Skyworks Solutions
Annual Report 2009

Plain-text annual report

2009 Annual ReportNotice of 2010 Annual Meeting and Proxy StatementSkyworks Solutions, Inc. 1Skyworks Solutions, Inc. is an innovator of high reliability analog and mixed signal semiconductors. Leveraging core technologies, Skyworks offers diverse standard and custom linear products supporting automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and mobile handset applications.innovatorautomotive (cid:129) broadband (cid:129) cellular infrastructure (cid:129) energy management (cid:129) industrial (cid:129) medical (cid:129) military (cid:129) mobile handsetsAbout SkyworksSkyworks Solutions, Inc. Letter to Stockholders 2Dear Stockholders,2009 proved to be a year of transition, with signs of market recovery following one of the worst global economic downturns in recent history. Despite reductions in demand and broader financial pressures, Skyworks outperformed its peers by quickly realigning our cost structure and intensifying our focus on the most profitable, highest growth segments of our business. As a result, we exited the year with the highest non-GAAP operating income in the company’s history, and in a much stronger position to gain share as the market recovers.At a higher level, throughout the fiscal year, we also began capitalizing on a few, key strategic market trends:(cid:129) First, the growing demand for mobile Internet applications and always-on connectivity, par-tic ularly given the increasing ubiquity of social networking, enterprise access, and music and video applications. This in turn has been driving the broad proliferation of smart phones, notebooks, netbooks, tablets and embedded wireless devices.(cid:129) Second, the emergence of a host of custom, analog-intensive applications spanning a wide variety of non-handset markets including high definition television, automotive, avionics, wire-less and wireline infrastructure, satellite, medical, military and industrial.(cid:129) Third, the rapid adoption of smart grid technologies as utilities and consumers alike seek to more efficiently measure and manage their energy utilization. Fiscal 2009 These market trends intersect with Skyworks’ core capabilities and are supporting our ongoing Highlights transformation to a high-margin and highly-diversified analog company. When coupled with the progress we have made against our strategic objectives, we are further differentiating Skyworks and are closer to realizing our vision of becoming the leader in analog mobile con-nectivity semiconductor solutions. In fiscal 2009, Skyworks generated $803 million in revenue, posted operating income of $121 million, a company record, and delivered operating margins of greater than 15 percent on a non-GAAP basis.* During the fiscal year, we also generated $210 million in cash flow from operations, exiting the year with over $370 million in cash and equivalents, even after retiring David J. AldrichPresident and Chief Executive Officerleadership Fiscal 2009 Highlights Skyworks Solutions, Inc. Letter to Stockholders 3$58 million of convertible debt. This balance sheet strength has increasingly been a key determining factor in winning business, as customers and suppliers alike choose to partner with companies who not only provide innovative solutions, but who are financially well-positioned to support their long-term product roadmaps.Strategically, we made substantial progress along each of our three core objectives:(cid:129) Gaining share in our targeted markets(cid:129) Diversifying our business, and(cid:129) Delivering ongoing margin expansion and higher return on investment.With regard to gaining share, we expanded our engagements with key customers across multiple platforms. As a result, today Skyworks is uniquely supporting all top-tier handset OEMs and key smart phone providers. More importantly, with service providers maximizing network roaming and carrier flexibility, we are seeing a growing trend towards more frequency bands and, as a result, up to a three-fold increase in addressable semiconductor content per device.At the same time, we are diversifying into new markets including medical, avionics, automotive, broadband, smart energy and industrial, to name just a few. Our approach in these targeted vertical applications is to service our customers’ needs with a focus on portability, mobility, current consumption, and signal and data integrity—the key challenges our linear technology is ideally suited to solve.Smart energy, for example, is one of our fastest growing analog markets and one in which we are particularly well positioned. Here, Skyworks is partnering with several of the energy industry’s top solution providers to meet the growing worldwide demand for smart water, gas and electric meter readers. These strategic partnerships are enabling Skyworks to offer highly-valued solutions for energy management applications which offer multiple benefits including efficient delivery of power and energy to consumers, reduced utility and consumer costs, and increased system reliability. According to IMS Research, only 8 percent of the 2.7 billion meters worldwide are automated, highlighting the massive retrofit and new deployment opportunity.FY07FY09FY080Non-GAAP Operating Margin*(percent of sales)3%6%9%12%15%FY07FY09FY080Revenue(dollars in millions)$200$400$600$800$1,000*Please see table on page 118 for a full reconciliation of non-GAAP results to GAAP results.Skyworks Solutions, Inc. Letter to Stockholders 4Finally, we continue to execute operationally. This element became even more important as we entered the economic downturn. With our fab-lite manufacturing strategy, where we partner with external foundry suppliers, we are able to balance our external capacity with internal utilization according to market demand. This approach, coupled with our leaner cost structure and intense commitment to continuous improvement in yields, cycle times and utilization, enabled us to maintain margins and return-on-invested capital despite the market downturn. Today, as markets recover, this operating model is driving increased profitability for Skyworks. Our strong results in a difficult economic environment speak volumes about the resolve of the Skyworks team and the strength of our overall business model. Looking We are entering a new and exciting growth phase driven by large, secular trends that intersect Ahead with Skyworks’ strengths. We enter this phase with a robust product portfolio, a strong customer focus and demonstrated operational agility, all positioning us to further differentiate Skyworks and create even greater shareholder value.In closing, we would like to thank our employees whose efforts enable Skyworks to succeed even in the most difficult times, our customers for their confidence in our ability to deliver superior products, and you, our stockholders, for your belief and support of our business.David J. AldrichPresident and Chief Executive OfficersolutionsFY07FY09FY080$50$100$150$200$250Cash Flow From Operations(dollars in millions)Skyworks Solutions, Inc. Executive Management 5DAVID J. ALDRICHPresident and Chief Executive OfficerBRUCE J. FREYMANVice President, Worldwide OperationsLIAM K. GRIFFINSenior Vice President, Sales and MarketingGEORGE M. LEVANVice President, Human ResourcesDAVID C. STASEYVice President, Analog ComponentsMARK V.B. TREMALLOVice President, General Counsel and SecretaryGREGORY L. WATERSExecutive Vice President and General Manager,Front-End SolutionsDONALD W. PALETTEVice President and Chief Financial OfficerTHOMAS S. SCHILLERVice President, Corporate DevelopmentNIEN-TSU SHENVice President, QualityExecutive ManagementMarch31,2010DearStockholder:Iampleasedtoinviteyoutoattendthe2010annualmeetingofstockholdersofSkyworksSolutions,Inc.tobeheldat2:00p.m.,localtime,onTuesday,May11,2010,attheDoubleTreeHotelBoston—BedfordGlen,44MiddlesexTurnpike,Bedford,Massachusetts(the“AnnualMeeting”).Welookforwardtoyourparticipationinpersonorbyproxy.TheattachedNoticeofAnnualMeetingofStockholdersandProxyStatementdescribethemattersthatweexpecttobeacteduponattheAnnualMeeting.IfyouplantoattendtheAnnualMeeting,pleasecheckthedesignatedboxontheenclosedproxycard.Or,ifyouutilizeourtelephoneorInternetvotingsystems,pleaseindicateyourplanstoattendtheAnnualMeetingwhenpromptedtodoso.Ifyouareastockholderofrecord,youshouldbringthetophalfofyourproxycardasyouradmissionticketandpresentituponenteringtheAnnualMeeting.IfyouareplanningtoattendtheAnnualMeetingandyoursharesareheldin“streetname”byyourbroker(orothernominee),youshouldaskthebroker(orothernominee)foraproxyissuedinyournameandpresentitatthemeeting.WhetherornotyouplantoattendtheAnnualMeeting,andregardlessofhowmanysharesyouown,itisimportantthatyoursharesberepresentedattheAnnualMeeting.Accordingly,weurgeyoutocompletetheenclosedproxyandreturnittouspromptlyinthepostage-prepaidenvelopeprovided,ortocompleteyourproxybytelephoneorviatheInternetinaccordancewiththeinstructionsontheproxycard.IfyoudoattendtheAnnualMeetingandwishtovoteinperson,youmaywithdrawapreviouslysubmittedproxyatthattime.Sincerelyyours,DavidJ.McLachlanChairmanoftheBoardSkyworksSolutions,Inc.StockholderInvitation6SKYWORKSSOLUTIONS,INC.20SylvanRoad5221CaliforniaAvenueWoburn,MA01801Irvine,CA92617(781)376-3000(949)231-3000NOTICEOFANNUALMEETINGOFSTOCKHOLDERSTOBEHELDONTUESDAY,MAY11,2010TotheStockholdersofSkyworksSolutions,Inc.:The2010annualmeetingofstockholdersofSkyworksSolutions,Inc.,aDelawarecorporation(the“Com-pany”),willbeheldat2:00p.m.,localtime,onTuesday,May11,2010,attheDoubleTreeHotelBoston—BedfordGlen,44MiddlesexTurnpike,Bedford,Massachusetts(the“AnnualMeeting”)toactuponthefollowingproposals:1.ToelectthreemembersoftheBoardofDirectorsoftheCompanytoserveasClassIIdirectorswithtermsexpiringatthe2013annualmeetingofstockholders.2.ToratifytheselectionbytheCompany’sAuditCommitteeofKPMGLLPastheindependentregisteredpublicaccountingfirmfortheCompanyforfiscalyear2010.3.TotransactsuchotherbusinessasmayproperlycomebeforetheAnnualMeetingoranyadjournmentorpostponementthereof.OnlystockholdersofrecordatthecloseofbusinessonMarch23,2010,areentitledtonoticeofandtovoteattheAnnualMeeting.AllstockholdersarecordiallyinvitedtoattendtheAnnualMeeting.ToensureyourrepresentationattheAnnualMeeting,however,weurgeyoutovotepromptlyinoneofthefollowingwayswhetherornotyouplantoattendtheAnnualMeeting:(1)bycompleting,signinganddatingtheaccompanyingproxycardandreturningitinthepostage-prepaidenvelopeenclosedforthatpurpose,(2)bycompletingyourproxyusingthetoll-freenumberlistedontheproxycard,or(3)bycompletingyourproxyviatheInternetbyvisitingtheWebsiteaddresslistedonyourproxycard.Shouldyoureceivemorethanoneproxycardbecauseyoursharesareheldinmultipleaccountsorregisteredindifferentnamesoraddresses,pleasecomplete,sign,dateandreturneachproxycard,orcompleteeachproxybytelephoneortheInternet,toensurethatallofyoursharesarevoted.YourproxymayberevokedatanytimepriortotheAnnualMeeting.AnystockholderattendingtheAnnualMeetingmayvoteatthemeetingevenifheorshepreviouslysubmittedaproxybymail,telephoneorviatheInternet.Ifyoursharesareheldin“streetname”byyourbroker(orothernominee),yourbroker(orothernominee)willprovideyouwithinstructionsonhowyoucanvoteyourshares.Further,ifyouholdyoursharesin“streetname”youwillnotbeabletoattendtheAnnualMeeting,andyourvoteinpersonattheAnnualMeetingwillnotbeeffective,unlessyouhaveobtainedandpresentaproxyissuedinyournamefromthebroker(orothernominee).ByOrderoftheBoardofDirectors,MARKV.B.TREMALLOVicePresident,GeneralCounselandSecretaryWoburn,MassachusettsMarch31,2010SkyworksSolutions,Inc.NoticeofAnnualMeeting7SKYWORKSSOLUTIONS,INC.20SylvanRoad5221CaliforniaAvenueWoburn,MA01801Irvine,CA92617(781)376-3000(949)231-3000PROXYSTATEMENTThisProxyStatementisbeingfurnishedinconnectionwiththesolicitationofproxiesbytheBoardofDirectorsofSkyworksSolutions,Inc.,aDelawarecorporation(“Skyworks”orthe“Company”),foruseattheCompany’sannualmeetingofstockholderstobeheldat2:00p.m.,localtime,onTuesday,May11,2010,attheDoubleTreeHotelBoston—BedfordGlen,44MiddlesexTurnpike,Bedford,Massachusettsoratanyadjournmentorpostponementthereof(the“AnnualMeeting”).TheCompany’sAnnualReport,whichincludesfinancialstatementsandManagement’sDiscussionandAnalysisofFinancialConditionandResultsofOperationforthefiscalyearendedOctober2,2009,isbeingmailedtogetherwiththisProxyStatementtoallstockholdersentitledtovoteattheAnnualMeeting.ThisProxyStatementandformofproxyarebeingfirstmailedtostockholdersonoraboutMarch31,2010.OnlystockholdersofrecordatthecloseofbusinessonMarch23,2010(the“RecordDate”),areentitledtonoticeofandtovoteattheAnnualMeeting.AsofMarch23,2010,therewere176,540,855sharesofSkyworks’commonstockissuedandoutstanding.PursuanttoSkyworks’certificateofincorporationandby-laws,andapplicableDelawarelaw,eachshareofcommonstockentitlestheholderofrecordatthecloseofbusinessontheRecordDatetoonevoteoneachmatterconsideredattheAnnualMeeting.Asastockholderofrecord,youmayvoteinoneofthefollowingthreewayswhetherornotyouplantoattendtheAnnualMeeting:(1)bycompleting,signinganddatingtheaccompanyingproxycardandreturningitinthepostage-prepaidenvelopeenclosedforthatpurpose,(2)bycompletingyourproxyusingthetoll-freetelephonenumberlistedontheproxycard,or(3)bycompletingyourproxyviatheInternetatthewebsiteaddresslistedontheproxycard.IfyouattendtheAnnualMeeting,youmayvoteinpersonatthemeetingevenifyouhavepreviouslycompletedyourproxybymail,telephoneorviatheInternet.Ifyoursharesareheldonyourbehalfbyathirdpartysuchasyourbroker(oranothernominee)andareregisteredinthenameofyourbroker(orothernominee),therebymakingthebroker(orothernominee)thestockholderofrecordandyouthebeneficialowner,werefertoyoursharesasbeingheldin“streetname.”Asthebeneficialownerofyour“streetname”shares,youareentitledtoinstructyourbroker(orothernominee)astohowtovoteyourshares.Yourbroker(orothernominee)willprovideyouwithinformationastothemannersinwhichyouareabletoinstructthemastothevotingofyour“streetname”shares.Ifyoursharesareheldin“streetname”andyouwishtoattendtheAnnualMeetinginpersonandvoteattheAnnualMeeting,youwillneedtoobtainalegalproxyinyournamefromyourbroker(orothernominee).Ifyoursharesareheldin“streetname,”yourbroker(orothernominee)isrequiredtovotethosesharesinaccordancewithyourinstructions.Ifyoudonotgiveinstructionstoyourbroker(orothernominee),yourbroker(orothernominee)willonlybeentitledtovotetheshareswithrespectto“discretionary”mattersasdescribedbelowbutwillnotbepermittedtovotetheshareswithrespectto“non-discretionary”matters.A“brokernon-vote”occurswhenyourbroker(orothernominee)submitsaproxyforyourshares(becausethebroker(orothernominee)haseitherreceivedinstructionsfromyouononeormoreproposals,butnotall,orhasnotreceivedinstructionsfromyoubutisentitledtovoteonaparticularmatter)butdoesnotindicateavoteforaparticularproposalbecausethebroker(orothernominee)doesnothaveauthoritytovoteonthatproposalandhasnotreceivedvotinginstructionsfromyou.“Brokernon-votes”arenotcountedasvotesfororagainsttheproposalinquestionorasabstentions,noraretheycountedtodeterminethenumberofvotespresentfortheparticularproposal.Wedo,however,count“brokernon-votes”forthepurposeofdeterminingaquorum.Ifyoursharesareheldin“streetname”byyourbroker(orothernominee),pleasechecktheinstructioncardprovidedbyyourbroker(orothernominee)orcontactyourbroker(orothernominee)todeterminewhetheryouwillbeabletovotebytelephoneorviatheInternet.SkyworksSolutions,Inc.ProxyStatement8AnyproxygivenpursuanttothissolicitationmayberevokedbythepersongivingitatanytimebeforeitisvotedattheAnnualMeeting.Proxiesmayberevokedby(i)deliveringtotheSecretaryoftheCompany,beforethetakingofthevoteattheAnnualMeeting,awrittennoticeofrevocationbearingalaterdatethantheproxy,(ii)dulycompletingalater-datedproxyrelatingtothesamesharesandpresentingittotheSecretaryoftheCompanybeforethetakingofthevoteattheAnnualMeetingor(iii)attendingtheAnnualMeetingandvotinginperson(althoughattendanceattheAnnualMeetingwillnotinandofitselfconstitutearevocationofaproxy).AnywrittennoticeofrevocationorsubsequentproxyshouldbedeliveredtotheCompany’sprincipalexecutiveofficesatSkyworksSolutions,Inc.,20SylvanRoad,Woburn,MA01801,Attention:Secretary,orhanddeliveredtotheSecretaryoftheCompany,beforethetakingofthevoteattheAnnualMeeting.TheholdersofamajorityoftheissuedandoutstandingstockoftheCompanypresenteitherinpersonorbyproxyattheAnnualMeetingconstitutesaquorumforthetransactionofbusinessattheAnnualMeeting.Sharesthatabstainfromvotingonanyproposaland“brokernon-votes”willbecountedassharesthatarepresentandentitledtovoteforpurposesofdeterminingwhetheraquorumexistsattheAnnualMeeting.Forpurposesofdeterminingtheoutcomeofanymatterastowhichabroker(orothernominee)hasnotreceivedinstructionsfor,anddoesnothavediscretionaryvotingauthorityfor,thoseshareswillbetreatedasnotpresentandnotentitledtovotewithrespecttothatmatter(eventhoughthosesharesareconsideredentitledtovoteforpurposesofdeterminingwhetheraquorumexistsandmaybeentitledtovoteonothermatters).PursuanttotheCompany’sby-laws,directorsareelectedbyapluralityvoteofallvotescastfortheelectionofdirectorsattheAnnualmeetingand,therefore,thethreenomineesfordirectorwhoreceivethemostvoteswillbeelected.Stockholderswillnotbeallowedtocumulatetheirvotesintheelectionofdirectors.Sharesthatabstainfromvotingwillnotaffecttheoutcomeoftheelectionofdirectors.Unlikeprioryears,thisyearandgoingforward,uncontestedelectionsofdirectorsarenotconsideredtobe“discretionary”mattersforcertainbrokersand,asaresult,thosebrokersarenotauthorizedtovote“streetname”sharesintheabsenceofinstructionsfromthebeneficialowner.Thus,ifyoudonotprovidespecificinstructionstoyourbrokeronhowtovoteanyofyour“streetname”shareswithrespecttotheelectionofourdirectors,yourbrokermaynotbeabletovotethosesharesinitsdiscretionand,insuchcase,a“brokernon-vote”wouldoccurandnovotewouldbecountedforpurposesoftheelectionofourdirectors.“Brokernon-votes”willnotaffecttheoutcomeofourelectiondirectors.Therefore,withrespecttosharesheldin“streetname”byyourbroker(orothernominee),westronglyencourageyoutoprovideinstructionstosuchbroker(orothernominee)astohowtovoteontheelectionofdirectorsbysigning,datingandreturningtothebroker(orothernominee)theinstructioncardprovidedbythatbroker(orothernominee).THEBOARDOFDIRECTORSRECOMMENDSTHATYOUVOTEFOREACHOFTHEDIRECTORNOMINEES.RegardingProposal2,anaffirmativevoteofamajorityofthesharespresentinpersonorrepresentedbyproxyattheAnnualMeeting,andentitledtovoteonsuchmatterattheAnnualMeeting,isrequiredforapproval.Unliketheelectionofdirectors,Proposal2involvesamatteronwhichabroker(orothernominee)doeshavediscretionaryauthoritytovoteandasaresult,ifyoudonotinstructyourbroker(orothernominee)astohowyouwanttovoteyourshares,yourbroker(orothernominee)isentitledtovoteyoursharesinitsdiscretion.WithrespecttoProposal2,anabstentionwillhavethesameeffectasa“no”vote.THEBOARDOFDIRECTORSRECOMMENDSTHATYOUVOTEFORPROPOSAL2.AnautomatedsystemadministeredbytheCompany’stransferagenttabulatesthevotesattheAnnualMeeting.Thevoteoneachmattersubmittedtostockholderswillbetabulatedseparately.Thepersonsnamedasattorneys-in-factinthethisproxystatement,DavidJ.AldrichandMarkV.B.Tremallo,wereselectedbytheBoardofDirectorsandareofficersoftheCompany.EachexecutedproxycardreturnedpriortothetakingofthevoteattheAnnualMeetingwillbevoted.WhereachoicehasbeenspecifiedinanexecutedproxywithrespecttothematterstobeacteduponattheAnnualMeeting,thesharesrepresentedbytheproxywillbevotedinaccordancewiththespecifications.Ifnosuchspecificationsareindicated,suchproxieswillbevotedFORthethreenomineestotheBoardofDirectorsandFORtheratificationoftheselectionofKPMGLLPastheindependentregisteredpublicaccountingfirmoftheCompanyforthe2010fiscalyear.SkyworksSolutions,Inc.ProxyStatement9IfyouplantoattendtheAnnualMeeting,pleasebesuretocheckthedesignatedboxonyourproxycardindicatingyourintenttoattend,andsavetheadmissionticketattachedtoyourproxy(thetophalf);or,indicateyourintenttoattendthroughSkyworks’telephoneorInternetvotingprocedures,andsavetheadmissionticketattachedtoyourproxy.Ifyoursharesareheldin“streetname”byyourbroker(orothernominee),pleasecheckyourinstructioncardorcontactyourbroker(orothernominee)todeterminewhetheryouwillbeabletoindicateyourintenttoattendbytelephoneorviatheInternet.InordertobeadmittedtotheAnnualMeeting,youwillneedtopresentyouradmissionticket,aswellasprovideavalidpictureidentification,suchasadriver’slicenseorpassport.Ifyoursharesareheldin“streetname”byyourbroker(orothernominee),youshouldcontactyourbroker(orothernominee)toobtainaproxyinyournameandpresentitattheAnnualMeetinginordertovote.Somebrokers(orothernominees)maybeparticipatinginthepracticeof“householding”proxystatementsandannualreports.ThismeansthatonlyonecopyofthisProxyStatementandourAnnualReportmayhavebeensenttomultiplestockholdersinyourhousehold.IfyouareastockholderandyourhouseholdoraddresshasreceivedonlyoneAnnualReportandoneProxyStatement,theCompanywillpromptlydeliveraseparatecopyoftheAnnualReportandtheProxyStatementtoyou,uponyourwrittenrequesttoSkyworksSolutions,Inc.,5221CaliforniaAvenue,Irvine,CA92617,Attention:InvestorRelations,ororalrequesttoInvestorRelationsat(949)231-4700.IfyouwouldliketoreceiveseparatecopiesofourAnnualReportandProxyStatementinthefuture,youshoulddirectsuchrequesttoyourbroker(orothernominee).EvenifyourhouseholdoraddresshasreceivedonlyoneAnnualReportandoneProxyStatement,aseparateproxycardshouldhavebeenprovidedforeachstockholderaccount.Eachindividualproxycardshouldbesigned,dated,andreturnedintheenclosedpostage-prepaidenvelope(orvotedbytelephoneorviatheInternet,asdescribedtherein).IfyourhouseholdhasreceivedmultiplecopiesofourAnnualReportandProxyStatement,youcanrequestthedeliveryofsinglecopiesinthefuturebycontactingyourbroker(orothernominee),ortheCompanyattheaddressortelephonenumberabove.IfyouareaparticipantintheSkyworks401(k)SavingsandInvestmentPlan,youwillreceiveaninstructioncardfortheSkyworkssharesyouownthroughthe401(k)Plan.Thatinstructioncardwillserveasavotinginstructioncardforthetrusteeofthe401(k)Plan,andyour401(k)Planshareswillbevotedasyouinstruct.ImportantNoticeRegardingtheAvailabilityofProxyMaterialsfortheStockholderMeetingtobeHeldonMay11,2010TheProxyStatementandtheCompany’sAnnualReportareavailableatwww.skyworksinc.com/annualreport.SkyworksSolutions,Inc.ProxyStatement10SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTTotheCompany’sknowledge,thefollowingtablesetsforththebeneficialownershipoftheCompany’scommonstockasofMarch12,2010,bythefollowingindividualsorentities:(i)eachpersonwhobeneficiallyowns5%ormoreoftheoutstandingsharesoftheCompany’scommonstockasofMarch12,2010;(ii)theNamedExecutiveOfficers(asdefinedhereinundertheheading“CompensationTablesforNamedExecutiveOfficers”);(iii)eachdirectorandnomineefordirector;and(iv)allcurrentexecutiveofficersanddirectorsoftheCompany,asagroup.BeneficialownershipisdeterminedinaccordancewiththerulesoftheSEC,isnotnecessarilyindicativeofbeneficialownershipforanyotherpurpose,anddoesnotconstituteanadmissionthatthenamedstockholderisadirectorindirectbeneficialownerofthoseshares.AsofMarch12,2010,therewere176,208,021sharesofSkyworkscommonstockissuedandoutstanding.IncomputingthenumberofsharesofCompanycommonstockbeneficiallyownedbyapersonandthepercentageownershipofthatperson,sharesofCompanycommonstockthataresubjecttostockoptionsorotherrightsheldbythatpersonthatarecurrentlyexercisableorthatwillbecomeexercisablewithinsixty(60)daysofMarch12,2010,aredeemedoutstanding.Thesesharesarenot,however,deemedoutstandingforthepurposeofcomputingthepercentageownershipofanyotherperson.NamesandAddressesofBeneficialOwners(1)NumberofSharesBeneficiallyOwned(2)PercentofClassFMRLLC.........................................22,512,176(3)12.8%WellingtonManagementCompany,LLP..................17,993,820(4)10.2%BlackRock,Inc.....................................12,746,185(5)7.2%FrontierCapitalManagementCo.,LLC...................11,067,514(6)6.3%TheVanguardGroup,Inc.............................10,650,764(7)6.0%DavidJ.Aldrich....................................2,212,452(8)1.2%KevinL.Beebe.....................................126,250(*)MoizM.Beguwala..................................228,945(*)BruceJ.Freyman...................................378,854(8)(*)TimothyR.Furey...................................156,250(*)LiamK.Griffin.....................................456,747(8)(*)BalakrishnanS.Iyer.................................291,767(*)ThomasC.Leonard..................................202,807(*)DavidP.McGlade...................................111,250(*)DavidJ.McLachlan.................................158,850(*)DonaldW.Palette...................................77,990(8)(*)RobertA.Schriesheim...............................81,250(*)GregoryL.Waters...................................531,886(8)(*)Allcurrentdirectorsandexecutiveofficersasagroup(15persons).....................................5,428,334(8)3.0%*Lessthan1%(1)Unlessotherwisenotedinthefollowingnotes,eachperson’saddressistheaddressoftheCompany’sprincipalexecutiveofficesatSkyworksSolutions,Inc.,20SylvanRoad,Woburn,MA01801,andstockholdershavesolevotingandsoleinvestmentpowerwithrespecttotheshares,excepttotheextentsuchpowermaybesharedbyaspouseorotherwisesubjecttoapplicablecommunitypropertylaws.(2)IncludesthenumberofsharesofCompanycommonstocksubjecttostockoptionsheldbythatpersonthatarecurrentlyexercisableorwillbecomeexercisablewithinsixty(60)daysofMarch12,2010(the“CurrentSkyworksSolutions,Inc.ProxyStatement11Options”),asfollows:Mr.Aldrich—1,722,754sharesunderCurrentOptions;Mr.Beebe—101,250sharesunderCurrentOptions;Mr.Beguwala—190,590sharesunderCurrentOptions;Mr.Freyman—280,000sharesunderCurrentOptions;Mr.Furey—131,250sharesunderCurrentOptions;Mr.Griffin—310,000sharesunderCurrentOptions;Mr.Iyer—260,685sharesunderCurrentOptions;Mr.Leonard—146,250sharesunderCurrentOptions;Mr.McGlade—86,250sharesunderCurrentOptions;Mr.McLachlan—131,250sharesunderCurrentOptions;Mr.Palette—10,000sharesunderCurrentOptions;Mr.Schriesheim—56,250sharesunderCurrentOptions;Mr.Waters—370,780sharesunderCurrentOptions;currentdirectorsandexecutiveofficersasagroup(15persons)—4,037,615sharesunderCurrentOptions.(3)ConsistsofsharesbeneficiallyownedbyFMRLLC,aninvestmentadviserregisteredunderSection203oftheInvestmentAdvisersActof1940,asaresultofitssoleownershipofFidelityManagement&ResearchCompany(“FidelityResearch”)andindirectownershipofPyramisGlobalAdvisorsTrustCompany(“PGATC”).FidelityResearch,aninvestmentadvisorregisteredunderSection203oftheInvestmentAdvisorsActof1940,isthebeneficialownerof21,636,156sharesasaresultofactingasinvestmentadvisortovariousinvestmentcompaniesregisteredunderSection8oftheInvestmentCompanyActof1940thatholdtheshares.EdwardC.Johnson3dandFMRLLC,throughitscontrolofFidelityResearch,andthefundseachhassolepowertodisposeofthe21,636,156sharesownedbythefunds.PyramisGlobalAdvisors,LLC(“PGALLC”),anindirectwholly-ownedsubsidiaryofFMRLLCandaninvestmentadvisorregisteredunderSection203oftheInvestmentAdvisoryActof1940,isthebeneficialownerof412,000shares.EdwardC.Johnson3dandFMRLLC,throughitscontrolofPGALLC,eachhassoledispositivepowerandsolepowertovoteortodirectthevotingofthe412,000sharesownedbyinstitutionalaccountsorfundsadvisedbyPGALLC.PGATC,abankasdefinedinSection3(a)(6)oftheSecuritiesExchangeActof1934(the“ExchangeAct”),isthebeneficialownerof464,020sharesasaresultofitsservingasinvestmentmanagerofinstitutionalaccountsowningsuchshares.EdwardC.Johnson3dandFMRLLC,throughitscontrolofPGATC,eachhassoledispositivepowerover464,020sharesandsolepowertovoteortodirectthevotingof450,610sharesownedbytheinstitutionalaccountsmanagedbyPGATC.Ofthesharesbeneficiallyowned,FMRLLC(throughitsownershipFidelityResearchandPGATC)hassolevotingpowerwithrespectto862,610sharesandsoledispositionpowerwithrespectto22,512,176shares.TheaddressofFidelityResearchandFidelityTrustis82DevonshireStreet,Boston,MA02109.TheaddressofPGATCandPGALLCis900SalemStreet,Smithfield,RhodeIsland,02917.WithrespecttotheinformationrelatingtotheaffiliatedFMRLLCentities,theCompanyhasreliedoninformationsuppliedbyFMRLLConaSchedule13GfiledwiththeSEConMarch10,2010.(4)ConsistsofsharesbeneficiallyownedbyWellingtonManagementCompany,LLP,whichhassharedvotingpowerasto13,823,929sharesandshareddispositivepoweroverallsuchshares.WithrespecttotheinformationrelatingtoWellingtonManagementCompany,LLP,theCompanyhasreliedoninformationsuppliedbyWellingtonManagementCompany,LLPonaSchedule13GfiledwiththeSEConJanuary11,2010.TheaddressandprincipalbusinessofficeofWellingtonManagementCompany,LLPis75StateStreet,Boston,MA02109.(5)ConsistsofsharesbeneficiallyownedbyBlackRock,Inc.,throughitssubsidiaryBarclaysGlobalInvestors,NAandcertainofitsaffiliates(“BGIEntities”).BlackRock,Inc.hassolevotingandsoledispositivepowerastoallshares.WithrespecttotheinformationrelatingtoBlackRock,Inc.,theCompanyhasreliedoninformationsuppliedbyBlackRockInc.onaSchedule13GfiledwiththeSEConJanuary29,2010.TheaddressoftheprincipalbusinessofficeofBlackRock,Inc.is40East52ndStreet,NewYork,NY10022.(6)ConsistsofsharesbeneficiallyownedbyFrontierCapitalManagementCo.,LLC,whichhassolevotingcontrolandsoledispositivepoweroverallsuchshares.WithrespecttotheinformationrelatingtoFrontierCapitalManagementCo.,LLC,theCompanyhasreliedoninformationsuppliedbyFrontierCapitalManagementCo.,LLConaSchedule13GfiledwiththeSEConFebruary12,2010.TheaddressandprincipalbusinessofficeoftheFrontierCapitalManagementCo.,LLCis99SummerStreet,Boston,MA02110.(7)ConsistsofsharesbeneficiallyownedbyTheVanguardGroup,Inc.,whichhassolevotingcontrolasto215,780shares,soledispositivepowerasto10,434,984shares,andshareddispositivepowerasto215,780shares.VanguardFiduciaryTrustCompany,awhollyownedsubsidiaryofTheVanguardGroup,SkyworksSolutions,Inc.ProxyStatement12Inc.,whichservesasinvestmentmanagerofcollectivetrustaccounts,isalsodeemedtobethebeneficialownerof215,780shares.WithrespecttotheinformationrelatingtoTheVanguardGroup,Inc.,theCompanyhasreliedoninformationsuppliedbyTheVanguardGroup,Inc.onaSchedule13G/AfiledwiththeSEConFebruary5,2010.TheaddressandprincipalbusinessofficeoftheVanguardGroup,Inc.is100VanguardBlvd.,Malvern,PA19355.(8)IncludessharesheldintheCompany’s401(k)SavingsandInvestmentPlanasofMarch1,2010.SkyworksSolutions,Inc.ProxyStatement13PROPOSALSTOBEVOTEDPROPOSAL1ELECTIONOFDIRECTORSTheCompany’scertificateofincorporationandby-lawsprovidethattheBoardofDirectorsisdividedintothreeclasses,witheachclassconsisting,asnearlyaspossible,ofone-thirdofthetotalnumberofdirectors,andhavingathree-yearterm.TheBoardofDirectorscurrentlyiscomposedofnine(9)members:threeClassIdirectors,threeClassIIdirectorsandthreeClassIIIdirectors.Thetermsofthesethreeclassesarestaggeredinamannersothatonlyoneclassiselectedbystockholdersannually.Messrs.KevinL.Beebe,TimothyR.FureyandDavidJ.McLachlanhavebeennominatedforelectionasClassIIdirectorstoholdofficeuntilthe2013annualmeetingofstockholdersandthereafteruntiltheirsuccessorshavebeendulyelectedandqualified.Directorsareelectedbyapluralityofallvotescastfortheelectionofdirectorsatthemeeting.SharesrepresentedbyallproxiesreceivedbytheBoardofDirectorsandnotsomarkedastowithholdauthoritytovoteforthenomineeswillbevotedFORtheelectionofthethreenominees.Eachpersonnominatedforelectionhasagreedtoserveifelected,andtheBoardofDirectorsknowsofnoreasonwhyanynomineeshouldbeunableorunwillingtoserve.Ifanomineeisunableorunwillingtoservetheattorneys-in-factnamedinthisproxystatementwillvoteanysharesrepresentedatthemeetingbyproxyfortheelectionofanotherindividualnominatedbytheBoardofDirectors.Nodirector,directornomineeorexecutiveofficerisrelatedbyblood,marriageoradoptiontoanyotherdirectororexecutiveofficer.Noarrangementsorunderstandingsexistbetweenanydirectororpersonnominatedforelectionasadirectorandanyotherpersonpursuanttowhichsuchpersonistobeselectedasadirectorornomineeforelectionasadirector.SkyworksSolutions,Inc.ProxyStatement14SetforthbelowissummaryinformationforeachpersonnominatedforelectionasadirectorattheAnnualMeetingandeachdirectorwhosetermofofficewillcontinueaftertheAnnualMeeting,includingtheyearsuchnomineeordirectorwasfirstelectedadirector,thepositionscurrentlyheldbyeachnomineeandeachdirectorwiththeCompany,theyeareachnominee’sordirector’stermwillexpireandclassofdirectorofeachnomineeandeachdirector.Thisinformationisfollowedbyadditionalbiographicalinformationabouttheseindividuals,aswellastheCompany’sotherexecutiveofficers.THEBOARDOFDIRECTORSUNANIMOUSLYRECOMMENDSAVOTE“FOR”THENOMINEESLISTEDBELOWNominee’sorDirector’sName(YearHeFirstBecameaDirector)Position(s)withtheCompanyYearDirectorTermWillExpireClassofDirectorNominees:KevinL.Beebe(2004)(1)(2)..............Non-EmployeeDirector2010IITimothyR.Furey(1998)(2)(3).............Non-EmployeeDirector2010IIDavidJ.McLachlan(2000)(1)(3)...........Non-EmployeeDirectorandChairmanoftheBoard2010IIContinuingDirectors:DavidJ.Aldrich(2000)..................President,ChiefExecutiveOfficerandDirector2011IIIMoizM.Beguwala(2002)(1)(3)............Non-EmployeeDirector2011IIIDavidP.McGlade(2005)(2)(3)............Non-EmployeeDirector2011IIIBalakrishnanS.Iyer(2002)(1)(3)...........Non-EmployeeDirector2012IThomasC.Leonard(1996)...............Non-EmployeeDirector2012IRobertA.Schriesheim(2006)(1)(2).........Non-EmployeeDirector2012I(1)MemberoftheAuditCommittee(2)MemberoftheCompensationCommittee(3)MemberoftheNominatingandCorporateGovernanceCommitteeSkyworksSolutions,Inc.ProxyStatement15DIRECTORSANDEXECUTIVEOFFICERSThefollowingtablesetsforthforeachdirectorandexecutiveofficeroftheCompanyhispositionwiththeCompanyasofMarch15,2010:NameTitleDavidJ.McLachlan.............ChairmanoftheBoardDavidJ.Aldrich................President,ChiefExecutiveOfficerandDirectorKevinL.Beebe.................DirectorMoizM.Beguwala..............DirectorTimothyR.Furey...............DirectorBalakrishnanS.Iyer.............DirectorThomasC.Leonard..............DirectorDavidP.McGlade...............DirectorRobertA.Schriesheim...........DirectorDonaldW.Palette...............VicePresidentandChiefFinancialOfficerBruceJ.Freyman...............VicePresident,WorldwideOperationsLiamK.Griffin.................SeniorVicePresident,SalesandMarketingGeorgeM.LeVan...............VicePresident,HumanResourcesMarkV.B.Tremallo.............VicePresident,GeneralCounselandSecretaryGregoryL.Waters...............ExecutiveVicePresidentandGeneralManager,Front-EndSolutionsDavidJ.Aldrich,age53,hasservedasChiefExecutiveOfficer,PresidentandDirectoroftheCompanysinceApril2000.FromSeptember1999toApril2000,Mr.AldrichservedasPresidentandChiefOperatingOfficer.FromMay1996toMay1999,whenhewasappointedExecutiveVicePresident,Mr.AldrichservedasVicePresidentandGeneralManagerofthesemiconductorproductsbusinessunit.Mr.AldrichjoinedtheCompanyin1995asVicePresident,ChiefFinancialOfficerandTreasurer.From1989to1995,Mr.AldrichheldseniormanagementpositionsatM/A-COM,Inc.(developerandmanufacturerofradiofrequencyandmicrowavesemiconductors,componentsandIPnetworkingsolutions),includingManagerIntegratedCircuitsActiveProducts,CorporateVicePresidentofStrategicPlanning,DirectorofFinanceandAdministrationandDirectorofStrategicInitiativeswiththeMicro-electronicsDivision.Mr.AldrichhasalsoservedsinceFebruary2007asadirectorofBeldenInc.(apubliclytradeddesignerandmanufacturerofcableproductsandtransmissionsolutions).KevinL.Beebe,age50,hasbeenadirectorsinceJanuary2004.SinceNovember2007,hehasbeenPresidentandChiefExecutiveOfficerof2BPartners,LLC(apartnershipthatprovidesstrategic,financialandoperationaladvicetoinvestorsandmanagement,andwhoseclientsincludeCarlyleGroup,GSCapitalPartners,KKRandTPGCapital).Previously,beginningin1998,hewasGroupPresidentofOperationsatALLTELCorporation,atelecommunicationsservicescompany.From1996to1998,Mr.BeebeservedasExecutiveVicePresidentofOperationsfor360™CommunicationsCo.,awirelesscommunicationcompany.HehasheldavarietyofexecutiveandseniormanagementpositionsatseveraldivisionsofSprint,includingVicePresidentofOperationsandVicePresidentofMarketingandAdministrationforSprintCellular,DirectorofMarketingforSprintNorthCentralDivision,DirectorofEngineeringandOperationsStaffandDirectorofProductManagementandBusinessDevelopmentforSprintSoutheastDivision,aswellasStaffDirectorofProductServicesatSprintCorporation.Mr.BeebebeganhiscareeratAT&T/SouthwesternBellasaManager.Mr.BeebealsoservesasadirectorforSBACommunicationsCorporation(apubliclytradedNorthAmericanoperatorofwirelesscommunicationstowers).MoizM.Beguwala,age63,hasbeenadirectorsinceJune2002.HeservedasSeniorVicePresidentandGeneralManageroftheWirelessCommunicationsbusinessunitofConexantfromJanuary1999toJune2002.PriortoConexant’sspin-offfromRockwellInternationalCorporation,Mr.BeguwalaservedasVicePresidentandGeneralManager,WirelessCommunicationsDivision,RockwellSemiconductorSystems,Inc.fromOctober1998SkyworksSolutions,Inc.ProxyStatement16toDecember1998;VicePresidentandGeneralManagerPersonalComputingDivision,RockwellSemiconductorSystems,Inc.fromJanuary1998toOctober1998;andVicePresident,WorldwideSales,RockwellSemiconductorSystems,Inc.fromOctober1995toJanuary1998.Mr.BeguwalaservesontheBoardofDirectorsofPowerwaveTechnologies,Inc.