shares
(in thousands)

number of shares, does not have a fixed term, and
may be modified, suspended or terminated at any time
without prior notice.

at

respectively,

repurchased 6.4 million shares,
The Company
its
9.1 million shares and 2.9 million shares of
common stock during fiscal years 2020, 2019 and
2018,
of
$515.1 million, $638.1 million and $219.9 million,
respectively, in accordance with the current and prior
share repurchase programs. As of March 28, 2020,
$765.9 million
future
repurchases under
the Company’s current share
repurchase program.

aggregate

available

remains

cost

for

an

Balance at March 30,

2019

Granted

Vested

Forfeited

Balance at March 28,

2020

1,994

1,146

(936)

(113)

$69.03

71.88

64.89

69.76

Common Stock Reserved For Future Issuance
At March 28, 2020, the Company had reserved a total
its authorized
of approximately 11.2 million of
405.0 million shares of common stock for
future
issuance as follows (in thousands):

2,091

$72.59

Outstanding stock options under formal directors’

total

remaining unearned
As of March 28, 2020,
compensation cost
related to unvested restricted
stock units was $87.4 million, which will be amortized
over the weighted-average remaining service period of
approximately 1.3 years.

The total intrinsic value of restricted stock units that
vested during fiscal years 2020, 2019 and 2018 was
$67.7 million, $77.5 million and $73.2 million,
respectively, based upon the fair market value of the
Company’s common stock on the vesting date.

16. STOCKHOLDERS’ EQUITY

a

prior

program which was

Stock Repurchase
On October 31, 2019, the Company announced that
its Board of Directors authorized a new share
repurchase program to repurchase up to $1.0 billion
of the Company’s outstanding common stock, which
included approximately $117.0 million authorized
terminated
under
concurrent with the new authorization. Under
this
program, share repurchases are made in accordance
with applicable securities laws on the open market or
to
in privately negotiated transactions. The extent
which the Company repurchases its shares,
the
number of shares and the timing of any repurchases
depends on general market conditions,
regulatory
requirements, alternative investment opportunities
and other considerations. The program does not
to repurchase a minimum
require the Company

and employees’ stock option plans

Possible future issuance under Company stock

incentive plans

Employee stock purchase plan

Restricted stock-based units outstanding

Total shares reserved

967

4,515
3,673
2,091

11,246

17. OPERATING SEGMENT AND GEOGRAPHIC

INFORMATION

The Company’s operating and reportable segments as
of March 28, 2020 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 operating decision maker (“CODM”),
and these segments are managed separately based
on the end markets and applications they support. The
CODM allocates
the
performance of each operating segment primarily
based on non-GAAP operating income.

resources

assesses

and

MP is a global supplier of cellular, UWB and Wi-Fi
solutions for a variety of high-volume markets,
including smartphones, wearables,
tablets
and IoT applications.

laptops,

IDP is a global supplier of RF, system-on-a-chip and
power
wireless
infrastructure, defense, smart home, automotive and
other IoT applications.

management

solutions

for

69

(1) “All other” revenue relates to royalty income that was not
allocated to MP or IDP for fiscal 2018. As a result of the
adoption of ASU 2014-09, “Revenue from Contracts with
Customers (Topic 606),” income related to a right-to-use
license of
intellectual property was recognized at a
point-in-time and, therefore, was included as a transition
adjustment impacting retained earnings.

2020

Fiscal Year
2019

2018

Reconciliation of “All
other” category:
Stock-based

compensation
expense
Amortization of

$ (75,978) $ (71,580) $ (68,158)

intangible assets

(246,563)

(453,515)

(539,362)

Acquisition and

integration related
costs

Restructuring related

charges
Start-up costs
Asset impairment and

accelerated
depreciation

Other (including (loss)
gain on assets and
other
miscellaneous
corporate
overhead)

(61,891)

(8,522)

(10,561)

(21,808)
(712)

(13,467)
(18,035)

(21,406)
(24,271)

(27,118)

(37,246)

(38,000)

(3,523)

(7,463)

(13,253)

Loss from operations

for “All other”

$(437,593) $(609,828) $(715,011)