(apubliclytradedwirelesssolutionssupplierforcommunicationsnetworksworldwide)andasChairmanoftheBoardofRFNanoCorporation(aprivatelyheldsemiconductorcompanyinNewportBeach,CA).TimothyR.Furey,age51,hasbeenadirectorsince1998.HehasbeenChiefExecutiveOfficerofMarketBridge(aprivatelyownedsalesandmarketingstrategyandtechnologyprofessionalservicesfirm)since1991.Hiscompany’sclientsincludeorganizationssuchasIBM,BritishTelecomandotherglobalFortune500companiessellingcomplextechnologyproductsandservicesintobothOEMandend-usermarkets.Priorto1991,Mr.FureyheldavarietyofconsultingpositionswithBostonConsultingGroup,StrategicPlanningAssociates,KaiserAssociatesandtheMarketingScienceInstitute.BalakrishnanS.Iyer,age53,hasbeenadirectorsinceJune2002.HeservedasSeniorVicePresidentandChiefFinancialOfficerofConexantSystems,Inc.fromOctober1998toJune2003,andhasbeenadirectorofConexantsinceFebruary2002.PriortojoiningConexant,Mr.IyerservedasSeniorVicePresidentandChiefFinancialOfficerofVLSITechnologyInc.Priortothat,hewascorporatecontrollerforCypressSemiconductorCorp.andDirectorofFinanceforAdvancedMicroDevices,Inc.Mr.IyerservesontheBoardofDirectorsofConexant,LifeTechnologiesCorp.,PowerIntegrations,Inc.,QLogicCorporation,andIHSInc.(eachapubliclytradedcompany).ThomasC.Leonard,age75,hasbeenadirectorsinceAugust1996.FromApril2000untilJune2002,heservedasChairmanoftheBoardoftheCompany,andfromSeptember1999toApril2000,heservedtheCompanyasChiefExecutiveOfficer.FromJuly1996toSeptember1999,heservedasPresidentandChiefExecutiveOfficer.Mr.LeonardjoinedtheCompanyin1992asaDivisionGeneralManagerandwaselectedaVicePresidentin1994.Mr.Leonardhasover30yearsofexperienceinthemicrowaveindustry,havingheldavarietyofexecutiveandseniorlevelmanagementandmarketingpositionsatM/A-COM,Inc.,VarianAssociates,Inc.andSylvania.DavidP.McGlade,age49,hasbeenadirectorsinceFebruary2005.SinceApril2005,hehasservedastheChiefExecutiveOfficerandDeputyChairmanofIntelsatGlobalS.A.(aprivatelyheldworldwideprovideroffixedsatelliteservices).Previously,Mr.McGladeservedasanExecutiveDirectorofmmO2PLCandastheChiefExecutiveOfficerofO2UK(asubsidiaryofmmO2),apositionheheldfromOctober2000untilMarch2005.BeforejoiningO2UK,Mr.McGladewasPresidentoftheWesternRegionforSprintPCS.DavidJ.McLachlan,age71,hasbeenadirectorsince2000andChairmanoftheBoardsinceMay2008.Mr.McLachlanservedasasenioradvisortotheChairmanandChiefExecutiveOfficerofGenzymeCorporation(apubliclytradedbiotechnologycompany)from1999to2004.HealsowastheExecutiveVicePresidentandChiefFinancialOfficerofGenzymefrom1989to1999.PriortojoiningGenzyme,Mr.McLachlanservedasVicePresidentandChiefFinancialOfficerofAdams-RussellCompany(anelectroniccomponentsupplierandcabletelevisionfranchiseowner).Mr.McLachlanalsoservesontheBoardofDirectorsofDyaxCorp.(apubliclytradedbiotechnologycompany)andHearUSA,Ltd.(apubliclytradedhearingcareservicescompany).RobertA.Schriesheim,age49,hasbeenadirectorsince2006.Mr.SchriesheimcurrentlyservesastheChiefFinancialOfficerofHewittAssociates,Inc.(apubliclytradedglobalhumanresourcesconsultingandoutsourcingcompany).Previously,fromOctober2006untilDecember2009,hewastheExecutiveVicePresident,ChiefFinancialOfficerandPrincipalFinancialOfficerofLawsonSoftware,Inc.(apubliclytradedERPsoftwareprovider).FromAugust2002toOctober2006,hewasaffiliatedwithARCHDevelopmentPartners,LLC,aseedstageventurecapitalfund.BeforejoiningARCH,Mr.SchriesheimheldexecutivepositionsatGlobalTeleSystems,SBCEquityPartners,Ameritech,ACNielsen,andBrookeGroupLtd.Mr.SchriesheimisalsoadirectorofLawsonSoftware,Inc.andEnfora(aprivatelyheldproviderofintelligentwirelessmachine-to-machinemodulesandintegratedplatformsolutions).DonaldW.Palette,age52,joinedtheCompanyasVicePresidentandChiefFinancialOfficerofSkyworksinAugust2007.Previously,fromMay2005untilAugust2007,Mr.PaletteservedasSeniorVicePresident,FinanceandControllerofAxcelisTechnologies,Inc.(apubliclytradedsemiconductorequipmentmanufacturer).PriortoSkyworksSolutions,Inc.ProxyStatement17May2005,hewasAxcelis’Controllerbeginningin1999,DirectorofFinancebeginningAugust2000,andVicePresidentandTreasurerbeginningin2003.BeforejoiningAxcelisin1999,Mr.PalettewasControllerofFinancialReporting/OperationsforSimplex,aleadingmanufactureroffireprotectionandsecuritysystems.Priortothat,Mr.PalettewasDirectorofFinanceforBell&Howell’sMailProcessingCompany,aleadingmanufacturerofhighspeedmailinsertionandsortingequipment.BruceJ.Freyman,age49,joinedtheCompanyasVicePresident,WorldwideOperationsinMay2005.Previously,heservedasPresidentandChiefOperatingOfficerofAmkorTechnologyandalsoheldvariousseniormanagementpositions,includingExecutiveVicePresidentofOperationsfrom2001to2004.Earlier,Mr.Freymanspent10yearswithMotorolamanagingtheirsemiconductorpackagingoperationsforportablecommunicationsproducts.LiamK.Griffin,age43,joinedtheCompanyinAugust2001andservesasSeniorVicePresident,SalesandMarketing.Previously,Mr.GriffinwasemployedbyVectronInternational,adivisionofDoverCorp.,asVicePresidentofWorldwideSalesfrom1997to2001,andasVicePresidentofNorthAmericanSalesfrom1995to1997.HispriorexperienceincludedpositionsasaMarketingManageratAT&TMicroelectronics,Inc.andProductandProcessEngineeratAT&TNetworkSystems.Mr.GriffinalsoservesasadirectorofVicorCorp.(apubliclytradeddesigner,developer,manufacturerandmarketerofmodularpowercomponentsandcompletepowersystems).GeorgeM.LeVan,age64,hasservedasVicePresident,HumanResourcessinceJune2002.Previously,Mr.LeVanservedasDirector,HumanResources,from1991to2002andhasmanagedthehumanresourcedepartmentsincejoiningtheCompanyin1982.Priorto1982,Mr.LeVanheldhumanresourcespositionsatDataTerminalSystems,Inc.,W.R.Grace&Co.,CompoIndustries,Inc.andRCA.MarkV.B.Tremallo,age53,joinedtheCompanyinApril2004andservesasVicePresident,GeneralCounselandSecretary.Previously,fromJanuary2003toApril2004,Mr.TremallowasSeniorVicePresidentandGeneralCounselatTACWorldwideCompanies(atechnicalworkforcesolutionsprovider).PriortoTAC,fromMay1997toMay2002,hewasVicePresident,GeneralCounselandSecretaryatActernaCorp.(aglobalcommunicationstestequipmentandsolutionsprovider).Earlier,Mr.TremalloservedasVicePresident,GeneralCounselandSecretaryatCabotSafetyCorporation.GregoryL.Waters,age49,joinedtheCompanyinApril2003,andhasservedasExecutiveVicePresidentandGeneralManager,Front-EndSolutionssinceOctober2006,ExecutiveVicePresidentbeginningNovember2005,andVicePresidentandGeneralManager,CellularSystemsasofMay2004.Previously,fromFebruary2001untilApril2003,Mr.WatersservedasSeniorVicePresidentofStrategyandBusinessDevelopmentatAgereSystemsand,beginningin1998,heldpositionsthereasVicePresidentoftheWirelessCommunicationsbusinessandVicePresidentoftheBroadbandCommunicationsbusiness.PriortoworkingatAgere,Mr.WatersheldavarietyofseniormanagementpositionswithinTexasInstruments,includingDirectorofNetworkAccessProductsandDirectorofNorthAmericanSales.CORPORATEGOVERNANCEGeneralBoardofDirectorMeetings:TheBoardofDirectorsmetfour(4)timesduringthefiscalyearendedOctober2,2009(“fiscalyear2009”).Eachdirectorattendedatleast75%oftheBoardofDirectorsmeetingsandthemeetingsofthecommitteesoftheBoardofDirectorsonwhichheservedduringfiscalyear2009.DirectorIndependence:Eachyear,theBoardofDirectorsreviewstherelationshipsthateachdirectorhaswiththeCompanyandwithotherparties.OnlythosedirectorswhodonothaveanyofthecategoricalrelationshipsthatprecludethemfrombeingindependentwithinthemeaningoftheapplicableListingRulesoftheNASDAQStockMarketLLC(the“NASDAQRules”)andwhotheBoardofDirectorsaffirmativelydetermineshavenorelationshipsthatwouldinterferewiththeexerciseofindependentjudgmentincarryingouttheresponsibilitiesofadirector,areconsideredtobeindependentdirectors.TheBoardofDirectorshasreviewedanumberoffactorstoevaluatetheindependenceofeachofitsmembers.Thesefactorsincludeitsmembers’currentandhistoricSkyworksSolutions,Inc.ProxyStatement18relationshipswiththeCompanyanditscompetitors,suppliersandcustomers;theirrelationshipswithmanagementandotherdirectors;therelationshipstheircurrentandformeremployershavewiththeCompany;andtherelationshipsbetweentheCompanyandothercompaniesofwhichamemberoftheCompany’sBoardofDirectorsisadirectororexecutiveofficer.Afterevaluatingthesefactors,theBoardofDirectorshasdeterminedthatamajorityofthemembersoftheBoardofDirectors,namely,KevinL.Beebe,MoizM.Beguwala,TimothyR.Furey,BalakrishnanS.Iyer,ThomasC.Leonard,DavidJ.McLachlan,DavidP.McGladeandRobertA.Schriesheim,donothaveanyrelationshipsthatwouldinterferewiththeexerciseofindependentjudgmentincarryingouttheirresponsibilitiesasadirectorandareindependentdirectorsoftheCompanyunderapplicableNASDAQRules.CorporateGovernanceGuidelines:TheBoardofDirectorshasadoptedcorporategovernancepracticestohelpfulfillitsresponsibilitiestothestockholdersinoverseeingtheworkofmanagementandtheCompany’sbusinessresults.TheseguidelinesareintendedtoensurethattheBoardofDirectorshasthenecessaryauthorityandpracticesinplacetoreviewandevaluatetheCompany’sbusinessoperations,asneeded,andtomakedecisionsthatareindependentoftheCompany’smanagement.Inaddition,theguidelinesareintendedtoaligntheinterestsofdirectorsandmanagementwiththoseoftheCompany’sstockholders.AcopyoftheCompany’sCorporateGovernanceGuidelinesisavailableontheInvestorRelationsportiontheCompany’swebsiteat:http://www.skyworksinc.com.InaccordancewiththeseCorporateGovernanceGuidelines,independentmembersoftheBoardofDirectorsoftheCompanymetinexecutivesessionwithoutmanagementpresentfour(4)timesduringfiscalyear2009.TheChairmanoftheBoardservesaspresidingdirectorforthesemeetings.StockholderCommunications:OurstockholdersmaycommunicatedirectlywiththeBoardofDirectorsasawholeortoindividualdirectorsbywritingdirectlytothoseindividualsatthefollowingaddress:20SylvanRoad,Woburn,MA01801.TheCompanywillforwardtoeachdirectortowhomsuchcommunicationisaddressed,andtotheChairmanoftheBoardinhiscapacityasrepresentativeoftheentireBoardofDirectors,anymailreceivedattheCompany’scorporateofficetotheaddressspecifiedbysuchdirectorandtheChairmanoftheBoard.CodesofEthics:WehaveadoptedaCodeofBusinessConductandEthicsthatappliestoallofouremployees,officersanddirectors(the“Code”),aswellasaCodeofEthicsforPrincipalFinancialOfficers.TheCodeappliestoourdirectors,officersandemployees,includingourprincipalexecutiveofficer,principalfinancialofficer,principalaccountingofficerorcontroller,orpersonsperformingsimilarfunctions.Wemakeavailableourcodeofbusinessconductandethicsfreeofchargethroughourwebsite,whichislocatedatwww.skyworksinc.com.Weintendtodiscloseanyamendmentsto,orwaiversfrom,ourcodeofbusinessconductandethicsthatarerequiredtobepubliclydisclosedpursuanttorulesoftheSECandtheNASDAQRulesbypostinganysuchamendmentorwaiversonourwebsiteanddisclosinganysuchwaiversinaForm8-KfiledwiththeSEC.ExecutiveOfficerStockOwnershipRequirements.WehaveadoptedanExecutiveOfficerStockOwnershipprogramthatrequiresourexecutiveofficers,includingourNamedExecutiveOfficers,toholdasignificantequityinterestinSkyworksandaimstomorecloselyaligntheinterestsofourexecutiveofficerswiththoseofourstockholders.TheminimumnumberofsharesofourcommonstockthattheguidelinesrequireourNamedExecutiveOfficerstoholdwhileservingintheircapacityasexecutiveofficersisasfollows:PositionMinimumShareRequirementPresidentandChiefExecutiveOfficerLesserof(a)numberofshareswithaFMVequalto3xcurrentbasesalaryor(b)251,000sharesVPandChiefFinancialOfficer;ExecutiveVicePresidentandGMFES;SeniorVicePresidentSalesandMarketing;VicePresident,WorldwideOperationsLesserof(a)numberofshareswithaFMVequalto1.5xcurrentbasesalaryor(b)69,000,79,000,74,000or74,000shares,respectively.CurrentlyservingexecutiveofficersmustattaintheirstipulatedownershiplevelsbySeptember16,2011.AnynewexecutiveofficertheCompanymayhiremustcomplywiththestockownershiprequirementsbythefifthSkyworksSolutions,Inc.ProxyStatement19anniversaryofthedatethatsuchofficercommencesservicewithus.TheCompensationCommitteeintendstomonitorholdingstoensurethateachnamedexecutiveofficermeetshisstockownershipguidelinesrequirementswithintheapplicabletimeframe.COMMITTEESOFTHEBOARDOFDIRECTORSTheBoardofDirectorshasastandingAuditCommittee,CompensationCommittee,andNominatingandCorporateGovernanceCommittee.AuditCommittee:WehaveestablishedanAuditCommitteecomprisedofthefollowingindividuals,eachofwhomqualifiesasindependentwithinthemeaningoftheapplicableNASDAQRulesandmeetsthecriteriaforindependencesetforthinRule10A-3(b)(1)undertheExchangeAct:Messrs.Schriesheim(Chairman),Beebe,Iyer,BeguwalaandMcLachlan.TheprimaryresponsibilityoftheAuditCommitteeistheoversightofthequalityandintegrityoftheCompany’sfinancialstatements,theCompany’sinternalfinancialandaccountingprocesses,andtheindependentauditprocess.Additionally,theAuditCommitteehastheresponsibilitiesandauthoritynecessarytocomplywithRule10A-3undertheExchangeAct.Thecommitteemeetsprivatelywiththeindependentregisteredpublicaccountingfirm,reviewstheirperformanceandindependencefrommanagementandhasthesoleauthoritytoretainanddismisstheindependentregisteredpublicaccountingfirm.TheseandotheraspectsoftheAuditCommittee’sauthorityaremoreparticularlydescribedintheCompany’sAuditCommitteeCharter,whichtheBoardofDirectorsadoptedandisreviewedannuallybythecommitteeandisavailableontheInvestorRelationsportionofourwebsiteat:http://www.skyworksinc.com.TheAuditCommitteehasadoptedaformalpolicyconcerningapprovalofauditandnon-auditservicestobeprovidedtotheCompanybyitsindependentregisteredpublicaccountingfirm,KPMGLLP.ThepolicyrequiresthatallservicesprovidedbyKPMGLLP,includingauditservicesandpermittedaudit-relatedandnon-auditservices,bepre-approvedbytheAuditCommittee.TheAuditCommitteepre-approvedallauditandnon-auditservicesprovidedbyKPMGLLPforfiscalyear2009.TheAuditCommitteemeteight(8)timesduringfiscalyear2009.AuditCommitteeFinancialExpert:TheBoardofDirectorshasdeterminedthateachofMr.Schriesheim(Chairman),Mr.IyerandMr.McLachlan,meetsthequalificationsofan“auditcommitteefinancialexpert”underSECRulesandthequalificationsof“financialsophistication”undertheapplicableNASDAQRules,andqualifiesas“independent”asdefinedundertheapplicableNASDAQRules.CompensationCommittee:WehavealsoestablishedaCompensationCommitteecomprisedofthefollowingindividuals,eachofwhomqualifiesasindependentwithinthemeaningoftheapplicableNASDAQRules:Messrs.Furey(Chairman),Beebe,McGladeandSchriesheim.TheCompensationCommitteemetfour(4)timesduringfiscalyear2009.ThefunctionsoftheCompensationCommitteeincludeestablishingtheappropriatelevelofcompensation,includingshortandlong-termincentivecompensation,oftheChiefExecutiveOfficer,allotherexecutiveofficersandanyotherofficersoremployeeswhoreportdirectlytotheChiefExecutiveOfficer.TheCompensationCommitteealsoadministersSkyworks’equity-basedcompensationplans.TheBoardofDirectorshasadoptedawrittencharterfortheCompensationCommittee,anditisavailableontheInvestorRelationsportionoftheCompany’swebsiteat:http://www.skyworksinc.com.TheCompensationCommitteehasengagedAon/RadfordConsultingtoassistitindeterminingthecompo-nentsandamountofexecutivecompensation.TheconsultantreportsdirectlytotheCompensationCommittee,throughitschairman,andtheCompensationCommitteeretainstherighttoterminateorreplacetheconsultantatanytime.TheprocessandproceduresfollowedbytheCompensationCommitteeinconsideringanddeterminingexecutiveanddirectorcompensationaredescribedbelowundertheheading“CompensationDiscussionandAnalysis.”SkyworksSolutions,Inc.ProxyStatement20NominatingandCorporateGovernanceCommittee:ThemembersoftheNominatingandCorporateGovernanceCommittee,eachofwhomtheBoardofDirectorshasdeterminedisindependentwithinthemeaningofapplicableNASDAQRules,areMessrs.Iyer(Chairman),Beguwala,Furey,McGlade,andMcLachlan.TheNominatingandCorporateGovernanceCommitteemetthree(3)timesduringfiscalyear2009.TheNominatingandCorporateGovernanceCommitteeisresponsibleforevaluatingandrecommendingindividualsforelectionorre-electiontotheBoardofDirectorsanditscommittees,includinganyrecommendationsthatmaybesubmittedbystockholders,theevaluationoftheperformanceoftheBoardofDirectorsanditscommittees,andtheevaluationandrecommendationofthecorporategovernancepolicies.TheseandotheraspectsoftheNominatingandCorporateGovernanceCommittee’sauthorityaremoreparticularlydescribedintheNominatingandCorporateGovernanceCommitteeCharter,whichtheBoardofDirectorsadoptedandisavailableontheInvestorRelationsportionoftheCompany’swebsiteat:http://www.skyworksinc.com.DirectorNominationProcedures:TheNominatingandCorporateGovernanceCommitteeevaluatesdirectorcandidatesinthecontextoftheoverallcompositionandneedsoftheBoardofDirectors,withtheobjectiveofrecommendingagroupthatcanbestmanagethebusinessandaffairsoftheCompanyandrepresenttheinterestsoftheCompany’sstockholdersusingitsdiversityofexperience.Thecommitteeseeksdirectorswhopossesscertainminimumqualifications,includingthefollowing:(cid:129)Adirectormusthavesubstantialorsignificantbusinessorprofessionalexperienceoranunderstandingoftechnology,finance,marketing,financialreporting,internationalbusinessorotherdisciplinesrelevanttothebusinessoftheCompany.(cid:129)Adirector(otherthananemployee-director)mustbefreefromanyrelationshipthat,intheopinionoftheBoardofDirectors,wouldinterferewiththeexerciseofhisorherindependentjudgmentasamemberoftheBoardofDirectorsorofaBoardcommittee.(cid:129)Thecommitteealsoconsidersthefollowingqualitiesandskills,amongothers,initsselectionofdirectorsandascandidatesforappointmenttothecommitteesoftheBoardofDirectors:(cid:129)Economic,technical,scientific,academic,financial,accounting,legal,marketing,orotherexpertiseapplicabletothebusinessoftheCompany;(cid:129)Leadershiporsubstantialachievementintheirparticularfields;(cid:129)Demonstratedabilitytoexercisesoundbusinessjudgment;(cid:129)Integrityandhighmoralandethicalcharacter;(cid:129)Potentialtocontributetothediversityofviewpoints,backgrounds,orexperiencesoftheBoardofDirectorsasawhole;(cid:129)Capacityanddesiretorepresentthebalanced,bestinterestsoftheCompanyasawholeandnotprimarilyaspecialinterestgrouporconstituency;(cid:129)Abilitytoworkwellwithothers;(cid:129)HighdegreeofinterestinthebusinessoftheCompany;(cid:129)DedicationtothesuccessoftheCompany;(cid:129)Commitmenttotheresponsibilitiesofadirector;and(cid:129)Internationalbusinessorprofessionalexperience.Inaddition,thecommitteewillconsiderthatamajorityoftheBoardofDirectorsmustmeettheindependencerequirementsoftheapplicableNASDAQRules.TheCompanyexpectsthatadirector’sexistingandfuturecommitmentswillnotmateriallyinterferewithsuchdirector’sobligationstotheCompany.Forcandidateswhoareincumbentdirectors,thecommitteeconsiderseachdirector’spastattendanceatmeetingsandparticipationinandcontributionstotheactivitiesoftheBoardofDirectors.ThecommitteeidentifiescandidatesfordirectornomineesSkyworksSolutions,Inc.ProxyStatement21inconsultationwiththeChiefExecutiveOfficeroftheCompanyandtheChairmanoftheBoardofDirectors,throughtheuseofsearchfirmsorotheradvisorsorthroughsuchothermethodsasthecommitteedeemstobehelpfultoidentifycandidates.Oncecandidateshavebeenidentified,thecommitteeconfirmsthatthecandidatesmeetalloftheminimumqualificationsfordirectornomineessetforthabovethroughinterviews,backgroundchecks,oranyothermeansthatthecommitteedeemstobehelpfulintheevaluationprocess.Thecommitteethenmeetstodiscussandevaluatethequalitiesandskillsofeachcandidate,bothonanindividualbasisandtakingintoaccounttheoverallcompositionandneedsoftheBoardofDirectors.Basedontheresultsoftheevaluationprocess,thecommitteerecommendscandidatesfordirectornomineesforelectiontotheBoardofDirectors.TheNominatingandCorporateGovernanceCommitteewillconsiderdirectorcandidatesrecommendedbystockholdersprovidedthestockholdersfollowtheproceduressetforthbelow.Thecommitteedoesnotintendtoalterthemannerinwhichitevaluatescandidates,includingthecriteriasetforthabove,basedonwhetherthecandidatewasrecommendedbyastockholderorotherwise.Todate,theNominatingandCorporateGovernanceCommitteehasnotreceivedarecommendationforadirectornomineefromanystockholderoftheCompany.StockholderswhowishtorecommendindividualsforconsiderationbytheNominatingandCorporateGovernanceCommitteetobecomenomineesforelectiontotheBoardofDirectorsin2011maydosobysubmittingawrittenrecommendationtothecommitteenotlaterthanDecember31,2010,inaccordancewiththeproceduressetforthbelowinthisProxyStatementundertheheading“StockholderProposals.”FornomineesforelectiontotheBoardofDirectorsproposedbystockholderstobeconsidered,therecommendationfornominationmustbeinwritingandmustincludethefollowinginformation:(cid:129)Nameofthestockholder,whetheranentityoranindividual,makingtherecommendation;(cid:129)Awrittenstatementdisclosingsuchstockholder’sbeneficialownershipoftheCompany’scapitalstock;(cid:129)Nameoftheindividualrecommendedforconsiderationasadirectornominee;(cid:129)Awrittenstatementfromthestockholdermakingtherecommendationstatingwhysuchrecommendedcandidatewouldbeabletofulfillthedutiesofadirector;(cid:129)AwrittenstatementfromthestockholdermakingtherecommendationstatinghowtherecommendedcandidatemeetstheindependencerequirementsestablishedbytheSECandtheapplicableNASDAQRules;(cid:129)Awrittenstatementdisclosingtherecommendedcandidate’sbeneficialownershipoftheCompany’scapitalstock;and(cid:129)AwrittenstatementdisclosingrelationshipsbetweentherecommendedcandidateandtheCompanywhichmayconstituteaconflictofinterest.NominationsmaybesenttotheattentionofthecommitteeviaU.S.mailorexpediteddeliveryservicetoSkyworksSolutions,Inc.,20SylvanRoad,Woburn,Massachusetts01801,Attn:NominatingandCorporateGovernanceCommittee,c/oSecretaryofSkyworksSolutions,Inc.SkyworksSolutions,Inc.ProxyStatement22PROPOSAL2RATIFICATIONOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTheAuditCommitteehasselectedKPMGLLPastheCompany’sindependentregisteredpublicaccountingfirmforthecurrentfiscalyearendingOctober1,2010(“fiscalyear2010”),andhasfurtherdirectedthatmanagementsubmittheselectionoftheindependentregisteredpublicaccountingfirmforratificationbythestockholdersattheAnnualMeeting.KPMGLLPwastheindependentregisteredpublicaccountingfirmfortheCompanyforthefiscalyearendedOctober2,2009,andhasbeentheindependentregisteredpublicaccountingfirmfortheCompany’spredecessor,AlphaIndustries,Inc.,since1975.WeareaskingthestockholderstoratifytheappointmentofKPMGLLPastheCompany’sindependentregisteredpublicaccountingfirmforthefiscalyear2010.RepresentativesofKPMGLLPareexpectedtoattendtheAnnualMeeting.Theywillhaveanopportunitytomakeastatementiftheydesiretodosoandwillbeavailabletorespondtoappropriatestockholderquestions.StockholderratificationoftheselectionofKPMGLLPastheCompany’sindependentregisteredpublicaccountingfirmisnotrequiredbytheCompany’sby-lawsorotherapplicablelegalrequirements.However,theAuditCommitteeissubmittingtheselectionofKPMGLLPtothestockholdersforratificationasamatterofgoodcorporatepractice.TheaffirmativevoteofamajorityofthesharespresentinpersonorrepresentedbyproxyattheAnnualMeetingandentitledtovoteonsuchmatterattheAnnualMeeting,isrequiredtoapprovetheselectionofKPMGLLPastheCompany’sindependentregisteredpublicaccountingfirm.Intheeventstockholdersfailtoratifytheappointment,theAuditCommitteemayreconsiderthisappointment.Eveniftheappointmentisratified,theAuditCommittee,initsdiscretion,maydirecttheappointmentofadifferentindependentregisteredpublicaccountingfirmatanytimeduringtheyeariftheAuditCommitteedeterminesthatsuchachangewouldbeintheCompany’sandstockholders’bestinterests.THEBOARDOFDIRECTORSUNANIMOUSLYRECOMMENDSAVOTE“FOR”THERATIFICATIONOFTHESELECTIONOFKPMGLLPASTHEINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMOFTHECOMPANYSkyworksSolutions,Inc.ProxyStatement23REPORTOFTHEAUDITCOMMITTEETheAuditCommitteeofSkyworks’BoardofDirectorsisresponsibleforprovidingindependent,objectiveoversightofSkyworks’accountingfunctionsandinternalcontrols.TheAuditCommitteeiscomposedoffivedirectors,eachofwhomisindependentwithinthemeaningofapplicableNASDAQRulesandmeetsthecriteriaforindependencesetforthinRule10A-3(b)(1)undertheExchangeAct.TheAuditCommitteeoperatesunderawrittencharterapprovedbytheBoardofDirectors.ManagementisresponsiblefortheCompany’sinternalcontrolandfinancialreportingprocess.TheCompany’sindependentregisteredpublicaccountingfirmisresponsibleforperforminganindependentauditofSkyworks’consolidatedfinancialstatementsinaccordancewithgenerallyacceptedauditingstandardsandforissuingareportconcerningsuchfinancialstatements.TheAuditCommittee’sresponsibilityistomonitorandoverseetheseprocesses.Inconnectionwiththeseresponsibilities,theAuditCommitteemetwithmanagementandrepresentativesofKPMGLLP,theCompany’sindependentregisteredpublicaccountingfirm,andreviewedanddiscussedtheauditedfinancialstatementsfortheyearendedOctober2,2009,resultsoftheinternalandexternalauditexaminations,evaluationsoftheCompany’sinternalcontrolsandtheoverallqualityofSkyworks’financialreporting.TheAuditCommitteealsodiscussedwiththeindependentregisteredpublicaccountingfirmthemattersrequiredtobediscussedbythestatementonAuditingStandardsNo.61,asamended(AICPA,ProfessionalStandards,Vol.1.AUsection380),asadoptedbythePublicCompanyAccountingOversightBoardinRule3200T.Inaddition,theAuditCommitteehasreceivedthewrittendisclosuresandtheletterfromitsindependentregisteredpublicaccountingfirmrequiredbyapplicablerequirementsofthePublicCompanyAccountingOversightBoardregardingtheindepen-dentaccountant’scommunicationswiththeAuditCommitteeconcerningindependenceandhasdiscussedwiththeindependentregisteredpublicaccountingfirmtheindependentregisteredpublicaccountingfirm’sindependencefromtheCompanyanditsmanagement,includingthemattersinthewrittendisclosuresandletterwhichwerereceivedbythecommitteefromsuchfirm.BasedupontheAuditCommittee’sreviewanddiscussionsdescribedabove,theAuditCommitteerecom-mendedthattheBoardofDirectorsincludetheauditedconsolidatedfinancialstatementsintheCompany’sAnnualReportonForm10-KfortheyearendedOctober2,2009,asfiledwiththeSEC.THEAUDITCOMMITTEEKevinL.BeebeMoizM.BeguwalaBalakrishnanS.IyerDavidJ.McLachlanRobertA.Schriesheim,ChairmanSkyworksSolutions,Inc.ProxyStatement24AUDITFEESKPMGLLPprovidedauditservicestotheCompanyconsistingoftheannualauditoftheCompany’sfiscal2009consolidatedfinancialstatementscontainedintheCompany’sAnnualReportonForm10-KandreviewsofthefinancialstatementscontainedintheCompany’sQuarterlyReportsonForm10-Qforfiscalyear2009.ThefollowingtablesummarizesthefeesofKPMGLLPbilledtotheCompanyforthelasttwofiscalyears.FeeCategoryFiscalYear2009%ofTotalFiscalYear2008%ofTotalAuditFees—IntegratedAudit(1)...........$1,215,00097%$1,356,00097%Audit-RelatedFees(2)...................5,0000%—0%TaxFees(3)...........................33,0003%45,0003%AllOtherFees(4).......................2,0000%2,0000%TotalFees............................$1,255,000100%$1,403,000100%(1)Auditfeesconsistoffeesfortheauditofourfinancialstatements,thereviewoftheinterimfinancialstatementsincludedinourquarterlyreportsonForm10-Q,andotherprofessionalservicesprovidedinconnectionwithstatutoryandregulatoryfilingsorengagements.Fiscalyear2009andfiscalyear2008auditfeesalsoincludedfeesforservicesincurredinconnectionwithrenderinganopinionunderSection404oftheSarbanesOxleyAct.(2)Auditrelatedfeesconsistoffeesforassuranceandrelatedservicesthatarereasonablyrelatedtotheperformanceoftheauditandthereviewofourfinancialstatementsandwhicharenotreportedunder“AuditFees.”Theseservicesrelatetoregistrationstatementfilingsandconsultationsconcerningfinancialaccountingandreportingstandards.(3)Taxfeesconsistoffeesfortaxcompliance,taxadviceandtaxplanningservices.Taxcomplianceservices,whichrelatetopreparationorreviewoforiginalandamendedtaxreturns,claimsforrefundsandtaxpayment-planningservices,accountedfor$33,000and$45,000ofthetotaltaxfeesforfiscalyear2009and2008,respectively.Taxadviceandtaxplanningservicesrelatetoassistancewithtaxaudits.(4)Allotherfeesforfiscalyear2009and2008consistoflicensesforaccountingresearchsoftware.In2003,theAuditCommitteeadoptedaformalpolicyconcerningapprovalofauditandnon-auditservicestobeprovidedtotheCompanybyitsindependentregisteredpublicaccountingfirm.Thepolicyrequiresthatallservicestobeprovidedbyitsindependentregisteredpublicaccountingfirm,includingauditservicesandpermittedaudit-relatedandnon-auditservices,mustbepre-approvedbytheAuditCommittee.TheAuditCommitteepre-approvedallauditandnon-auditservicesprovidedbyKPMGLLPduringfiscal2009andfiscal2008.SkyworksSolutions,Inc.ProxyStatement25COMPENSATIONCOMMITTEEREPORTTheCompensationCommitteehasreviewedanddiscussedtheCompensationDiscussionandAnalysisincludedhereinwithmanagement,andbasedonthereviewanddiscussions,theCompensationCommitteerecommendedtotheBoardofDirectorsthattheCompensationDiscussionandAnalysisbeincludedinthisProxyStatementforthe2010AnnualMeetingoftheStockholders.THECOMPENSATIONCOMMITTEEKevinL.BeebeTimothyR.Furey,ChairmanDavidP.McGladeRobertA.SchriesheimSkyworksSolutions,Inc.ProxyStatement26INFORMATIONABOUTEXECUTIVEANDDIRECTORCOMPENSATIONCOMPENSATIONDISCUSSIONANDANALYSISWhoSetsCompensationforSeniorExecutives?TheCompensationCommittee,whichiscomprisedsolelyofindependentdirectorswithinthemeaningofapplicableNASDAQRules,outsidedirectorswithinthemeaningofSection162oftheInternalRevenueCode(“Section162(m)”)andnon-employeedirectorswithinthemeaningofRule16b-3undertheExchangeAct,isresponsiblefordeterminingallcomponentsandamountsofcompensationtobepaidtoourChiefExecutiveOfficer,ourChiefFinancialOfficerandeachofourotherexecutiveofficers,aswellasanyotherofficersoremployeeswhoreportdirectlytotheChiefExecutiveOfficer.ThisCompensationDiscussionandAnalysissectiondiscussesthecompensationpoliciesandprogramsforourChiefExecutiveOfficer,ourChiefFinancialOfficerandourthreenextmosthighlypaidexecutiveofficersduringfiscal2009asdeterminedundertherulesoftheSEC.Werefertothisgroupofexecutiveofficersasour“NamedExecutiveOfficers.”WhataretheObjectivesofOurCompensationProgram?Theobjectivesofourexecutivecompensationprogramaretoattract,retainandmotivatehighlyqualifiedexecutivestooperateourbusiness,andtolinkthecompensationofthoseexecutivestoimprovementsintheCompany’sfinancialperformanceandincreasesinstockholdervalue.Accordingly,theCompensationCommittee’sgoalsinestablishingourexecutivecompensationprograminclude:(1)ensuringthatourexecutivecompensationprogramiscompetitivewithagroupofcompaniesinthesemiconductorindustrywithwhichwecompeteforexecutivetalent;(2)providingabasesalarythatservesasthefoundationofacompensationpackagethatattractsandretainstheexecutivetalentneededtoachieveourbusinessobjectives;(3)providingshort-termvariablecompensationthatmotivatesexecutivesandrewardsthemforachiev-ingfinancialperformancetargets;(4)providinglong-termstock-basedcompensationthatalignstheinterestofourexecutiveswithstockholdersandrewardsthemforincreasesinstockholdervalue;and(5)ensuringthatourexecutivecompensationprogramisperceivedasfundamentallyfairtoallofouremployees.HowDoWeDeterminetheComponentsandAmountofCompensationtoPay?TheCompensationCommitteesetscompensationfortheNamedExecutiveOfficers,includingsalary,short-termincentivesandlong-termstock-basedawards,atlevelsgenerallyintendedtobecompetitivewiththecompensationofcomparableexecutivesinsemiconductorcompanieswithwhichtheCompanycompetesforexecutivetalent.RetentionofCompensationConsultantTheCompensationCommitteehasengagedAon/RadfordConsultingtoassisttheCompensationCommitteeindeterminingthecomponentsandamountofexecutivecompensation.TheconsultantreportsdirectlytotheCompensationCommittee,throughitschairperson,andtheCompensationCommitteeretainstherighttoterminateorreplacetheconsultantatanytime.TheconsultantadvisestheCompensationCommitteeonsuchcompensationmattersasarerequestedbytheCompensationCommittee.TheCompensationCommitteeconsiderstheconsultant’sadviceonsuchmattersinadditiontoanyotherinformationorfactorsitconsidersrelevantinmakingitscompensationdeterminations.SkyworksSolutions,Inc.ProxyStatement27RoleofChiefExecutiveOfficerTheCompensationCommitteealsoconsiderstherecommendationsoftheChiefExecutiveOfficerregardingthecompensationofeachofhisdirectreports,includingtheotherNamedExecutiveOfficers.Theserecommen-dationsincludeanassessmentofeachindividual’sresponsibilities,experience,individualperformanceandcontributiontotheCompany’sperformance,andalsogenerallytakesintoaccountinternalfactorssuchashistoricalcompensationandlevelintheorganization,inadditiontoexternalfactorssuchasthecurrentenvironmentforattractingandretainingexecutives.EstablishmentofComparatorGroupDataIndeterminingcompensationforeachoftheNamedExecutiveOfficers,thecommitteeutilizes“ComparatorGroup”dataforeachposition.Forfiscalyear2009,theCompensationCommitteeapprovedComparatorGroupdataconsistingofa50⁄50blendof(i)Aon/Radfordsurveydataof45semiconductorcompanies1and(ii)thepublic“peer”groupdatafor14publicly-tradedsemiconductorcompanieswithwhichtheCompanycompetesforexecutivetalent(the“PeerGroup”):*Anadigics*AnalogDevices*Broadcom*CypressSemiconductor*FairchildSemiconductor*IntegratedDeviceTechnology*Intersil*LinearTechnology*LSILogic*NationalSemiconductor*ONSemiconductor*RFMicroDevices*SiliconLaboratories*TriQuintSemiconductorUtilizationofComparatorGroupDataTheCompensationCommitteeannuallycomparesthecomponentsandamountsofcompensationthatweprovidetoourChiefExecutiveOfficerandotherNamedExecutiveOfficerswiththecomponentsandamountsofcompensationprovidedtotheircounterpartsintheComparatorGroupandusesthiscomparisondataasaguidelineinitsreviewanddeterminationofbasesalaries,short-termincentivesandlong-termstock-basedcompensationawards.Inaddition,insettingfiscalyear2009compensation,theCompensationCommitteesoughtandreceivedinputfromitsconsultantregardingthebasesalariesfortheChiefExecutiveOfficerandeachofhisdirectreports,theawardlevelsandperformancetargetsrelatingtotheshort-termincentiveprogramforexecutiveofficers,andtheindividualstock-basedcompensationawardsforexecutiveofficers,aswellastherelatedvestingschedules.Afterreviewingthedataandconsideringtheinput,theCompensationCommitteeestablished(andthefullBoardofDirectorswasadvisedof)thebasesalary,short-termincentivetargetandlong-termstock-basedcompensationawardforeachNamedExecutiveOfficer.Inestablishingindividualcompensation,theCompen-sationCommitteealsoconsideredtheinputoftheChiefExecutiveOfficer,aswellastheindividualexperienceandperformanceoftheexecutive.IndeterminingthecompensationofourChiefExecutiveOfficer,ourCompensationCommitteefocusedon(i)competitivelevelsofcompensationforchiefexecutiveofficerswhoareleadingacompanyofsimilarsizeandcomplexity,(ii)theimportanceofretainingachiefexecutiveofficerwiththestrategic,financialandleadershipskillsnecessarytoensureourcontinuedgrowthandsuccess,(iii)theChiefExecutiveOfficer’srolerelativetootherNamedExecutiveOfficersand(iv)theconsiderablelengthofhis15-yearservicetotheCompany.Aon/RadfordadvisedtheCompensationCommitteethatthebasesalary,annualperformancetargetsandshort-termincentivetargetopportunity,andequity-basedcompensationfor2009werecompetitiveforchiefexecutiveofficersinthesector.TheChiefExecutiveOfficerwasnotpresentduringvotingordeliberationsoftheCompensationCommitteeSkyworksSolutions,Inc.ProxyStatement281Wheresufficientdatawasnotavailableinthesemiconductorsurveydata—forexample,foraVP/GeneralManagerposition—theComparatorGroupdatareflectedsurveydataregardinghigh-technologycompanies,whichincludedalargersurveysample.Semiconductorcompaniesincludedinthesurveyhadaverageannualrevenueofapproximately$1billion,whereasthehigh-technologycompaniesincludedinthesurveyweresegregatedbasedontheannualrevenueofthegeneralmanager’sbusinessunit.concerninghiscompensation.Asstatedabove,however,theCompensationCommitteedidconsidertherecom-mendationsoftheChiefExecutiveOfficerregardingthecompensationofallofhisdirectreports,includingtheotherNamedExecutiveOfficers.WhataretheComponentsofExecutiveCompensation?ThekeyelementsofcompensationforourNamedExecutiveOfficersarebasesalary,short-termincentives,long-termstock-basedincentives,401(k)planretirementbenefits,andmedicalandinsurancebenefits.Consistentwithourobjectiveofensuringthatexecutivecompensationisperceivedasfairtoallemployees,theNamedExecutiveOfficersdonotreceiveanyretirementbenefitsbeyondthosegenerallyavailabletoourfull-timeemployees,andwedonotprovidemedicalorinsurancebenefitstoNamedExecutiveOfficersthataredifferentfromthoseofferedtootherfull-timeemployees.BaseSalaryBasesalariesprovideourexecutiveofficerswithadegreeoffinancialcertaintyandstability.TheCompen-sationCommitteedeterminesacompetitivebasesalaryforeachexecutiveofficerusingtheComparatorGroupdataandinputprovidedbyitsconsultant.Basedonthesefactors,basesalariesoftheNamedExecutiveOfficersforfiscalyear2009weregenerallytargetedattheComparatorGroupmedian,withconsiderationgiventorole,responsibility,performanceandlengthofservice.Aftertakingthesefactorsintoaccount,thebasesalaryincreaseforeachNamedExecutiveOfficerforfiscalyear2009wasapproximately4%,withtheexceptionoftheChiefFinancialOfficer,whoreceiveda10%increaseinordertobringhisbasesalaryclosertothemedian.Short-TermIncentivesOurshort-termincentivecompensationplanforexecutiveofficersisestablishedannuallybytheCompen-sationCommittee.Forfiscalyear2009,theCompensationCommitteeadoptedthe2009ExecutiveIncentivePlan(the“IncentivePlan”).TheIncentivePlanestablishedshort-termincentiveawardsthatcouldbeearnedsemi-annuallybycertainofficersoftheCompany,includingtheNamedExecutiveOfficers,basedontheCompany’sachievementofcertaincorporateperformancemetricsestablishedonasemi-annualbasis.Short-termincentivesareintendedtomotivateandrewardexecutivesbytyingasignificantportionoftheirtotalcompensationtotheCompany’sachievementofpre-establishedperformancemetricsthataregenerallyshort-term(i.e.,lessthanoneyear).Inestablishingtheshort-termincentiveplan,theCompensationCommitteefirstdeterminedacompetitiveshort-termincentivetargetforeachNamedExecutiveOfficerbasedontheComparatorGroupdata,andthensetthreshold,targetandmaximumincentivepaymentlevels.Atthetargetpayoutlevel,Skyworks’short-termincentivewasdesignedtoresultinanincentivepayoutequaltothemedianoftheComparatorGroup,whileamaximumincentivepayoutforexceedingtheperformancemetricswouldresultinapayoutabovethemedianoftheComparatorGroup,andathresholdpayoutformeetingtheminimalcorporateperformancemetricswouldresultinapayoutbelowthemedian.ThefollowingtableshowstheincentivepaymentlevelstheNamedExecutiveOfficerscouldearninfiscalyear2009(shownasapercentageofbasesalary),dependingontheCompany’sachievementoftheperformancemetrics.Actualperformancebetweenthethresholdandthetargetmetricsorbetweenthetargetandmaximummetricswasdeterminedbasedonalinearslidingscale.ThresholdTargetMaximumChiefExecutiveOfficer..................................50%100%200%OtherNamedExecutiveOfficers...........................30%60%120%Forfiscalyear2009,inestablishingtheIncentivePlan,theCompensationCommitteeconsideredthefactthatforthefirsthalfoffiscal2009ourprimarycorporategoalwastoincreaserevenueinexcessofthemarketgrowthratebygainingmarketshare,whileatthesametimeleveragingourfixedcoststructuretogeneratehigherearnings.Asintheprioryear,forfiscalyear2009,theCompensationCommitteesplittheIncentivePlanintotwosixmonthperformanceperiods,withtheperformancemetricsfocusedonachievingbusinessunitrevenue,non-GAAPgrossSkyworksSolutions,Inc.ProxyStatement29marginandspecifiednon-GAAPoperatingmargintargets,inadditiontoacashandcustomersatisfactionmetric.Theweightingofthedifferentmetricsforthefirsthalfoffiscalyear2009issetforthasfollows.RevenueNon-GAAPOperatingMargin%Non-GAAPGrossMargin%CustomerSatisfactionMetricCashMetricPresidentandChiefExecutiveOfficer;VicePresidentandChiefFinancialOfficer.........................20%40%20%10%10%VicePresident,WorldwideOperations....20%20%40%10%10%ExecutiveVicePresidentandGeneralManager,Front-EndSolutions........30%(basedonbusinessunitrevenue)20%(basedonbusinessunitOM%)30%10%10%SeniorVicePresident,SalesandMarketing.......................30%30%(basedonbusinessunitOM%)20%10%10%Forthefirsthalfoffiscal2009,eachexecutiveofficer’sincentiveawardwasconsistentwiththemetricssetforthabove,althoughtheCompensationCommitteeexerciseddiscretionpermittedbytheplantomakesuchawardpaymentsbywaivingtheminimumoperatingincomemarginmetric,giventhattheCompanynearlyachievedsuchobjectivedespitethesevereandunanticipatedeconomicdownturnthatoccurredduringthefirsthalfoffiscal2009.TheCompanyonlymadepaymentsfortheperformancemetricsthatwereachieved,andnopaymentwasmadebasedontheoperatingincomemarginmetric.Accordingly,theChiefExecutiveOfficer,Vice-PresidentandChiefFinancialOfficer,ExecutiveVicePresidentandGeneralManager,Front-EndSolutions,SeniorVicePresident,SalesandMarketing,andVicePresident,WorldwideOperationsearnedafirsthalfincentiveawardequaltoapproximately14%,8%,14%,26%and11%oftheirannualbasesalary,respectively.Inaddition,inrecognitionoftheircontributionstotheCompany’sperformanceduringthefirsthalfoffiscal2009,theCompensationCommitteeapprovedpaymentstoapproximately800othernon-executiveemployeesundernon-executiveincentiveplanscontainingtermsandconditionssimilartotheIncentivePlan.ConsistentwiththeIncentivePlan(andotheremployeeincentiveplans),actualpaymentsforthefirstsixmonthperformanceperiodwerecappedat80%oftheawardearned,with20%oftheawardheldbackuntiltheendofthefiscalyeartoensuresustainedfinancialperformance.TheamountheldbackwassubsequentlypaidaftertheendofthefiscalyearsincetheCompanysustaineditsfinancialperformancethroughoutfiscalyear2009.SkyworksSolutions,Inc.ProxyStatement30Forthesecondhalfoffiscalyear2009,theCommitteeagainestablishedperformancemetricsbasedonachievingspecifiedrevenue,non-GAAPgrossmargin,non-GAAPoperatingmargintargetsandacashandcustomersatisfactionmetric.Theweightingofthedifferentmetricsforthesecondhalfoffiscalyear2009issetforthasfollows.RevenueNon-GAAPOperatingMargin%Non-GAAPGrossMargin%CustomerSatisfactionMetricCashMetricPresidentandChiefExecutiveOfficer;VicePresidentandChiefFinancialOfficer.........................20%40%20%10%10%VicePresident,WorldwideOperations....20%20%40%10%10%ExecutiveVicePresidentandGeneralManager,Front-EndSolutions........10%(basedoncorporaterevenue)30%(basedonbusinessunitrevenue)20%(basedonbusinessunitOM%)30%10%0%SeniorVicePresident,SalesandMarketing.......................30%10%(basedoncorporateOM%)20%(basedonbusinessunitOM%)20%10%10%IndeterminingtheweightingsamongtheNamedExecutiveOfficers,theCompensationCommittee’sgoalwastoaligntheincentivecompensationofeachNamedExecutiveOfficerwiththeperformancemetricssuchexecutivecouldmostimpact.Forinstance,theperformancemetricsfortheChiefExecutiveOfficer,Vice-PresidentandChiefFinancialOfficerandVicePresident,WorldwideOperationsweredesignedtofocussuchexecutivesonimprovingtheCompany’scompetitivepositionandachievingprofitablegrowthoverall.TheperformancemetricsfortheExecutiveVicePresidentandGeneralManager,Front-EndSolutionsweredesignedtofocussuchexecutiveonbusinessunitrevenue(i.e.,therampingofnewproductsandexpansionofthecustomerbase),andtheperformancemetricsfortheSeniorVicePresident,SalesandMarketingweredesignedtofocussuchexecutiveonincreasingoverallcorporaterevenuewhileatthesametimeincreasinggrossmargin.Inthesecondhalfoftheyear,theCompanymetorexceededitstargets.Accordingly,theChiefExecutiveOfficer,Vice-PresidentandChiefFinancialOfficer,ExecutiveVicePresidentandGeneralManager,Front-EndSolutions,SeniorVicePresident,SalesandMarketing,andVicePresident,WorldwideOperationsearnedasecondhalfincentiveawardequaltoapproximately95%,57%,57%,57%and57%oftheirannualbasesalary,respectively.TheCompensationCommitteedeterminedtopay,inlieuofcash,unrestrictedcommonstockoftheCompanyfortheportionofeachoftheNamedExecutiveOfficer’ssecondhalfshort-termincentiveearnedabovethe“target”level.Accordingly,theChiefExecutiveOfficer,theVice-PresidentandChiefFinancialOfficer,theExecutiveVicePresidentandGeneralManager,Front-EndSolutions,SeniorVicePresident,SalesandMarketing,andtheVicePresident,WorldwideOperationseachreceivedapproximately47%oftheirrespectivesecondhalfincentivepaymentsintheformofunrestrictedcommonstockoftheCompany.Inaddition,the20%“holdback”ofthefirsthalfincentivewaspaidouttoeachexecutiveofficerduetotheCompany’ssustainedfinancialperformance.Forthefullfiscalyear,thetotalpaymentsundertheIncentivePlantotheChiefExecutiveOfficer,Vice-PresidentandChiefFinancialOfficer,theExecutiveVicePresidentandGeneralManager,Front-EndSolutions,theSeniorVicePresident,SalesandMarketing,andtheVicePresident,WorldwideOperationswereapproximately109%,65%,71%,83%and68%oftheirrespectiveannualbasesalaries.SkyworksSolutions,Inc.ProxyStatement31ThetargetfinancialperformancemetricsestablishedbytheCompensationCommitteeundertheIncentivePlanarebasedonourhistoricaloperatingresultsandgrowthratesaswellasourexpectedfutureresults,andaredesignedtorequiresignificanteffortandoperationalsuccessonthepartofourexecutivesandtheCompany.ThemaximumfinancialperformancemetricsestablishedbytheCommitteehavehistoricallybeendifficulttoachieveandaredesignedtorepresentoutstandingperformancethattheCommitteebelievesshouldberewarded.TheCompensationCommitteeretainsthediscretion,basedontherecommendationoftheChiefExecutiveOfficer,tomakepaymentsevenifthethresholdperformancemetricsarenotmetortomakepaymentsinexcessofthemaximumleveliftheCompany’sperformanceexceedsthemaximummetrics.TheCompensationCommitteebelievesitisappropriatetoretainthisdiscretioninordertomakeshort-termincentiveawardsinextraordinarycircumstances,suchasexistedduringthesevereandunanticipatedeconomicdownturnthatoccurredduringthefirsthalfoffiscal2009.Long-TermStock-BasedCompensationTheCompensationCommitteegenerallymakesstock-basedcompensationawardstoexecutiveofficersonanannualbasis.Stock-basedcompensationawardsareintendedtoaligntheinterestsofourexecutiveofficerswithstockholders,andrewardthemforincreasesinstockholdervalueoverlongperiodsoftime(i.e.,greaterthanoneyear).ItistheCompany’spracticetomakestock-basedcompensationawardstoexecutiveofficersinNovemberofeachyearatapre-scheduledCompensationCommitteemeeting.Forfiscalyear2009,theCompensationCom-mitteemadeawardstoexecutiveofficers,includingcertainNamedExecutiveOfficers,onNovember4,2008,ataregularlyscheduledCompensationCommitteemeeting.StockoptionsawardedtoexecutiveofficersatthemeetinghadanexercisepriceequaltotheclosingpriceoftheCompany’scommonstockonthemeetingdate.Inmakingstock-basedcompensationawardstocertainexecutiveofficersforfiscalyear2009,theCompen-sationCommitteefirstreviewedtheComparatorGroupdatatodeterminethepercentageoftheoutstandingnumberofsharesthataretypicallyusedforemployeecompensationprograms.TheCompensationCommitteethensetthenumberofSkyworkssharesofcommonstockthatwouldbemadeavailableforexecutiveofficerawardsatapproximatelythemedianoftheComparatorGroupbasedonthebusinessneed,internalandexternalcircumstancesandRiskMetrics/ISSguidelines.TheCompensationCommitteethenreviewedtheComparatorGroupbyexecutivepositiontodeterminetheallocationoftheavailablesharesamongtheexecutiveofficers.TheCompensationCommitteethenattributedalong-termequity-basedcompensationvaluetoeachexecutiveofficer.One-halfofthatvaluewasconvertedtoanumberofstockoptionsusinganestimatedBlack-Scholesvalue,andtheremaininghalfofthevaluewasconvertedtoanumberofperformanceshareawards(attarget)basedonthefairmarketvalueofthecommonstock.TheCompensationCommittee’srationaleforawardingperformancesharesistofurtheraligntheexecutive’sinterestwiththoseoftheCompany’sstockholdersbyusingequity-awardsthatwillvestonlyiftheCompanyachievesapre-establishedperformancemetric(s).Inaddition,giventhesignificantchangesintheeconomicenvironmentandthefinancialmarketsinthefirsthalfoffiscal2009,andthatcertainpreviouslygrantedperformanceshareawardswerenotexemptfromthedeductionlimitationsunderSection162(m),onJune4,2009,theCompanygaveeachofitsexecutiveofficers,includingtheNamedExecutiveOfficers,theopportunitytoforfeitanoutstandingPerformanceShareAwarddatedNovember6,2007,suchexecutivehadpreviouslybeengranted(the“2007PSA”)andreceive,initsplace,thefollowingequityawards:(1)arestrictedstockaward(the“2009ReplacementRSA”)coveringsharesequaltothe“Threshold/Nominal”trancheofsharesoftheCompany’scommonstockthatcouldbeearnedundertheexecutive’s2007PSA,whichshareswillvestonNovember6,2010,providedthattheexecutivecontinuesemploymentwiththeCompanythroughsuchdate,and(2)aSection162(m)compliantperformanceshareaward(the“2009ReplacementPSA”,andtogetherwiththe2009ReplacementRSA,the“2009ReplacementAwards”)pursuanttowhichtheexecutivewillreceiveanumberofsharesoftheCompany’scommonstockequaltotheaggregateamountofthe“Target”andSkyworksSolutions,Inc.ProxyStatement32“Maximum/Stretch”tranchesofsharesoftheCompany’scommonstockthatcouldbeearnedunderthe2007PSA,ifcertainconditionsaresatisfied.Theconditionsthatmustbesatisfiedareasfollows:(a)RelativeStockPricePerformanceConditionThe“Target”relativestockpricecondition,whichcovers50%oftheunderlyingshares,shallbedeemedmetonNovember6,2010,ifthepercentagechangeinthepriceofSkyworks’commonstockexceedsthe60thpercentileofthePeerGroup2duringtheMeasurementPeriod.The“Stretch”relativestockpricecondition,whichcovers50%oftheunderlyingshares,shallbedeemedmetonNovember6,2010,ifthepercentagechangeinthepriceofSkyworks’commonstockexceedsthe70thpercentileofthePeerGroupduringtheMeasurementPeriod.Forpurposesofthe2009ReplacementPSA,the“MeasurementPeriod”wasdeemedtohavestartedonNovember6,2007,andwillendonNovember6,2010.(b)ContinuedEmploymentConditionIftheRelativeStockPricePerformanceConditionismetforeitherthe“Target”or“Stretch”tranche(orboth),then50%ofthetotalsharesforwhichtherelativestockpriceperformancemetricwasmetwouldbeissuabletotheexecutiveonNovember6,2010,andtheother50%ofsuchtotalshareswouldbeissuabletotheexecutiveonNovember6,2011,providedthattheexecutiveisemployedwithSkyworksthroughsuchdate(s).EachoftheNamedExecutiveOfficersacceptedtheCompany’sofferandagreedtohavehis2007PSAcancelledandreplacedwiththe2009ReplacementAwards.Themaximumnumberofsharesissuedunderthe2009ReplacementAwardsforeachNamedExecutiveOfficeronJune10,2009,isequaltothemaximumnumberofsharesthatwouldhavebeenissuabletosuchexecutiveunderhiscancelled2007PSA.OtherCompensationandBenefitsWealsoprovideotherbenefitstoourexecutiveofficersthatareintendedtobepartofacompetitiveoverallcompensationprogramandarenottiedtoanycompanyperformancecriteria.ConsistentwiththeCompensationCommittee’sgoalofensuringthatexecutivecompensationisperceivedasfairtoallstakeholders,theCompanyoffersmedicalplans,dentalplans,visionplans,lifeinsuranceplansanddisabilityinsuranceplanstoexecutiveofficersunderthesametermsassuchbenefitsareofferedtoallotheremployees.Additionally,executiveofficersarepermittedtoparticipateintheCompany’s401(k)SavingsandInvestmentPlanandEmployeeStockPurchasePlanunderthesametermsasallotheremployees.TheCompanydoesnotprovideexecutiveofficerswithanyenhancedretirementbenefits(i.e.,executiveofficersaresubjecttothesamelimitsoncontributionsasotheremployees,astheCompanydoesnotofferanySERPorothersimilarnon-qualifieddeferredcompensationplan),andtheyareeligiblefor401(k)company-matchcontributionsunderthesametermsasotheremployees.AlthoughcertainNamedExecutiveOfficerswerehistoricallyprovidedanopportunitytoparticipateintheCompany’sExecutiveCompensationPlan(the“ExecutiveCompensationPlan”)—anunfunded,non-qualifieddeferredcompensationplan,underwhichparticipantswereallowedtodeferaportionoftheircompensation—asaresultofdeferredcompensationlegislationunderSection409AoftheInternalRevenueCode(“IRC”),effectiveDecember31,2005,theCompanynolongerpermitsemployeestomakecontributionstotheplan.AlthoughtheCompanyhaddiscretiontomakeadditionalcontributionstotheaccountsofparticipantswhiletheExecutiveCompensationPlanwasactive,itneverdidso.SeveranceandChangeofControlBenefitsNoneofourexecutiveofficers,includingtheNamedExecutiveOfficers,hasanemploymentagreementthatprovidesaspecifictermofemploymentwiththeCompany.Accordingly,theemploymentofanysuchemployeemaybeterminatedatanytime.WedoprovidecertainbenefitstoourNamedExecutiveOfficersuponcertainqualifyingterminationsandinconnectionwithterminationsundercertaincircumstancesfollowingachangeofSkyworksSolutions,Inc.ProxyStatement332Forpurposesofthe2009ReplacementPSAs,MaximIntegratedProductswasincludedinthePeerGroup.control.AdescriptionofthematerialtermsofourseveranceandchangeofcontrolarrangementswiththeNamedExecutiveOfficerscanbefoundunderthe“PotentialPaymentsUponTerminationorChangeofControl”sectionbelow.TheCompanybelievesthatseveranceprotectionscanplayavaluableroleinrecruitingandretainingsuperiortalent.Severanceandotherterminationbenefitsareaneffectivewaytoofferexecutivesfinancialsecuritytoincentthemtoforegoanopportunitywithanothercompany.TheseagreementsalsoprotecttheCompanyastheNamedExecutiveOfficersareboundbyrestrictivenon-competeandnon-solicitcovenantsfortwoyearsafterterminationofemployment.Outsideofthechangeincontrolcontext,severancebenefitsarepayabletotheNamedExecutiveOfficersiftheiremploymentisinvoluntarilyterminatedbytheCompanywithoutcause,orifaNamedExecutiveOfficerterminateshisownemploymentforagoodreason(asdefinedintheagreement).Inaddition,providedheforfeitscertainequityawardsandagreestoserveontheCompany’sBoardofDirectorsforaminimumoftwoyears,theChiefExecutiveOfficerisentitledtocertainseverancebenefitsuponterminationofhisemploymentforanyreasononorafterJanuary1,2010.TheCompensationCommitteebelievesthatthisprovisionfacilitateshisretentionwiththeCompany.ThelevelofeachNamedExecutiveOfficer’sseveranceorotherterminationbenefitisgenerallytiedtohisrespectiveannualbasesalaryandtargetedshort-termincentiveopportunity(orpastshort-termincentiveearned).Additionally,theNamedExecutiveOfficerswouldreceiveenhancedseveranceandotherbenefitsiftheiremploymentterminatedundercertaincircumstancesinconnectionwithachangeincontroloftheCompany.Thesebenefitsaredescribedindetailunderthe“PotentialPaymentsUponTerminationorChangeofControl”sectionbelow.TheNamedExecutiveOfficersarealsoentitledtoreceiveataxgross-uppayment(witha$500,000capforNamedExecutiveOfficersotherthantheChiefExecutiveOfficer)iftheybecomesubjecttothe20%goldenparachuteexcisetaximposedbySection280GoftheIRC,astheCompanybelievesthattheexecutivesshouldbeabletoreceivetheircontractualrightstoseverancewithoutbeingsubjecttopunitiveexcisetaxes.TheCompanyfurtherbelievestheseenhancedseverancebenefitsareappropriatebecausetheoccurrence,orpotentialoccurrence,ofachangeincontroltransactionwouldlikelycreateuncertaintyregardingthecontinuedemploymentofeachNamedExecutiveOfficer,andtheseenhancedseveranceprotectionsencouragetheNamedExecutiveOfficerstoremainemployedwiththeCompanythroughthechangeincontrolprocessandtofocusonenhancingstockholdervaluebothbeforeandduringthechangeincontrolprocess.Lastly,eachNamedExecutiveOfficer’soutstandingunvestedstockoptionsandrestrictedstockawardsfullyvestupontheoccurrenceofachangeincontrol.Inaddition,eachoutstandingperformanceshareawardshallbedeemedearnedastothegreaterof(a)the“target”levelor(b)thenumberofsharesthatwouldhavebeendeemedearnedundertheawardasofthedaypriortothechangeincontrol.TheCompanybelievesthisacceleratedvestingisappropriategiventheimportanceoflong-termequityawardsinourexecutivecompensationprogramandtheuncertaintyregardingthecontinuedemploymentofNamedExecutiveOfficersthattypicallyoccursinachangeincontrolcontext.TheCompany’sviewisthatthisvestingprotectionhelpsassuretheNamedExecutiveOfficersthattheywillnotlosetheexpectedvalueoftheirequityawardsbecauseofachangeincontroloftheCompanyandencouragestheNamedExecutiveOfficerstoremainemployedwiththeCompanythroughthechangeincontrolprocessandtofocusonenhancingstockholdervaluebothbeforeandduringtheprocess.SkyworksSolutions,Inc.ProxyStatement34CompensationTablesforNamedExecutiveOfficersSummaryCompensationTableThefollowingtablesummarizescompensationearnedby,orawardedorpaidto,ourNamedExecutiveOfficersforfiscalyear2009,fiscalyear2008andfiscalyear2007.NameandPrincipalPositionYearSalary($)StockAwards($)(2)OptionAwards($)(2)Non-EquityIncentivePlanCompensation($)(3)AllOtherCompensation($)(4)Total($)DavidJ.Aldrich...............2009$598,077$2,207,652$932,825$653,750$12,879$4,405,183PresidentandChiefExecutive2008$583,404$1,936,986$933,064$1,048,220$12,191$4,513,865Officer2007$552,000$837,318$719,233$691,276$11,838$2,811,665DonaldW.Palette.............2009$327,692$346,441$268,214$215,738$11,471$1,169,556VicePresidentandChiefFinancial2008$305,769$195,917$195,653$328,138$12,199$1,037,676Officer2007(1)$34,615$5,005$18,507$56,354$340$114,821GregoryL.Waters.............2009$378,846$464,160$278,907$270,085$10,025$1,402,023ExecutiveVicePresidentand2008$370,635$393,257$270,445$397,347$9,464$1,441,148GeneralManager,Front-EndSolutions2007$353,000$240,198$325,824$252,715$9,810$1,181,547LiamK.Griffin...............2009$352,923$696,259$258,069$295,148$44,888$1,647,287SeniorVicePresident,Salesand2008$344,000$568,901$249,207$365,526$82,132$1,609,766Marketing2007$318,000$201,410$189,483$256,603$136,062$1,101,558BruceJ.Freyman..............2009$350,923$453,887$308,879$240,680$11,772$1,366,141VicePresident,Worldwide2008$343,000$344,246$313,207$335,879$11,218$1,347,550Operations2007$325,000$121,820$258,473$262,252$10,189$977,734(1)Mr.PalettewashiredasVice-PresidentandChiefFinancialOfficereffectiveAugust20,2007,atanannualsalaryof$300,000.Inaddition,hewasguaranteedashort-termincentivepaymentforfiscalyear2007equalto25%oftheincentivepayouthewouldhavereceivedunderthe2007IncentivePlanhadhebeenemployedfortheentirefiscalyear.(2)Theaggregatedollaramountoftheexpenserecognizedinfiscalyears2009,2008and2007foroutstandingstockandoptionswasdeterminedinaccordancewiththeprovisionsofASC718-Compensation-StockCompensation(“ASC718”),butwithoutregardtoanyestimatedforfeituresrelatedtoservice-basedvestingprovisions.ForadescriptionoftheassumptionsusedincalculatingthefairvalueofequityawardsunderASC718,seeNote11oftheCompany’sfinancialstatementsincludedintheOriginalFiling.Thereportedexpensealsoreflectsincrementalexpensesrelatingtothe2009ReplacementAwardsasfollows:Mr.Aldrich($117,470),Mr.Palette($13,705),Mr.Waters($15,663),Mr.Griffin($39,157)andMr.Freyman($19,578).(3)ReflectsamountspaidtotheNamedExecutiveOfficerspursuanttotheIncentivePlan.Forthesecondhalfoffiscalyears2008and2009,theportionoftheIncentivePlanattributabletoCompanyperformanceabovethe“target”performancemetricwaspaidintheformofunrestrictedcommonstockoftheCompanyasfollows:Mr.Aldrich(2008:$248,508;2009:$270,000),Mr.Palette(2008:$77,794;2009:$89,100),Mr.Waters(2008:$80,866;2009:$102,600),Mr.Griffin(2008:$87,342;2009:$95,580)andMr.Freyman(2008:$64,839;2009:$95,040).ThenumberofsharesawardedinlieuofcashwasbasedonthefairmarketvalueofthecommonstockonNovember4,2008,andNovember10,2009,thedatesthesecondhalfIncentivePlanpaymentforeachfiscalyearwasapprovedbytheCompensationCommittee.Forfiscalyear2007,allshort-termincentivepaymentsweremadeincash.(4)“AllOtherCompensation”includestheCompany’scontributionstoeachNamedExecutiveOfficer’s401(k)planaccountandthecostofgrouptermlifeinsurancepremiums.Mr.Griffin’samountincludessubsidizedmortgageandmiscellaneousrelocationexpensesof$72,381,$124,741and$34,548forfiscalyears2007,2008,and2009,respectively.SkyworksSolutions,Inc.ProxyStatement35GrantsofPlan-BasedAwardsTableThefollowingtablesummarizesallgrantsofplan-basedawardsmadetotheNamedExecutiveOfficersinfiscalyear2009,includingincentiveawardspayableunderourFiscalYear2009ExecutiveIncentivePlan.NameGrantDateThreshold($)Target($)Maximum($)Threshold(#)Target(#)Maximum(#)AllOtherStockAwards:NumberofSharesofStockorUnits(#)AllOtherOptionAwards:NumberofSecuritiesUnderlyingOptions(#)(3)ExerciseorBasePriceofOptionAwards($/Sh)(4)GrantDateFairValueofStockandOptionAwards(5)PossiblePayoutsUnderNon-EquityIncentivePlanAwards(1)EstimatedFuturePayoutsUnderEquityIncentivePlanAwards(2)DavidJ.Aldrich......11/4/2008$300,000$600,000$1,200,00075,000150,000300,000n/a300,000$7.18$3,505,921PresidentandChiefExecutiveOfficerDonaldW.Palette.....11/4/2008$99,000$198,000$396,00023,50047,00094,000n/a90,000$7.18$1,085,656VicePresidentandChiefFinancialOfficerGregoryL.Waters.....11/4/2008$114,000$228,000$456,00026,00052,000104,000n/a100,000$7.18$1,202,520ExecutiveVicePresidentandGeneralManager,Front-EndSolutionsLiamK.Griffin.......11/4/2008$106,200$212,400$424,80026,00052,000104,000n/a100,000$7.18$1,202,520SeniorVicePresident,SalesandMarketingBruceJ.Freyman......11/4/2008$105,600$211,200$422,40023,50047,00094,000n/a90,000$7.18$1,085,656VicePresident,WorldwideOperations(1)ActualperformancebetweentheThresholdandTargetmetricsarepaidonalinearslidingscalebeginningattheThresholdpercentageandmovinguptotheTargetpercentage.ThesamelinearscaleappliesforperformancebetweenTargetandMaximummetrics.TheamountsactuallypaidtotheNamedExecutiveOfficersundertheIncentivePlanareshownaboveintheSummaryCompensationTableunderNon-EquityIncentivePlanCompensation.Forfiscalyear2009,theportionoftheIncentivePlanpaymentattributabletoCompanyperformanceabovetheTargetlevelforthesecondhalfofthefiscalyearwaspaidtotheNamedExecutiveOfficersintheformofunrestrictedcommonstockoftheCompany.(2)RepresentsperformanceshareawardsmadeonNovember4,2008,undertheCompany’s2005Long-TermIncentivePlan(the“FY09PSA”).TheFY09PSAshaveboth“performance”and“continuedemployment”conditionsthatmustbemetinorderfortheexecutivetoreceivesharesunderlyingtheaward.The“perfor-mance”conditionrequiredthattheCompanyachievecertainpre-establishednon-GAAPoperatingmarginmetrics(i.e.,“minimum,”“target”and“maximum”non-GAAPoperatingmarginlevels),withthe“minimum”numberofsharesequaltoone-half(1/2)the“target”sharelevel,andthe“maximum”numberofsharesequaltotwotimes(2x)the“target”sharelevel.ForpurposesoftheFY09PSAs,the“non-GAAPoperatingmargin”meanttheCompany’snon-GAAPoperatingmarginforFiscalYear2009asreportedpubliclybytheCompanyfollowingthefiscalyearend.ActualCompanyperformancebetweenthe“minimum”andthe“maximum”performancemetricswastobedeterminedbasedonalinearslidingscale.The“continuedemployment”conditionoftheFY09PSAsprovidesthat,totheextentthatthenon-GAAPoperatingmarginperformancemetricismetforthefiscalyear,thenone-third(33%)ofthetotalsharesforwhichtheperformancemetricwasmetwouldbeissuabletotheexecutiveonthefirstanniversaryoftheGrantDate,thenextone-third(33%)ofsuchshareswouldbeissuabletotheexecutiveonthesecondanniversaryoftheGrantDate(the“SecondIssuanceDate”),andthefinalone-third(33%)ofsuchshareswouldbeissuabletotheParticipantonthethirdanniversaryoftheGrantDate(the“ThirdIssuanceDate”),providedthattheexecutivecontinuesemploymentwiththeCompanythrougheachsuchvestingdate(s).Intheeventofterminationbyreasonofdeathorpermanentdisability,theholderofanFY09PSA(orhisorherestate)wouldreceiveanysharesthatwouldhavebeenissuablethereunderduringtheremainingtermoftheaward(i.e.,earnedbutunissuedshares).SkyworksSolutions,Inc.ProxyStatement36(3)Theoptionsvestoverfouryearsatarateof25%peryearcommencingoneyearafterthedateofgrant,providedtheholderoftheoptionremainsemployedbytheCompany.OptionsmaynotbeexercisedbeyondthreemonthsaftertheholderceasestobeemployedbytheCompany,exceptintheeventofterminationbyreasonofdeathorpermanentdisability,inwhicheventtheoptionmaybeexercisedforspecificperiodsnotexceedingoneyearfollowingtermination.(4)StockoptionsawardedtoexecutiveofficershadanexercisepriceequaltotheclosingpriceoftheCompany’scommonstockonthegrantdate.(5)AmountreflectsstockoptionsandperformanceshareawardsgrantedonNovember4,2008.ThetotalexcludestheincrementalFMVofthe2009ReplacementAwardsasfollows:Mr.Aldrich($775,200),Mr.Palette($90,440),Mr.Waters($103,360),Mr.Griffin($258,400)andMr.Freyman($129,200).Asdescribedabovein“Long-TermStockBasedCompensation”,the2009ReplacementAwardsconsistedof(a)the2009Replace-mentRSAsthatvestonNovember6,2010,asfollows:Mr.Aldrich(150,000shares),Mr.Palette(17,500shares),Mr.Waters(20,000shares),Mr.Griffin(50,000shares)andMr.Freyman(25,000shares);and(b)the2009ReplacementPSAsasfollows(atthe“maximum”sharelevel):Mr.Aldrich(300,000shares),Mr.Palette(35,000shares),Mr.Waters(40,000shares),Mr.Griffin(100,000shares)andMr.Freyman(50,000shares).The2009ReplacementPSAshaveboth“performance”and“continuedemployment”conditionsthatmustbemetinorderfortheexecutivetoreceiveanysharesunderlyingtheaward.The“performance”conditionrequiresthatthepercentagechangeinthepriceofSkyworks’commonstockexceedsthe60thpercentile(i.e.,“target”levelofshares,whichisequalto50%ofthetotalshares),and/orthe70thpercentile(i.e.,the“maximum”levelofshares,whichisequaltotheother50%ofthetotalshares),ofthePeerGroupduringtheMeasurementPeriod.ThepercentagechangeinthepriceofthecommonstockoftheCompany,aswellaseachmemberofthePeerGroup,duringtheMeasurementPeriodwillbedeterminedbycomparing(x)theaverageofsuchentity’sstockpricefortheninety(90)dayperiodbeginningonNovember6,2007to(y)theaverageoftheentity’sstockpricefortheninety(90)dayperiodendingonNovember6,2010.Forpurposesofcalculatingtheaveragepriceofthecommonstockofanentityduringsuchninety(90)dayperiods,only“tradingdays”(daysonwhichtheNASDAQGlobalSelectMarketisopenfortrading)shallbeusedinsuchcalculation,andtradingvolumeonanysuchtradingdaywillnotbefactoredintosuchcalculation.Forpurposesofthe2009ReplacementPSAs,the“MeasurementPeriod”wasdeemedtohavestartedonNovember6,2007,andwillendonNovember6,2010.The“continuedemployment”conditionprovidesthat,iftherelativestockpriceperformanceconditionismetforeitherthe“Target”or“Maximum”tranche(orboth),then50%ofthetotalsharesforwhichtherelativestockpriceperformancemetricwasmetwouldbeissuabletotheexecutiveonNovember6,2010,andtheother50%ofsuchtotalshareswouldbeissuabletotheexecutiveonoraboutNovember6,2011,providedthattheexecutiveisemployedwithSkyworksthroughsuchdate(s).Intheeventofterminationbyreasonofdeathorpermanentdisabilityonorbeforethemeasurementdateofa2009ReplacementPSA,theholder(orhisorherestate)wouldreceivethegreaterof(a)theTargetlevelofsharesissuableor(2)thenumberofsharesthatwouldhavebeenissuablethereunderbasedontheactualperformanceoftheCompany.Intheeventofterminationbyreasonofdeathorpermanentdisabilityafterthemeasurementdateofa2009ReplacementPSA(butbeforesharesareissued),theholder(orhisorherestate)wouldreceivethenumberofsharesthatwouldhavebeenissuablethereunderbasedontheactualperformanceoftheCompany.Uponthedeathorterminationasaresultofpermanentdisabilityoftheholder,allrestrictionsonthesaleofthe2009ReplacementRSAswouldimmediatelylapse.SkyworksSolutions,Inc.ProxyStatement37OutstandingEquityAwardsatFiscalYearEndTableThefollowingtablesummarizestheunvestedstockawardsandallstockoptionsheldbytheNamedExecutiveOfficersasoftheendofFiscalYear2009.NameNumberofSecuritiesUnderlyingUnexercisedOptions(#)ExercisableNumberofSecuritiesUnderlyingUnexercisedOptions(#)UnexercisableEquityIncentivePlanAwards:NumberofSecuritiesUnderlyingUnexercisedUnearnedOptions(#)OptionExercisePrice($)OptionExpirationDateNumberofSharesorUnitsofStockThatHaveNotVested(#)MarketValueofSharesorUnitsofStockThatHaveNotVested($)(1)EquityIncentivePlanAwards:NumberofUnearnedShares,UnitsorOtherRightsThatHaveNotVested(#)(9)EquityIncentivePlanAwards:MarketorPayoutValueofUnearnedShares,UnitsorOtherRightsThatHaveNotVested($)(1)OptionAwardsStockAwardsDavidJ.Aldrich........75,00000$44.6884/26/10210,000(2)$2,499,000300,000$3,570,000PresidentandChief75,00000$28.93810/6/10ExecutiveOfficer160,00000$13.5634/4/11175,00000$12.6504/25/12500,00000$9.1801/7/14274,2540(3)0$8.93011/10/14187,50062,500(4)0$4.99011/8/12125,000125,000(5)0$6.73011/7/1345,000135,000(6)0$9.33011/6/140300,000(10)$7.18011/4/15DonaldW.Palette.......12,000100,000(7)0$7.5008/20/1436,666(2)$436,32564,500$767,550VicePresidentand5,00015,000(6)0$9.33011/6/14ChiefFinancialOfficer090,000(10)0$7.18011/4/15GregoryL.Waters.......100,00000$9.1801/7/1436,666(2)$436,32572,000$856,800ExecutiveVicePresident64,5300(3)0$8.93011/10/14andGeneralManager,75,00025,000(4)0$4.99011/8/12Front-EndSolutions37,50037,500(5)0$6.73011/7/1312,50037,500(6)0$9.33011/6/140100,000(10)0$7.18011/4/15LiamK.Griffin........100,00000$24.7809/7/1166,666(2)$793,325102,000$1,213,800SeniorVicePresident,50,00000$12.6504/25/12SalesandMarketing110,00000$9.1801/7/1464,5300(3)0$8.93011/10/14017,500(4)0$4.99011/8/1237,50037,500(5)0$6.73011/7/1312,50037,500(6)0$9.33011/6/140100,000(10)0$7.18011/4/15BruceJ.Freyman.......150,0000(8)0$5.1205/2/1540,000(2)$476,00072,000$856,800VicePresident,30,00010,000(4)0$4.99011/8/12WorldwideOperations30,00030,000(5)0$6.73011/7/1311,25033,750(6)0$9.33011/6/14090,000(10)0$7.18011/4/15(1)Assumesapriceof$11.90pershare,thefairmarketvalueasofOctober2,2009.(2)OtherthanMr.Palette’srestrictedstockgrantonAugust20,2007,whichwasmadeaspartofanewhiregrantpackageandvests25%peryearoverfouryears,unvestedrestrictedsharesshownarecomprisedof(a)two-thirds(66%)oftheNovember6,2007,grantand(b)100%ofthe2009ReplacementRSAs(asdescribedinfootnote5ofthe“GrantsofPlan-BasedAwardsTable”above).TherestrictedstockawardsmadeonNovember6,2007,hadbothperformanceandservicebasedvestingconditions.Theperformanceconditionallowedforacceleratedvestingofanawardasofthefirstanniversary,secondanniversaryand,ifnotpreviouslyaccelerated,thethirdanniversaryofthegrantdate.Specifically,iftheCompany’sstockperfor-mancemetorexceededthe60thpercentileofitsselectedpeergroupfortheyearsendedoneachofthefirstthreeanniversariesofthegrantdate,thenone-thirdoftheawardvestsuponeachanniversary(upto100%).Iftherestrictedstockrecipientmettheserviceconditionbutnottheperformanceconditioninyearsone,two,threeandfour,therestrictedstockwouldhavevestedinthreeequalinstallmentsonthesecond,thirdandfourthanniversariesofthegrantdate.InNovember2008,thefirstthird(33%)oftheNovember6,2007grantvestedasaresultofaperformanceacceleratortriggeredastheCompanyexceededthe60thpercentileofitsSkyworksSolutions,Inc.ProxyStatement38peersonthebasisofstockperformance.InNovember2009,anotherthird(33%)ofsuchgrantvestedasaresultofaperformanceacceleratortriggeredastheCompanyexceededthe60thpercentileofitpeers.Inaddition,thelastthird(33%)ofsuchgrantvestedinNovember2009asaresultofthepassageoftime.(3)TheseoptionsweregrantedonNovember10,2004,andvestedatarateof25%peryearuntiltheybecamefullyvestedonNovember10,2008.(4)TheseoptionsweregrantedonNovember8,2005,andvestedatarateof25%peryearuntiltheybecamefullyvestedonNovember8,2009.(5)TheseoptionsweregrantedonNovember7,2006,andvestatarateof25%peryearuntilfullyvestedonNovember7,2010.(6)TheseoptionsweregrantedonNovember6,2007,andvestatarateof25%peryearuntilfullyvestedonNovember6,2011.(7)TheseoptionsweregrantedonAugust20,2007,andvestatarateof25%peryearuntilfullyvestedonAugust20,2011.(8)TheseoptionsweregrantedonMay2,2005,andvestedatarateof25%peryearuntiltheybecamefullyvestedonMay2,2009.(9)ReflectstheFY09PSAsand2009ReplacementPSAsawardedtotheNamedExecutiveOfficersonNovember4,2008,andJune10,2009,respectively,bothatthe“target”level,andasdescribedinfootnotes2and5ofthe“GrantsofPlan-BasedAwardsTable”above,respectively.WithrespecttotheFY09PSAs,theCompanyachieved95.8%ofthe“maximum”non-GAAPoperatingmarginand,accordingly,onNovember4,2009,theCompanyissuedone-thirdofeachexecutive’s“earned”shares,andheldbacktheothertwo-thirdsofsuch“earned”sharesforpossibleissuanceontheSecondand/orThirdIssuanceDatesprovidedtheexecutivemeetsthecontinuedemploymentcondition.(10)TheseoptionsweregrantedonNovember4,2008,andvestatarateof25%peryearuntilfullyvestedonNovember4,2012.OptionExercisesandStockVestedTableThefollowingtablesummarizestheNamedExecutiveOfficers’optionexercisesandstockawardvestingduringfiscalyear2009.NameNumberofSharesAcquiredonExercise(#)ValueRealizedonExercise($)NumberofSharesAcquiredonVesting(#)(1)ValueRealizedonVesting($)(2)OptionAwardsStockAwardsDavidJ.Aldrich.......................PresidentandChiefExecutiveOfficer225,000$1,531,130148,843$992,375DonaldW.Palette.....................VicePresidentandChiefFinancialOfficer88,000$586,7149,584$93,342GregoryL.Waters.....................ExecutiveVicePresidentandGeneralManager,Front-EndSolutions225,000$965,72437,767$250,946LiamK.Griffin.......................SeniorVicePresident,SalesandMarketing102,500$919,04037,767$250,946BruceJ.Freyman......................VicePresident,WorldwideOperations100,000$826,23027,500$174,150(1)IncludesrestrictedstockthatvestedonNovember6,2008,andNovember7,2008,forMr.Aldrich(30,000sharesand100,000shares),Mr.Waters(8,334sharesand25,000shares),Mr.Griffin(8,334sharesand25,000shares)andMr.Freyman(7,500sharesand20,000shares)andrestrictedstockthatvestedonSkyworksSolutions,Inc.ProxyStatement39May11,2009forMr.Aldrich(18,843),Mr.Waters(4,433),andMr.Griffin(4,433).ForMr.Palette,thetableincludesrestrictedstockthatvestedonNovember6,2008(3,334shares)andAugust20,2009(6,250shares).