The consolidated financial statements include revenue
to
are
geographic
by
summarized as follows (in thousands):

customers

region

that

2020

Fiscal Year
2019

2018

Revenue:

United States
China
Other Asia
Taiwan
Europe

$1,468,358
1,106,679
340,400
169,337
154,367

$1,379,528
1,094,061
271,797
188,745
156,194

$1,463,594
890,969
327,158
161,479
130,336

Total Revenue

$3,239,141

$3,090,325

$2,973,536

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

Notes to Consolidated Financial Statements

The “All other” category includes operating expenses
such as stock-based compensation, amortization of
intangible assets, acquisition and integration related
costs, restructuring related charges, start-up costs,
asset impairment and accelerated depreciation, (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

The following tables present details of the Company’s
a
operating
reconciliation
(in
thousands):

segments
other”

reportable
“All
the

and
category

and

of

Revenue:

MP

IDP

All other(1)

2020

Fiscal Year
2019

2018

$2,397,740 $2,197,660 $2,181,161

841,401

892,665

788,495

—

—

3,880

Total revenue

$3,239,141 $3,090,325 $2,973,536

Operating income

(loss):

MP

IDP

All other

$ 715,514 $ 558,990 $ 549,574

145,295

267,304

235,719

(437,593)

(609,828)

(715,011)

Operating income

$ 423,216 $ 216,466 $

70,282

Interest expense

$ (60,392)$ (43,963)$ (59,548)

Interest income

12,066

10,971

7,017

Other income
(expense)

Income before

20,199

(91,682)

(606)

income taxes

$ 395,089 $

91,792 $

17,145

70

Notes to Consolidated Financial Statements

Qorvo, Inc. and Subsidiaries Annual Report on Form 10-K 2020

the customer

During the first quarter of fiscal 2020, the Company
changed its presentation of net revenue based on the
“sold to” address of
to the above
presentation of net revenue based on the location of
the customers’ headquarters. The information above
for fiscal years 2019 and 2018 has been reclassified
to reflect this change. The Company believes that the
disaggregation of revenue based on the location of the
customers’ headquarters is more representative of
how its revenue and cash flows are impacted by
geographically-sensitive changes in economic factors.

18. QUARTERLY FINANCIAL SUMMARY (UNAUDITED):

The consolidated financial statements include the
following long-lived tangible asset amounts related to
operations of the Company by geographic region (in
thousands):

March 28,
2020

March 30,
2019

Long-lived tangible assets:
United States
China
Other countries

$1,042,587 $1,106,705
216,342
43,466

166,524
50,092

(in thousands, except per share data)
Revenue
Gross profit
Net income
Net income per share:
Basic
Diluted

(in thousands, except per share data)
Revenue
Gross profit
Net (loss) income
Net (loss) income per share:
Basic
Diluted

First

Second

Third

Fourth

Fiscal 2020 Quarter

$775,598
294,289

$806,698
323,582

39,541(1),(2),(3)

83,038(1),(3)

$869,073
368,111
161,356(1),(2),(3),(4)

$787,772
335,781

50,390(1),(2),(3),(5)

$
$

0.33
0.33

$
$

0.71
0.70

$
$

1.39
1.36

$
$

0.44
0.43

First

Second

Third

Fourth

Fiscal 2019 Quarter

$692,670
236,733
(29,993)(1),(2),(6),(7)

$884,443
353,514

$832,330

338,363(1)

$680,882

266,573(1)

32,084(1),(2),(6)

69,517(1),(2),(6)

61,517(1),(6),(8)

$
$

(0.24)
(0.24)

$
$

0.26
0.25

$
$

0.56
0.55

$
$

0.51
0.50

1 The Company recorded restructuring related charges, including accelerated depreciation on certain property and equipment, of
$24.0 million, $9.5 million, $10.3 million and $4.1 million in the first, second, third and fourth quarters of fiscal 2020, respectively.
The Company recorded restructuring related charges, including accelerated depreciation and impairment charges on certain property
and equipment, of $2.8 million, $0.5 million, $19.5 million and $27.9 million in the first, second, third and fourth quarters of fiscal
2019, respectively (Note 12).