(2)Representstheaggregatefairmarketvalueofthestockawardsontheapplicablevestingdates.NonqualifiedDeferredCompensationTableInpriorfiscalyears,certainexecutiveofficerswereprovidedanopportunitytoparticipateintheCompany’sExecutiveCompensationPlan,anunfunded,non-qualifieddeferredcompensationplan,underwhichparticipantswereallowedtodeferaportionoftheircompensation,asaresultofdeferredcompensationlegislationunderSection409AoftheIRC.EffectiveDecember31,2005,theCompanynolongerpermitsemployeestomakecontributionstotheExecutiveCompensationPlan.Mr.AldrichistheonlyNamedExecutiveOfficerthatparticipatedintheExecutiveCompensationPlan.Mr.Aldrich’scontributionsarecreditedwithearnings/lossesbasedupontheperformanceoftheinvestmentsheselects.Uponretirement,asdefined,orotherseparationfromservice,or,ifsoelected,uponanyearlierchangeincontroloftheCompany,aparticipantisentitledtoapaymentofhisorhervestedaccountbalance,eitherinasinglelumpsumorinannualinstallments,aselectedinadvancebytheparticipant.AlthoughtheCompanyhaddiscretiontomakeadditionalcontributionstotheaccountsofparticipantswhileitwasactive,itnevermadeanycompanycontributions.Thefollowingtablesummarizestheaggregateearningsinthefiscalyear2009forMr.AldrichundertheExecutiveCompensationPlan.NameExecutiveContributionsinLastFiscalYear($)RegistrantContributionsinLastFiscalYear($)AggregateEarningsinLastFiscalYear($)AggregateWithdrawals/Distributions($)AggregateBalanceatLastFiscalYear-End($)(1)DavidJ.Aldrich,..........PresidentandChiefExecutiveOfficer$0$0$1,302$0$622,469(1)BalanceasofOctober2,2009.ThisamountiscomprisedofMr.Aldrich’sindividualcontributionsandthereturn/(loss)generatedfromtheinvestmentofthosecontributions.PotentialPaymentsUponTerminationorChangeofControlChiefExecutiveOfficerInJanuary2008,theCompanyenteredintoanamendedandrestatedChangeofControl/SeveranceAgreementwithMr.Aldrich(the“AldrichAgreement”).TheAldrichAgreementsetsoutseverancebenefitsthatbecomepayableif,withintwo(2)yearsafterachangeofcontrol,Mr.Aldricheither(i)isinvoluntarilyterminatedwithoutcauseor(ii)voluntarilyterminateshisemployment.TheseverancebenefitsprovidedtoMr.Aldrichinsuchcircumstanceswillconsistofthefollowing:(i)apaymentequaltotwoandone-half(21⁄2)timesthesumof(A)hisannualbasesalaryimmediatelypriortothechangeofcontroland(B)hisannualshort-termincentiveaward(calculatedasthegreaterof(x)theaverageshort-termincentiveawardsreceivedforthethreeyearspriortotheyearinwhichthechangeofcontroloccursor(y)thetargetannualshortincentiveawardfortheyearinwhichthechangeofcontroloccurs);(ii)allthenoutstandingstockoptionswillremainexercisableforaperiodofthirty(30)monthsaftertheterminationdate(butnotbeyondtheexpirationoftheirrespectivemaximumterms);and(iii)continuedmedicalbenefitsforaperiodofeighteen(18)monthsaftertheterminationdate.Theforegoingpaymentsaresubjecttoagross-uppaymentforanyapplicableexcisetaxesincurredunderSection4999oftheIRC.Additionally,intheeventofachangeofcontrol,Mr.Aldrich’sAgreementprovidesforfullaccelerationofthevestingofallthenoutstandingstockoptionsandrestrictedstockawardsandpartialaccelerationofanyoutstandingperformanceshareawards.TheAldrichAgreementalsosetsoutseverancebenefitsoutsideofachangeofcontrolthatbecomepayableif,whileemployedbytheCompany,Mr.Aldricheither(i)isinvoluntarilyterminatedwithoutcauseor(ii)terminatesSkyworksSolutions,Inc.ProxyStatement40hisemploymentforgoodreason.TheseverancebenefitsprovidedtoMr.Aldrichundereitherofthesecircum-stanceswillconsistofthefollowing:(i)apaymentequaltotwo(2)timesthesumof(A)hisannualbasesalaryimmediatelypriortosuchterminationand(B)hisannualshort-termincentiveaward(calculatedasthegreaterof(x)theaverageshort-termincentiveawardsreceivedforthethreeyearspriortotheyearinwhichtheterminationoccursor(y)thetargetannualshort-termincentiveawardfortheyearinwhichtheterminationoccurs);and(ii)fullaccelerationofthevestingofalloutstandingstockoptionsandrestrictedstockawards,withsuchstockoptionstoremainexercisableforaperiodoftwo(2)yearsaftertheterminationdate(butnotbeyondtheexpirationoftheirrespectivemaximumterms),and,withrespecttoanyperformanceshareawardsoutstanding,sharessubjecttosuchawardwillbedeemedearnedtotheextentanysuchshareswouldhavebeenearnedpursuanttothetermsofsuchawardasofthedaypriortothedateofsuchtermination(withoutregardtoanycontinuedservicerequirement)(collectively,“SeveranceBenefits”).IntheeventofMr.Aldrich’sdeathordisability,alloutstandingstockoptionswillvestinfullandremainexercisableforaperiodoftwelve(12)monthsfollowingtheterminationofemployment(butnotbeyondtheexpirationoftheirrespectivemaximumterms).Inaddition,theAldrichAgreementprovidesthatifMr.AldrichvoluntarilyterminateshisemploymentafterJanuary1,2010,subjecttocertainnoticerequirementsandhisavailabilitytocontinuetoserveontheBoardofDirectorsoftheCompanyandaschairmanofacommitteethereofforuptotwo(2)years,heshallbeentitledtotheSeveranceBenefits;providedhowever,thatallCompanystockoptions,stockappreciationrights,restrictedstock,andanyotherequity-basedawards,whichwereboth(a)grantedtohimintheeighteen(18)monthperiodpriortosuchterminationand(b)scheduledtovestmorethantwo(2)yearsfromthedateofsuchtermination,willbeforfeited.TheAldrichAgreementisintendedtobecompliantwithSection409AoftheIRCandhasathree(3)yearterm.Additionally,theAldrichAgreementrequiresMr.AldrichtosignareleaseofclaimsinfavoroftheCompanybeforeheiseligibletoreceiveanybenefitsundertheagreement,andcontainsnon-competeandnon-solicitationprovisionsapplicabletohimwhileheisemployedbytheCompanyandforaperiodoftwenty-four(24)monthsfollowingtheterminationofhisemployment.OtherNamedExecutiveOfficersInJanuary2008,theCompanyenteredintoChangeofControl/SeveranceAgreementswitheachofBruceJ.Freyman,LiamK.Griffin,DonaldW.PaletteandGregoryL.Waters(eacha“COCAgreement”).EachCOCAgreementsetsoutseverancebenefitsthatbecomepayableif,withintwelve(12)monthsafterachangeofcontrol,theexecutiveeither(i)isinvoluntarilyterminatedwithoutcauseor(ii)terminateshisemploymentforgoodreason.Theseverancebenefitsprovidedtotheexecutiveinsuchcircumstanceswillconsistofthefollowing:(i)apaymentequaltotwo(2)timesthesumof(A)hisannualbasesalaryimmediatelypriortothechangeofcontroland(B)hisannualshort-termincentiveaward(calculatedasthegreaterof(x)theaverageshort-termincentiveawardsreceivedforthethreeyearspriortotheyearinwhichthechangeofcontroloccursor(y)thetargetannualshort-termincentiveawardfortheyearinwhichthechangeofcontroloccurs);(ii)allthenoutstandingstockoptionswillremainexercisableforaperiodofeighteen(18)monthsaftertheterminationdate(butnotbeyondtheexpirationoftheirrespectivemaximumterms);and(iii)continuedmedicalbenefitsforeighteen(18)monthsaftertheterminationdate.Theforegoingpaymentsaresubjecttoagross-uppaymentlimitedtoamaximumof$500,000foranyapplicableexcisetaxesincurredunderSection4999oftheIRC.Additionally,intheeventofachangeofcontrol,eachCOCAgreementprovidesforfullaccelerationofthevestingofallthenoutstandingstockoptionsandrestrictedstockawardsandpartialaccelerationofanyoutstandingperformanceshareawards.InthecaseofMr.Freyman’sCOCAgreement,theseverancepaymentduewillbepaidoutinbi-weeklyinstallmentsoveratwelve(12)monthperiod.EachCOCAgreementalsosetsoutseverancebenefitsoutsideachangeofcontrolthatbecomepayableif,whileemployedbytheCompany,theexecutiveisinvoluntarilyterminatedwithoutcause.Theseverancebenefitsprovidedtotheexecutiveundersuchcircumstancewillconsistofthefollowing:(i)apaymentequaltothesumof(x)hisannualbasesalaryand(y)anyshort-termincentiveawardthendue;and(ii)allthenvestedoutstandingstockoptionswillremainexercisableforaperiodoftwelve(12)monthsaftertheterminationdate(butnotbeyondtheSkyworksSolutions,Inc.ProxyStatement41expirationoftheirrespectivemaximumterms).InthecaseofMr.Freyman’sCOCAgreement,anyseverancepaymentduewillbepaidoutinbi-weeklyinstallmentsoveratwelve(12)monthperiod.Intheeventoftheexecutive’sdeathordisability,alloutstandingstockoptionswillvestandremainexercisableforaperiodoftwelve(12)monthsfollowingtheterminationofemployment(butnotbeyondtheexpirationoftheirrespectivemaximumterms).EachCOCAgreementisintendedtobecompliantwithSection409AoftheIRCandhasaninitialtwo(2)yearterm,whichisthereafterrenewableonanannualbasisforuptofive(5)additionalyearsuponmutualagreementoftheCompanyandtheexecutive.Additionally,eachCOCAgreementrequiresthattheexecutivesignareleaseofclaimsinfavoroftheCompanybeforeheiseligibletoreceiveanybenefitsundertheagreement,and,exceptforMr.Freyman’sCOCAgreement,eachcontainsnon-competeandnon-solicitationprovisionsapplicabletotheexecutivewhileheisemployedbytheCompanyandforaperiodoftwenty-four(24)monthsfollowingtheterminationofhisemployment.Mr.Freyman’sCOCAgreementcontainsnon-solicitationprovisionsapplicabletohimwhileheisemployedbytheCompanyandforaperiodoftwelve(12)monthsfollowingtheterminationofhisemployment.Theterms“changeincontrol,”“cause,”and“goodreason”areeachdefinedintheCOCAgreements.Changeincontrolmeans,insummary:(i)theacquisitionbyapersonoragroupof40%ormoreoftheoutstandingstockofSkyworks;(ii)achange,withoutBoardofDirectorsapproval,ofamajorityoftheBoardofDirectorsofSkyworks;(iii)theacquisitionofSkyworksbymeansofareorganization,merger,consolidationorassetsale;or(iv)theapprovalofaliquidationordissolutionofSkyworks.Causemeans,insummary:(i)deliberatedishonestythatissignificantlydetrimentaltothebestinterestsofSkyworks;(ii)conductconstitutinganactofmoralturpitude;(iii)willfuldisloyaltyorinsubordination;or(iv)incompetentperformanceorsubstantialorcontinuinginattentiontoorneglectofduties.Goodreasonmeans,insummary:(i)amaterialdiminutioninbasecompensationorauthority,dutiesorresponsibility,(ii)amaterialchangeinofficelocation,or(iii)anyactionorinactionconstitutingamaterialbreachbySkyworksofthetermsoftheagreement.ThefollowingtablesummarizespaymentsandbenefitsthatwouldbemadetotheNamedExecutiveOfficersundertheirchangeofcontrol/severanceagreementswiththeCompanyinthefollowingcircumstancesasofOctober2,2009:(cid:129)terminationwithoutcauseorforgoodreasonintheabsenceofachangeofcontrol;(cid:129)terminationwithoutcauseorforgoodreasonafterachangeofcontrol;(cid:129)afterachangeofcontrolnotinvolvingaterminationofemploymentforgoodreasonorforcause;and(cid:129)intheeventofterminationofemploymentbecauseofdeathordisability.SkyworksSolutions,Inc.ProxyStatement42ThefollowingtabledoesnotreflectanyequityawardsmadeafterOctober2,2009.NameBenefitBeforeChangeinControl:Terminationw/oCauseorforGoodReason(1)AfterChangeinControl:Terminationw/oCauseorforGoodReason(1)UponChangeinControl(1)Death/Disability(1)DavidJ.Aldrich........SalaryandShort-TermIncentive(4)$2,396,154$2,995,192$0$0PresidentandChiefAcceleratedOptions$2,841,075$2,841,075$2,841,075$2,841,075ExecutiveOfficer(2)AcceleratedRestrictedStock$2,499,000$2,499,000$2,499,000$2,499,000AcceleratedPerformanceShares$0$3,570,000$3,570,000$3,570,000Medical$0$20,590$0$0ExciseTaxGross-Up(3)$0$2,085,024$0$0TOTAL$7,736,229$14,010,881$8,910,075$8,910,075DonaldW.Palette......SalaryandShort-TermIncentive(4)$525,692$1,051,385$0$0VicePresidentandAcceleratedOptions$0$903,350$903,350$903,350ChiefFinancialOfficerAcceleratedRestrictedStock$0$436,325$436,325$436,325AcceleratedPerformanceShares$0$767,550$767,550$767,550Medical$0$23,219$0$0ExciseTaxGross-Up(3)$0$500,000$0$0TOTAL$525,692$3,681,829$2,107,225$2,107,225GregoryL.Waters......SalaryandShort-TermIncentive(4)$606,846$1,213,692$0$0ExecutiveVicePresidentAcceleratedOptions$0$935,000$935,000$935,000andGeneralManager,AcceleratedRestrictedStock$0$436,325$436,325$436,325Front-EndSolutionsAcceleratedPerformanceShares$0$856,800$856,800$856,800Medical$0$23,219$0$0ExciseTaxGross-Up(3)$0$500,000$0$0TOTAL$606,846$3,965,037$2,228,125$2,228,125LiamK.Griffin........SalaryandShort-TermIncentive(4)$565,323$1,130,646$0$0SeniorVicePresident,AcceleratedOptions$0$883,175$883,175$883,175SalesandMarketingAcceleratedRestrictedStock$0$793,325$793,325$793,325AcceleratedPerformanceShares$0$1,213,800$1,213,800$1,213,800Medical$0$23,219$0$0ExciseTaxGross-Up(3)$0$500,000$0$0TOTAL$565,323$4,544,166$2,890,300$2,890,300BruceJ.Freyman.......SalaryandShort-TermIncentive(4)$562,123$1,124,246$0$0VicePresident,AcceleratedOptions$0$735,738$735,738$735,738WorldwideOperationsAcceleratedRestrictedStock$0$476,000$476,000$476,000AcceleratedPerformanceShares$0$856,800$856,800$856,800Medical$0$20,590$0$0ExciseTaxGross-Up(3)$0$500,000$0$0TOTAL$562,123$3,713,374$2,068,538$2,068,538(1)Assumesapriceof$11.90pershare,basedontheclosingsalepriceoftheCompany’scommonstockontheNASDAQGlobalSelectMarketonOctober2,2009.ExcludesMr.Aldrich’scontributionstodeferredcompensationplanastherehavebeennoemployercontributions.(2)GoodreasoninchangeincontrolcircumstancesforMr.Aldrichincludesvoluntarilyterminatingemployment.(3)OtherthanMr.Aldrich,theNamedExecutiveOfficer’sexcisetaxgross-upiscappedat$500,000.SkyworksSolutions,Inc.ProxyStatement43(4)AssumesanIncentivePlanpaymentatthetargetlevel,anddoesnotincludethevalueofaccruedvacation/paidtimeofftobepaiduponterminationasrequiredbylaw.DirectorCompensationDirectorswhoarenotemployeesoftheCompanyarepaid,inquarterlyinstallments,anannualretainerof$50,000.Additionalannualretainersarepaid,inquarterlyinstallments,totheChairmanoftheBoard($17,500);theChairmanoftheAuditCommittee($15,000);theChairmanoftheCompensationCommittee($10,000);andtheChairmanoftheNominatingandGovernanceCommittee($5,000).Additionalannualretainersarealsopaid,inquarterlyinstallments,todirectorswhoserveoncommitteesinrolesotherthanasChairmanasfollows:AuditCommittee($5,000);CompensationCommittee($3,000);andNominatingandCorporateGovernanceCommittee($2,000).Inaddition,theCompensationCommitteeretainsdiscretiontorecommendtothefullBoardofDirectorsthatadditionalcashpaymentsbemadetoanon-employeedirector(s)forextraordinaryserviceduringafiscalyear.Inaddition,non-employeedirectorsreceivethefollowingstock-basedcompensation:eachnon-employeedirector,whenfirstelectedtoserveasadirector,automaticallyreceivesanonqualifiedstockoptiontopurchase25,000sharesofcommonstock,atanexercisepriceequaltothefairmarketvalueofthecommonstockonthedateofgrant,andarestrictedstockawardfor12,500sharesofcommonstock.Inaddition,followingeachannualmeetingofstockholders,eachnon-employeedirectorwhoiscontinuinginofficeorre-electedreceivesarestrictedstockawardfor12,500shares.UnlessotherwisedeterminedbytheBoardofDirectors,thenonqualifiedstockoptionsawardedunderthe2008Director’sPlanwillvestinfour(4)equalannualinstallmentsandtherestrictedstockawardsunderthe2008Director’sPlanwillvestinthree(3)equalannualinstallments.IntheeventofachangeofcontroloftheCompany,theoutstandingoptionsandrestrictedstockunderthe2008Director’sPlanshallbecomefullyexercisableanddeemedfullyvested,respectively.Nodirectorwhoisalsoanemployeereceivesseparatecompensationforservicesrenderedasadirector.DavidJ.AldrichiscurrentlytheonlydirectorwhoisalsoanemployeeoftheCompany.DirectorCompensationTableThefollowingtablesummarizesthecompensationpaidtotheCompany’snon-employeedirectorsforfiscalyear2009.NameFeesEarnedorPaidinCash($)(3)StockAwards($)(1)(2)OptionAwards($)(1)(2)Total($)DavidJ.McLachlan,Chairman................$74,500$42,402$35,047$151,949TimothyR.Furey..........................$62,000$42,402$35,047$139,449KevinL.Beebe...........................$61,750$42,402$35,047$139,199DavidP.McGlade.........................$58,750$42,402$51,147$152,299RobertA.Schriesheim......................$68,000$42,402$58,864$169,266BalakrishnanS.Iyer........................$57,500$42,402$35,047$134,949MoizM.Beguwala........................$54,500$42,402$35,047$131,949ThomasC.Leonard........................$50,000$42,402$35,047$127,449(1)RepresentsthedollaramountrecognizedforfinancialstatementreportingpurposesfortheyearendedOctober2,2009inaccordancewithASC718and,accordingly,includesamountsfromoptionsgrantedpriortofiscalyear2009.ForadescriptionoftheassumptionsusedincalculatingthefairvalueofequityawardsunderASC718,seeNote11oftheCompany’sfinancialstatementsincludedintheOriginalFiling.Thenon-employeeSkyworksSolutions,Inc.ProxyStatement44membersofourboardofdirectorswhoheldsuchpositiononOctober2,2009,heldthefollowingaggregatenumberofunexercisedoptionsasofsuchdate:NameNumberofSecuritiesUnderlyingUnexercisedOptionsDavidJ.McLachlan,Chairman.....................................180,000TimothyR.Furey...............................................135,000KevinL.Beebe.................................................105,000DavidP.McGlade...............................................90,000RobertA.Schriesheim...........................................60,000BalakrishnanS.Iyer.............................................309,435MoizM.Beguwala..............................................216,840ThomasC.Leonard.............................................150,000(2)Thefollowingtablepresentsthefairvalueofeachgrantofrestrictedstockinfiscal2009tonon-employeemembersofourboardofdirectors,computedinaccordancewithASC718:NameGrantDateNumberofSecuritiesAwardedGrantDateFairValueofShares(4)DavidJ.McLachlan,Chairman........................5/12/0912,500$105,875TimothyR.Furey..................................5/12/0912,500$105,875KevinL.Beebe....................................5/12/0912,500$105,875DavidP.McGlade..................................5/12/0912,500$105,875RobertA.Schriesheim...............................5/12/0912,500$105,875BalakrishnanS.Iyer................................5/12/0912,500$105,875MoizM.Beguwala.................................5/12/0912,500$105,875ThomasC.Leonard.................................5/12/0912,500$105,875(3)DirectormeetingfeeswerenotproratedforcommitteeassignmentchangesthatbecameeffectiveMay12,2009(i.e.,whenMr.IyerreplacedMr.BeebeasChairmanoftheNominatingandCorporateGovernanceCommittee,andMr.BeguwalareplacedMr.McGladeasamemberoftheAuditCommittee,eachdirectorreceivedquarterlyfeesasiftheyhadheldbothpositionsthroughouttheapplicablequarter).(4)Basedonthefairmarketvalueof$8.47pershareofcommonstockonMay12,2009.EquityCompensationPlanInformationTheCompanycurrentlymaintainsnine(9)stock-basedcompensationplansunderwhichoursecuritiesareauthorizedforissuancetoouremployeesand/ordirectors:(cid:129)the1994Non-QualifiedStockOptionPlan(cid:129)the1996Long-TermIncentivePlan(cid:129)the1999EmployeeLong-TermIncentivePlan(cid:129)theDirectors’2001StockOptionPlan(cid:129)theNon-QualifiedEmployeeStockPurchasePlan(cid:129)the2002EmployeeStockPurchasePlan(cid:129)theWashingtonSub,Inc.2002StockOptionPlanSkyworksSolutions,Inc.ProxyStatement45(cid:129)the2005Long-TermIncentivePlan,and(cid:129)the2008DirectorLong-TermIncentivePlan.Exceptforthe1999EmployeeLong-TermIncentivePlan,theWashingtonSub,Inc.2002StockOptionPlanandtheNon-QualifiedEmployeeStockPurchasePlan,eachoftheforegoingstock-basedcompensationplanswasapprovedbyourstockholders.Adescriptionofthematerialfeaturesofeachnon-stockholderapprovedplanisprovidedbelowundertheheadings“1999EmployeeLong-TermIncentivePlan,”“WashingtonSub,Inc.2002StockOptionPlan”and“Non-QualifiedEmployeeStockPurchasePlan.”ThefollowingtablepresentsinformationabouttheseplansasofOctober2,2009.PlanCategoryNumberofSecuritiestobeIssuedUponExerciseofOutstandingOptions,Warrants,andRightsWeighted-AverageExercisePriceofOutstandingOptions,WarrantsandRightsNumberofSecuritiesRemainingAvailableforFutureIssuanceUnderEquityCompensationPlans(ExcludingSecuritiesReflectedinColumn(a))(a)(b)(c)Equitycompensationplansapprovedbysecurityholders............6,122,380(1)$9.1714,971,285(3)Equitycompensationplansnotapprovedbysecurityholders.....12,228,500$11.070(4)Total........................18,350,880(2)$10.4414,971,285(1)Excludes748,979unvestedrestrictedsharesand3,001,915unvestedsharesunderperformancesharesawards.(2)Includes1,642,149optionsheldbynon-employees(excludingnon-employeedirectors).(3)Nofurthergrantswillbemadeunderthe1994Non-QualifiedStockOptionPlan.(4)NofurthergrantswillbemadeundertheWashingtonSubInc.2002StockOptionPlanorthe1999EmployeeLong-TermIncentivePlan.1999EmployeeLong-TermIncentivePlanTheCompany’s1999EmployeeLong-TermIncentivePlan(the“1999EmployeePlan”)providedforthegrantofnon-qualifiedstockoptionstopurchasesharesoftheCompany’scommonstocktoemployees,otherthanofficersandnon-employeedirectors.Thetermoftheseoptionsmaynotexceed10years.The1999EmployeePlancontainsprovisions,whichpermitrestrictionsonvestingortransferability,aswellascontinuedexercisabilityuponaparticipant’sterminationofemploymentwiththeCompany,ofoptionsgrantedthereunder.The1999EmployeePlanprovidesforfullaccelerationofthevestingofoptionsgrantedthereunderupona“changeincontrol”oftheCompany,asdefinedinthe1999EmployeePlan.TheBoardofDirectorsgenerallymayamend,suspendorterminatethe1999EmployeePlaninwholeorinpartatanytime;providedthatanyamendmentwhichaffectsoutstandingoptionsbeconsentedtobytheholderoftheoptions.AsofApril26,2009,noadditionalgrantswereissuableunderthe1999EmployeeLong-TermIncentivePlan.WashingtonSub,Inc.2002StockOptionPlanTheWashingtonSub,Inc.2002StockOptionPlan(the“WashingtonSubPlan”)becameeffectiveonJune25,2002.Atthetimeofthespin-offofConexant’swirelessbusinessandmergerofsuchbusinessintoAlphaIndustries,Inc.,outstandingConexantoptionsgrantedpursuanttocertainConexantstock-basedcompensationplanswereconvertedsothatfollowingthespin-offandmergereachholderofthosecertainConexantoptionsheld(i)optionstopurchasesharesofConexantcommonstockand(ii)optionstopurchasesharesofSkyworkscommonstock.ThepurposeoftheWashingtonSubPlanistoprovideameansfortheCompanytoperformitsobligationswithrespecttotheseconvertedstockoptions.TheonlyparticipantsintheWashingtonSubPlanarethosepersonswho,atthetimeofthespin-offandmerger,heldoutstandingoptionsgrantedpursuanttocertainConexantstockoptionplans.NoSkyworksSolutions,Inc.ProxyStatement46furtheroptionstopurchasesharesofSkyworkscommonstockhavebeenorwillbegrantedundertheWashingtonSubPlan.TheWashingtonSubPlancontainsanumberofsub-plans,whichcontaintermsandconditionsthatareapplicabletocertainportionsoftheoptionssubjecttotheWashingtonSubPlan,dependingupontheConexantstockoptionplanfromwhichtheSkyworksoptionsgrantedundertheWashingtonSubPlanwerederived.TheoutstandingoptionsundertheWashingtonSubPlangenerallyhavethesametermsandconditionsastheoriginalConexantoptionsfromwhichtheyarederived.Mostofthesub-plansoftheWashingtonSubPlancontainprovisionsrelatedtotheeffectofaparticipant’sterminationofemploymentwiththeCompany,ifany,and/orwithConexantonoptionsgrantedpursuanttosuchsub-plan.Severalofthesub-plansundertheWashingtonSubPlancontainspecificprovisionsrelatedtoachangeincontroloftheCompany.Non-QualifiedESPPTheCompanyalsomaintainsaNon-QualifiedEmployeeStockPurchasePlantoprovideemployeesoftheCompanyandparticipatingsubsidiarieswithanopportunitytoacquireaproprietaryinterestintheCompanythroughthepurchase,bymeansofpayrolldeductions,ofsharesoftheCompany’scommonstockatadiscountfromthemarketpriceofthecommonstockatthetimeofpurchase.TheNon-QualifiedEmployeeStockPurchasePlanisintendedforuseprimarilybyemployeesoftheCompanylocatedoutsidetheUnitedStates.Undertheplan,eligibleemployeesmaypurchasecommonstockthroughpayrolldeductionsofupto10%ofcompensation.Thepricepershareisthelowerof85%ofthemarketpriceatthebeginningorendofeachsix-monthofferingperiod.SkyworksSolutions,Inc.ProxyStatement47COMPENSATIONCOMMITTEEINTERLOCKSANDINSIDERPARTICIPATIONTheCompensationCommitteeoftheBoardofDirectorscurrentlycomprises,andduringfiscalyear2009wascomprisedof,Messrs.Beebe,Furey(Chairman),McGladeandSchriesheim.NomemberofthiscommitteewasatanytimeduringthepastfiscalyearanofficeroremployeeoftheCompany,wasformerlyanofficeroftheCompanyoranyofitssubsidiaries,orhadanyemploymentrelationshipwiththeCompanyoranyofitssubsidiaries.NoexecutiveofficerofSkyworkshasservedasadirectorormemberofthecompensationcommittee(orothercommitteeservinganequivalentfunction)ofanyotherentity,oneofwhoseexecutiveofficersservedasadirectoroformemberoftheCompensationCommitteeofSkyworks.CERTAINRELATIONSHIPSANDRELATEDPERSONTRANSACTIONSOtherthancompensationagreementsandotherarrangementswhicharedescribedabovein“ExecutiveCompensation”,sinceOctober4,2008,therehasnotbeenatransactionorseriesofrelatedtransactionstowhichtheCompanywasorisapartyinvolvinganamountinexcessof$120,000andinwhichanydirector,executiveofficer,holderofmorethanfivepercent(5%)ofanyclassofourvotingsecurities,oranymemberoftheimmediatefamilyofanyoftheforegoingpersons,hadorwillhaveadirectorindirectmaterialinterest.InJanuary2008,theBoardofDirectorsadoptedawrittenrelatedpersontransactionapprovalpolicywhichsetsforththeCompany’spoliciesandproceduresforthereview,approvalorratificationofanytransactionrequiredtobereportedinitsfilingswiththeSEC.TheCompany’spolicywithregardtorelatedpersontransactionsisthatallrelatedpersontransactionsbetweentheCompanyandanyrelatedperson(asdefinedinItem404ofRegulationS-K)ortheiraffiliates,inwhichtheamountinvolvedisequaltoorgreaterthen$120,000,bereviewedbytheCompany’sGeneralCounselandapprovedinadvancebytheAuditCommittee.Inaddition,theCompany’sCodeofBusinessConductandEthicsrequiresthatemployeesdiscusswiththeCompany’sComplianceOfficeranysignificantrelationship(ortrans-action)thatmightraisedoubtaboutsuchemployee’sabilitytoactinthebestinterestoftheCompany.OTHERPROPOSEDACTIONAsofthedateofthisProxyStatement,thedirectorsknowofnobusinesswhichisexpectedtocomebeforetheAnnualMeetingotherthan(i)theelectionofthenomineestotheBoardofDirectorsand(ii)theratificationoftheselectionofKPMGLLPastheindependentregisteredpublicaccountingfirmfortheCompanyforfiscalyear2010.However,ifanyotherbusinessshouldbeproperlypresentedtotheAnnualMeeting,thepersonsnamedasproxieswillvoteinaccordancewiththeirjudgmentwithrespecttosuchmatters.OTHERMATTERSSECTION16(a)BENEFICIALOWNERSHIPREPORTINGCOMPLIANCESection16(a)oftheExchangeActrequiresourdirectors,executiveofficersandbeneficialownersofmorethan10%ofourequitysecuritiestofilereportsofholdingsandtransactionsinsecuritiesofSkyworkswiththeSEC.BasedsolelyonareviewofForms3,4and5andanyamendmentstheretofurnishedtous,andwrittenrepresentationsprovidedtous,withrespecttoourfiscalyearendedOctober2,2009,webelievethatallSection16(a)filingrequirementsapplicabletoourdirectors,executiveofficersandbeneficialownersofmorethan10%ofourcommonstockwithrespecttosuchfiscalyearweretimelymade.SOLICITATIONEXPENSESSkyworkswillbeartheexpensesofthepreparationoftheproxymaterialsandthesolicitationbytheBoardofDirectorsofproxies.ProxiesmaybesolicitedonbehalfoftheCompanyinpersonorbytelephone,e-mail,facsimileorotherelectronicmeansbydirectors,officersoremployeesoftheCompany,whowillreceivenoadditionalcompensationforanysuchservices.WehaveretainedMellonInvestorServicestoassistinthesolicitationofproxies,atacosttotheCompanyofapproximately$8,000,plusout-of-pocketexpenses.SkyworksSolutions,Inc.ProxyStatement48VIEWINGOFPROXYMATERIALSVIATHEINTERNETWeareabletodistributeourAnnualReportandthisProxyStatementtoourstockholdersinafastandefficientmannerviatheInternet.Thisreducestheamountofpaperdeliveredtoastockholder’saddressandeliminatesthecostofsendingthesedocumentsbymail.StockholdersmayelecttoviewallfutureannualreportsandproxystatementsontheInternetinsteadofreceivingthembymail.Youmaymakethiselectionwhenvotingyourproxythisyear.SimplyfollowtheinstructionstovoteviatheInternettoregisteryourconsent.Yourelectiontoviewproxymaterialsonlineisperpetualunlessyourevokeitlater.FutureproxycardswillcontaintheInternetwebsiteaddressandinstructionstoviewthematerials.Youwillcontinuetohavetheoptiontovoteyoursharesbytelephone,mailorviatheInternet.ANNUALREPORTONFORM10-KCopiesoftheCompany’sAnnualReportonForm10-KforthefiscalyearendedOctober2,2009,asfiledwiththeSEC,areavailabletostockholderswithoutchargeviatheCompany’swebsiteathttp://www.skyworksinc.com,oruponwrittenrequestaddressedtoInvestorRelations,SkyworksSolutions,Inc.,5221CaliforniaAvenue,Irvine,CA92617.STOCKHOLDERPROPOSALSPursuanttoRule14a-8undertheExchangeAct,somestockholderproposalsornominationsmaybeeligibleforinclusionintheCompany’sProxyStatementfortheCompany’s2011annualmeetingofstockholders.TobeeligibleforinclusionintheCompany’s2011proxystatement,anysuchproposalsornominationsmustmeettherequirementsofRule14a-8undertheExchangeActandbedeliveredinwritingtotheSecretaryoftheCompanyatitsprincipalofficesat20SylvanRoad,Woburn,MA01801,nolaterthanDecember31,2010,andmustmeettherequirementsofRule14a-8undertheExchangeAct.ThesubmissionofastockholderproposaldoesnotguaranteethatitwillbeincludedintheCompany’sproxystatement.Additionally,theCompanymusthavenoticeofanystockholderproposalornominationtobesubmittedatthe2011annualmeeting(butnotrequiredtobeincludedintheproxystatement)notlaterthanFebruary12,2011or,intheeventthatthe2011annualmeetingisheldmorethanthirty(30)daysbeforeorafterthefirstanniversaryoftheCompany’s2010annualmeeting,thelaterofFebruary12,2011orthe10thdayfollowingthedayonwhichpublicannouncementofthedateofthe2011annualmeetingisfirstmadebytheCompany,orsuchproposalwillbeconsidereduntimelypursuanttoRule14a-5(e)undertheExchangeActandpersonsnamedintheproxiessolicitedbymanagementmayexercisediscretionaryvotingauthoritywithrespecttosuchproposal.Thestockholder’ssubmissionmustinclude,withrespecttothestockholdergivingthenoticeandthebeneficialowner,ifany,onwhosebehalfthenominationorproposalismade,thenameandaddressandthenumberofsharesofcommonstockoftheCompanywhichareownedbeneficiallyandofrecordandmustalsosetforth:(i)astoeachpersonproposedfornominationforelectionorre-electionasadirector,allinformationrelatingtosuchpersonthatisrequiredtobedisclosedinsolicitationsofproxiesforelectionofdirectorsinanelectioncontest,orisotherwiserequired,ineachcasepursuanttoRegulation14AundertheExchangeAct(includingsuchperson’swrittenconsenttobeingnamedintheproxystatementasanomineeandtoservingasadirectorifelected);and(ii)astoanyotherbusinessproposedtobebroughtbeforethemeeting,abriefdescriptionofthebusinessdesiredtobebroughtbeforethemeeting,thereasonsforconductingsuchbusinessatthemeetingandanymaterialinterestinsuchbusinessofsuchstockholderandthebeneficialowner,ifany,onwhosebehalftheproposalismade.Proposalsornominationsnotmeetingtheserequirementswillnotbeentertainedatthe2011annualmeeting.OURBOARDOFDIRECTORSENCOURAGESSTOCKHOLDERSTOATTENDTHEANNUALMEETING.WHETHERORNOTYOUPLANTOATTEND,YOUAREURGEDTOCOMPLETE,DATE,SIGNANDRETURNTHEENCLOSEDPROXYINTHEACCOMPANYINGENVELOPE.APROMPTRESPONSEWILLGREATLYFACILITATEARRANGEMENTSFORTHEMEETINGANDYOURCOOPERATIONWILLBEAPPRECIATED.STOCKHOLDERSWHOATTENDTHISMEETINGMAYVOTETHEIRSTOCKPERSONALLYEVENTHOUGHTHEYHAVESENTINTHEIRPROXIES.SkyworksSolutions,Inc.ProxyStatement49FISCAL YEAR 2009 ANNUAL REPORTAND CONSOLIDATED FINANCIAL STATEMENTSSkyworksSolutions,Inc.2009AnnualReport50TABLEOFCONTENTSIntroduction.....................................................................54IndustryBackground...............................................................54BusinessOverview................................................................56Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperation............59QuantitativeandQualitativeDisclosuresAboutMarketRisk..................................76SelectedFinancialData.............................................................77ConsolidatedStatementsofOperations.................................................79ConsolidatedBalanceSheets.........................................................80ConsolidatedStatementsofCashFlows.................................................81ConsolidatedStatementsofStockholders’EquityandComprehensiveIncome(Loss)...............82NotestoConsolidatedFinancialStatements..............................................83ReportofIndependentRegisteredPublicAccountingFirm...................................115ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure...........116MarketforRegistrant’sCommonEquity,RelatedStockholdersMattersandIssuerPurchasesofEquitySecurities.....................................................................116ComparativeStockPerformanceGraph.................................................117SkyworksSolutions,Inc.2009AnnualReport51CAUTIONARYSTATEMENTThisAnnualReportcontainsforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,asamended,andSection21EoftheSecuritiesandExchangeActof1934,asamended,andissubjecttothe“safeharbor”createdbythosesections.Wordssuchas“believes”,“expects”,“may”,“will”,“would”,“should”,“could”,“seek”,“intends”,“plans”,“potential”,“continue”,“estimates”,“anticipates”,“predicts”andsimilarexpressionsorvariationsornegativesofsuchwordsareintendedtoidentifyforward-lookingstatements,butarenottheexclusivemeansofidentifyingforward-lookingstatementsinthisAnnualReport.Additionally,forward-lookingstatementsinclude,butarenotlimitedto:(cid:129)ourplanstodevelopandmarketnewproducts,enhancementsortechnologiesandthetimingofthesedevelopmentprograms;(cid:129)ourestimatesregardingourcapitalrequirementsandourneedsforadditionalfinancing;(cid:129)ourestimatesofexpensesandfuturerevenuesandprofitability;(cid:129)ourestimatesofthesizeofthemarketsforourproductsandservices;(cid:129)therateanddegreeofmarketacceptanceofourproducts;and(cid:129)thesuccessofothercompetingtechnologiesthatmaybecomeavailable.Althoughforward-lookingstatementsinthisAnnualReportreflectthegoodfaithjudgmentofourmanage-ment,suchstatementscanonlybebasedonfactsandfactorscurrentlyknownbyus.Consequently,forward-lookingstatementsinvolveinherentrisksanduncertaintiesandactualresultsandoutcomesmaydiffermateriallyandadverselyfromtheresultsandoutcomesdiscussedin,oranticipatedby,theforward-lookingstatements.Anumberofimportantfactorscouldcauseactualresultstodiffermateriallyandadverselyfromthoseintheforward-lookingstatements.WeurgeyoutoconsidertherisksanduncertaintiesdiscussedelsewhereinthisreportandintheotherdocumentsfiledbyuswiththeSecuritiesandExchangeCommission(“SEC”)inevaluatingourforward-lookingstatements.Wehavenoplans,andundertakenoobligation,toreviseorupdateourforward-lookingstatementstoreflectanyeventorcircumstancethatmayariseafterthedateofthisreport.Wecautionreadersnottoplaceunduerelianceuponanysuchforward-lookingstatements,whichspeakonlyasofthedatemade.ThisAnnualReportalsocontainsestimatesmadebyindependentpartiesandbyusrelatingtomarketsizeandgrowthandotherindustrydata.Theseestimatesinvolveanumberofassumptionsandlimitationsandyouarecautionednottogiveundueweighttosuchestimates.Inaddition,projections,assumptionsandestimatesofourfutureperformanceandthefutureperformanceoftheindustriesinwhichweoperatearenecessarilysubjecttoahighdegreeofuncertaintyandriskduetoavarietyofimportantfactors,includingthosedescribedin“RiskFactors”and“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperation”.Theseandotherfactorscouldcauseresultstodiffermateriallyandadverselyfromthoseexpressedintheestimatesmadebytheindependentpartiesandbyus.Inthisdocument,thewords“we”,“our”,“ours”and“us”referonlytoSkyworksSolutions,Inc.,anditsconsolidatedsubsidiariesandnotanyotherpersonorentity.Inaddition,thefollowingindustrystandardsarereferencedthroughoutthedocument:(cid:129)CATV(CableTelevision):asystemofprovidingtelevisiontoconsumersviaradiofrequencysignalstransmittedtotelevisionsthroughfixedopticalfibersorcoaxialcablesasopposedtotheover-the-airmethodusedintraditionaltelevisionbroadcasting(cid:129)CDMA(CodeDivisionMultipleAccess):amethodfortransmittingsimultaneoussignalsoverasharedportionoftheRadioFrequency(“RF”)spectrum(cid:129)EDGE(EnhancedDataRatesforGSMEvolution):anenhancementtotheGSMandTDMAwirelesscommunicationssystemsthatincreasesdatathroughputto474KbpsSkyworksSolutions,Inc.2009AnnualReport52(cid:129)GPRS(GeneralPacketRadioService):anenhancementtotheGSMmobilecommunicationssystemthatsupportstransmissionofdatapackets(cid:129)GSM(GlobalSystemforMobileCommunications):adigitalcellularphonetechnologybasedonTDMAthatisthepredominantsysteminEurope,andisalsousedaroundtheworld(cid:129)LTE(LongTermEvolution):4thgeneration(4G)radiotechnologiesdesignedtoincreasethecapacityandspeedofmobiletelephonenetworks(cid:129)RFID(RadioFrequencyIdentification):referstotheuseofanelectronictag(typicallyreferredtoasanRFIDtag)forthepurposeofidentificationandtrackingobjectsusingradiowaves(cid:129)Satcom(SatelliteCommunications):whereasatellitestationedinspaceisusedforthepurposeoftelecommunications(cid:129)TD-SCDMA(TimeDivisionSynchronousCodeDivisionMultipleAccess):3rdgeneration(3G)wirelessservicesmobilecommunicationsstandard,beingpursuedinthePeople’sRepublicofChina(cid:129)WCDMA(WidebandCDMA):a3Gtechnologythatincreasesdatatransmissionrates(cid:129)WEDGEanacronymfortechnologiesthatsupportbothWCDMAandEDGEwirelesscommunicationsystems(cid:129)WiMAX(WorldwideInteroperabilityforMicrowaveAccess):astandards-basedtechnologyenablingthedeliveryoflastmilewirelessbroadbandaccessasanalternativetocableandDSL(cid:129)WLAN(WirelessLocalAreaNetwork):atypeoflocal-areanetworkthatuseshigh-frequencyradiowavesratherthanwirestocommunicatebetweennodesSkyworks,BreakthroughSimplicity,thestardesignlogo,InteraandTrans-TecharetrademarksorregisteredtrademarksofSkyworksSolutions,Inc.oritssubsidiariesintheUnitedStatesandinothercountries.Allotherbrandsandnameslistedaretrademarksoftheirrespectivecompanies.SkyworksSolutions,Inc.2009AnnualReport53INTRODUCTIONSkyworksSolutions,Inc.,togetherwithitsconsolidatedsubsidiaries,(“Skyworks”orthe“Company”)isaninnovatorofhighreliabilityanalogandmixedsignalsemiconductors.Leveragingcoretechnologies,Skyworksoffersdiversestandardandcustomlinearproductssupportingautomotive,broadband,cellularinfrastructure,energymanagement,industrial,medical,militaryandcellularhandsetapplications.TheCompany’sportfolioincludesamplifiers,attenuators,detectors,diodes,directionalcouplers,front-endmodules,hybrids,infrastructureRFsubsystems,mixers/demodulators,phaseshifters,PLLs/synthesizers/VCOs,powerdividers/combiners,receiv-ers,switchesandtechnicalceramics.Wehavealignedourproductportfolioaroundtwobroadmarkets:cellularhandsetsandanalogsemicon-ductors.Ingeneral,ourhandsetportfolioincludeshighlycustomizedpoweramplifiersandfront-endsolutionsthatareinmanyoftoday’scellulardevices,fromentryleveltomultimediaplatformsandsmartphones.OurprimaryhandsetcustomersincludeLGElectronics,Motorola,Nokia,Samsung,SonyEricsson,ResearchinMotionandHTC.OurcompetitorsincludeAvagoandRFMicroDevices.Inparallel,weofferover2,500differentcatalogandcustomlinearproductstoahighlydiversifiednon-handsetcustomerbase.Ourcustomersincludeinfrastructure,automotive,energymanagement,medicalandmilitaryproviderssuchasHuawei,Ericsson,Landis+Gyr,Sensus,Itron,Siemens,andNorthropGrumman.OurcompetitorsinthelinearproductsmarketsincludeAnalogDevices,HittiteMicrowave,LinearTechnology,andMaximIntegratedProducts.HeadquarteredinWoburn,Massachusetts,theCompanyisaDelawarecorporationthatwasformedin1962.TheCompanychangeditscorporatenamefromAlphaIndustries,Inc.toSkyworksSolutions,Inc.onJune25,2002,followingabusinesscombination.Wehaveworldwideoperationswithengineering,manufacturing,salesandservicefacilitiesthroughoutAsia,EuropeandNorthAmerica.OurInternetaddressiswww.skyworksinc.com.WemakeavailableonourWebsiteourAnnualReportonForm10-K,quarterlyreportsonForm10-Q,currentreportsonForm8-K,Section16filingsonForms3,4and5,andamendmentstothosereportsassoonaspracticableafterweelectronicallysubmitsuchmaterialtotheSEC.TheinformationcontainedinourWebsiteisnotincorporatedbyreferenceinthisAnnualReport.YoumayreadandcopymaterialsthatwehavefiledwiththeSECattheSECpublicreferenceroomlocatedat100FStreet,N.E.,Washington,D.C.20549.PleasecalltheSECat1-800-SEC-0330forfurtherinformationonthepublicreferenceroom.OurSECfilingsarealsoavailabletothepublicontheSEC’sInternetWebsiteatwww.sec.gov.INDUSTRYBACKGROUNDWebelievethereareseveralkeygrowthtrendsshapingthewirelessindustry.FirstistheadventofthemobileInternet,whereconsumersareincreasinglydemandingmobiledeviceswithfasterdatarates,advancedimagequalityandimprovedWebconnections.Webelievethisdemandisoneofthebiggestseculargrowthtrendsintechnology.Onthehigh-endofthecellularhandsetmarket,smartphonegrowth—whichisattheheartofthemobileInternetphenomenon—isfosteringthisindustrywideseachange.Ineffect,thesmartphoneismovingfromahigherendtoolreservedforthecorporateexecutivetoanincreasinglymainstreamcommunicationplatformnecessity—onethatischangingthewayinwhichwelive,workandplay.SocialnetworkingsitessuchasFacebookandTwitter,areonlyfuelingthistrend.Furthermore,thissegmentisbeingembracedandwidelypromotedbycarrierswhobenefitfromthehighlyprofitabledataservicesrevenuestreamassubscribersmovetoenhanceddataplans.Anothertrendinthewirelessindustryistheconvergenceofmultimedia-richmobiledevicesandtherecognitionoftheincreasinglyimportantrolemultimodeFront-EndModules(“FEM”)playintherapidlyevolvingwirelesshandsetmarket,particularlyastheindustrymigratesto3Gand4GtechnologieswhichenableapplicationssuchasWebbrowsing,videostreaming,gaming,MP3playersandcameras.Next-generationEDGE,WEDGEandWCDMAwirelessplatformsarebecomingthemajorityofthemorethanonebillioncellularphonestheindustrySkyworksSolutions,Inc.2009AnnualReport54producesannually.Withthisacceleratingtrend,thecomplexityintheFEMincreasesaseachnewoperatingfrequencybandrequiresadditionalamplifier,filteringandswitchingcontenttosupport:(cid:129)backwardcompatibilitytoexistingnetworks,(cid:129)simultaneoustransmissionofvoiceanddata,(cid:129)internationalroaming,and(cid:129)broadbandfunctionalitytoaccommodatemusic,video,data,andothermultimediafeatures.Further,givenconstraintsonhandsetsizeandpowerconsumption,thesecomplexmodulesmustremainphysicallysmall,energyefficientandcosteffective,whilealsomanaginganunprecedentedlevelofpotentialsignalinterferencewithinthehandset.Finally,andadirectresultofthisincreasingfront-endmodulecomplexity,theaddressablesemiconductorcontentwithinthetransmitandreceivechainportionofthecellularhandsetisincreasing.Webelievethistrendiscreatinganincrementalmarketopportunitymeasuredinthebillionsofdollarsasswitching,filteringandwirelesslocalareanetworkingfunctionalityareintegrated.Meanwhile,outsideofthehandsetmarket,wirelesstechnologiesarealsorapidlyproliferating.AccordingtoGartner,aleadingindependentmarketresearchfirm,thetotalavailablemarketfortheanalogsemiconductorsegmentisexpectedtoexceed$15billionin2011.Today,thisadjacentanalogsemiconductormarket,whichischaracterizedbylongerproductlifecyclesandrelativelyhighgrossmargins,isfragmentedanddiversifiedamongvariousend-markets,customerbasesandapplicationsincluding:(cid:129)Infrastructure(cid:129)Automotive(cid:129)CATV/Satcom(cid:129)SmartEnergy(cid:129)Medical(cid:129)Military(cid:129)RFID(cid:129)Test&Measurement(cid:129)WiMAX(cid:129)WLANSkyworksSolutions,Inc.2009AnnualReport55BUSINESSOVERVIEWSkyworks’StrategySkyworks’missionistoachievemobileconnectivityleadershipthroughsemiconductorinnovation.Keyelementsinourstrategyinclude:DiversifyingOurBusinessByleveragingourcoreanalogandmixedsignaltechnology,Skyworksisabletodeliversolutionstoabroadanddiversesetofendmarketsandcustomers.Inthehandsetmarket,wecurrentlysupportalltoptierhandsetmanufacturersaswellastheleadingsmartphonesuppliers,andhavestrategicrelationshipswitheachkeybasebandsupplier.Innon-handsetmarkets,wecontinuetotakeadvantageofourcatalogbusiness,intellectualpropertyandworldwidedistributionnetwork,tobolsterourproductpipelineandexpandouraddressablemarketsbeyondtheapproximately1,000globalcustomersand2,500analogcomponentscurrentlymarketed.DiversifyingourBusinessGainingMarketShareOurcustomerengagementsareincreasinglycenteredonsolvinghighlycomplexmultimode,multiband,switching,filtering,digitalcontrolandamplificationchallenges—system-levelrequirementswhichintersectwithSkyworks’corecompetencies.Skyworkscontinuestoinvestindevelopingarchitectureswhichoptimizepowerefficiencywhileminimizingcostandfootprint,allowingustomeetcustomers’demandingnext-generationtechnologyrequirementsaswellasstringentqualitystandardsandmanufacturingscalenecessities.SkyworksSolutions,Inc.2009AnnualReport56CapitalizingonContentGrowthinThirdandFourthGenerationApplicationsAstheindustrymigratestomulti-modeEDGE,WEDGE,WCDMAandLTEarchitecturesacrossamultitudeofwirelessbroadbandapplications,RFcomplexityinthetransmitandreceivechainsubstantiallyincreasesgivensimultaneousvoiceandhighspeeddatacommunicationsrequirements,coupledwiththeneedforbackwardcompatibilitytoexistingnetworks.Asaresultofthiscomplexityinthefront-endmodule,ouraddressablemarketisincreasingsignificantly.CapitalizingonContentGrowthDeliveringOperationalExcellenceSkyworks’strategyistoverticallyintegrateoursupplychainwherewecandifferentiateorotherwiseenteralliancesandstrategicrelationshipsforleading-edgecapabilities.Thishybridmanufacturingapproachallowsustobetterbalanceexternalcapacitywiththedemandsofthemarketplace.Internally,ourcapacityutilizationremainshighandwearethereforeabletomaintainmarginsandourreturnoninvestedcapitalonabroaderrangeofrevenues.Wearefocusedonachievingtheindustry’sshortestcycletimes,highestyieldsandultimatelythelowestproductcoststructure.SKYWORKS’PRODUCTPORTFOLIOOurproductportfolioconsistsof:(cid:129)Amplifiers:themodulesthatstrengthenthesignalsothatithassufficientenergytoreachabasestation(cid:129)Attenuators:circuitsthatallowaknownsourceofpowertobereducedbyapredeterminedfactor(usuallyexpressedasdecibels)(cid:129)Detectors:intendedforuseinpowermanagementapplications(cid:129)Diodes:semiconductordevicesthatpasscurrentinonedirectiononly(cid:129)DirectionalCouplers:transmissioncouplingdevicesforseparatelysamplingtheforwardorbackwardwaveinatransmissionline(cid:129)Front-EndModules:poweramplifiersthatareintegratedwithswitches,diplexers,filtersandothercomponentstocreateasinglepackagefront-endsolution(cid:129)Hybrid:atypeofdirectionalcouplerusedinradioandtelecommunications(cid:129)InfrastructureRFSubsystems:highlyintegratedtransceiversandpoweramplifiersforwirelessbasestationapplicationsSkyworksSolutions,Inc.2009AnnualReport57(cid:129)MISSiliconChipCapacitors:usedinapplicationsrequiringDCblockingandRFbypassing,orasafixedcapacitancetuningelementinfilters,oscillators,andmatchingnetworks(cid:129)Mixers/Demodulators:integrated,high-dynamicrange,zeroIFarchitecturedownconverterforuseinwirelesscommunicationapplications(cid:129)Modulators:designedfordirectmodulationofhighfrequencyAM,PMorcompoundcarriers(cid:129)PhaseLockedLoops(PLL):closed-loopfeedbackcontrolsystemthatmaintainsageneratedsignalinafixedphaserelationshiptoareferencesignal(cid:129)PhaseShifters:designedforuseinpoweramplifierdistortioncompensationcircuitsinbasestationapplications(cid:129)PowerDividers/Combiners:utilizedtoequallysplitsignalsintoin-phasesignalsasoftenfoundinbalancedsignalchainsandlocaloscillatordistributionnetworks(cid:129)Receivers:electronicdevicesthatchangearadiosignalfromatransmitterintousefulinformation(cid:129)Switches:componentsthatperformthechangebetweenthetransmitandreceivefunction,aswellasthebandfunctionforcellularhandsets(cid:129)Synthesizers:providesultra-finefrequencyresolution,fastswitchingspeed,andlowphase-noiseperformance(cid:129)TechnicalCeramics:polycrystallineoxidematerialsusedforawidevarietyofelectrical,mechanical,thermalandmagneticapplications(cid:129)Transceivers:devicesthathavebothatransmitterandareceiverwhicharecombinedandsharecommoncircuitryorasinglehousing(cid:129)VCOs/Synthesizers:fullyintegrated,highperformancesignalsourceforhighdynamicrangetransceiversWebelievewepossessabroadtechnologycapabilityandoneofthemostcompletewirelesscommunicationsproductportfoliosintheindustry.TheSkyworksAdvantageByturningcomplexityintosimplicity,weprovideourcustomerswiththefollowingcompetitiveadvantages:(cid:129)Broadfront-endmoduleandprecisionanalogproductportfolio(cid:129)Technologyleadershipinpoweramplifierandfront-endmoduleproductsegments(cid:129)Solutionsforkeyairinterfacestandards,includingCDMA2000,GSM/GPRS/EDGE,LTE,WCDMA,WLANandWiMAX(cid:129)Engagementswithadiversesetoftop-tiercustomers(cid:129)Analog,RFandmixedsignaldesigncapabilities(cid:129)Accesstokeyprocesstechnologies:GaAsHBT,pHEMT,BiCMOS,SiGE,CMOS,RFCMOS,andsilicon(cid:129)World-classmanufacturingcapabilitiesandscale(cid:129)Highlevelofcustomerserviceandtechnicalsupport(cid:129)CommitmenttotechnologyinnovationSkyworksSolutions,Inc.2009AnnualReport58MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONThefollowingdiscussionandanalysisofourfinancialconditionandresultsofoperationsshouldbereadinconjunctionwithourconsolidatedfinancialstatementsandrelatednotesthatappearelsewhereinthisAnnualReport.Inadditiontohistoricalinformation,thefollowingdiscussioncontainsforward-lookingstatementsthataresubjecttorisksanduncertainties.Actualresultsmaydiffersubstantiallyandadverselyfromthosereferredtohereinduetoanumberoffactors,includingbutnotlimitedtothosedescribedbelowandelsewhereinthisAnnualReport.OVERVIEWSkyworksSolutions,Inc.,togetherwithitsconsolidatedsubsidiaries,(“Skyworks”orthe“Company”)isaninnovatorofhighreliabilityanalogandmixedsignalsemiconductors.Leveragingcoretechnologies,Skyworksoffersdiversestandardandcustomlinearproductssupportingautomotive,broadband,cellularinfrastructure,energymanagement,industrial,medical,militaryandcellularhandsetapplications.TheCompany’sportfolioincludesamplifiers,attenuators,detectors,diodes,directionalcouplers,front-endmodules,hybrids,infrastructureRFsubsystems,mixers/demodulators,phaseshifters,PLLs/synthesizers/VCOs,powerdividers/combiners,receiv-ers,switchesandtechnicalceramics.BUSINESSFRAMEWORKWehavealignedourproductportfolioaroundtwobroadmarkets:cellularhandsetsandanalogsemicon-ductors.Ingeneral,ourhandsetportfolioincludeshighlycustomizedpoweramplifiersandfront-endsolutionsthatareinmanyoftoday’scellulardevices,fromentryleveltomultimediaplatformsandsmartphones.OurprimaryhandsetcustomersincludeLGElectronics,Motorola,Nokia,Samsung,SonyEricsson,ResearchinMotionandHTC.OurcompetitorsincludeAvagoandRFMicroDevices.Inparallel,weofferover2,500differentcatalogandcustomlinearproductstoahighlydiversifiednon-handsetcustomerbase.Ourcustomersincludeinfrastructure,automotive,energymanagement,medicalandmilitaryproviderssuchasHuawei,Ericsson,Landis+Gyr,Sensus,Itron,Siemens,andNorthropGrumman.OurcompetitorsinthelinearproductsmarketsincludeAnalogDevices,HittiteMicrowave,LinearTechnology,andMaximIntegratedProducts.BASISOFPRESENTATIONTheCompany’sfiscalyearendsontheFridayclosesttoSeptember30.Fiscalyears2009and2007eachconsistedof52weeksandendedonOctober2,2009andSeptember28,2007,respectively.Fiscal2008consistedof53weeksandendedonOctober3,2008.InJune,2009,theFinancialAccountingStandardsBoard,(“FASB”),establishedtheAccountingStandardsCodification,(“Codification”),asthesourceofauthoritativeGAAPrecognizedbytheFASB.TheCodificationiseffectiveinthefirstinterimandannualperiodsendingafterSeptember15,2009andhadnoeffectonourauditedconsolidatedfinancialstatements.WehaveevaluatedsubsequenteventsthroughNovember30,2009,thedateofissuanceoftheauditedconsolidatedfinancialstatements.Duringthisperiodwedidnothaveanymaterialsubsequentevents.SkyworksSolutions,Inc.2009AnnualReport59RESULTSOFOPERATIONSYEARSENDEDOCTOBER2,2009,OCTOBER3,2008,ANDSEPTEMBER28,2007.Thefollowingtablesetsforththeresultsofouroperationsexpressedasapercentageofnetrevenuesforthefiscalyearsbelow:200920082007Netrevenues..............................................100.0%100.0%100.0%Costofgoodssold..........................................60.460.161.3Grossmargin..............................................39.639.938.7Operatingexpenses:Researchanddevelopment..................................15.417.017.0Selling,generalandadministrative............................12.511.612.8Amortizationofintangibleassets..............................0.80.70.3Restructuringandothercharges...............................2.00.10.8Totaloperatingexpenses..................................30.729.430.9Operatingincome...........................................8.910.57.8Interestexpense............................................(0.5)(0.9)(1.6)Lossonearlyretirementofconvertibledebt.......................(0.5)(0.8)(0.1)Otherincome,net...........................................0.20.71.5Incomebeforeincometaxes...................................8.19.57.6Benefitforincometaxes......................................(3.4)(3.4)(0.1)Netincome...............................................11.5%12.9%7.7%GENERALDuringfiscal2009,certainkeyfactorscontributedtoouroverallresultsofoperationsandcashflowsfromoperations.Morespecifically:(cid:129)Accordingtosomeindustryestimates,cellularhandsetunitvolumeserodedinexcessof12%between2008and2009primarilyasaresultofadverseglobalmacroeconomicconditions.Despitetheoverallestimateddecreaseofapproximately12%indemand,ourrevenuesdeclinedbyonly6.7%or$57.4millionyear-over-yearduetomarketsharegainsandastrengtheningpositioninhighdollarcontent3Gandmultimodesegments.(cid:129)Wemaintainedrelativelyconsistentgrossprofitmarginsofapproximately40%forthefiscalyearendedOctober2,2009ascomparedtothepriorfiscalyeardespiteayear-over-yeardecreaseintheoverallrevenuebase.Thiswasprincipallytheresultofaggressiveyear-over-yearmaterialcostreductions,yieldimprove-ments,leverageofourfixedcostsandcostcontrolmeasuresincludingcapacitymanagementenhancedbytheflexibilityofourhybridmanufacturingmodel.(cid:129)Wegenerated$210.1millionincashprovidedbyoperationsforfiscal2009ascomparedto$173.7infiscal2008(a21%increaseyear-over-year).Thisresultedinacash,cashequivalentsandrestrictedcashbalanceof$370.1millionatOctober2,2009,ascomparedto$231.1millionatOctober3,2008.(cid:129)Infiscalyear2009,weretired$40.5millionand$17.4millionofour2007ConvertibleNotes(duein2012and2010,respectively).Theseretirementsreducedtheremainingprincipalbalanceonour2007ConvertibleNotesto$79.7million.Inadditionwegenerated$210.1millionofcashinfiscalyear2009whichhasallowedustoimproveournetcashpositionfrom$43.5millionatOctober3,2008to$240.4millionatOctober2,2009.SkyworksSolutions,Inc.2009AnnualReport60(cid:129)Asrevenuedeclined$57.4millionsequentiallybetweenfiscal2008and2009,weimplementedbroad-basedcostcontrolmeasuresinordertooffsettheanticipateddeclineinoperatingincome.Asaresult,ouroperatingincomedeclinedonlymodestlyby$18.7millioninfiscal2009ascomparedtofiscal2008.NETREVENUESOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Netrevenues.....................$802,577(6.7)%$860,01715.9%$741,744WemarketandsellourproductsdirectlytoOriginalEquipmentManufacturers(“OEMs”)ofcommunicationelectronicproducts,third-partyOriginalDesignManufacturers(“ODMs”)andcontractmanufacturers,andindirectlythroughelectroniccomponentsdistributors.Weperiodicallyenterintorevenuegeneratingarrangementsthatleverageourbroadintellectualpropertyportfoliobylicensingorsellingournon-corepatentsorotherintellectualproperty.Weanticipatecontinuingthisintellectualpropertystrategyinfutureperiods.Overallrevenuesinfiscal2009decreasedby$57.4million,or6.7%,fromfiscal2008.Thisrevenuedeclinewasprincipallyduetoareductionindemandinourendmarketsasaresultofadverseglobalmacroeconomicconditions,inadditiontoourexitfromcertainproductareassuchasmobiletransceiversinthesecondfiscalquarterof2009.Netrevenuesfromourtopthreecustomersdecreasedto38.2%forthefiscalyearendedOctober2,2009ascomparedto43.5%forthecorrespondingperiodintheprioryear,reflectingcontinueddiversificationofourcustomerbase.Overallrevenuesinfiscal2008increasedby$118.3million,or15.9%,fromfiscal2007.Thisrevenuegrowthwasprincipallyduetotherampofnewmobileplatformproducts,theadditionofnewmobileplatformcustomers,diversificationintonew,adjacentmarketsandtheexpansionofourmarketshareinincreasinglycomplexfront-endmodulesatourexistingcustomers.Forinformationregardingnetrevenuesbygeographicregionandcustomerconcentrationforeachofthelastthreefiscalyears,seeNote18ofthisAnnualReport.GROSSPROFITOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Grossprofit......................$318,220(7.2)%$342,96319.3%$287,385%ofnetrevenues.................39.6%39.9%38.7%Grossprofitrepresentsnetrevenueslesscostofgoodssold.Costofgoodssoldconsistsprimarilyofpurchasedmaterials,laborandoverhead(includingdepreciationandequitybasedcompensationexpense)associatedwithproductmanufacturing.Wemaintainedrelativelyconsistentgrossprofitmarginsof40%forthefiscalyearendedOctober2,2009ascomparedtothepriorfiscalyeardespiteayear-over-yeardecreaseintheoverallrevenuebasebetweenthetwofiscalyears.Thiswasprincipallytheresultofaggressiveyear-over-yearmaterialcostreductions,yieldimprove-ments,leverageofourfixedcostsandcostcontrolmeasuresincludingcapacitymanagementenhancedbytheflexibilityofourhybridmanufacturingmodel.Grossprofitinaggregatedollarsdecreased$24.7millionbetweenfiscalyear2009andfiscalyear2008primarilyastheresultoftheaforementioned$57.4milliondecreaseinoverallrevenues.Infiscalyear2009,wecontinuedtobenefitfromhighergrossmarginsassociatedwithintellectualpropertyrevenues.Grossprofitasapercentageofnetrevenuesimprovedto39.9%infiscalyear2008,from38.7%infiscalyear2007,andwasprincipallytheresultofamorefavorablerevenuemix.Additionally,grossprofitmarginimprovedasSkyworksSolutions,Inc.2009AnnualReport61aresultofhigherequipmentefficienciesatallofourfactoriesasourestablishedhybridmanufacturingmodelwithmultipleexternalfoundriesallowsustomaintainhighinternalcapacityutilizationbyusingsecond-sourcesforhighfixedcostserviceslikefoundryandassembly.Thisapproachprovidessupplychainflexibility,lowercapitalinvestment,theabilitytomeetupsidedemandandprovidescostadvantages.Furthermore,yieldimprovementsandyear-over-yearmaterialcostreductionsalongwiththeincreasedoverallrevenuecontributedtothegrossprofitandmarginimprovementinbothaggregatedollarsandasapercentageofsales.Infiscalyear2008,wecontinuedtobenefitfromhighergrossmarginsassociatedwithintellectualpropertyrevenue.RESEARCHANDDEVELOPMENTOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Researchanddevelopment...........$123,996(15.1)%$146,01315.8%$126,075%ofnetrevenues.................15.4%17.0%17.0%Researchanddevelopmentexpensesconsistprincipallyofdirectpersonnelcosts,costsforpre-productionevaluationandtestingofnewdevices,masksandengineeringprototypes,equitybasedcompensationexpenseanddesignandtesttoolcosts.Thedecreaseinresearchanddevelopmentexpensesinaggregatedollarsandasapercentageofnetrevenuesforfiscalyear2009whencomparedtofiscalyear2008isprincipallyattributabletotherestructuringplanimplementedonJanuary22,2009inwhichweexitednon-coreproductareas.Theincreaseinresearchanddevelopmentexpensesinaggregatedollarsforfiscalyear2008whencomparedtofiscalyear2007isprincipallyattributabletoincreasedlaborandbenefitcostsandincreasesinengineeringbuildsandmaskexpendituresandvariablematerialsandsuppliesexpensesaswecontinuedtoinvestinnewproductdevelopmentsinbothourmobileplatformsandlinearproductareas.SELLING,GENERALANDADMINISTRATIVEOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Selling,generalandadministrative.....$100,4210.4%$100,0075.3%$94,950%ofnetrevenues.................12.5%11.6%12.8%Selling,generalandadministrativeexpensesincludelegal,accounting,treasury,humanresources,informationsystems,customerservice,baddebtexpense,salescommissions,stockbasedcompensationexpense,advertising,marketingandothercosts.Selling,generalandadministrativeexpensesremainedrelativelyunchangedinaggregatedollarsforfiscalyear2009ascomparedtofiscalyear2008.Selling,generalandadministrativeexpensesasapercentageofnetrevenuesincreasedforfiscalyear2009,ascomparedtofiscalyear2008,duetotheaforementioneddeclineinfiscalyear2009revenue.Selling,generalandadministrativeexpensesincreasedinaggregatedollarsforfiscalyear2008ascomparedtofiscalyear2007,primarilyduetohighershare-basedcompensationexpense,higherincentivecompensationcostsandhighersalescommissions.Selling,generalandadministrativeexpensesasapercentageofnetrevenuesdecreasedforfiscal2008,ascomparedtofiscal2007,asaresultofnetrevenuegrowthgreaterthanincreasesinselling,generalandadministrativecosts.SkyworksSolutions,Inc.2009AnnualReport62AMORTIZATIONOFINTANGIBLEASSETSOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Amortization.....................$6,1181.9%$6,005180.1%$2,144%ofnetrevenues..................0.8%0.7%0.3%TheincreaseinamortizationexpenseduringthefiscalyearendedOctober2,2009ascomparedtofiscalyear2008isduetoadditionalamortizationexpenseonintangibleassetsrecordedaspartoftheacquisitionofAxiomMicrodevices,Inc.,completedinthethirdfiscalquarterof2009.TheincreaseinamortizationexpenseduringthefiscalyearendedOctober3,2008ascomparedtofiscal2007isduetotheacquisitionscompletedinOctober2007andtheassociatedamortizablecustomerrelationships,patents,orderbacklog,foundryservicesagreementanddevelopedtechnologythatwereacquired.Infiscal2008,thegrossofouramortizableintangibleassetsincreasedbyapproximately$13.2million.In2002,werecorded$36.4millionofintangibleassetsconsistingofdevelopedtechnology,customerrelationshipsandatrademarkacquiredbytheCompany.Theseassetsareprincipallybeingamortizedonastraight-linebasisovera10-yearperiod.Foradditionalinformationregardinggoodwillandintangibleassets,seeNote8ofthisAnnualReport.RESTRUCTURINGANDOTHERCHARGESOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Restructuringandothercharges.......$15,9822718.7%$567(90.1)%$5,730%ofnetrevenues.................2.0%0.1%0.8%Restructuringandotherchargesconsistofchargesforassetimpairmentsandrestructuringactivities,asfollows:OnJanuary22,2009,weimplementedarestructuringplantorealignourcostsgivencurrentbusinessconditions.Weexitedourmobiletransceiverproductareaandreducedglobalheadcountbyapproximately4%,or150employeeswhichresultedinareductiontoannualoperatingexpendituresofapproximately$20million.Werecordedvariouschargesassociatedwiththisaction.Intotal,werecorded$16.0millionofrestructuringandotherchargesand$3.5millionininventorywrite-downsthatwerechargedtocostofgoodssold.The$16.0millionchargeincludesthefollowing:$4.5millionrelatedtoseveranceandbenefits,$5.6millionrelatedtotheimpairmentofcertainlong-livedassets,whichwerewrittendowntotheirsalvagevalues,$2.1millionrelatedtotheexitofcertainoperatingleases,$2.3millionrelatedtotheimpairmentoftechnologylicensesanddesignsoftware,and$1.5millionrelatedtoothercharges.Thesechargestotal$16.0millionandarerecordedinrestructuringandothercharges.Foradditionalinformationregardingrestructuringchargesandliabilitybalances,seeNote16ofthisAnnualReport.SkyworksSolutions,Inc.2009AnnualReport63INTERESTEXPENSEOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Interestexpense...................$3,644(50.3)%$7,330(39.0)%$12,026%ofnetrevenues..................0.5%0.9%1.6%Interestexpenseiscomprisedprincipallyofpaymentsinconnectionwiththe$50.0millioncreditfacilitybetweenSkyworksUSA,Inc.,ourwhollyownedsubsidiary,andWachoviaBank,N.A.(“FacilityAgreement”),theCompany’s4.75%convertiblesubordinatednotes(the“JuniorNotes”),andtheCompany’s1.25%and1.50%convertiblesubordinatednotes(the“2007ConvertibleNotes”).ThedecreaseininterestexpenseforthefiscalyearendedOctober2,2009ascomparedtofiscal2008inaggregatedollarsandasapercentageofnetrevenuesisduetotheearlyretirementof$57.9millionoftheCompany’s2007ConvertibleNotesinthefirstandfourthquartersoffiscal2009.ThedecreaseininterestexpenseforthefiscalyearendedOctober3,2008ascomparedtofiscal2007inaggregatedollarsandasapercentageofnetrevenuesisduetotheretirementoftheremaining$49.3millionofhigherinterestrateJuniorNotesduringthefirstquarteroffiscal2008andtheearlyretirementof$62.4millionoftheCompany’s2007ConvertibleNotesinthefourthquarteroffiscal2008.Foradditionalinformationregardingourborrowingarrangements,seeNote9ofthisAnnualReport.LOSSONEARLYRETIREMENTOFCONVERTIBLEDEBTOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Lossonearlyretirementofconvertibledebt..........................$4,066(40.5)%$6,8361112.1%$564%ofnetrevenues.................0.5%0.8%0.1%Inthefirstquarteroffiscal2009weretired$40.5millionprincipalamountofour2007ConvertibleNotesduein2012.Werecordedagainof$2.0millioninthefirstquarteroffiscal2009relatedtotheearlyretirementofthesenotes,reflectinga$2.9milliondiscountreceivedontheearlyretirementofthesenotesoffsetbya$0.9millionwrite-offofdeferredfinancingcosts.Inthefourthquarteroffiscal2009weretired$17.4millionofour2007ConvertibleNotesduein2010.Werecordedalossof$6.1millioninthefourthquarterrelatedtotheearlyretirementofthesenotes.Weretiredatotalof$57.9millionofour2007ConvertibleNotesinfiscalyear2009.InSeptember2008,weretired$50.0millionand$12.4millionofour2007ConvertibleNotesduein2010and2012,respectively.Werecordedalossof$6.8millionduringthethreemonthsandfiscalyearendedOctober3,2008relatedtotheearlyretirementofthesenotes.Approximately$5.8millionofthischargerepresentsapremiumpaidtoretirethenotesand$1.0millionofthechargerepresentsawrite-offofdeferredfinancingcosts.OTHERINCOME,NETOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Otherincome,net..................$1,753(70.7)%$5,983(45.0)%$10,874%ofnetrevenues..................0.2%0.7%1.5%Otherincome,netiscomprisedprimarilyofinterestincomeoninvestedcashbalances,othernon-operatingincomeandexpenseitemsandforeignexchangegains/losses.SkyworksSolutions,Inc.2009AnnualReport64ThedecreasesinotherincomeinbothaggregatedollarsandasapercentageofnetrevenuesforthefiscalyearendedOctober2,2009ascomparedtofiscal2008aswellasforthefiscalyearendedOctober3,2008ascomparedtofiscal2007,isduetoanoveralldeclineininterestincomeoninvestedcashbalancesduetolowerinterestratesinfiscal2008and2009.BENEFITFORINCOMETAXESOctober2,2009ChangeOctober3,2008ChangeSeptember28,2007FiscalYearsEnded(Dollarsinthousands)Benefitforincometaxes............$(27,543)(4.4)%$(28,818)3174.8%$(880)%ofnetrevenues.................3.4%3.4%0.1%Incometaxbenefitforfiscal2009was$(27.5)millionascomparedtoa$(28.8)millionbenefitforfiscal2008and$(0.9)millionforfiscal2007.Thefiscal2009benefitisduetoa$(45.5)millionreductioninthevaluationallowancerelatedtocurrentyearutilizationandtherecognitionoffuturetaxbenefitsonUnitedStatesstatenetoperatinglosses,creditcarryforwards,andothertemporaryitemsandUnitedStatesincometaxbenefitof$(1.0)million,offsetbyreservesfortaxuncertaintiesof$0.3million.Thefiscal2008benefitof$(28.2)millionisduetoa$(36.4)millionreductioninthevaluationallowancerelatedtothepartialrecognitionoffuturetaxbenefitsonUnitedStatesfederalandstatenetoperatinglossandcreditcarryforwards,offsetbyUnitedStatesincometaxexpenseof$1.2million,andachargeinlieuoftaxexpenseof$7.0million.Thefiscal2008chargeinlieuoftaxexpenseresultedfromapartialrecognitionofcertainacquiredtaxbenefitsthatweresubjecttoavaluationallowanceatthetimeofacquisition,therealizationofwhichrequiredareductionofgoodwill.Thefiscal2007UnitedStatesincometaxbenefitof$(2.2)millionisduetoa$(1.7)millionreductioninthevaluationallowancerelatedtothepartialrecognitionoffuturetaxbenefitsonUnitedStatesfederalandstatenetoperatinglosscarryforwardsandthereversalof$(0.5)millionoftaxreservenolongerrequired.Theprovision(benefit)forforeignincometaxesforfiscal2009,2008,and2007was$0.9million,$(0.6)mil-lion,and$1.3million,respectively.Theforeigntaxbenefitforfiscal2008includedareversalof$(1.0)millionofreservesfortaxuncertaintiesthatarenolongerrequired.InaccordancewithGAAP,managementhasdeterminedthatitismorelikelythannotthataportionofourhistoricandcurrentyearincometaxbenefitswillnotberealized.Accordingly,asofOctober2,2009,wehavemaintainedavaluationallowanceof$26.6millionofwhich$25.0millionrelatestoourUnitedStatesdeferredtaxassetsand$1.6millionrelatestoourforeignoperations.Realizationofourdeferredtaxassetsisdependentupongeneratingtaxableincomeinthefuture.Wehaveconsideredseveralfactorsinevaluatingourcapacitytogeneratefutureearnings.Skyworkshasproducedastrongearningstrendgeneratingcumulativeearningsbeforeincometaxesof$204.7millioninfiscalyears2007through2009.Inaddition,despitethecurrenteconomicslowdown,earningsbeforeincometaxesof$65.7millionwerereportedforfiscalyear2009.Basedonmanagement’sevaluationoftherealizabilityofitsnetdeferredtaxassetsthroughthegenerationoffutureincome,$40.9millionofourvaluationallowancewasreversedatOctober2,2009.Theamountreversedconsistedof$27.7millionrecognizedasincometaxbenefit,and$13.2millionrecognizedasareductiontogoodwill,whichincludes$5.6millionrelatedtotheacquiredAxiomdeferredtaxassets.TheremainingvaluationallowanceasofOctober2,2009is$26.6million,principallyrelatedtostateresearchtaxcreditsthatmanagementhasdeterminedismorelikelythannotthatitwillnotberealized.Whenrecognized,thetaxbenefitsrelatingtoanyfuturereversalofthevaluationallowanceondeferredtaxassetswillbeaccountedforasfollows:approximately$22.3millionwillberecognizedasanincometaxbenefit,$0.4millionwillberecognizedasareductiontogoodwilland$3.9millionwillberecognizedasanincreasetoshareholders’equityforcertaintaxdeductionsfromemployeestockoptions.Wewillcontinuetoevaluateourvaluationallowanceinfutureperiodsanddependingupontheoutcomeofthatassessment,additionalamountscouldbereversedorrecordedandrecognizedasareductiontogoodwilloranSkyworksSolutions,Inc.2009AnnualReport65adjustmenttoincometaxbenefitorexpense.Suchadjustmentscouldcauseoureffectiveincometaxratetovaryinfutureperiods.Wewillneedtogenerate$181.3millionoffutureUnitedStatesfederaltaxableincometoutilizeallofourfederalnetoperatinglosscarryforwardsandfederalresearchandexperimentationtaxcreditcarryforwardsasofOctober2,2009.NoprovisionhasbeenmadeforUnitedStates,state,oradditionalforeignincometaxesrelatedtoapprox-imately$4.9millionofundistributedearningsofforeignsubsidiarieswhichhavebeenorareintendedtobepermanentlyreinvested.ItisnotpracticabletodeterminetheUnitedStatesfederalincometaxliability,ifany,whichwouldbepayableifsuchearningswerenotpermanentlyreinvested.OnSeptember29,2007,weadoptedASC740-IncomeTaxes(“ASC740”)—(formerlyreferencedasFASBInterpretationNo.48,AccountingforUncertaintyinIncomeTaxes-aninterpretationofFASBStatementNo.109).ASC740clarifiestheaccountingforuncertaintyinincometaxesrecognizedinanenterprise’sfinancialstatementsinaccordancewithSFAS109.ASC740prescribesarecognitionthresholdandmeasurementattributeforthefinancialstatementrecognitionandmeasurementofataxpositiontakenorexpectedtobetakeninataxreturn.Thisstatementalsoprovidesguidanceonderecognition,classification,interestandpenalties,accountingintheinterimperiods,disclosure,andtransition.TheprovisionsofASC740willbeappliedtoallincometaxprovisionscommencingfromthatdate.OfthetotalunrecognizedtaxbenefitsatOctober2,2009,$6.5millionwouldimpacttheeffectivetaxrate,ifrecognized.Therearenopositionswhichweanticipatecouldchangewithinthenexttwelvemonths.OnOctober1,2007,Mexicoenactedanew“flattax”regimewhichbecameeffectiveJanuary1,2008.GAAPprescribesthattheeffectofthenewtaxondeferredtaxesmustbeincludedintaxexpenseintheperiodthatincludestheenactmentdate.Theeffectofrecordingdeferredtaxesinthefirstfiscalquarterof2008totheforeigntaxprovision(benefit)was$(0.2)million.WehaveaccruedflattaxfortheyearendedOctober2,2009of$0.5million.LIQUIDITYANDCAPITALRESOURCESOctober2,2009October32008September28,2007FiscalYearsEnded(Dollarsinthousands)Cashandcashequivalentsatbeginningofperiod.........$225,104$241,577$136,749Netcashprovidedbyoperatingactivities.............210,149173,67884,778Netcashusedininvestingactivities.................(49,528)(94,959)(20,146)Netcashprovidedby(usedin)financingactivities......(21,504)(95,192)40,196Cashandcashequivalentsatendofperiod..............