2 The Company recorded start-up expenses of $0.1 million, $0.4 million and $0.2 million in the first, third and fourth quarters of fiscal
2020, respectively. The Company recorded start-up expenses of $5.3 million, $5.9 million and $6.8 million in the first, second and
third quarters of fiscal 2019, respectively.

3 The Company recorded acquisition and integration related expenses of $23.1 million, $7.6 million, $7.2 million and $24.0 million in
the first, second, third and fourth quarters of fiscal 2020, respectively, primarily associated with the acquisitions of Active-Semi,
Cavendish, Custom MMIC and Decawave (Note 5).

4 The Company recorded a gain of $43.0 million in the third quarter of fiscal 2020 related to the remeasurement of its previously held
equity interest in Cavendish in connection with the purchase of the remaining issued and outstanding capital of the entity (Note 5).

5 The Company recorded an impairment of $18.3 million in the fourth quarter of fiscal 2020 on an equity investment without a readily

determinable fair value (Note 7).

6 The Company recorded losses on debt extinguishment of $33.4 million, $48.8 million, $1.8 million and $6.2 million in the first,

second, third and fourth quarters of fiscal 2019, respectively.

7 Income tax benefit of $32.1 million for the first quarter of fiscal 2019 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 13).

8 Income tax benefit of $11.3 million for the fourth quarter of fiscal 2019 relates primarily to a discrete benefit for the recognition of a

previously unrecognized tax benefit as a result of legislative guidance issued during the year (Note 13).

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 2020 and fiscal 2019 contained a comparable number of weeks (13 weeks).

71

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Qorvo, Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Qorvo, Inc. and subsidiaries (the Company) as
of March 28, 2020 and March 30, 2019, the related consolidated statements of operations, comprehensive
income, stockholders’ equity and cash flows for each of the two years in the period ended March 28, 2020, and
the related notes (collectively referred to as the “consolidated financial statements”).
the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at
March 28, 2020 and March 30, 2019, and the results of its operations and its cash flows for each of the two
years in the period ended March 28, 2020, in conformity with U.S. generally accepted accounting principles.

In our opinion,

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 28, 2020, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated May 20, 2020 expressed an unqualified opinion
thereon.

Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s 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.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

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 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 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 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 financial
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.

72

Inventory—Valuation
Description of the
Matter

How We
Addressed the
Matter in Our
Audit

totaled $517.2 million as of March 28, 2020,
The Company’s inventory, net
total assets. As explained in Note 1 to the
representing approximately 8% of
consolidated financial statements,
the Company assesses the valuation of all
inventories including manufacturing raw materials, work-in-process, and finished goods
each reporting period. Obsolete inventory or inventory in excess of management’s
estimated demand forecasts is written down to its estimated net realizable value if less
than cost by recording an inventory reserve at each reporting period.

Auditing management’s estimates for inventory reserves involved subjective auditor
judgment because the assessment considers a number of factors, including estimated
customer demand forecasts, technological obsolescence risks, and possible alternative
uses that are affected at least partially by market and economic conditions outside the
Company’s control.

We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s inventory reserve process. This included
testing controls over management’s review of the assumptions and data underlying the
inventory reserves, such as demand forecasts and consideration of how factors outside
of the Company’s control might affect the valuation of obsolete and excess inventory.

Our audit procedures included, among others, evaluating the significant assumptions
(e.g., customer demand forecasts, technological and/or market obsolescence, and
possible alternative uses) and the accuracy and completeness of underlying data used in
management’s assessment of
inventory reserves. We evaluated inventory levels
compared to forecasted demand, historical sales and specific product considerations.
We also assessed the historical accuracy of management’s estimates for both the
forecast assumptions and the reserve estimate.

73

Business Combinations
Description of the
Matter

How We
Addressed the
Matter in Our Audit

International,

the Company
As explained in Note 5 to the consolidated financial statements,
completed acquisitions of Active-Semi
(“Active-Semi”), Cavendish
Kinetics Limited (“Cavendish”), Custom MMIC Design Services, Inc. (“Custom MMIC”),
and Decawave Limited (“Decawave”) during the fiscal year ended March 28, 2020. The
acquisitions were each accounted for as business combinations. The Company recorded
intangible assets from these acquisitions, primarily consisting of customer relationships
and developed technology. The Company used the income approach to estimate the
preliminary fair values of the customer relationships and developed technology, each of
which are based on management’s estimates and assumptions.