$364,221$225,104$241,577FISCAL2009Basedonourresultsofoperationsforfiscal2009,alongwithcurrenttrends,weexpectourexistingsourcesofliquidity,togetherwithcashexpectedtobegeneratedfromoperations,willbesufficienttofundourresearchanddevelopment,capitalexpenditures,debtobligations,workingcapitalandothercashrequirementsforatleastthenext12months.However,wecannotbecertainthatthecapitalrequiredtofundtheseexpenseswillbeavailableinthefuture.Inaddition,anystrategicinvestmentsandacquisitionsthatwemaymaketohelpusgrowourbusinessmayrequireadditionalcapitalresources.Ifweareunabletoobtainsufficientcapitaltomeetourcapitalneedsonatimelybasisandonfavorableterms(ifatall),ourbusinessandoperationscouldbemateriallyadverselyaffected.Cashandcashequivalentbalancesincreased$139.1millionto$364.2millionatOctober2,2009from$225.1millionatOctober3,2008.Wegenerated$210.1incashfromoperationsduringthefiscalyearendedOctober2,2009,whichwasoffsetbytheretirementof$57.9millionofthe2007ConvertibleNotes,capitalexpendituresof$39.2millionandexpendituresonacquisitionsof$10.4million.ThenumberofdayssalesoutstandingforthefiscalyearendedOctober2,2009decreasedto46from57forfiscal2008.SkyworksSolutions,Inc.2009AnnualReport66Duringfiscal2009,wegeneratednetincomeof$93.3million.Weexperiencedadecreaseinreceivablesandinventoriesof$29.9millionand$15.7million,respectively,anincreaseinaccountspayableof$9.2millionandincurredmultiplenon-cashcharges(e.g.,depreciation,amortization,contributionofcommonsharestosavingsandretirementplans,share-basedcompensationexpense,non-cashrestructuringexpense,assetimpairmentsandinventorywrite-downs)totaling$93.5million.Thiswasoffsetbyadecreaseinaccruedliabilitiesof$2.5million,anincreasetootherassetsof$3.9million,andanincreasetoourdeferredtaxassetsof$27.2million(primarilytheresultofapartialreleaseofourtaxvaluationallowanceinfiscal2009).CashusedininvestingactivitiesforthefiscalyearendedOctober2,2009,consistedofinvestmentsincapitalequipmentof$39.2millionprimarilytoexpandfabricationandassemblyandtestcapacity.Webelieveafocusedprogramofcapitalexpenditureswillberequiredtosustainourcurrentmanufacturingcapabilitiesandcanbefundedbythegenerationofpositivecashflowsfromoperations.Wealsomadepaymentsforacquisitions,netofcashacquiredof$10.4million.Wemayalsoconsideradditionalfutureacquisitionopportunitiestoextendourtechnologyportfolioanddesignexpertiseandtoexpandourproductofferings.CashusedinfinancingactivitiesforthefiscalyearendedOctober2,2009,consistedofearlyretirementof$57.9millionofour2007ConvertibleNotes,therepurchaseoftreasurystockof$2.4million,offsetbyproceedsfromstockoptionexercisesof$38.7million.Foradditionalinformationregardingourborrowingarrangements,seeNote9ofthisAnnualReport.OurinvestedcashbalancesprimarilyconsistofmoneymarketfundsandrepurchaseagreementswheretheunderlyingsecuritiesprimarilyconsistofUnitedStatestreasuryobligations,UnitedStatesagencyobligations,overnightrepurchaseagreementsbackedbyUnitedStatestreasuriesand/orUnitedStatesagencyobligationsandhighlyratedcommercialpaper.Ourinvestedcashbalancesalsoincludetimedeposits/certificatesofdeposit.AtOctober2,2009,wealsohelda$3.2millionauctionratesecuritywhichhistoricallyhasprovidedliquiditythroughaDutchauctionprocess.Disruptionsinthecreditmarketshavesubstantiallyeliminatedtheliquidityofthisprocessresultinginfailedauctions.DuringthefiscalyearendedOctober3,2008,weperformedacomprehensivevaluationanddiscountedcashflowanalysisontheauctionratesecurity.Weconcludedthevalueoftheauctionratesecuritywas$2.3million,andthecarryingvalueofthesesecuritieswasreducedby$0.9million,reflectingthischangeinfairvalue.Accordingly,inthefiscalyearendedOctober3,2008,werecordedunrealizedlossesonthisauctionratesecurityofapproximately$0.9million.Weassessedthesedeclinesinfairmarketvaluetobetemporaryandconsiderthesecuritytobeilliquiduntilthereisasuccessfulauctionorthesecuritymatures.Accordingly,theremainingauctionratesecuritybalancehasbeenreclassifiedtonon-currentotherassetsandthelosshasbeenrecordedinOtherComprehensiveIncome.Wewillcontinuetomonitortheliquidityandaccountingclassificationofthissecurityinfutureperiods.Ifinafutureperiod,wedeterminethattheimpairmentisotherthantemporary,wewillimpairthesecuritytoitsfairvalueandchargethelosstoearnings.OnJuly15,2003,weenteredintoareceivablespurchaseagreementunderwhichwehaveagreedtosellfromtimetotimecertainofouraccountsreceivabletoSkyworksUSA,Inc.(“SkyworksUSA”),awholly-ownedspecialpurposeentitythatisfullyconsolidatedforaccountingpurposes.Concurrently,SkyworksUSAenteredintoanagreementwithWachoviaBank,N.A.providingfora$50.0millioncreditfacility(“FacilityAgreement”)securedbythepurchasedaccountsreceivable.Asapartoftheconsolidation,anyinterestincurredbySkyworksUSArelatedtomoniesitborrowsundertheFacilityAgreementisrecordedasinterestexpenseintheCompany’sresultsofoperations.WeperformcollectionsandadministrativefunctionsonbehalfofSkyworksUSA.InterestrelatedtotheFacilityAgreementisatLIBORplus0.75%.WerenewedtheFacilityAgreementforanotheryearinJuly2009,andasofOctober2,2009,SkyworksUSAhadborrowed$50.0millionunderthisagreement.FISCAL2008Cashandcashequivalentbalancesdecreased$16.5millionto$225.1millionatOctober3,2008from$241.6millionatSeptember28,2007.Wegenerated$173.7millionincashfromoperationsduringthefiscalyearendedOctober3,2008,whichwasoffsetbytheretirementof$49.3millionofJuniorNotes,$62.4millionofthe2007ConvertibleNotes,capitalexpendituresof$64.8millionandexpendituresonacquisitionsof$32.6million.SkyworksSolutions,Inc.2009AnnualReport67ThenumberofdayssalesoutstandingforthefiscalyearendedOctober3,2008decreasedto57from80forfiscal2007.Duringfiscal2008,wegeneratednetincomeof$111.0million.Weexperiencedadecreaseinreceivablesandotherassetsof$21.2millionand$2.9million,respectively,anincreaseinaccountspayablebalancesof$2.1millionandincurredmultiplenon-cashcharges(e.g.,depreciation,amortization,chargeinlieuofincometaxexpense,contributionofcommonsharestosavingsandretirementplans,share-basedcompensationexpenseandnon-cashrestructuringexpense)totaling$94.9million.Thiswasoffsetbyanincreaseininventoriesof$16.1million,adecreaseinotheraccruedliabilitiesof$5.1millionandanincreasetoourdeferredtaxassetsof$36.6million(primarilytheresultofapartialreleaseofourtaxvaluationallowanceinfiscal2008).CashusedininvestingactivitiesforthefiscalyearendedOctober3,2008,consistedofnetsalesof$2.5millioninauctionratesecuritiesandinvestmentsincapitalequipmentof$64.8millionprimarilytoexpandfabricationandassemblyandtestcapacity.Webelievedafocusedprogramofcapitalexpenditureswouldhavebeenrequiredtosustainourmanufacturingcapabilities.Weexpectedthatfuturecapitalexpenditureswouldbefundedbythegenerationofpositivecashflowsfromoperations.Inaddition,wepaid$32.6millionincashtoacquirecertainassetsfromtwoseparatecompanies.WeacquiredFreescaleSemiconductor’shandsetpoweramplifierbusinessandalsoacquiredpatentsfromanothercompany.CashusedinfinancingactivitiesforthefiscalyearendedOctober3,2008,consistedoftheretirementoftheremaining$49.3millioninJuniorNotes,theretirementof$62.4millionofour2007ConvertibleNotes,andtherepurchaseoftreasurystockof$2.1million,offsetbycashprovidedbystockoptionexercisesof$18.0million.Foradditionalinformationregardingourborrowingarrangements,seeNote9ofthisAnnualReport.OurinvestedcashbalancesprimarilyconsistofmoneymarketfundsandrepurchaseagreementswheretheunderlyingsecuritiesprimarilyconsistofUnitedStatestreasuryobligations,UnitedStatesagencyobligations,overnightrepurchaseagreementsbackedbyUnitedStatestreasuriesand/orUnitedStatesagencyobligationsandhighlyratedcommercialpaper.Ourinvestedcashbalancesalsoincludetimedeposits/certificatesofdeposit.AtOctober3,2008,wealsohelda$3.2millionauctionratesecuritywhichhistoricallyhasprovidedliquiditythroughaDutchauctionprocess.Therecentdisruptionsinthecreditmarketshavesubstantiallyeliminatedtheliquidityofthisprocessresultinginfailedauctions.DuringthefiscalyearendedOctober3,2008,weperformedacompre-hensivevaluationanddiscountedcashflowanalysisontheauctionratesecurity.Weconcludedthevalueoftheauctionratesecuritywas$2.3million,andthecarryingvalueofthesesecuritieswasreducedby$0.9million,reflectingthischangeinfairvalue.Accordingly,inthefiscalyearendedOctober3,2008,werecordedunrealizedlossesonthisauctionratesecurityofapproximately$0.9million.Weassessedthesedeclinesinfairmarketvaluetobetemporaryandconsiderthesecuritytobeilliquiduntilthereisasuccessfulauctionorthesecuritymatures.Accordingly,theremainingauctionratesecuritybalancehasbeenreclassifiedtonon-currentotherassetsandthelosshasbeenrecordedinOtherComprehensiveIncome.Wewillcontinuetomonitortheliquidityandaccountingclassificationofthissecurityinfutureperiods.Ifinafutureperiod,wedeterminethattheimpairmentisotherthantemporary,wewillimpairthesecuritytoitsfairvalueandchargethelosstoearnings.OnJuly15,2003,weenteredintoareceivablespurchaseagreementunderwhichwehaveagreedtosellfromtimetotimecertainofouraccountsreceivabletoSkyworksUSA,Inc.(“SkyworksUSA”),awholly-ownedspecialpurposeentitythatisfullyconsolidatedforaccountingpurposes.Concurrently,SkyworksUSAenteredintoanagreementwithWachoviaBank,N.A.providingfora$50.0millioncreditfacility(“FacilityAgreement”)securedbythepurchasedaccountsreceivable.Asapartoftheconsolidation,anyinterestincurredbySkyworksUSArelatedtomoniesitborrowsundertheFacilityAgreementisrecordedasinterestexpenseintheCompany’sresultsofoperations.WeperformcollectionsandadministrativefunctionsonbehalfofSkyworksUSA.InterestrelatedtotheFacilityAgreementisatLIBORplus0.75%.WerenewedtheFacilityAgreementforanotheryearinJuly2008,andasofOctober3,2008,SkyworksUSAhadborrowed$50.0millionunderthisagreement.SkyworksSolutions,Inc.2009AnnualReport68CONTRACTUALCASHFLOWSFollowingisasummaryofourcontractualpaymentobligationsforconsolidateddebt,purchaseagreements,operatingleases,othercommitmentsandlong-termliabilitiesatOctober2,2009(seeNotes9and13ofthisAnnualReport),inthousands:ObligationTotalLessThan1Year1-3years3-5YearsThereafter(1)PaymentsDueByPeriod(3)Long-TermDebtObligations.......$79,733$32,617$47,116$—$—OtherCommitments(1)...........9,7474,2274,895625—OperatingLeaseObligations.......10,4476,7023,73213—OtherLong-TermLiabilities(2).....6,0862,7503211742,841$106,013$46,296$56,064$812$2,841(1)OtherCommitmentsconsistofcontractuallicenseandroyaltypayments.(2)OtherLong-TermLiabilitiesincludes$2.4millionofExecutiveDeferredCompensationforwhichthereisacorrespondinglongtermasset.(3)TheaforementionedFacilityAgreementisnotincludedinthetableabove.CRITICALACCOUNTINGESTIMATESThepreparationoffinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesrequiresustomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpensesduringthereportingperiod.Weregularlyevaluateourestimatesandassumptionsbaseduponhistoricalexperienceandvariousotherfactorsthatwebelievetobereasonableunderthecircumstances,theresultsofwhichformthebasisformakingjudgmentsaboutthecarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Totheextentactualresultsdifferfromthoseestimates,ourfutureresultsofoperationsmaybeaffected.Webelievethefollowingcriticalaccountingpoliciesaffectthemoresignificantjudgmentsandestimatesusedinthepreparationofourconsolidatedfinancialstatements.REVENUERECOGNITIONRevenuesfromproductsalesarerecognizeduponshipmentandtransferoftitle,inaccordancewiththeshippingtermsspecifiedinthearrangementwiththecustomer.Revenuefromlicensefeesandintellectualpropertyisrecognizedwhenthesefeesaredueandpayable,andallothercriteriaofASC605-RevenueRecognition,havebeenmet.Weshipproductonconsignmenttocertaincustomersandonlyrecognizerevenuewhenthecustomernotifiesusthattheinventoryhasbeenconsumed.Revenuerecognitionisdeferredinallinstanceswheretheearningsprocessisincomplete.Certainproductsalesaremadetoelectroniccomponentdistributorsunderagreementsallowingforpriceprotectionand/orarightofreturnonunsoldproducts.Areserveforsalesreturnsandallowancesforcustomersisrecordedbasedonhistoricalexperienceorspecificidentificationofaneventnecessitatingareserve.ALLOWANCEFORDOUBTFULACCOUNTSWemaintaingeneralallowancesfordoubtfulaccountsforlossesthatweestimatewillarisefromourcustomers’inabilitytomakerequiredpayments.Thesereservesaredeterminedquarterlyandrequiremanagementtomakeestimatesofthecollectabilityofouraccountsreceivablebyconsideringfactorssuchashistoricalbaddebtexperience,theageoftheaccountsreceivablebalancesandtheimpactofthecurrenteconomicclimateonacustomer’sabilitytopay.Inaddition,aswebecomeawareofanyspecificreceivableswhichmaybeuncollectable,weperformadditionalanalysisandreservesarerecordedifdeemednecessary.DeterminationofsuchadditionalSkyworksSolutions,Inc.2009AnnualReport69specificreservesrequiremanagementtomakejudgmentsandestimatespertainingtofactorssuchasacustomer’screditworthiness,intentandabilitytopay,andoverallfinancialposition.Ifthedataweusetocalculatetheallowancefordoubtfulaccountsdoesnotreflectthefutureabilitytocollectoutstandingreceivables,additionalprovisionsfordoubtfulaccountsmaybeneededandourresultsofoperationscouldbemateriallyaffected.INVENTORIESInventoriesarestatedatthelowerofcost,determinedonafirst-in,first-outbasis,ormarket.Eachquarter,weestimateandestablishreservesforexcess,obsoleteorunmarketableinventory.Thesereservesaregenerallyequaltothehistoricalcostbasisoftheexcessorobsoleteinventoryandoncerecordedareconsideredpermanentadjustments.Calculationofthereservesrequiresmanagementtousejudgmentandmakeassumptionsaboutforecasteddemandinrelationtotheinventoryonhand,competitivenessofourproductofferings,generalmarketconditionsandproductlifecyclesuponwhichthereservesarebased.Wheninventoryonhandexceedsforeseeabledemand(generallyinexcessoftwelvemonths),reservesareestablishedforthevalueofsuchinventorythatisnotexpectedtobesoldatthetimeofthereview.Ifactualdemandandmarketconditionsarelessfavorablethanthoseweproject,additionalinventoryreservesmayberequiredandourresultsofoperationscouldbemateriallyaffected.Someoralloftheinventoriesthathavebeenreservedmayberetainedandmadeavailableforsale,however,theyaregenerallyscrappedovertime.SHARE-BASEDCOMPENSATIONTheCompanyappliesASC718-Compensation-StockCompensation(“ASC718”)whichrequiresthemea-surementandrecognitionofcompensationexpenseforallshare-basedpaymentawardsmadetoemployeesanddirectorsincludingemployeestockoptions,employeestockpurchasesrelatedtoour2002EmployeeStockPurchasePlan,restrictedstockandotherspecialequityawardsbasedonestimatedfairvalues.WeadoptedASC718usingthemodifiedprospectivetransitionmethod,whichrequirestheapplicationoftheapplicableaccountingstandardasofOctober1,2005,thefirstdayofourfiscalyear2006.Share-basedcompensationexpenserecognizedduringtheperiodisbasedonthevalueoftheportionofshare-basedpaymentawardsthatisultimatelyexpectedtovestduringtheperiod.Share-basedcompensationexpenserecognizedintheCompany’sConsolidatedStatementofOperationsforthefiscalyearendedOctober2,2009onlyincludedshare-basedpaymentawardsgrantedsubsequenttoSeptember30,2005basedonthegrantdatefairvalueestimatedinaccordancewiththeprovisionsofASC718.Asshare-basedcompensationexpenserecognizedintheConsolidatedStatementofOperationsforthefiscalyearendedOctober2,2009isbasedonawardsultimatelyexpectedtovest,ithasbeenreducedforestimatedforfeitures.ASC718requiresforfeiturestobeestimatedatthetimeofgrantandrevised,ifnecessary,insubsequentperiodsifactualforfeituresdifferfromthoseestimates.UponadoptionofASC718,weelectedtoretainourmethodofvaluationforshare-basedawardsusingtheBlack-Scholesoption-pricingmodel(“Black-Scholesmodel”)whichwasalsopreviouslyusedforourproformainformationdisclosurerequiredunderpreviousaccountingguidance.Ourdeterminationoffairvalueofshare-basedpaymentawardsonthedateofgrantusingtheBlack-Scholesmodelisaffectedbyourstockpriceaswellasassumptionsregardinganumberofhighlycomplexandsubjectivevariables.Thesevariablesinclude,butarenotlimitedto;ourexpectedstockpricevolatilityoverthetermoftheawards,andactualandprojectedemployeestockoptionexercisebehaviors.Formorecomplexawardswithmarket-basedperformanceconditions,weemployaMonteCarlosimulationmethodwhichcalculatesmanypotentialoutcomesforanawardandestablishesfairvaluebasedonthemostlikelyoutcome.ASC718requiresustoevaluateandperiodicallyvalidateseveralassumptionsinconjunctionwithcalculatingshare-basedcompensationexpense.Theseassumptionsincludetheexpectedlifeofastockoptionorotherequitybasedaward,expectedvolatility,pre-vestingforfeiture,riskfreerateandexpecteddividendyield.Alloftheseassumptionsaffecttoonedegreeoranother,thevaluationofourequitybasedawardsortherecognitionoftheresultingshare-basedcompensationexpense.Themostsignificantassumptionsinourcalculationsaredescribedbelow.SkyworksSolutions,Inc.2009AnnualReport70ExpectedLifeofanOptionorotherEquityBasedAwardSinceemployeeoptionsarenon-transferable,ASC718allowstheuseofanexpectedlifetomoreaccuratelyestimatethevalueofanemployeestockoptionratherthanusingthefullcontractualterm.Thevestingofthemajorityofourstockoptionsaregradedoverfouryears(25%ateachanniversary)andthecontractualtermiseither7yearsor10years.Weanalyzedourhistoricalexerciseexperienceandexercisebehaviorbyjobgroup.Weanalyzedthefollowingthreeexercisemetrics:exerciseatfullvesting,exerciseatmidpointinthecontractuallifeandexerciseattheendofthefullcontractualterm.Wechosethemid-pointalternativeastheestimatewhichmostcloselyapproximatedactualexerciseexperienceofouremployeepopulation.Thevaluationandresultingshare-basedcompensationexpenserecordedissensitivetowhatalternativeischosenandthechoiceofanotheralternativeinthefuturecouldresultinamaterialdifferenceintheamountofshare-basedcompensationexpenserecordedinareportingperiod.ExpectedVolatilityExpectedvolatilityisastatisticalmeasureoftheamountbywhichastockpriceisexpectedtofluctuateduringaperiod.ASC718doesnotspecifyamethodforestimatingexpectedvolatility;insteaditprovidesalistoffactorsthatshouldbeconsideredwhenestimatingvolatility:historicalvolatilitythatisgenerallycommensuratewiththeexpectedoptionlife,impliedvolatilities,thelengthoftimeastockhasbeenpubliclytraded,regularintervalsforpriceobservations,corporateandcapitalstructureandthepossibilityofmeanreversion.Weanalyzedourvolatilityhistoryanddeterminedthattheselectionofaweightingof50%tohistoricalvolatilityand50%toimpliedvolatility(asmeasuredbyexaminingtheunderlyingvolatilityintheopenmarketofpubliclytradedcalloptions)wouldprovidethebestestimateofexpectedfuturevolatilityofthestockprice.Theselectionofanothermethodologytocalculatevolatilityorevenadifferentweightingbetweenimpliedvolatilityandhistoricalvolatilitycouldmateriallyimpactthevaluationofstockoptionsandotherequitybasedawardsandtheresultingamountofshare-basedcompensationexpenserecordedinareportingperiod.Pre-VestingForfeitureASC718specifiesthatinitialaccrualsofshare-basedcompensationexpenseshouldbebasedontheestimatednumberofinstrumentsforwhichtherequisiteserviceisexpectedtoberendered.Weexaminedouroptionsforfeiturehistoryandcomputedanaverageannualizedforfeiturepercentage.Wedeterminedthataweightedaverageofhistoricalannualizedforfeituresisthebestestimateoffutureactualforfeitureexperience.Theapplicationofadifferentmethodologyforcalculatingestimatedforfeiturescouldmateriallyimpacttheamountofshare-basedcompensationexpenserecordedinareportingperiod.VALUATIONOFLONG-LIVEDASSETSCarryingvaluesforlong-livedassetsanddefinitelivedintangibleassets,whichexcludegoodwill,arereviewedforpossibleimpairmentascircumstanceswarrant.Factorsconsideredimportantthatcouldresultinanimpairmentreviewincludesignificantunderperformancerelativetoexpected,historicalorprojectedfutureoperatingresults,significantchangesinthemannerofuseofassetsorourbusinessstrategy,significantnegativeindustryoreconomictrendsandasignificantdeclineinourstockpriceforasustainedperiodoftime.Inaddition,impairmentreviewsareconductedatthejudgmentofmanagementwheneverasset/assetgroupvaluesaredeemedtobeunrecoverablerelativetofutureundiscountedcashflowsexpectedtobegeneratedbythatparticularasset/assetgroup.Thedeterminationofrecoverabilityisbasedonanestimateofundiscountedcashflowsexpectedtoresultfromtheuseofanasset/assetgroupanditseventualdisposition.Suchestimatesrequiremanagementtoexercisejudgmentandmakeassumptionsregardingfactorssuchasfuturerevenuestreams,operatingexpenditures,costallocationandassetutilizationlevels,allofwhichcollectivelyimpactfutureoperatingperformance.Ourestimatesofundis-countedcashflowsmaydifferfromactualcashflowsdueto,amongotherthings,technologicalchanges,economicconditions,changestoourbusinessmodelorchangesinouroperatingperformance.Ifthesumoftheundiscountedcashflows(excludinginterest)islessthanthecarryingvalueofanassetorassetgroup,wewouldrecognizeanSkyworksSolutions,Inc.2009AnnualReport71impairmentloss,measuredastheamountbywhichthecarryingvalueexceedsthefairvalueoftheassetorassetgroup.GOODWILLANDINTANGIBLEASSETSGoodwillandintangibleassetswithindefiniteusefullivesaretestedatleastannuallyforimpairmentinaccordancewiththeprovisionsofASC350-Intangibles-GoodwillandOther(“ASC350”).Intangibleassetswithindefiniteusefullivescompriseaninsignificantportionofthetotalbookvalueofourgoodwillandintangibleassets.Weassesstheneedtotestourgoodwillforimpairmentonaregularbasis.PursuanttotheguidanceprovidedunderASC280-SegmentReporting(“ASC280”),wehavedeterminedthatwehaveonlyonereportingunitforthepurposesofallocatingandtestinggoodwillunderASC350.Thegoodwillimpairmenttestisatwo-stepprocess.Thefirststepofourimpairmentanalysiscomparesourfairvaluetoournetbookvaluetodetermineifthereisanindicatorofimpairment.Todeterminefairvalue,ASC350allowsfortheuseofseveralvaluationmethodologies,althoughitstatesthatquotedmarketpricesarethebestevidenceoffairvalueandshallbeusedasthebasisformeasuringfairvaluewhereavailable.Inourassessmentofourfairvalue,weconsidertheaveragemarketpriceofourcommonstocksurroundingtheselectedtestingdate,thenumberofsharesofourcommonstockoutstandingduringsuchperiodandothermarketplaceactivityandrelatedcontrolpremiums.IfthecalculatedfairvalueisdeterminedtobelessthanthebookvalueoftheCompany,thenweperformsteptwooftheimpairmentanalysis.Steptwooftheanalysiscomparestheimpliedfairvalueofourgoodwill,tothebookvalueofourgoodwill.Ifthebookvalueofourgoodwillexceedstheimpliedfairvalueofourgoodwill,animpairmentlossisrecognizedequaltothatexcess.InStep2ofourannualimpairmentanalysis,weprimarilyusetheincomeapproachmethodologyofvaluation,whichincludesthediscountedcashflowmethodaswellasothergenerallyacceptedvaluationmethodologies,todeterminetheimpliedfairvalueofourgoodwill.Significantmanagementjudgmentisrequiredinpreparingtheforecastsoffutureoperatingresultsthatareusedinthediscountedcashflowmethodofvaluation.Shouldsteptwooftheimpairmenttestberequired,theestimateswewouldusewouldbeconsistentwiththeplansandestimatesthatweusetomanageourbusiness.Inadditiontotestinggoodwillforimpairmentonanannualbasis,factorssuchasunexpectedadversebusinessconditions,deteriorationoftheeconomicclimate,unanticipatedtechnologicalchanges,adversechangesinthecompetitiveenvironment,lossofkeypersonnelandactsbygovernmentsandcourts,areconsideredbymanagementandmaysignalthatourintangibleassetshavebecomeimpairedandresultinadditionalinterimimpairmenttesting.Infiscal2009,weperformedimpairmenttestsofourgoodwillonJanuary3,2009,April4,2009andonJuly4,2009.Thefirstimpairmenttestwastriggeredbyasignificantdeclineinourstockpriceanddeteriorationinthemacro-economicclimateduringthefirstfiscalquarter.ThesecondimpairmenttestwastriggeredbyarestructuringactionannouncedonJanuary22,2009andthethirdtestwasconductedonthefirstdayofthefourthfiscalquarter,July4,2009,inaccordancewithourregularlyscheduledannualtesting.TheresultsofallthreeofthesetestsindicatedthatnoneofourgoodwillwasimpairedbasedonStep1ofthetest;accordinglyStep2ofthetestwasnotperformed.Anymanagementjudgmentsandassumptionsmadeinthesetestsweregenerallyconsistentwiththosemadeinpriorperiods.INCOMETAXESWeusetheassetandliabilitymethodofaccountingforincometaxes.Undertheassetandliabilitymethod,deferredtaxassetsandliabilitiesarerecognizedfortheestimatedfuturetaxconsequencesattributabletodifferencesbetweenthefinancialstatementcarryingamountsofexistingassetsandliabilitiesandtheirrespectivetaxbasis.Thismethodalsorequirestherecognitionoffuturetaxbenefitssuchasnetoperatinglosscarryforwards,totheextentthatrealizationofsuchbenefitsismorelikelythannot.Deferredtaxassetsandliabilitiesaremeasuredusingenactedtaxratesexpectedtoapplytotaxableincomeintheyearsinwhichthosetemporarydifferencesareexpectedtoberecoveredorsettled.Theeffectondeferredtaxassetsandliabilitiesofachangeintaxratesisrecognizedinincomeintheperiodthatincludestheenactmentdate.SkyworksSolutions,Inc.2009AnnualReport72Thecarryingvalueofournetdeferredtaxassetsassumesthatwewillbeabletogeneratesufficientfuturetaxableincomeincertaintaxjurisdictions,basedonestimatesandassumptions.Iftheseestimatesandrelatedassumptionschangeinthefuture,wemayberequiredtorecordadditionalvaluationallowancesagainstourdeferredtaxassetsresultinginadditionalincometaxexpenseinourconsolidatedstatementofoperations.Weevaluatetherealizabilityofthedeferredtaxassetsandassesstheadequacyofthevaluationallowancequarterly.Likewise,intheeventthatweweretodeterminethatwewouldbeabletorealizeourdeferredtaxassetsinthefutureinexcessofitsnetrecordedamount,anadjustmenttothedeferredtaxassetswouldincreaseincomeordecreasethecarryingvalueofgoodwillintheperiodsuchdeterminationwasmade.Thedeterminationofrecordingorreleasingtaxvaluationallowancesismade,inpart,pursuanttoanassessmentperformedbymanagementregardingthelikelihoodthatwewillgeneratefuturetaxableincomeagainstwhichbenefitsofourdeferredtaxassetsmayormaynotberealized.Thisassessmentrequiresmanagementtoexercisesignificantjudgmentandmakeestimateswithrespecttoourabilitytogeneraterevenues,grossprofits,operatingincomeandtaxableincomeinfutureperiods.Amongstotherfactors,managementmustmakeassump-tionsregardingoverallbusinessandsemiconductorindustryconditions,operatingefficiencies,ourabilitytodevelopproductstoourcustomers’specifications,technologicalchange,thecompetitiveenvironmentandchangesinregulatoryrequirementswhichmayimpactourabilitytogeneratetaxableincomeand,inturn,realizethevalueofourdeferredtaxassets.Inaddition,thecurrentuncertaineconomicenvironmentlimitsourabilitytoconfidentlyforecastourtaxableincome.Infiscalyears2008and2009,ourestimatesoffuturetaxableincomewerepreparedinamannerconsistentwithourassessmentofvariousfactors,includingmarketandindustryconditions,operatingtrends,productlifecyclesandcompetitiveandregulatoryenvironments.Thecalculationofourtaxliabilitiesincludesaddressinguncertaintiesintheapplicationofcomplextaxregulations.WiththeimplementationeffectiveSeptember29,2007,ASC740-(“IncomeTaxes”)(formerlyreferencedasFASBInterpretationNo.48,AccountingforUncertaintyinIncomeTaxes-aninterpretationofFASBStatementNo.109),clarifiestheaccountingforuncertaintyinincometaxesrecognizedinanenterprise’sfinancialstatementsinaccordancewithGAAP.ASC740prescribesarecognitionthresholdandmeasurementattributeforthefinancialstatementrecognitionandmeasurementofataxpositiontakenorexpectedtobetakeninataxreturn.WerecognizeliabilitiesforanticipatedtaxauditissuesintheUnitedStatesandothertaxjurisdictionsbasedonourrecognitionthresholdandmeasurementattributeofwhetheritismorelikelythannotthatthepositionswehavetakenintaxfilingswillbesustainedupontaxaudit,andtheextenttowhich,additionaltaxeswouldbedue.Ifpaymentoftheseamountsultimatelyprovestobeunnecessary,thereversaloftheliabilitieswouldresultintaxbenefitsbeingrecognizedintheperiodinwhichitisdeterminedtheliabilitiesarenolongernecessary.Iftheestimateoftaxliabilitiesprovestobelessthantheultimateassessment,afurtherchargetoexpensewouldresult.RECENTLYISSUEDACCOUNTINGPRONOUNCEMENTSASC805InDecember2007,theFASBissuedamendmentstoASC805-BusinessCombinations(“ASC805”),whichestablishedprinciplesandrequirementsfortheacquirerofabusinesstorecognizeandmeasureinitsfinancialstatementstheidentifiableassets(includingin-processresearchanddevelopmentanddefensiveassets)acquired,theliabilitiesassumed,andanynoncontrollinginterestintheacquiree.TheamendmentstoASC805areeffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterDecember15,2008.PriortotheadoptionofASC805,in-processresearchanddevelopmentcostswereimmediatelyexpensedandacquisitioncostswerecapitalized.UnderASC805allacquisitioncostsareexpensedasincurred.Thestandardalsoprovidesguidanceforrecognizingandmeasuringthegoodwillacquiredinthebusinesscombinationanddetermineswhatinformationtodisclosetoenableusersoffinancialstatementstoevaluatethenatureandfinancialeffectsofthebusinesscombination.InApril2009theFASBupdatedASC805toamendtheprovisionsfortheinitialrecognitionandmeasurement,subsequentmeasurementandaccounting,anddisclosuresforassetsandliabilitiesarisingfromcontingenciesinbusinesscombinations.Thisupdatealsoeliminatesthedistinctionbetweencontractualandnon-contractualcontingencies.TheCompanyexpectsASC805willhaveanimpactonourconsolidatedfinancialstatements,butthenatureandSkyworksSolutions,Inc.2009AnnualReport73magnitudeofthespecificeffectswilldependuponthenature,termsandsizeoftheacquisitionstheCompanyconsummatesaftertheOctober3,2009effectivedate.ASC810InDecember2007,theFASBissuedamendmentstoASC810-Consolidation(“ASC810”).ASC810amendspreviouslyissuedauthoritativeliteraturetoamendaccountingandreportingstandardsforthenoncontrollinginterestinasubsidiaryandforthedeconsolidationofasubsidiary.ItalsoamendscertainofconsolidationproceduresforconsistencywiththerequirementsofASC805.Thisstatementiseffectiveforfiscalyears,andinterimperiodswithinthosefiscalyears,beginningonorafterDecember15,2008.Thestatementshallbeappliedprospectivelyasofthebeginningofthefiscalyearinwhichthestatementisinitiallyadopted.TheCompanydoesnotexpecttheadoptionofASC810toimpactitsresultsofoperationsorfinancialpositionbecausetheCompanydoesnothaveanyminorityinterests.ASC820InSeptember2006,theFASBissuedASC820-FairValueMeasurementsandDisclosures(“ASC820”),whichdefinesfairvalue,establishesaframeworkformeasuringfairvalueingenerallyacceptedaccountingprinciplesandexpandsdisclosuresaboutfairvaluemeasurements.ASC820iseffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterNovember15,2007forfinancialassetscarriedatfairvalue,andyearsbeginningafterNovember15,2008fornon-financialassetsnotcarriedatfairvalue.TheCompanyhasdeterminedthattheadoptionofASC820willnothaveamaterialimpactontheCompany’sresultsfromoperationsorfinancialposition.ASC825InFebruary2007,theFASBissuedASC825-FinancialInstruments(“ASC825”),includinganamendmentofASC320-Investments-DebtandEquitySecurities(“ASC320”),whichpermitsentitiestochoosetomeasuremanyfinancialinstrumentsandcertainotheritemsatfairvaluethatarenotcurrentlyrequiredtobemeasuredatfairvalue.ASC825iseffectivefortheCompanybeginningonOctober3,2009.TheadoptionofASC825willnothaveamaterialimpactontheCompany’sresultsfromoperationsorfinancialposition.ASC470-20InMay2008,theFASBissuedASC470-20-Debt,DebtwithConversionsandOtherOptions(“ASC470-20”).ASC470-20alterstheaccountingtreatmentforconvertibledebtinstrumentsthatallowforeithermandatoryoroptionalcashsettlements.ASC470-20isexpectedtoimpacttheCompany’saccountingforits2007ConvertibleNotesandpreviouslyheldJuniorNotes.Thisauthoritativeaccountingliteraturerequiresregistrantswithspecifiedconvertiblenotefeaturestorecognize(non-cash)interestexpensebasedonthemarketrateforsimilardebtinstrumentswithouttheconversionfeature.Furthermore,pursuanttoitsretrospectiveaccountingtreatment,theaccountingliteraturerequirespriorperiodinterestexpenserecognition.ASC470-20iseffectiveforfinancialstatementsissuedforfiscalyearsandinterimperiodsbeginningafterDecember15,2008.TheCompanyiscurrentlyevaluatingASC470-20andtheimpactthatitwillhaveonitsConsolidatedFinancialStatements.TheCompanywilladoptASCTopic470onOctober3,2009.ASC855InMay2009,theFASBestablishedgeneralstandardsofaccountingforanddisclosureofeventsthatoccurafterthebalancesheetdatebutbeforefinancialstatementsareissued.ThisguidancewasincludedintheCodificationunderASC855-SubsequentEvents(“ASC855”),andbecameeffectivefortheCompanybeginningwiththethirdfiscalquarterof2009.WeperformedanevaluationofsubsequenteventsthroughNovember30,2009,andweissuedourfinancialstatementsonNovember30,2009.SkyworksSolutions,Inc.2009AnnualReport74ASC105InJune2009,theFASBestablishedtheFASBAccountingStandardsCodificationTM(“Codification”)asthesourceofauthoritativeaccountingprinciplesrecognizedbytheFASBtobeappliedbynongovernmentalentitiesinthepreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesintheUnitedStates(“GAAP”).ThisguidancewasincludedintheCodificationunderASC105-GenerallyAcceptedAccountingPrinciples(“ASC105”).AllprioraccountingstandarddocumentsweresupersededbytheCodificationandanyaccountingliteraturenotincludedintheCodificationisnolongerauthoritative.RulesandinterpretivereleasesoftheSECissuedundertheauthorityoffederalsecuritieslawswillcontinuetobesourcesofauthoritativeGAAPforSECregistrants.TheCodificationbecameeffectivefortheCompanybeginningwiththefourthfiscalquarterof2009.Therefore,beginningwiththefourthfiscalquarterof2009,allreferencesmadebytheCompanytoGAAPinitsnotestotheconsolidatedfinancialstatementsusethenewCodificationnumberingsystem.TheCodificationdoesnotchangeoralterexistingGAAPand,therefore,didnothaveanyimpactontheCompany’sconsolidatedfinancialstatements.ASU2009-13andASU2009-14InSeptember2009,theFASBreachedaconsensusonAccountingStandardsUpdate(“ASU”)-2009-13-RevenueRecognition(“ASC605”)—Multiple-DeliverableRevenueArrangements(“ASU2009-13”)andASU2009-14-Software(“ASC985”)—CertainRevenueArrangementsThatIncludeSoftwareElements(“ASU2009-14”).ASU2009-13modifiestherequirementsthatmustbemetforanentitytorecognizerevenuefromthesaleofadelivereditemthatispartofamultiple-elementarrangementwhenotheritemshavenotyetbeendelivered.ASU2009-13eliminatestherequirementthatallundeliveredelementsmusthaveeither:i)VSOEorii)third-partyevidence,orTPE,beforeanentitycanrecognizetheportionofanoverallarrangementconsiderationthatisattributabletoitemsthatalreadyhavebeendelivered.IntheabsenceofVSOEorTPEofthestandalonesellingpriceforoneormoredeliveredorundeliveredelementsinamultiple-elementarrangement,entitieswillberequiredtoestimatethesellingpricesofthoseelements.Overallarrangementconsiderationwillbeallocatedtoeachelement(bothdeliveredandundelivereditems)basedontheirrelativesellingprices,regardlessofwhetherthosesellingpricesareevidencedbyVSOEorTPEorarebasedontheentity’sestimatedsellingprice.Theresidualmethodofallocatingarrangementconsiderationhasbeeneliminated.ASU2009-14modifiesthesoftwarerevenuerecognitionguidancetoexcludefromitsscopetangibleproductsthatcontainbothsoftwareandnon-softwarecomponentsthatfunctiontogethertodeliveraproduct’sessentialfunctionality.ThesenewupdatesareeffectiveforrevenuearrangementsenteredintoormateriallymodifiedinfiscalyearsbeginningonorafterJune15,2010.Earlyadoptionispermitted.TheCompanyiscurrentlyevaluatingtheimpactthattheadoptionoftheseASUswillhaveonourconsolidatedfinancialstatements.OTHERMATTERSInflationdidnothaveamaterialimpactuponourresultsofoperationsduringthethree-yearperiodendedOctober2,2009.SkyworksSolutions,Inc.2009AnnualReport75QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISKWearesubjecttoforeigncurrency,marketrateandinterestrisksasdescribedbelow:InvestmentandInterestRateRiskOurexposuretointerestandmarketrisksrelatesprincipallytoourinvestmentportfolio,whichasofOctober2,2009consistedofthefollowing(inthousands):Cashandcashequivalents(timedeposits,overnightrepurchaseagreementsandmoneymarketfunds).......................................................$364,221Restrictedcash(timedepositsandcertificatesofdeposit)........................5,863Availableforsalesecurities(auctionratesecurities)............................2,288$372,372Themainobjectiveofourinvestmentactivitiesistheliquidityandpreservationofcapital.Creditriskassociatedwithourinvestmentsisnotsignificantasourinvestmentpolicyprescribeshighcreditqualitystandardsandlimitstheamountofcreditexposuretoanyoneissuer.Wedonotusederivativeinstrumentsfortrading,speculativeorinvestmentpurposes.Ingeneral,ourcashandcashequivalentinvestmentshaveshort-termmaturityperiodswhichdampentheimpactofsignificantmarketorinterestraterisk.Weare,however,subjecttooverallfinancialmarketrisks,suchaschangesinmarketliquidity,creditqualityandinterestrates.Availableforsalesecuritiescarryalongermaturityperiod(contractualmaturitiesexceedtenyears).Infiscal2008,weexperiencedwhatwebelievewillbeatemporaryunrealizedlossonourinvestmentinauctionratesecuritiesprimarilycausedbyadisruptionintheliquidityoftheDutchauctionprocesswhichresetsinterestrateseachperiod.Weclassifiedauctionratesecuritiesinpriorperiodsascurrentassetsunder“ShortTermInvestments”.Giventhefailedauctions,theauctionratesecuritiesareeffectivelyilliquiduntilthereisasuccessfulauction.Accordingly,theremainingauctionratesecuritiesbalancehasbeenreclassifiedtonon-currentotherassets.However,itisnotmorelikely-than-notthatwewillberequiredtoselltheauctionratesecuritiespriortomaturity.Ourshort-termdebtconsistsofborrowingsunderourcreditfacilitywithWachoviaBank,N.A.of$50.0mil-lion.InterestrelatedtoourborrowingsunderourcreditfacilitywithWachoviaBank,N.A.isatLIBORplus0.75%andwasapproximately0.99%atOctober2,2009.Consequently,wedonothavesignificantcashflowexposureonthisshort-termdebtorinterestraterisk.Ourlong-termdebtatOctober2,2009consistsof$79.7millionaggregateprincipalamountofconvertiblesubordinatednotes(“2007ConvertibleNotes”),ofwhich$32.6millionareclassifiedinshort-termdebtascurrentmaturities.These2007ConvertibleNotescontaincashsettlementprovisions,whichpermittheapplicationofthetreasurystockmethodindeterminingpotentialsharedilutionoftheconversionspreadshouldthesharepriceoftheCompany’scommonstockexceed$9.52.IthasbeentheCompany’shistoricalpracticetocashsettletheprincipalandinterestcomponentsofconvertibledebtinstruments,anditisourintentiontocontinuetodosointhefuture,includingsettlementofthe2007ConvertibleNotesissuedinMarch2007.TheseshareshavebeenincludedinthecomputationofearningspershareforthefiscalyearendedOctober2,2009.ExchangeRateRiskSubstantiallyallsalestocustomersandarrangementswiththird-partymanufacturersprovideforpricingandpaymentinUnitedStatesdollars,therebyreducingtheimpactofforeignexchangeratefluctuationsonourresults.Asmallpercentageofourinternationaloperationalexpensesaredenominatedinforeigncurrencies.Exchangeratevolatilitycouldnegativelyorpositivelyimpactthoseoperatingcosts.ForthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,theCompanyhadunrealizedforeignexchangegains/(losses)of$0.7million,$(0.6)million,and$0.4million,respectively.IncreasesinthevalueoftheU.S.dollarrelativetoothercurrenciescouldmakeourproductsmoreexpensive,whichcouldnegativelyimpactourabilitytocompete.Conversely,decreasesinthevalueoftheU.S.dollarrelativetoothercurrenciescouldresultinoursuppliersraisingtheirpricestocontinuedoingbusinesswithus.Fluctuationsincurrencyexchangeratescouldhaveagreatereffectonourbusinessinthefuturetotheextentourexpensesincreasinglybecomedenominatedinforeigncurrencies.SkyworksSolutions,Inc.2009AnnualReport76SELECTEDFINANCIALDATAYoushouldreadthedatasetforthbelowinconjunctionwithManagement’sDiscussionandAnalysisofFinancialConditionandResultsofOperation,andourconsolidatedfinancialstatementsandrelatednotesappearingelsewhereinthisAnnualReport.TheCompany’sfiscalyearendsontheFridayclosesttoSeptember30.Fiscalyears2009and2007eachconsistedof52weeksandendedonOctober2,2009andSeptember28,2007,respectively.Fiscal2008consistedof53weeksandendedonOctober3,2008.ThefollowingbalancesheetdataandstatementsofoperationsdataforthefiveyearsendedOctober2,2009werederivedfromourauditedconsolidatedfinancialstatements.ConsolidatedbalancesheetsatOctober2,2009andatOctober3,2008,andtherelatedconsolidatedstatementsofoperationsandcashflowsforeachofthethreeyearsintheperiodendedOctober2,2009,andnotestheretoappearelsewhereinthisAnnualReport.2009(6)2008(6)2007(6)2006(6)2005FiscalYear(Inthousandsexceptpersharedata)StatementofOperationsData:Netrevenues....................$802,577$860,017$741,744$773,750$792,371Costofgoodssold(1).............484,357517,054454,359511,071484,599Grossprofit....................318,220342,963287,385262,679307,772Operatingexpenses:Researchanddevelopment........123,996146,013126,075164,106152,215Selling,generalandadministrative(2).............100,421100,00794,950135,801103,070Amortizationofintangibleassets(3)...................6,1186,0052,1442,1442,354Restructuringandothercharges(4)..15,9825675,73026,955—Totaloperatingexpenses.......246,517252,592228,899329,006257,639Operatingincome(loss)...........71,70390,37158,486(66,327)50,133Interestexpense.................(3,644)(7,330)(12,026)(14,797)(14,597)Lossonearlyretirementofconvertibledebt(5)......................(4,066)(6,836)(564)——Otherincome,net................1,7535,98310,8748,3505,453Income(loss)beforeincometaxes....65,74682,18856,770(72,774)40,989Provision(benefit)forincometaxes(7)......................(27,543)(28,818)(880)15,37815,378Netincome(loss)................$93,289$111,006$57,650$(88,152)$25,611Pershareinformation:Netincome(loss),basic...........$0.56$0.69$0.36$(0.55)$0.16Netincome(loss),diluted..........$0.55$0.68$0.36$(0.55)$0.16BalanceSheetData:Workingcapital.................$393,132$345,916$316,494$245,223$337,747Totalassets.....................1,355,3261,236,0991,189,9081,090,4961,187,843Long-termliabilities..............53,202143,143206,338185,783237,044Stockholders’equity..............1,105,129944,216786,347729,093792,564(1)Duringthesecondquarteroffiscal2009,weimplementedarestructuringplantoreduceglobalheadcountbyapproximately4%or150employees.Thetotalchargesrelatedtotheplanwere$19.4millionofwhich$3.5millionwaschargedtocostofgoodssoldforinventorywrite-downs.Duringfiscal2006,werecorded$23.3millionofinventorychargesandreservesprimarilyrelatedtotheexitofourbasebandproductarea.SkyworksSolutions,Inc.2009AnnualReport77(2)Duringfiscal2006,werecordedbaddebtexpenseof$35.1millionrelatedtocertainbasebandcustomers.(3)Theincreaseinamortizationexpenseinfiscal2009andfiscal2008isprimarilyduetotheacquisitionscompletedinOctober2007andinMay2009.(4)Infiscal2009,weimplementedarestructuringplantoreduceglobalheadcountbyapproximately4%or150employees.Thetotalchargesrelatedtotheplanwere$19.4millionofwhich$16.0millionwaschargedtorestructuringandothercharges.Thisprimarilyconsistedof$4.5millionrelatedtoseveranceandbenefits,$5.6millionrelatedtotheimpairmentoflong-livedassets,$2.1millionrelatedtoleaseobligations,$2.3millionrelatedtotheimpairmentoftechnologylicensesanddesignsoftwareand$1.5millionrelatedtoothercharges.Infiscal2007,werecordedrestructuringandotherchargesof$4.9millionrelatedtotheexitofthebasebandproductarea.Infiscal2006,werecordedrestructuringandotherchargesof$27.0millionrelatedtotheexitofourbasebandproductarea.(5)Inthefourthquarteroffiscal2009,werecordedapproximately$6.1millionofcostsrelatingtotheearlyretirementof$17.4millionofour1.25%convertiblesubordinatednotes.Thisisoffsetbya$2.0milliongainrecordedduringthefirstquarteroffiscal2009relatingtotheearlyretirementof$40.5millionoftheCompany’s1.50%convertiblesubordinatednotes.Thenoteswereretiredatagainofapproximately$2.9millionoffsetbya$0.9millionwrite-offofdeferredfinancingcosts.Infiscal2008,werecordedapproximately$5.8millionofpremiuminexcessofparvalueand$1.0millionofdeferredfinancingcostsrelatingtotheearlyretirementof$62.4millionof1.25%and1.50%convertiblesubordinatednotes.(6)FiscalyearsendedOctober2,2009,October3,2008,September28,2007andSeptember29,2006included$23.5million,$23.2million,$13.7millionand$14.2million,respectively,ofshare-basedcompensationexpenseduetotheadoptionoftheStatementofASC718-Compensation-StockCompensation(“ASC718”).(7)BasedontheCompany’sevaluationoftherealizabilityofitsUnitedStatesnetdeferredtaxassetsthroughthegenerationoffuturetaxableincome,$40.9million,$40.0millionand$14.2millionoftheCompany’svaluationallowancewasreversedduringthefiscalyearsendedOctober2,2009,October3,2008andSeptember28,2007,respectively.Forfiscal2009,theamountreversedconsistedof$27.7millionrecognizedasincometaxbenefit,and$13.2millionrecognizedasareductiontogoodwill.Forfiscal2008,theamountreversedconsistedof$36.4millionrecognizedasincometaxbenefit,and$3.6millionrecognizedasareductiontogoodwill.Forfiscal2007,theamountreversedconsistedof$1.7millionrecognizedasincometaxbenefit,and$12.5millionrecognizedasareductiontogoodwill.SkyworksSolutions,Inc.2009AnnualReport78SKYWORKSSOLUTIONS,INC.CONSOLIDATEDSTATEMENTSOFOPERATIONSOctober2,2009October3,2008September28,2007FiscalYearsEnded(Inthousands,exceptpershareamounts)Netrevenues...........................................$802,577$860,017$741,744Costofgoodssold.......................................484,357517,054454,359Grossprofit............................................318,220342,963287,385Operatingexpenses:Researchanddevelopment...............................123,996146,013126,075Selling,generalandadministrative.........................100,421100,00794,950Amortizationofintangibleassets...........................6,1186,0052,144Restructuringandothercharges............................15,9825675,730Totaloperatingexpenses...............................246,517252,592228,899Operatingincome........................................71,70390,37158,486Interestexpense.........................................(3,644)(7,330)(12,026)Lossonearlyretirementofconvertibledebt....................(4,066)(6,836)(564)Otherincome,net........................................1,7535,98310,874Incomebeforeincometaxes................................65,74682,18856,770Benefitforincometaxes...................................(27,543)(28,818)(880)Netincome............................................$93,289$111,006$57,650Pershareinformation:Netincome,basic......................................$0.56$0.69$0.36Netincome,diluted....................................$0.55$0.68$0.36Numberofweighted-averagesharesusedinpersharecomputations,basic..............................................167,047161,878159,993Numberofweighted-averagesharesusedinpersharecomputations,diluted............................................169,663164,755161,064Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.SkyworksSolutions,Inc.2009AnnualReport79SKYWORKSSOLUTIONS,INC.CONSOLIDATEDBALANCESHEETSOctober2,2009October3,2008Asof(Inthousands,exceptpershareamounts)ASSETSCurrentassets:Cashandcashequivalents.........................................$364,221$225,104Restrictedcash.................................................5,8635,962Receivables,netofallowancefordoubtfulaccountsof$2,845and$1,048,respectively..................................................115,034146,710Inventories....................................................86,097103,791Othercurrentassets.............................................18,91213,089Totalcurrentassets............................................590,127494,656Property,plantandequipment,net...................................162,299173,360Goodwill.....................................................482,893483,671Intangibleassets,net.............................................18,24519,746Deferredtaxassets..............................................91,47953,192Otherassets...................................................10,28311,474Totalassets..................................................$1,355,326$1,236,099LIABILITIESANDSTOCKHOLDERS’EQUITYCurrentliabilities:Short-termdebt.................................................$82,617$50,000Accountspayable...............................................69,09858,527Accruedcompensationandbenefits..................................29,44932,110Othercurrentliabilities...........................................15,8318,103Totalcurrentliabilities.........................................196,995148,740Long-termdebt,lesscurrentmaturities...............................47,116137,616Otherlong-termliabilities.........................................6,0865,527Totalliabilities...............................................250,197291,883Commitmentsandcontingencies(Note13andNote14)Stockholders’equity:Preferredstock,noparvalue:25,000sharesauthorized,nosharesissued......——Commonstock,$0.25parvalue:525,000sharesauthorized;177,873sharesissuedand172,815sharesoutstandingatOctober2,2009and170,323sharesissuedand165,592sharesoutstandingatOctober3,2008...............43,20441,398Additionalpaid-incapital.........................................1,499,4061,430,999Treasurystock.................................................(36,307)(33,918)Accumulateddeficit.............................................(399,794)(493,083)Accumulatedothercomprehensiveloss...............................(1,380)(1,180)Totalstockholders’equity.......................................1,105,129944,216Totalliabilitiesandstockholders’equity............................$1,355,326$1,236,099Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.SkyworksSolutions,Inc.2009AnnualReport80SKYWORKSSOLUTIONS,INC.CONSOLIDATEDSTATEMENTSOFCASHFLOWSOctober2,2009October3,2008September28,2007FiscalYearsEnded(Inthousands)Cashflowsfromoperatingactivities:Netincome............................................$93,289$111,006$57,650Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities:Share-basedcompensationexpense.........................23,46623,21213,737Depreciation..........................................44,41344,71239,237Chargeinlieuofincometaxexpense.......................—7,014—Amortizationofintangibleassets...........................6,1186,9332,144Amortizationofdeferredfinancingcosts.....................9431,7532,311Contributionofcommonsharestosavingsandretirementplans....8,50210,4078,565Non-cashrestructuringexpense............................955567419Deferredincometaxes..................................(27,182)(36,648)(1,741)Lossondisposalofassets................................411276227Inventorywrite-downs..................................3,458——Assetimpairments.....................................5,616——Provisionforlosses(recoveries)onaccountsreceivable..........1,797(614)2,203Changesinassetsandliabilitiesnetofacquiredbalances:Receivables..........................................29,94721,223(10,724)Inventories...........................................15,678(16,082)(247)Othercurrentandlong-termassets.........................(3,932)2,860(1,534)Accountspayable......................................9,2192,110(16,654)Othercurrentandlong-termliabilities.......................(2,549)(5,051)(10,815)Netcashprovidedbyoperatingactivities...................210,149173,67884,778Cashflowsfrominvestingactivities:Capitalexpenditures......................................(39,172)(64,832)(42,596)Paymentsforacquisitions..................................(10,356)(32,627)—Saleofinvestments.......................................—10,000978,046Purchaseofinvestments...................................—(7,500)(955,596)Netcashusedininvestingactivities.......................(49,528)(94,959)(20,146)Cashflowsfromfinancingactivities:Proceedsfrom2007ConvertibleNotes........................——200,000Retirementof2007ConvertibleNotes.........................(57,883)(62,384)—RetirementofJuniorNotes.................................—(49,335)(130,000)Deferredfinancingcosts...................................——(6,189)Changeinrestrictedcash..................................100541(200)Repurchaseofcommonstock...............................(2,389)(2,063)(31,681)Netproceedsfromexerciseofstockoptions....................38,66818,0498,266Netcashprovidedby(usedin)financingactivities............(21,504)(95,192)40,196Netincrease(decrease)incashandcashequivalents..............139,117(16,473)104,828Cashandcashequivalentsatbeginningofperiod................225,104241,577136,749Cashandcashequivalentsatendofperiod.....................$364,221$225,104$241,577Supplementalcashflowdisclosures:Taxespaid.............................................$1,009$1,156$1,117Interestpaid............................................$2,323$6,023$12,479Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.SkyworksSolutions,Inc.2009AnnualReport81SKYWORKSSOLUTIONS,INC.CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERS’EQUITYANDCOMPREHENSIVEINCOME(LOSS)SharesofCommonStockParvalueofCommonStockSharesofTreasuryStockValueofTreasuryStockAdditionalPaid-inCapitalAccumulatedDeficitAccumulatedOtherComprehensiveLossTotalStockholders’Equity(Inthousands)BalanceatSeptember29,2006..161,659$40,41431$(173)$1,351,190$(661,739)$(599)$729,093Netincome................—————57,650—57,650Pensionadjustment...........——————159159Othercomprehensiveincome....——————159159Comprehensiveincome........———————57,809AdjustmenttoinitiallyapplyASC715................——————226226Issuanceandexpenseofcommonsharesforstockpurchaseplans,401(k)andstockoptionplans...................3,221805——25,468——26,273Issuanceandexpenseofcommonsharesforrestrictedstockandperformanceshares.........682171——4,457——4,628Repurchaseofcommonstock...(4,255)(1,064)4,255(30,083)1,064——(30,083)Shareswithheldfortaxes......(206)(51)206(1,599)51——(1,599)BalanceatSeptember28,2007..161,101$40,2754,492$(31,855)$1,382,230$(604,089)$(214)$786,347Netincome................—————111,006—111,006ImpairmentofAuctionRateSecurity.................——————(912)(912)Pensionadjustment...........——————(54)(54)Othercomprehensiveloss......——————(966)(966)Comprehensiveincome........———————110,040Issuanceandexpenseofcommonsharesforstockpurchaseplans,401(k)andstockoptionplans...................3,951988——40,308——41,296Issuanceandexpenseofcommonsharesforrestrictedstockandperformanceshares.........780195——8,401——8,596Shareswithheldfortaxes......(240)(60)240(2,063)60——(2,063)BalanceatOctober3,2008.....165,592$41,3984,732$(33,918)$1,430,999$(493,083)$(1,180)$944,216Netincome................—————93,289—93,289Pensionadjustment...........——————(200)(200)Othercomprehensiveloss......——————(200)(200)Comprehensiveincome........———————93,089Issuanceandexpenseofcommonsharesforstockpurchaseplans,401(k)andstockoptionplans...................7,1591,790——59,214——61,004Issuanceandexpenseofcommonsharesforrestrictedstockandperformanceshares.........39098——9,111——9,209Shareswithheldfortaxes......(326)(82)326(2,389)82——(2,389)BalanceatOctober2,2009.....172,815$43,2045,058$(36,307)$1,499,406$(399,794)$(1,380)$1,105,129Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.SkyworksSolutions,Inc.2009AnnualReport82NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS1.DESCRIPTIONOFBUSINESSANDBASISOFPRESENTATIONSkyworksSolutions,Inc.togetherwithitsconsolidatedsubsidiaries,(“Skyworks”orthe“Company”)isaninnovatorofhighreliabilityanalogandmixedsignalsemiconductors.Leveragingcoretechnologies,Skyworksoffersdiversestandardandcustomlinearproductssupportingautomotive,broadband,cellularinfrastructure,energymanagement,industrial,medical,militaryandcellularhandsetapplications.TheCompany’sportfolioincludesamplifiers,attenuators,detectors,diodes,directionalcouplers,front-endmodules,hybrids,infrastructureRFsubsystems,mixers/demodulators,phaseshifters,PLLs/synthesizers/VCOs,powerdividers/combiners,receiv-ers,switchesandtechnicalceramics.InJune2009theFinancialAccountingStandardsBoard,(“FASB”),establishedtheAccountingStandardsCodification,(“ASC”),asthesourceofauthoritativeGAAPrecognizedbytheFASB.TheCodificationiseffectiveinthefirstinterimandannualperiodsendingafterSeptember15,2009andhadnoeffectontheCompany’sauditedconsolidatedfinancialstatements.TheCompanyhasevaluatedsubsequenteventsthroughNovember30,2009,thedateofissuanceoftheauditedconsolidatedfinancialstatements.DuringthisperiodtheCompanydidnothaveanymaterialsubsequentevents.2.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESREVENUERECOGNITIONRevenuesfromproductsalesarerecognizeduponshipmentandtransferoftitle,inaccordancewiththeshippingtermsspecifiedinthearrangementwiththecustomer.Revenuefromlicensefeesandintellectualpropertyisrecognizedwhenthesefeesaredueandpayable,andallothercriteriaofASC605-RevenueRecognition,havebeenmet.TheCompanyshipsproductonconsignmenttocertaincustomersandonlyrecognizerevenuewhenthecustomernotifiesusthattheinventoryhasbeenconsumed.Revenuerecognitionisdeferredinallinstanceswheretheearningsprocessisincomplete.Certainproductsalesaremadetoelectroniccomponentdistributorsunderagreementsallowingforpriceprotectionand/orarightofreturnonunsoldproducts.Areserveforsalesreturnsandallowancesforcustomersisrecordedbasedonhistoricalexperienceorspecificidentificationofaneventnecessitatingareserve.ALLOWANCEFORDOUBTFULACCOUNTSTheCompanymaintainsgeneralallowancesfordoubtfulaccountsforlossesthattheyestimatewillarisefromtheircustomers’inabilitytomakerequiredpayments.Thesereservesaredeterminedquarterlyandrequiremanagementtomakeestimatesofthecollectabilityofitsaccountsreceivablebyconsideringfactorssuchashistoricalbaddebtexperience,theageoftheaccountsreceivablebalancesandtheimpactofthecurrenteconomicclimateonacustomer’sabilitytopay.Inaddition,astheCompanybecomesawareofanyspecificreceivableswhichmaybeuncollectable,theyperformadditionalanalysisandreservesarerecordedifdeemednecessary.Determi-nationofsuchadditionalspecificreservesrequiremanagementtomakejudgmentsandestimatespertainingtofactorssuchasacustomer’screditworthiness,intentandabilitytopay,andoverallfinancialposition.IfthedatatheCompanyusestocalculatetheallowancefordoubtfulaccountsdoesnotreflectthefutureabilitytocollectoutstandingreceivables,additionalprovisionsfordoubtfulaccountsmaybeneededanditsresultsofoperationscouldbemateriallyaffected.PRINCIPLESOFCONSOLIDATIONAllmajorityownedsubsidiariesareincludedintheCompany’sConsolidatedFinancialStatementsandallintercompanybalancesareeliminatedinconsolidation.SkyworksSolutions,Inc.2009AnnualReport83FISCALYEARTheCompany’sfiscalyearendsontheFridayclosesttoSeptember30.Fiscalyears2009and2007eachconsistedof52weeksandendedonOctober2,2009andSeptember28,2007,respectively.Fiscal2008consistedof53weeksandendedonOctober3,2008.USEOFESTIMATESThepreparationofconsolidatedfinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpensesduringthereportingperiod.Onanongoingbasis,managementreviewsitsestimatesbaseduponcurrentlyavailableinformation.Actualresultscoulddiffermateriallyfromthoseestimates.CASHANDCASHEQUIVALENTSTheCompany’scashandcashequivalentsprimarilyconsistofmoneymarketfundsandrepurchaseagree-mentswheretheunderlyingsecuritiesprimarilyconsistofUnitedStatestreasuryobligations,UnitedStatesagencyobligations,overnightrepurchaseagreementsbackedbyUnitedStatestreasuriesand/orUnitedStatesagencyobligationsandhighlyratedcommercialpaper.INVESTMENTSTheCompany’sinvestmentsareclassifiedasavailableforsale.Theseinvestmentsconsistofanauctionratesecurity(ARS)whichhaslong-termunderlyingmaturities(rangingfrom20to40years).DuetotherecentdisruptionsinthecreditmarketstheDutchauctionprocessthatnormallywouldallowtheCompanytosellthesecurityevery28-35dayshasfailedsinceAugust2007.Thisinvestmentandtheauctionratesecuritymarketareilliquidatthistime.TheCompanyperformedacomprehensivevaluationanddiscountedcashflowanalysisontheARSandconcludedthevalueoftheARSwas$2.3million.The$2.3millionvaluationfromfiscal2008remainedunchangedinfiscalyear2009.TheCompanywillcontinuetocloselymonitortheARSandevaluatetheappropriateaccountingtreatmentineachreportingperiod.RESTRICTEDCASHRestrictedcashisprimarilyusedtocollateralizetheCompany’sobligationunderareceivablespurchaseagreementunderwhichithasagreedtosellfromtimetotimecertainofitsaccountsreceivabletoSkyworksUSA,Inc.(“SkyworksUSA”),awholly-ownedspecialpurposeentitythatisfullyconsolidatedforaccountingpurposes.Concurrently,SkyworksUSAenteredintoanagreementwithWachoviaBank,N.A.providingfora$50millioncreditfacility(“FacilityAgreement”)securedbythepurchasedaccountsreceivable.ForfurtherinformationregardingtheFacilityAgreement,pleaseseeNote9totheConsolidatedFinancialStatements.INVENTORIESInventoriesarestatedatthelowerofcost,determinedonafirst-in,first-outbasis,ormarket.Eachquarter,theCompanyestimatesandestablishesreservesforexcess,obsoleteorunmarketableinventory.Thesereservesaregenerallyequaltothehistoricalcostbasisoftheexcessorobsoleteinventoryandoncerecordedareconsideredpermanentadjustments.Calculationofthereservesrequiresmanagementtousejudgmentandmakeassumptionsaboutforecasteddemandinrelationtotheinventoryonhand,competitivenessofitsproductofferings,generalmarketconditionsandproductlifecyclesuponwhichthereservesarebased.Wheninventoryonhandexceedsforeseeabledemand(generallyinexcessoftwelvemonths),reservesareestablishedforthevalueofsuchinventorythatisnotexpectedtobesoldatthetimeofthereview.SkyworksSolutions,Inc.2009AnnualReport84NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)IfactualdemandandmarketconditionsarelessfavorablethanthosetheCompanyprojects,additionalinventoryreservesmayberequiredanditsresultsofoperationscouldbemateriallyaffected.Someoralloftheinventoriesthathavebeenreservedmayberetainedandmadeavailableforsale,however,theyaregenerallyscrappedovertime.PROPERTY,PLANTANDEQUIPMENTProperty,plantandequipmentarecarriedatcostlessaccumulateddepreciationandamortization.Depreciationiscalculatedusingthestraight-linemethod.Significantrenewalsandbettermentsarecapitalizedandequipmenttakenoutofserviceiswrittenoff.Maintenanceandrepairs,aswellasrenewalsofaminoramount,areexpensedasincurred.Estimatedusefullivesusedfordepreciationpurposesare5to30yearsforbuildingsandimprovementsand3to10yearsformachineryandequipment.Leaseholdimprovementsaredepreciatedoverthelesseroftheeconomiclifeorthelifeoftheassociatedlease.SHARE-BASEDCOMPENSATIONTheCompanyappliesASC718Compensation-StockCompensation(“ASC718”)whichrequiresthemea-surementandrecognitionofcompensationexpenseforallshare-basedpaymentawardsmadetoemployeesanddirectorsincludingemployeestockoptions,employeestockpurchasesrelatedtotheCompany’s2002EmployeeStockPurchasePlan,restrictedstockandotherspecialequityawardsbasedonestimatedfairvalues.TheCompanyadoptedASC718usingthemodifiedprospectivetransitionmethod,whichrequirestheapplicationoftheapplicableaccountingstandardasofOctober1,2005,thefirstdayoftheCompany’sfiscalyear2006.Thefairvalueofstock-basedawardsisamortizedovertherequisiteserviceperiod,whichisdefinedastheperiodduringwhichanemployeeisrequiredtoprovideserviceinexchangeforanaward.TheCompanyusesastraight-lineattributionmethodforallgrantsthatincludeonlyaservicecondition.Duetotheexistenceofamarketcondition,certainrestrictedstockgrantsareexpensedovertheserviceperiodforeachseparatelyvestingtranche.Share-basedcompensationexpenserecognizedduringtheperiodisbasedonthevalueoftheportionofshare-basedpaymentawardsthatisultimatelyexpectedtovestduringtheperiod.Share-basedcompensationexpenserecognizedintheCompany’sConsolidatedStatementofOperationsforthefiscalyearendedOctober2,2009onlyincludedshare-basedpaymentawardsgrantedsubsequenttoSeptember30,2005basedonthegrantdatefairvalueestimatedinaccordancewiththeprovisionsofASC718.Asshare-basedcompensationexpenserecognizedintheConsolidatedStatementofOperationsforthefiscalyearendedOctober2,2009isbasedonawardsultimatelyexpectedtovest,ithasbeenreducedforestimatedforfeitures.ASC718requiresforfeiturestobeestimatedatthetimeofgrantandrevised,ifnecessary,insubsequentperiodsifactualforfeituresdifferfromthoseestimates.UponadoptionofASC718,theCompanyelectedtoretainitsmethodofvaluationforshare-basedawardsusingtheBlack-Scholesoption-pricingmodel(“Black-Scholesmodel”)whichwasalsopreviouslyusedfortheCompany’sproformainformationrequiredunderthepreviousauthoritativeliteraturegoverningstockcompen-sationexpense.TheCompany’sdeterminationoffairvalueofshare-basedpaymentawardsonthedateofgrantusingtheBlack-ScholesmodelisaffectedbytheCompany’sstockpriceaswellasassumptionsregardinganumberofhighlycomplexandsubjectivevariables.Thesevariablesinclude,butarenotlimitedto;theCompany’sexpectedstockpricevolatilityoverthetermoftheawards,andactualandprojectedemployeestockoptionexercisebehaviors.Formorecomplexawardswithmarket-basedperformanceconditions,theCompanyemploysaMonteCarlosimulationmethodwhichcalculatesmanypotentialoutcomesforanawardandestablishesfairvaluebasedonthemostlikelyoutcome.SkyworksSolutions,Inc.2009AnnualReport85NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)VALUATIONOFLONG-LIVEDASSETSCarryingvaluesforlong-livedassetsanddefinitelivedintangibleassets,whichexcludegoodwill,arereviewedforpossibleimpairmentascircumstanceswarrant.Factorsconsideredimportantthatcouldresultinanimpairmentreviewincludesignificantunderperformancerelativetoexpected,historicalorprojectedfutureoperatingresults,significantchangesinthemannerofuseofassetsortheCompany’sbusinessstrategy,significantnegativeindustryoreconomictrendsandasignificantdeclineinitsstockpriceforasustainedperiodoftime.Inaddition,impairmentreviewsareconductedatthejudgmentofmanagementwheneverasset/assetgroupvaluesaredeemedtobeunrecoverablerelativetofutureundiscountedcashflowsexpectedtobegeneratedbythatparticularasset/assetgroup.Thedeterminationofrecoverabilityisbasedonanestimateofundiscountedcashflowsexpectedtoresultfromtheuseofanasset/assetgroupanditseventualdisposition.Suchestimatesrequiremanagementtoexercisejudgmentandmakeassumptionsregardingfactorssuchasfuturerevenuestreams,operatingexpenditures,costallocationandassetutilizationlevels,allofwhichcollectivelyimpactfutureoperatingperformance.TheCompany’sestimatesofundiscountedcashflowsmaydifferfromactualcashflowsdueto,amongotherthings,technologicalchanges,economicconditions,changestoitsbusinessmodelorchangesinitsoperatingperformance.Ifthesumoftheundiscountedcashflows(excludinginterest)islessthanthecarryingvalueofanassetorassetgroup,theCompanywouldrecognizeanimpairmentloss,measuredastheamountbywhichthecarryingvalueexceedsthefairvalueoftheassetorassetgroup.GOODWILLANDINTANGIBLEASSETSGoodwillandintangibleassetswithindefiniteusefullivesaretestedatleastannuallyforimpairmentinaccordancewiththeprovisionsofASC350Intangibles-GoodwillandOther(“ASC350”).IntangibleassetswithindefiniteusefullivescompriseaninsignificantportionofthetotalbookvalueoftheCompany’sgoodwillandintangibleassets.TheCompanyassessestheneedtotestitsgoodwillforimpairmentonaregularbasis.PursuanttotheguidanceprovidedunderASC280-SegmentReporting(“ASC280”),theCompanyhasdeterminedthatithasonlyonereportingunitforthepurposesofallocatingandtestinggoodwillunderASC350.Thegoodwillimpairmenttestisatwo-stepprocess.ThefirststepoftheCompany’simpairmentanalysiscomparesitsfairvaluetoitsnetbookvaluetodetermineifthereisanindicatorofimpairment.Todeterminefairvalue,ASC350allowsfortheuseofseveralvaluationmethodologies,althoughitstatesthatquotedmarketpricesarethebestevidenceoffairvalueandshallbeusedasthebasisformeasuringfairvaluewhereavailable.IntheCompany’sassessmentofitsfairvalue,theCompanyconsiderstheaveragemarketpriceofitscommonstocksurroundingtheselectedtestingdate,thenumberofsharesofitscommonstockoutstandingduringsuchperiodandothermarketplaceactivityandrelatedcontrolpremiums.IfthecalculatedfairvalueisdeterminedtobelessthanthebookvalueoftheCompany,thentheCompanyperformssteptwooftheimpairmentanalysis.SteptwooftheanalysiscomparestheimpliedfairvalueoftheCompany’sgoodwill,tothebookvalueofitsgoodwill.IfthebookvalueoftheCompany’sgoodwillexceedstheimpliedfairvalueofitsgoodwill,animpairmentlossisrecognizedequaltothatexcess.InStep2oftheCompany’sannualimpairmentanalysis,theCompanyprimarilyusestheincomeapproachmethodologyofvaluation,whichincludesthediscountedcashflowmethodaswellasothergenerallyacceptedvaluationmethodologies,todeterminetheimpliedfairvalueoftheCompany’sgoodwill.Significantmanagementjudgmentisrequiredinpreparingtheforecastsoffutureoperatingresultsthatareusedinthediscountedcashflowmethodofvaluation.Shouldsteptwooftheimpairmenttestberequired,theestimatesmanagementwouldusewouldbeconsistentwiththeplansandestimatesthattheCompanyusestomanageitsbusiness.Inadditiontotestinggoodwillforimpairmentonanannualbasis,factorssuchasunexpectedadversebusinessconditions,deteriorationoftheeconomicclimate,unanticipatedtechnologicalchanges,adversechangesinthecompetitiveenvironment,lossofkeypersonnelandactsbygovernmentsandcourts,areconsideredbymanagementandmaysignalthattheCompany’sintangibleassetshavebecomeimpairedandresultinadditionalinterimimpairmenttesting.SkyworksSolutions,Inc.2009AnnualReport86NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)Infiscal2009,theCompanyperformedimpairmenttestsofitsgoodwillonJanuary3,2009,April4,2009andonJuly4,2009.ThefirstimpairmenttestwastriggeredbyasignificantdeclineintheCompany’sstockpriceanddeteriorationinthemacro-economicclimateduringthefirstfiscalquarter.ThesecondimpairmenttestwastriggeredbyarestructuringactionannouncedonJanuary22,2009andthethirdtestwasconductedonthefirstdayofthefourthfiscalquarter,July4,2009,inaccordancewiththeCompany’sregularlyscheduledannualtesting.TheresultsofallthreeofthesetestsindicatedthatnoneoftheCompany’sgoodwillwasimpairedbasedonStep1ofthetest;accordinglyStep2ofthetestwasnotperformed.Anymanagementjudgmentsandassumptionsmadeinthesetestsweregenerallyconsistentwiththosemadeinpriorperiods.DEFERREDFINANCINGCOSTSFinancingcostsarecapitalizedasanassetontheCompany’sbalancesheetandamortizedonastraight-linebasisoverthelifeofthefinancing.Ifdebtisextinguishedearly,aproportionateamountofdeferredfinancingcostsischargedtoearnings.INCOMETAXESTheCompanyusestheassetandliabilitymethodofaccountingforincometaxes.Undertheassetandliabilitymethod,deferredtaxassetsandliabilitiesarerecognizedfortheestimatedfuturetaxconsequencesattributabletodifferencesbetweenthefinancialstatementcarryingamountsofexistingassetsandliabilitiesandtheirrespectivetaxbasis.Thismethodalsorequirestherecognitionoffuturetaxbenefitssuchasnetoperatinglosscarryforwards,totheextentthatrealizationofsuchbenefitsismorelikelythannot.Deferredtaxassetsandliabilitiesaremeasuredusingenactedtaxratesexpectedtoapplytotaxableincomeintheyearsinwhichthosetemporarydifferencesareexpectedtoberecoveredorsettled.Theeffectondeferredtaxassetsandliabilitiesofachangeintaxratesisrecognizedinincomeintheperiodthatincludestheenactmentdate.ThecarryingvalueoftheCompany’snetdeferredtaxassetsassumestheCompanywillbeabletogeneratesufficientfuturetaxableincomeincertaintaxjurisdictions,basedonestimatesandassumptions.Iftheseestimatesandrelatedassumptionschangeinthefuture,theCompanymayberequiredtorecordadditionalvaluationallowancesagainstitsdeferredtaxassetsresultinginadditionalincometaxexpenseinitsconsolidatedstatementofoperations.Managementevaluatestherealizabilityofthedeferredtaxassetsandassessestheadequacyofthevaluationallowancequarterly.Likewise,intheeventtheCompanyweretodeterminethatitwouldbeabletorealizeitsdeferredtaxassetsinthefutureinexcessoftheirnetrecordedamount,anadjustmenttothedeferredtaxassetswouldincreaseincomeordecreasethecarryingvalueofgoodwillintheperiodsuchdeterminationwasmade.Thedeterminationofrecordingorreleasingtaxvaluationallowancesismade,inpart,pursuanttoanassessmentperformedbymanagementregardingthelikelihoodthattheCompanywillgeneratefuturetaxableincomeagainstwhichbenefitsofitsdeferredtaxassetsmayormaynotberealized.Thisassessmentrequiresmanagementtoexercisesignificantjudgmentandmakeestimateswithrespecttoitsabilitytogeneraterevenues,grossprofits,operatingincomeandtaxableincomeinfutureperiods.Amongstotherfactors,managementmustmakeassumptionsregardingoverallbusinessandsemiconductorindustryconditions,operatingefficiencies,theCompany’sabilitytodevelopproductstoitscustomers’specifications,technologicalchange,thecompetitiveenvironmentandchangesinregulatoryrequirementswhichmayimpactitsabilitytogeneratetaxableincomeand,inturn,realizethevalueofitsdeferredtaxassets.Inaddition,thecurrentuncertaineconomicenvironmentlimitstheCompany’sabilitytoconfidentlyforecastitstaxableincome.Infiscalyears2008and2009,theCompany’sestimatesoffuturetaxableincomewerepreparedinamannerconsistentwithitsassessmentofvariousfactors,includingmarketandindustryconditions,operatingtrends,productlifecyclesandcompetitiveandregulatoryenvironments.ItwaspreviouslytheCompany’sintentiontopermanentlyreinvesttheundistributedearningsofallitsforeignsubsidiariesinaccordancewithASC740-10,IncomeTaxes(“ASC740-10”).DuringthefiscalyearendedSkyworksSolutions,Inc.2009AnnualReport87NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)September30,2005,theCompanyreverseditspolicyofpermanentlyreinvestingtheearningsofitsMexicanbusiness.ForthefiscalyearendedOctober2,2009,U.S.incometaxwasprovidedoncurrentearningsattributabletoitsoperationsinMexico.NoprovisionhasbeenmadeforU.S.federal,state,oradditionalforeignincometaxesthatwouldbedueupontheactualordeemeddistributionofundistributedearningsoftheotherforeignsubsidiaries,whichhavebeen,orare,intendedtobe,permanentlyreinvested.ThecalculationoftheCompany’staxliabilitiesincludesaddressinguncertaintiesintheapplicationofcomplextaxregulations.WiththeimplementationeffectiveSeptember29,2007,ASC740-(formerlyreferencedasFASBInterpretationNo.48,AccountingforUncertaintyinIncomeTaxes-aninterpretationofFASBStatementNo.109),clarifiestheaccountingforuncertaintyinincometaxesrecognizedinanenterprise’sfinancialstatementsinaccordancewithGAAP.ASC740prescribesarecognitionthresholdandmeasurementattributeforthefinancialstatementrecognitionandmeasurementofataxpositiontakenorexpectedtobetakeninataxreturn.TheCompanyrecognizesliabilitiesforanticipatedtaxauditissuesintheUnitedStatesandothertaxjurisdictionsbasedonitsrecognitionthresholdandmeasurementattributeofwhetheritismorelikelythannotthatthepositionstheCompanyhastakenintaxfilingswillbesustainedupontaxaudit,andtheextenttowhich,additionaltaxeswouldbedue.Ifpaymentoftheseamountsultimatelyprovestobeunnecessary,thereversaloftheliabilitieswouldresultintaxbenefitsbeingrecognizedintheperiodinwhichitisdeterminedtheliabilitiesarenolongernecessary.Iftheestimateoftaxliabilitiesprovestobelessthantheultimateassessment,afurtherchargetoexpensewouldresult.RESEARCHANDDEVELOPMENTCOSTSResearchanddevelopmentcostsareexpensedasincurred.FINANCIALINSTRUMENTSThecarryingvalueofcashandcashequivalents,accountsreceivable,accountspayable,short-termdebtandaccruedliabilitiesapproximatesfairvalueduetoshort-termmaturitiesoftheseassetsandliabilities.Fairvaluesoflong-termdebtandinvestmentsarebasedonquotedmarketpricesifavailable,andifnotavailableafairvalueisdeterminedthroughadiscountedcashflowanalysisatthedateofmeasurement.COMPREHENSIVEINCOME(LOSS)TheCompanyaccountsforcomprehensiveincome(loss)inaccordancewiththeprovisionsofASC220-ComprehensiveIncome(“ASC220”).ASC220isafinancialstatementpresentationstandardthatrequirestheCompanytodisclosenon-ownerchangesincludedinequitybutnotincludedinnetincomeorloss.AccumulatedcomprehensivelosspresentedinthefinancialstatementsconsistsofadjustmentstotheCompany’sauctionratesecuritiesandminimumpensionliabilityasfollows(inthousands):PensionAdjustmentsAuctionRateSecuritiesAdjustmentAccumulatedOtherComprehensiveLossBalanceasofSeptember28,2007.................$(214)$—$(214)Pensionadjustment............................(54)—(54)Impairmentofauctionratesecurity................—(912)(912)BalanceasofOctober3,2008....................$(268)$(912)$(1,180)Pensionadjustment............................