Inc.

Auditing the Company’s accounting for
its acquisitions of Active-Semi, Cavendish,
Custom MMIC, and Decawave was complex and subjective due to the significant
estimation uncertainty in determining the fair value of the above identified intangible
assets, which was primarily due to the sensitivity of the respective fair values to
underlying assumptions. The fair value estimate of the customer relationships intangible
asset included significant assumptions in the prospective financial information (including
revenue growth, EBITDA margin, and customer attrition) and the discount rate. The fair
included significant
the developed technology intangible asset
value estimate of
assumptions in the prospective financial information (including revenue growth, EBITDA
margin, technology migration rates, royalty rates, and expected economic life) and the
discount rate. These significant assumptions for each of the identified intangible assets
are forward-looking and could be affected by future economic and market conditions.

We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the accounting for the acquisitions. Our tests included
controls over the estimation process and models to calculate the fair value estimates of
the above identified intangible assets, as well as controls over management’s review of
the valuation methodologies and significant assumptions discussed above.

the valuation methodologies,

To test the estimated fair values of the developed technology and customer relationship
included, among others,
intangible assets, we performed audit procedures that
evaluating the Company’s selection of
testing the
significant assumptions and the completeness and accuracy of the underlying data. For
example, we compared the significant assumptions in the prospective financial
information, including, but not limited to, the forecasted revenue growth rates, EBITDA
margin, expected annual customer attrition,
technology migration rates, and the
estimated economic life, as appropriate for each calculation to current industry trends,
as well as to the historical performance of the acquired businesses. With the assistance
of our valuation specialists, we evaluated the reasonableness of
the valuation
methodology, and significant assumptions, including royalty rates and discount rates.
This included understanding and validating the source information underlying the
determination of the royalty rates and discount rates and testing the mathematical
accuracy of the calculations. In addition, we developed a range of independent estimates
for the discount rates using publicly available market data for comparable entities and
comparing those to the discount rates selected by management.

We have served as the Company’s auditor since 2018.
Raleigh, North Carolina
May 20, 2020

/s/ Ernst & Young LLP

74

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Qorvo, Inc.

Opinion on Internal Control over Financial Reporting
We have audited Qorvo, Inc. and subsidiaries’ internal control over financial reporting as of March 28, 2020, based
on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Qorvo, Inc. and
subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as
of March 28, 2020, based on the COSO criteria.

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 28, 2020 and March 30, 2019, the
related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for
each of the two years in the period ended March 28, 2020, and the related notes and our report dated May 20,
2020 expressed an unqualified opinion thereon.

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 included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and 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

Raleigh, North Carolina
May 20, 2020

/s/ Ernst & Young LLP

75

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 statements of operations, comprehensive loss, stockholders’
equity, and cash flows of Qorvo, Inc. and subsidiaries (the Company) for the year 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 results of operations of the Company and its cash flows for
the year ended March 31, 2018, in conformity with U.S. generally accepted accounting principles.

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 audit. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (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 the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audit 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 audit 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 audit provides a reasonable basis for
our opinion.

We served as the Company’s auditor from 2014 to 2018.
Greensboro, North Carolina
May 21, 2018

/s/ KPMG LLP

76

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

of

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)
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

the Exchange Act. Our

internal

control

over

for

the

preparation

internal
those

reporting
financial

and
statements

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
28,

Management assessed the effectiveness of our
as of
internal
March
this
2020. 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 28, 2020, based
on the criteria in the Internal Control-Integrated
Framework (2013) issued by the COSO.

Ernst & Young LLP, an independent registered public
accounting firm, has issued an unqualified opinion on
the effectiveness of the Company’s internal control
over financial reporting, as of March 28, 2020, which
is included in this Annual Report on Form 10-K under
Part
and
Supplementary Data.”

Statements

“Financial

Item 8

II,

(c) Changes in internal control over financial reporting

financial

There were no changes in our Company’s internal
control over
reporting during the quarter
ended March 28, 2020 that have materially affected,
or are reasonably likely to materially affect, our
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.

Information required by this Item may be found in our
for our 2020 Annual
definitive proxy statement
captions
the
under
Stockholders
Meeting
Officers,”
“Executive
Governance,”
“Corporate

of

77

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 2020 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 2020 Annual
Meeting of Stockholders under the captions “Proposal
Independent
3 — Ratification of Appointment of
Registered Public Accounting Firm” and “Corporate
Governance,”
is
incorporated herein by reference.

information

therein

and

the

“Proposal 1 — Election of Directors” and “Delinquent
Section 16(a) Reports”
reported
therein), and the information therein is incorporated
herein by reference.

(to the extent

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
the “Investor
“Corporate Governance” tab under
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 2020 Annual
Meeting of Stockholders under the captions “Executive
Committee
Compensation”
the
and
Interlocks
information
by
reference.

Participation,”
incorporated

and
Insider
is

“Compensation

and
herein

therein

ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.

Information required by this Item may be found in our
for our 2020 Annual
definitive proxy statement
Meeting of Stockholders under the captions “Security
and
Ownership
Plan
Management”
is
Information,”
incorporated herein by reference.

Beneficial Owners
Compensation

“Equity
the

information

and
and

Certain

therein

of

78

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 28, 2020 and March 30, 2019.

ii. Consolidated Statements of Operations for fiscal years 2020, 2019 and 2018.

iii. Consolidated Statements of Comprehensive Income (Loss) for fiscal years 2020, 2019 and 2018.

iv. Consolidated Statements of Stockholders’ Equity for fiscal years 2020, 2019 and 2018.

v. Consolidated Statements of Cash Flows for fiscal years 2020, 2019 and 2018.

vi. Notes to Consolidated Financial Statements.

Reports of Independent Registered Public Accounting Firms.

(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.

79

EXHIBIT INDEX

Description

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 Incorporation of Qorvo, 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)

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)

Supplemental Indenture No. 1, dated as of June 29, 2018 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 June 29, 2018)

Supplemental Indenture No. 2, dated as of August 28, 2018, among Qorvo, Inc., the Guarantors party
thereto and MUFG Union Bank, N.A., as Trustee (incorporated by reference to Exhibit 4.3 to the
Company’s Current Report on Form 8-K filed with the SEC on August 28, 2018)

Indenture, dated as of July 16, 2018, 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 July 16, 2018)

Supplemental
Indenture, dated as of August 28, 2018, 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 August 28, 2018)

Second Supplemental Indenture, dated as of March 5, 2019, 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 March 5, 2019)

Indenture, dated as of September 30, 2019, among Qorvo, Inc., the Guarantors party thereto and
MUFG Union Bank, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on
Form 8-K filed with the SEC on October 1, 2019)

Supplemental Indenture, dated as of December 20, 2019, 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 December 20, 2019)

Registration Rights Agreement, dated as of September 30, 2019, by and among Qorvo, Inc., the
Guarantors named therein and BofA Securities, Inc., as representative of the several Initial Purchasers
named therein (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K
filed with the SEC on October 1, 2019)

Registration Rights Agreement, dated as of December 20, 2019, by and among Qorvo, Inc., the
Guarantors named therein and BofA Securities, Inc., as representative of the several Initial Purchasers
named therein (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K
filed with the SEC on December 20, 2019)

Description of Securities (incorporated by reference to Exhibit 4.11 to the Company’s Annual Report on
Form 10-K filed with the SEC on May 17, 2019)

Qorvo, Inc. 2007 Employee Stock Purchase Plan (As Assumed and Amended by Qorvo, Inc., and as
(incorporated by reference to Exhibit 10.1 to the
further amended, effective February 8, 2017)
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))*

Exhibit
No.

2.1

2.2

3.1

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

10.1

10.2

80

Exhibit
No.

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

Description

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))*

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))*

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))*

Qorvo, Inc. Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed with the SEC on January 5, 2015)*

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)*

Inc. Nonqualified Deferred Compensation Plan (As Assumed and Amended and Restated
Qorvo,
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))*

Wafer Supply Agreement, dated June 9, 2012, between RF Micro Devices,
Inc.
(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,

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 to the Qorvo, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the
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)*

81

Description

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)*

(Performance-Based Award for Senior Officers (TSR))
Form of Restricted Stock Unit Agreement
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
(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)*

(Director Annual/Supplemental RSUs)

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)

2018 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan, effective as
of April 1, 2018 (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form
10-K filed with the SEC on May 21, 2018)*

Second 2018 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan,
dated as of October 8, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q filed with the SEC on February 7, 2019)*

First Amendment to Credit Agreement, dated as of June 5, 2018, by and between Qorvo, Inc., certain
of its material domestic subsidiaries, the lenders party thereto, and Bank of America, N.A., as
administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed with the SEC on June 6, 2018)

Second Amendment to Credit Agreement, dated as of December 17, 2018, by and between Qorvo,
Inc., certain of its material domestic subsidiaries, the lenders party thereto, and Bank of America,
N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed with the SEC on December 18, 2018)

Third Amendment to Credit Agreement, dated as of June 24, 2019, by and between Qorvo, Inc., certain
of its material domestic subsidiaries, the lenders party thereto, and Bank of America, N.A., as
administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed with the SEC filed on June 25, 2019)

2019 Declaration of Amendment to Qorvo, Inc. 2007 Employee Stock Purchase Plan, dated as of
October 30, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on
Form 10-Q filed with the SEC on January 30, 2020)*

Exhibit
No.

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38

82

Exhibit
No.

10.39

21

23.1

23.2

31.1

31.2

32.1

32.2

101

Description

2019 Declaration of Amendment to Qorvo, Inc. Nonqualified Deferred Compensation Plan, dated as of
October 30, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q filed with the SEC on January 30, 2020)*

Subsidiaries of Qorvo, Inc.

Consent of Independent Registered Public Accounting Firm (Ernst & Young LLP)

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

formatted in iXBRL (Inline eXtensible Business Reporting Language):

The following materials from our Annual Report on Form 10-K for the fiscal year ended March 28,
(i) the Consolidated
2020,
Balance Sheets as of March 28, 2020 and March 30, 2019, (ii) the Consolidated Statements of
Operations for the fiscal years ended March 28, 2020, March 30, 2019, and March 31, 2018, (iii) the
Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended March 28, 2020,
March 30, 2019, and March 31, 2018, (iv) the Consolidated Statements of Stockholders’ Equity for
the fiscal years ended March 28, 2020, March 30, 2019, and March 31, 2018, (v) the Consolidated
Statements of Cash Flows for the fiscal years ended March 28, 2020, March 30, 2019, and
March 31, 2018, and (vi) the Notes to the Consolidated Financial Statements.

104

The cover page from our Annual Report on Form 10-K for the year ended March 28, 2020, formatted in
iXBRL

+ 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.

83

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 20, 2020

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 20, 2020.

/S/ ROBERT A. BRUGGEWORTH

Name:

Robert A. Bruggeworth

Title:

President, Chief Executive Officer and Director
(Principal Executive Officer)

/S/ MARK J. MURPHY

Name: Mark J. Murphy

Title:

Chief Financial Officer
(Principal Financial Officer)

/S/ GINA B. HARRISON

Name:

Gina B. Harrison

Title:

Vice President and Corporate Controller
(Principal Accounting Officer)

/S/ RALPH G. QUINSEY

Name:

Ralph G. Quinsey

Title:

Chairman of the Board of Directors

/S/ JEFFERY R. GARDNER

Name:

Jeffery R. Gardner

Title:

Director

/S/ JOHN R. HARDING

Name:

John R. Harding

Title:

Director

/S/ DAVID H. Y. HO

Name:

David H. Y. Ho

Title:

Director

/S/ RODERICK D. NELSON

Name:

Roderick D. Nelson

Title:

Director

/S/ DR. WALDEN C. RHINES

Name:

Dr. Walden C. Rhines

Title:

Director

/S/ SUSAN L. SPRADLEY

Name:

Susan L. Spradley

Title:

Director

/S/ WALTER H. WILKINSON, JR.

Name: Walter H. Wilkinson, Jr.

Title:

Director

84