(200)—(200)BalanceasofOctober2,2009....................$(468)$(912)$(1,380)SkyworksSolutions,Inc.2009AnnualReport88NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)RECENTLYISSUEDACCOUNTINGPRONOUNCEMENTSASC805InDecember2007,theFASBissuedamendmentstoASC805-BusinessCombinations(“ASC805”),whichestablishedprinciplesandrequirementsfortheacquirerofabusinesstorecognizeandmeasureinitsfinancialstatementstheidentifiableassets(includingin-processresearchanddevelopmentanddefensiveassets)acquired,theliabilitiesassumed,andanynoncontrollinginterestintheacquiree.TheamendmentstoASC805areeffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterDecember15,2008.PriortotheadoptionofASC805,in-processresearchanddevelopmentcostswereimmediatelyexpensedandacquisitioncostswerecapitalized.UnderASC805allacquisitioncostsareexpensedasincurred.Thestandardalsoprovidesguidanceforrecognizingandmeasuringthegoodwillacquiredinthebusinesscombinationanddetermineswhatinformationtodisclosetoenableusersoffinancialstatementstoevaluatethenatureandfinancialeffectsofthebusinesscombination.InApril2009,theFASBupdatedASC805toamendtheprovisionsfortheinitialrecognitionandmeasurement,subsequentmeasurementandaccounting,anddisclosuresforassetsandliabilitiesarisingfromcontingenciesinbusinesscombinations.Thisupdatealsoeliminatesthedistinctionbetweencontractualandnon-contractualcontingencies.TheCompanyexpectsASC805willhaveanimpactonitsconsolidatedfinancialstatements,butthenatureandmagnitudeofthespecificeffectswilldependuponthenature,termsandsizeoftheacquisitionstheCompanyconsummatesaftertheOctober3,2009effectivedate.ASC810InDecember2007,theFASBissuedamendmentstoASC810-Consolidation(“ASC810”).ASC810amendspreviouslyissuedauthoritativeliteraturetoamendaccountingandreportingstandardsforthenoncontrollinginterestinasubsidiaryandforthedeconsolidationofasubsidiary.ItalsoamendscertainofconsolidationproceduresforconsistencywiththerequirementsofASC805.Thisstatementiseffectiveforfiscalyears,andinterimperiodswithinthosefiscalyears,beginningonorafterDecember15,2008.Thestatementshallbeappliedprospectivelyasofthebeginningofthefiscalyearinwhichthestatementisinitiallyadopted.TheCompanydoesnotexpecttheadoptionofASC810toimpactitsresultsofoperationsorfinancialpositionbecausetheCompanydoesnothaveanyminorityinterests.ASC820InSeptember2006,theFASBissuedASC820-FairValueMeasurementsandDisclosures(“ASC820”),whichdefinesfairvalue,establishesaframeworkformeasuringfairvalueingenerallyacceptedaccountingprinciplesandexpandsdisclosuresaboutfairvaluemeasurements.ASC820iseffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterNovember15,2007forfinancialassetscarriedatfairvalue,andyearsbeginningafterNovember15,2008fornon-financialassetsnotcarriedatfairvalue.TheCompanyhasdeterminedthattheadoptionofASC820willnothaveamaterialimpactontheCompany’sresultsfromoperationsorfinancialposition.ASC825InFebruary2007,theFASBissuedASC825-FinancialInstruments(“ASC825”),includinganamendmentofASC320-Investments-DebtandEquitySecurities(“ASC320”),whichpermitsentitiestochoosetomeasuremanyfinancialinstrumentsandcertainotheritemsatfairvaluethatarenotcurrentlyrequiredtobemeasuredatfairvalue.ASC825iseffectivefortheCompanybeginningonOctober3,2009.TheadoptionofASC825willnothaveamaterialimpactontheCompany’sresultsfromoperationsorfinancialposition.ASC470-20InMay2008,theFASBissuedASC470-20-Debt,DebtwithConversionsandOtherOptions(“ASC470-20”).ASC470-20alterstheaccountingtreatmentforconvertibledebtinstrumentsthatallowforeithermandatoryorSkyworksSolutions,Inc.2009AnnualReport89NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)optionalcashsettlements.ASC470-20isexpectedtoimpacttheCompany’saccountingforits2007ConvertibleNotesandpreviouslyheldJuniorNotes.Thisauthoritativeaccountingliteraturerequiresregistrantswithspecifiedconvertiblenotefeaturestorecognize(non-cash)interestexpensebasedonthemarketrateforsimilardebtinstrumentswithouttheconversionfeature.Furthermore,pursuanttoitsretrospectiveaccountingtreatment,theaccountingliteraturerequirespriorperiodinterestexpenserecognition.ASC470-20iseffectiveforfinancialstatementsissuedforfiscalyearsandinterimperiodsbeginningafterDecember15,2008.TheCompanyiscurrentlyevaluatingASC470-20andtheimpactthatitwillhaveonitsConsolidatedFinancialStatements.TheCompanywilladoptASCTopic470-20onOctober3,2009.ASC855InMay2009,theFASBestablishedgeneralstandardsofaccountingforanddisclosureofeventsthatoccurafterthebalancesheetdatebutbeforefinancialstatementsareissued.ThisguidancewasincludedintheCodificationunderASC855-SubsequentEvents(“ASC855”),andbecameeffectivefortheCompanybeginningwiththethirdfiscalquarterof2009.TheCompanyperformedanevaluationofsubsequenteventsthroughNovember30,2009,andissueditsfinancialstatementsonNovember30,2009.ASC105InJune2009,theFASBestablishedtheFASBAccountingStandardsCodificationTM(“Codification”)asthesourceofauthoritativeaccountingprinciplesrecognizedbytheFASBtobeappliedbynongovernmentalentitiesinthepreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesintheUnitedStates(“GAAP”).ThisguidancewasincludedintheCodificationunderASC105-GenerallyAcceptedAccountingPrinciples(“ASC105”).AllprioraccountingstandarddocumentsweresupersededbytheCodificationandanyaccountingliteraturenotincludedintheCodificationisnolongerauthoritative.RulesandinterpretivereleasesoftheSECissuedundertheauthorityoffederalsecuritieslawswillcontinuetobesourcesofauthoritativeGAAPforSECregistrants.TheCodificationbecameeffectivefortheCompanybeginningwiththefourthfiscalquarterof2009.Therefore,beginningwiththefourthfiscalquarterof2009,allreferencesmadebytheCompanytoGAAPinitsnotestotheconsolidatedfinancialstatementsusethenewCodificationnumberingsystem.TheCodificationdoesnotchangeoralterexistingGAAPand,therefore,didnothaveanyimpactontheCompany’sconsolidatedfinancialstatements.ASU2009-13andASU2009-14InSeptember2009,theFASBreachedaconsensusonAccountingStandardsUpdate(“ASU”)-2009-13-RevenueRecognition(“ASC605”)—Multiple-DeliverableRevenueArrangements(“ASU2009-13”)andASU2009-14-Software(“ASC985”)—CertainRevenueArrangementsThatIncludeSoftwareElements(“ASU2009-14”).ASU2009-13modifiestherequirementsthatmustbemetforanentitytorecognizerevenuefromthesaleofadelivereditemthatispartofamultiple-elementarrangementwhenotheritemshavenotyetbeendelivered.ASU2009-13eliminatestherequirementthatallundeliveredelementsmusthaveeither:i)VSOEorii)third-partyevidence,orTPE,beforeanentitycanrecognizetheportionofanoverallarrangementconsiderationthatisattributabletoitemsthatalreadyhavebeendelivered.IntheabsenceofVSOEorTPEofthestandalonesellingpriceforoneormoredeliveredorundeliveredelementsinamultiple-elementarrangement,entitieswillberequiredtoestimatethesellingpricesofthoseelements.Overallarrangementconsiderationwillbeallocatedtoeachelement(bothdeliveredandundelivereditems)basedontheirrelativesellingprices,regardlessofwhetherthosesellingpricesareevidencedbyVSOEorTPEorarebasedontheentity’sestimatedsellingprice.Theresidualmethodofallocatingarrangementconsiderationhasbeeneliminated.ASU2009-14modifiesthesoftwarerevenuerecognitionguidancetoexcludefromitsscopetangibleproductsthatcontainbothsoftwareandnon-softwarecomponentsthatfunctiontogethertodeliveraproduct’sessentialfunctionality.ThesenewupdatesareeffectiveforrevenuearrangementsenteredintoormateriallymodifiedinfiscalyearsbeginningonorafterJune15,2010.EarlySkyworksSolutions,Inc.2009AnnualReport90NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)adoptionispermitted.TheCompanyiscurrentlyevaluatingtheimpactthattheadoptionoftheseASUswillhaveonitsconsolidatedfinancialstatements.3.BUSINESSCOMBINATIONSIn2009,theCompanyacquiredalloftheoutstandingstockofAxiomMicrodevices,Inc.(“Axiom”)andpurchasedcertainpatentsfromothercompaniesfor$10.4millionincash.ThepurchaseofAxiomisnotexpectedtohaveasignificantimpactontheCompany’sfutureresultsfromoperationsandfinancialconditionandtherefore,proformadisclosureshavebeenomitted.4.MARKETABLESECURITIESTheCompanyaccountsforitsinvestmentindebtandequitysecuritiesinaccordancewithASC320-Investments-DebtandEquitySecurities,andclassifiesthemas“availableforsale”.AtOctober2,2009,thesesecuritiesconsistedof$3.2millioninauctionratesecurities(“ARS”),whicharelong-termdebtinstrumentswhichprovideliquiditythroughaDutchauctionprocessthatresetsinterestrateseachperiod.TheuncertaintiesinthecreditmarketshavecausedtheARStobecomeilliquidresultinginfailedauctions.DuringthefiscalyearendedOctober3,2008,theCompanyperformedacomprehensivevaluationanddiscountedcashflowanalysisontheARS.TheCompanyconcludedthevalueoftheARSwas$2.3millionthusthecarryingvalueofthesesecuritieswasreducedby$0.9million,reflectingthischangeinfairvalue.TheCompanyassessedthedeclineinfairvaluetobetemporaryandrecordedthisreductioninshareholders’equityinaccumulatedothercomprehensiveloss.TheCompanywillcontinuetocloselymonitortheARSandevaluatetheappropriateaccountingtreatmentineachreportingperiod.TheCompanyholdsnootherauctionratesecurities.5.FINANCIALINSTRUMENTSOnOctober4,2008,theCompanyadoptedASC820-FairValueMeasurementsandDisclosure(“ASC820”).InaccordancewithASC820-10-55,theCompanyhasdeferredtheadoptionofASC820fornon-financialassetsandliabilitiesincludingintangibleassetsandreportingunitsmeasuredatfairvalueinthefirststepofagoodwillimpairmenttest.TheCompanywilladopttheremainderofASC820onOctober3,2009.InaccordancewithASC820,theCompanygroupsitsfinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisinthreelevels,basedonthemarketsinwhichtheassetsandliabilitiesaretradedandthereliabilityoftheassumptionsusedtodeterminefairvalue.Theselevelsare:(cid:129)Level1—Valuationisbaseduponquotedmarketpriceforidenticalinstrumentstradedinactivemarkets.(cid:129)Level2—Valuationisbasedonquotedmarketpricesforsimilarinstrumentsinactivemarkets,quotedpricesforidenticalorsimilarinstrumentsinmarketsthatarenotactive,andmodel-basedvaluationtechniquesforwhichallsignificantassumptionsareobservableinthemarket.(cid:129)Level3—Valuationisgeneratedfrommodel-basedtechniquesthatusesignificantassumptionsnotobservableinthemarket.Valuationtechniquesincludeuseofdiscountedcashflowmodelsandsimilartechniques.UnderASC820,theCompanygroupsmarketablesecuritiesmeasuredatfairvalueonarecurringbasisinthreelevels,basedonthemarketsinwhichtheassetsaretradedandthereliabilityoftheassumptionsusedtodeterminefairvalue.TheCompanyhascashequivalentsclassifiedasLevel1andhasnoLevel2securities.ThemarketablesecuritiesclassifiedasLevel3areauctionratesecurities.SkyworksSolutions,Inc.2009AnnualReport91NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)ThefollowingtablepresentsthebalancesofcashequivalentsandmarketablesecuritiesmeasuredatfairvalueonarecurringbasisasofOctober2,2009(inthousands):TotalQuotedPricesinActiveMarketsforIdenticalAssets(Level1)SignificantOtherObservableInputs(Level2)SignificantUnobservableInputs(Level3)FairValueMeasurementsCashequivalents:Moneymarket/repurchaseagreements................$355,388$355,388$—$—Auctionratesecurities..........2,288——2,288Total.......................$357,676$355,388$—$2,2886.INVENTORYInventoriesconsistofthefollowing(inthousands):October2,2009October3,2008AsofRawmaterials...............................................$9,889$8,005Work-in-process.............................................56,07464,305Finishedgoods..............................................12,95018,711Finishedgoodsheldonconsignmentbycustomers....................7,18412,770Totalinventories.............................................$86,097$103,7917.PROPERTY,PLANTANDEQUIPMENTProperty,plantandequipmentconsistofthefollowing(inthousands):October2,2009October3,2008AsofLand....................................................$9,423$9,423Landandleaseholdimprovements...............................5,0634,989Buildings.................................................39,99239,708FurnitureandFixtures........................................24,45024,889Machineryandequipment.....................................393,566382,582Constructioninprogress......................................19,20929,845Totalproperty,plantandequipment,gross.........................491,703491,436Accumulateddepreciationandamortization........................(329,404)(318,076)Totalproperty,plantandequipment,net..........................$162,299$173,360SkyworksSolutions,Inc.2009AnnualReport92NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)8.GOODWILLANDINTANGIBLEASSETSGoodwillandintangibleassetsconsistofthefollowing(inthousands):WeightedAverageAmortizationPeriod(Years)GrossCarryingAmountAccumulatedAmortizationNetCarryingAmountGrossCarryingAmountAccumulatedAmortizationNetCarryingAmountOctober2,2009October3,2008Goodwill...............$482,893$—$482,893$483,671$—$483,671AmortizedintangibleassetsDevelopedtechnology......5-10$13,750$(8,899)$4,851$11,850$(7,533)$4,317Customerrelationships.....5-1021,510(12,697)8,81321,210(9,650)11,560Patents................32,417(1,105)1,312900(300)600Other..................5-33,549(3,549)—2,649(2,649)—41,226(26,250)14,97636,609(20,132)16,477UnamortizedintangibleassetsTrademarks.............3,269—3,2693,269—3,269Totalintangibleassets......$44,495$(26,250)$18,245$39,878$(20,132)$19,746Annualamortizationexpenserelatedtointangibleassetsisasfollows(inthousands):October2,2009October3,2008September28,2007FiscalYearsEndedAmortizationexpense..............................$6,118$6,933$2,144Thechangesinthegrosscarryingamountofgoodwillandintangibleassetsareasfollows:GoodwillDevelopedTechnologyCustomerRelationshipsPatentsandOtherTrademarksTotalBalanceasofSeptember28,2007.......$480,890$10,550$12,700$122$3,269$507,531Additionsduringperiod.............13,7791,3008,5103,427—27,016Deductionsduringyear.............(10,998)————(10,998)BalanceasofOctober3,2008..........$483,671$11,850$21,210$3,549$3,269$523,549Additionsduringperiod.............6,3951,9003002,417—11,012Deductionsduringyear.............(7,173)————(7,173)BalanceasofOctober2,2009..........$482,893$13,750$21,510$5,966$3,269$527,388In2009,theCompanyacquiredalloftheoutstandingstockofAxiomandpurchasedcertainpatentsfromothercompaniesfor$10.4millionincash.Thisresultedintheallocationofapproximately$6.4milliontogoodwill.ThepurchaseofAxiomisnotexpectedtohaveasignificantimpactontheCompany’sfutureresultsfromoperationsandfinancialcondition.InOctober2007,theCompanypaid$32.6millionincashtoacquirecertainassetsfromtwoseparatecompaniesresultingintheallocationofapproximately$13.8milliontogoodwill.Goodwillisadjustedasrequiredasaresultoftherealizationofdeferredtaxassets.Thebenefitfromtherecognitionofaportionofthesedeferreditemsreducesthecarryingvalueofgoodwillinsteadofreducingincometaxexpense.Accordingly,futurerealizationofcertaindeferredtaxassetswillreducethecarryingvalueofgoodwill.ForthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,goodwillwasreducedbySkyworksSolutions,Inc.2009AnnualReport93NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)$7.2million,$11.0million,and$12.5million,respectively.Theremainingdeferredtaxassetsthatcouldreducegoodwillinfutureperiodsare$0.4millionasofOctober2,2009.TheCompanytestsitsgoodwillforimpairmentannuallyasofthefirstdayofitsfourthfiscalquarterandininterimperiodsifcertaineventsoccurindicatingthatthecarryingvalueofgoodwillmaybeimpaired.InaccordancewithASC350,Intangibles-GoodwillandOther,theCompanyperformedagoodwillimpairmenttestanddeterminedthatasofJuly4,2009,itsgoodwillwasnotimpaired.Annualamortizationexpenserelatedtointangibleassetsisexpectedtobeasfollows(inthousands):20102011201220132014Amortizationexpense.........................$6,002$5,052$3,783$139$—9.BORROWINGARRANGEMENTSLONG-TERMDEBTLong-termdebtconsistsofthefollowing(inthousands):October2,2009October3,2008FiscalYearsEnded2007ConvertibleNotes........................................$79,733$137,616Less-currentmaturities.......................................32,617—Totallong-termdebt..........................................$47,116$137,616OnMarch2,2007,theCompanyissued$200.0millionaggregateprincipalamountofconvertiblesubordinatednotes(“2007ConvertibleNotes”).Theofferingcontainedtwotranches.Thefirsttrancheconsistedof$100.0mil-lionof1.25%convertiblesubordinatednotesdueMarch2010.Thesecondtrancheconsistedof$100.0millionof1.50%convertiblesubordinatednotesdueMarch2012.Theconversionpriceofthe2007ConvertibleNotesis105.0696sharesper$1,000principalamountofnotestoberedeemed,whichistheequivalentofaconversionpriceofapproximately$9.52pershare,plusaccruedandunpaidinterest,ifany,totheconversiondate.HoldersmayrequiretheCompanytorepurchasethe2007ConvertibleNotesuponachangeincontroloftheCompany.TheCompanypaysinterestincashsemi-annuallyinarrearsonMarch1andSeptember1ofeachyear.IthasbeentheCompany’shistoricalpracticetocashsettletheprincipalandinterestcomponentsofconvertibledebtinstruments,anditisitsintentiontocontinuetodosointhefuture,includingsettlementofthe2007ConvertibleNotes.Duringthefirstquarteroffiscal2009,theCompanyredeemed$40.5millionofprincipalamountofthe1.50%convertiblesubordinatednotesatanaveragepriceof92.6%ofparvalue.Adiscountofapproximately$2.9millionoffsetbyapproximately$0.9millionindeferredfinancingcostswasrecordedasagainduringtheperiod.TheCompanyalsoredeemed$17.4millionofprincipalamountofthe1.25%convertiblesubordinatednotesduringthefourthquarteroffiscal2009.Apremiumofapproximately$6.0million,alongwithapproximately$0.1millionindeferredfinancingcostswasrecordedasachargeagainstearnings.DuringthefiscalyearendedOctober3,2008,theCompanyredeemed$50.0millionand$12.4millioninaggregateprincipalamountofthe1.25%and1.50%convertiblesubordinatednotes,respectively,atanaveragepriceof109.0%ofparvalue.Apremiumofapproximately$5.8million,alongwithapproximately$1.0millionindeferredfinancingcostswasrecordedasachargeagainstearningsinfiscal2008.OnDecember21,2006,theFinancialAccountingStandardsBoard(“FASB”)issuedASC825,FinancialInstruments(“ASC825”).ASC825specifiesthatthecontingentobligationtomakefuturepayments,orotherwisetransferconsiderationunderaregistrationpaymentarrangement,shouldbeseparatelyrecognizedandmeasuredinaccordancewithASC450,Contingencies.TheCompanyadoptedASC825onSeptember29,2007.TheCompanySkyworksSolutions,Inc.2009AnnualReport94NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)agreedtofileashelfregistrationstatementundertheSecuritiesActof1933(the“SecuritiesAct”)notlaterthan120daysafterthefirstdateoforiginalissuanceofthe2007ConvertibleNotes.TheCompanyagreedtoutilizecommerciallyreasonableeffortstohavethisshelfregistrationstatementdeclaredeffectivenotlaterthan180daysafterthefirstdateoforiginalissuanceofthenotes,andtokeepiteffectiveuntiltheearliestof:1)twoyearsfromtheeffectivedateoftheshelfregistrationstatement;2)thedatewhenallregistrablesecuritieshavebeenregisteredundertheSecuritiesActanddisposedof;and3)thedateonwhichallregistrablesecuritiesheldbynon-affiliatesareeligibletobesoldtothepublicpursuanttoRule144(k)undertheSecuritiesAct.TheCompanyfiledtheshelfregistrationstatementwithin120daysoftheoriginalissuanceofthe2007ConvertibleNotesandtheshelfregistrationstatementwasdeclaredeffectivewithin180daysafterthefirstdateoforiginalissuanceofthenotes.IftheshelfregistrationstatementceasestobeeffectivewithintwoyearsfromtheeffectivedateoftheshelfregistrationstatementtheCompanywillbeobligatedtopayanadditional0.25%interestperannumforthefirst90daysaftertheoccurrenceoftheregistrationdefaultandattherateof0.50%perannumthereafter.TheCompanyhasconcludedthatitisnotprobablethatacontingentliabilityhasbeenincurredatOctober2,2009pursuanttotheapplicationofASC450andthushasnotrecordedaliability.Aggregateannualmaturitiesoflong-termdebtareasfollows(inthousands):FiscalYearMaturity2010................................................................$32,6172011................................................................—2012................................................................47,116$79,733SHORT-TERMDEBTShort-termdebtconsistsofthefollowing(inthousands):October2,2009October3,2008FiscalYearsEndedCurrentmaturitiesoflong-termdebt...............................$32,617$—FacilityAgreement...........................................50,00050,000$82,617$50,000OnJuly15,2003,theCompanyenteredintoareceivablespurchaseagreementunderwhichithasagreedtosellfromtimetotimecertainofitsaccountsreceivabletoSkyworksUSA,Inc.(“SkyworksUSA”),awholly-ownedspecialpurposeentitythatisconsolidatedforaccountingpurposes.Concurrently,SkyworksUSAenteredintoanagreementwithWachoviaBank,N.A.providingfora$50.0millioncreditfacility(“FacilityAgreement”)securedbythepurchasedaccountsreceivable.Asapartoftheconsolidation,anyinterestincurredbySkyworksUSArelatedtomoniesitborrowsundertheFacilityAgreementisrecordedasinterestexpenseintheCompany’sresultsofoperations.TheCompanyperformscollectionsandadministrativefunctionsonbehalfofSkyworksUSA.TheCompanyrenewedtheFacilityAgreementonJuly9,2009foraoneyearterm.InterestrelatedtotheFacilityAgreementisatLIBORplus0.75%.AsofOctober2,2009,SkyworksUSAhadborrowed$50.0millionunderthisagreement.SkyworksSolutions,Inc.2009AnnualReport95NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)10.INCOMETAXESIncomebeforeincometaxesconsistsofthefollowingcomponents(inthousands):October2,2009October3,2008September28,2007FiscalYearsEndedUnitedStates....................................$61,593$79,931$54,685Foreign........................................4,1532,2572,085$65,746$82,188$56,770Theprovision(benefit)forincometaxesconsistsofthefollowing(inthousands):October2,2009October3,2008September28,2007FiscalYearsEndedCurrenttaxexpense(benefit):Federal.........................................$(251)$1,310$—State..........................................(413)(72)(461)Foreign........................................966(94)1,1493021,144688Deferredtaxexpense(benefit):Federal.........................................(27,752)(36,405)(1,672)State..........................................———Foreign........................................(93)(571)104(27,845)(36,976)(1,568)Chargeinlieuoftaxexpense........................—7,014—Provision(benefit)forincometaxes...................$(27,543)$(28,818)$(880)SkyworksSolutions,Inc.2009AnnualReport96NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)Theactualincometaxexpenseisdifferentthanthatwhichwouldhavebeencomputedbyapplyingthefederalstatutorytaxratetoincomebeforeincometaxes.AreconciliationofincometaxexpenseascomputedattheUnitedStatesFederalstatutoryincometaxratetotheprovisionforincometaxexpensefollows(inthousands):October2,2009October3,2008September28,2007FiscalYearsEndedTaxexpenseatUnitedStatesstatutoryrate..............$23,011$28,766$19,870Foreigntaxratedifference..........................(580)(436)(301)Deemeddividendfromforeignsubsidiary...............774102—Researchanddevelopmentcredits.....................(7,211)(7,970)(7,495)Changeintaxreserve..............................295(999)(461)Changeinvaluationallowance.......................(45,510)(59,315)(14,306)Chargeinlieuoftaxexpense........................—7,014—Foreignwithholdingtax............................——825Nondeductibledebtretirementpremium................2,0011,741—Alternativeminimumtax...........................(958)1,306—Other,net.......................................635973988Provision(benefit)forincometaxes...................$(27,543)$(28,818)$(880)DuringthefiscalyearsendedOctober2,2009,October3,2008andSeptember28,2007,thevaluationallowancewasreducedby$12.8million,including$5.6millionrelatedtoacquiredAxiomdeferredtaxassets,$11.0millionand$12.5million,respectively,resultingfromthepartialrecognitionofcertainacquiredtaxbenefitsthatweresubjecttoavaluationallowanceatthetimeofacquisition,therealizationofwhichrequiredareductionofgoodwill.Ofthisamount,$0.0million,$7.0millionand$0.0millionisincludedinthechargeinlieuoftaxexpenseinthetableaboveforfiscal2009,fiscal2008andfiscal2007,respectively,and$12.8million,$4.0millionand$12.5millionisincludedinthechangeinthevaluationallowanceforfiscal2009,fiscal2008andfiscal2007,respectively.Deferredincometaxassetsandliabilitiesconsistofthetaxeffectsoftemporarydifferencesrelatedtothefollowing(inthousands):October2,2009October3,2008FiscalYearsEndedDeferredTaxAssets:Current:Inventories................................................$5,261$3,726Baddebts.................................................1,025329Accruedcompensationandbenefits.............................3,2193,460Productreturns,allowancesandwarranty.........................686849Restructuring..............................................1,503888Currentdeferredtaxassets..................................11,6949,252Lessvaluationallowance...................................(963)(3,420)Netcurrentdeferredtaxassets..............................10,7315,832SkyworksSolutions,Inc.2009AnnualReport97NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)October2,2009October3,2008FiscalYearsEndedLong-term:Property,plantandequipment.................................3,7629,726Intangibleassets...........................................11,1219,904Retirementbenefitsanddeferredcompensation.....................15,57613,817Netoperatinglosscarryforwards...............................24,43844,903Federaltaxcredits..........................................42,78737,170Stateinvestmentcredits......................................21,51319,106Other—net..............................................180733Long-termdeferredtaxassets................................119,377135,359Lessvaluationallowance...................................(25,630)(79,429)Netlong-termdeferredtaxassets...........................93,74755,930Deferredtaxassets....................................131,071144,611Lessvaluationallowance................................(26,593)(82,849)Netdeferredtaxassets.................................104,47861,762DeferredTaxLiabilities:Current:Prepaidinsurance..........................................(787)(739)Other—net..............................................(5,439)(2,221)Currentdeferredtaxliabilities...............................(6,226)(2,960)Long-term:Intangibleassets...........................................(2,267)(2,738)Long-termdeferredtaxliabilities.............................(2,267)(2,738)Netdeferredtaxliabilities...............................(8,493)(5,698)Totaldeferredtaxassets................................$95,985$56,064InaccordancewithGAAP,managementhasdeterminedthatitismorelikelythannotthataportionofitshistoricandcurrentyearincometaxbenefitswillnotberealized.AsofOctober2,2009,theCompanyhasmaintainedavaluationallowancefordeferredtaxassetsof$26.6million,principallyrelatedtostateresearchtaxcreditsthatmanagementhasdeterminedismorelikelythannotthatitwillnotberealized.Thenetchangeinthevaluationallowanceof$56.3millionduringfiscal2009isprincipallyduetotherecognitionoftaxbenefitsoffsetagainstcurrentyeartaxableincomeof$85.7millionandareductionintheendofyearvaluationallowanceof$40.9millionbasedontheCompany’sassessmentoftheamountofdeferredtaxassetsthatarerealizableonamorelikelythannotbasis.Whenrecognized,thetaxbenefitsrelatingtoanyfuturereversalofthevaluationallowanceondeferredtaxassetsatOctober2,2009willbeaccountedforasfollows:approximately$22.3millionwillberecognizedasanincometaxbenefit,$0.4millionwillberecognizedasareductiontogoodwilland$3.9millionwillberecognizedasanincreasetoshareholders’equityforcertaintaxdeductionsfromemployeestockoptions.BasedontheCompany’sevaluationoftherealizabilityofitsUnitedStatesnetdeferredtaxassetsandotherfuturedeductibleitemsthroughthegenerationoffuturetaxableincome,$40.9millionoftheCompany’svaluationallowancewasreversedatOctober2,2009.Theamountreversedconsistedof$27.7millionrecognizedasincomeSkyworksSolutions,Inc.2009AnnualReport98NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)taxbenefit,and$13.2millionrecognizedasareductiontogoodwill.Deferredtaxassetshavebeenrecognizedforforeignoperationswhenmanagementbelievestheywillmorelikelythannotberecoveredduringthecarryforwardperiod.TheCompanywillcontinuetoassessitsvaluationallowanceinfutureperiods.AsofOctober2,2009,theCompanyhasUnitedStatesfederalnetoperatinglosscarryforwardsofapprox-imately$71.1million,whichwillexpireatvariousdatesthrough2028andaggregatestatenetoperatinglosscarryforwardsofapproximately$2.3million,whichwillexpireatvariousdatesthrough2018.TheCompanyalsohasUnitedStatesfederalandstateincometaxcreditcarryforwardsofapproximately$64.3million.TheUnitedStatesfederaltaxcreditsexpireatvariousdatesthrough2029.ThestatetaxcreditsrelateprimarilytoCaliforniaresearchtaxcreditswhichcanbecarriedforwardindefinitely.NoprovisionhasbeenmadeforUnitedStatesfederal,state,oradditionalforeignincometaxesrelatedtoapproximately$4.9millionofundistributedearningsofforeignsubsidiarieswhichhavebeenorareintendedtobepermanentlyreinvested.ItisnotpracticabletodeterminetheUnitedStatesfederalincometaxliability,ifany,whichwouldbepayableifsuchearningswerenotpermanentlyreinvested.TheCompanyadoptedASC740—IncomeTaxes—(formerlyreferencedasFASBInterpretationNo.48,AccountingforUncertaintyinIncomeTaxes-aninterpretationofFASBStatementNo.109)asofthebeginningoffiscalyear2008.AsofOctober3,2008,theCompany’sgrossunrecognizedtaxbenefitstotaled$7.9million.AsofOctober2,2009,theCompany’sgrossunrecognizedtaxbenefitstotaled$8.9million.Includedinthisamountis$6.5millionwhichwouldimpacttheeffectivetaxrate,ifrecognized.Theremainingunrecognizedtaxbenefitswouldnotimpacttheeffectivetaxrate,ifrecognized,duetotheCompany’svaluationallowance.TherearenopositionswhichtheCompanyanticipatescouldchangewithinthenexttwelvemonths.Areconciliationofthebeginningandendingamountofgrossunrecognizedtaxbenefitsisasfollows(inthousands):BalanceatOctober3,2008................................................$7,874Decreasesbasedonpositionsrelatedtoprioryears...............................(82)Increasesbasedonpositionsrelatedtocurrentyear...............................1,074Decreasesrelatingtolapsesofapplicablestatutesoflimitations.....................(7)BalanceatOctober2,2009................................................$8,859TheCompany’smajortaxjurisdictionsasofOctober2,2009aretheU.S.,California,andIowa.FortheU.S.,theCompanyhasopentaxyearsdatingbacktofiscalyear1998duetothecarryforwardoftaxattributes.ForCalifornia,theCompanyhasopentaxyearsdatingbacktofiscalyear2002duetothecarryforwardoftaxattributes.ForIowa,theCompanyhasopentaxyearsdatingbacktofiscalyear2002duetothecarryforwardoftaxattributes.DuringtheyearendedOctober2,2009,therewasnosignificantrecognitionofpreviouslyunrecognizedtaxbenefitsrelatedtotheexpirationofthestatuteoflimitationsperiod.Totalyear-to-dateaccruedinterestrelatedtotheCompany’sunrecognizedtaxbenefitswas$0.0million.11.STOCKHOLDERS’EQUITYCOMMONSTOCKTheCompanyisauthorizedtoissue(1)525,000,000sharesofcommonstock,parvalue$0.25pershare,and(2)25,000,000sharesofpreferredstock,withoutparvalue.HoldersoftheCompany’scommonstockareentitledtosuchdividendsasmaybedeclaredbytheCompany’sBoardofDirectorsoutoffundslegallyavailableforsuchpurpose.Dividendsmaynotbepaidoncommonstockunlessallaccrueddividendsonpreferredstock,ifany,havebeenpaidordeclaredandsetaside.IntheeventoftheCompany’sliquidation,dissolutionorwindingup,theholdersofcommonstockwillbeentitledtoshareproratainSkyworksSolutions,Inc.2009AnnualReport99NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)theassetsremainingafterpaymenttocreditorsandafterpaymentoftheliquidationpreferenceplusanyunpaiddividendstoholdersofanyoutstandingpreferredstock.EachholderoftheCompany’scommonstockisentitledtoonevoteforeachsuchshareoutstandingintheholder’sname.Noholderofcommonstockisentitledtocumulatevotesinvotingfordirectors.TheCompany’ssecondamendedandrestatedcertificateofincorporationprovidesthat,unlessotherwisedeterminedbytheCompany’sBoardofDirectors,noholderofcommonstockhasanypreemptiverighttopurchaseorsubscribeforanystockofanyclasswhichtheCompanymayissueorsell.InMarch2007,theCompanyrepurchasedapproximately4.3millionofitscommonsharesfor$30.1millionasauthorizedbytheCompany’sBoardofDirectors.TheCompanyhasnopubliclydisclosedstockrepurchaseplans.AtOctober2,2009,theCompanyhad177,873,067sharesofcommonstockissuedand172,815,222sharesoutstanding.PREFERREDSTOCKTheCompany’ssecondamendedandrestatedcertificateofincorporationpermitstheCompanytoissueupto25,000,000sharesofpreferredstockinoneormoreseriesandwithrightsandpreferencesthatmaybefixedordesignatedbytheCompany’sBoardofDirectorswithoutanyfurtheractionbytheCompany’sstockholders.Thedesignation,powers,preferences,rightsandqualifications,limitationsandrestrictionsofthepreferredstockofeachserieswillbefixedbythecertificateofdesignationrelatingtosuchseries,whichwillspecifythetermsofthepreferredstock.AtOctober2,2009,theCompanyhadnosharesofpreferredstockissuedoroutstanding.EMPLOYEESTOCKBENEFITPLANSThefollowingtablesummarizespre-taxshare-basedcompensationexpenserelatedtoemployeestockoptions,restrictedstockgrants,performancestockgrants,employeestockpurchases,andmanagementincentivecompen-sationunderASC718forthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,respectively.October2,2009October3,2008September28,2007FiscalYearsEnded(Inthousands)StockOptions...........................................$12,669$13,046$7,781Non-vestedrestrictedstockwithserviceandmarketconditions......3,1443,9352,501Non-vestedrestrictedstockwithserviceconditions...............1,0881,1111,451Performanceshares.......................................5,0033,525655EmployeeStockPurchasePlan..............................1,5621,5951,349$23,466$23,212$13,737Share-basedcompensationforthefiscalyearendedOctober2,2009andOctober3,2008includesapprox-imately$2.1millionand$1.7million,respectively,relatedtotheportionsoffiscal2009andfiscal2008short-termmanagementincentivecompensationthatexceededtargetmetricswhichwerepaidincommonstockafteryearend.TheCompanyanticipatesanimmaterialamountofsharedilutionasaresultofthisarrangement.EmployeeStockPurchasePlanTheCompanymaintainsadomesticandaninternationalemployeestockpurchaseplan.Undertheseplans,eligibleemployeesmaypurchasecommonstockthroughpayrolldeductionsofupto10%ofcompensation.Thepricepershareisthelowerof85%ofthemarketpriceatthebeginningorendofeachofferingperiod(generallysixSkyworksSolutions,Inc.2009AnnualReport100NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)months).Theplansprovideforpurchasesbyemployeesofuptoanaggregateof8.1millionsharesthroughDecember31,2012.Sharesofcommonstockpurchasedundertheseplansinfiscal2009,2008,and2007were1,058,736,790,556,and830,103,respectively.AtOctober2,2009,thereare1.6millionsharesavailableforpurchase.TheCompanyrecognizedcompensationexpenseof$1.6millionforboththefiscalyearsendedOctober2,2009andOctober3,2008,and$1.3millionforthefiscalyearendedSeptember28,2007.EmployeeandDirectorStockOptionPlansTheCompanyhasshare-basedcompensationplansunderwhichemployeesanddirectorsmaybegrantedoptionstopurchasecommonstock.Optionsaregenerallygrantedwithexercisepricesatnotlessthanthefairmarketvalueonthegrantdate,generallyvestover4yearsandexpire7or10yearsafterthegrantdate.AsofOctober2,2009,atotalof83.1millionsharesareauthorizedforgrantundertheCompany’sshare-basedcompensationplans,with18.4millionoptionsoutstanding.Thenumberofcommonsharesreservedforgrantingoffutureawardstoemployeesanddirectorsundertheseplanswas15.0millionatOctober2,2009.TheremainingunrecognizedcompensationexpenseonstockoptionsatOctober2,2009was$16.0million,andtheweightedaverageperiodoverwhichthecostisexpectedtoberecognizedisapproximately2.2years.AsofOctober2,2009,theCompanyhad10equitycompensationplansunderwhichitsequitysecuritieswereauthorizedforissuancetoitsemployeesand/ordirectors:(cid:129)the1994Non-QualifiedStockOptionPlan(cid:129)the1996Long-TermIncentivePlan(cid:129)theDirectors’1997Non-QualifiedStockOptionPlan(cid:129)the1999EmployeeLong-TermIncentivePlan(cid:129)theDirectors’2001StockOptionPlan(cid:129)theNon-QualifiedEmployeeStockPurchasePlan(cid:129)the2002EmployeeStockPurchasePlan(cid:129)theWashingtonSub,Inc.2002StockOptionPlan(cid:129)the2005Long-TermIncentivePlan(cid:129)the2008DirectorLong-TermIncentivePlanExceptforthe1999EmployeeLong-TermIncentivePlan,theWashingtonSub,Inc.2002StockOptionPlanandtheNon-QualifiedEmployeeStockPurchasePlan,eachoftheforegoingequitycompensationplanswasapprovedbytheCompany’sstockholders.The1999EmployeeLong-TermIncentivePlanexpiredonApril26,2009.RestrictedStockAwardsIssuedinconnectionwiththeFiscalYear2008ManagementIncentivePlanTheCompanyissued238,706sharesofcommonstockinfiscalyear2009tocertainkeyemployeesbasedontheCompany’sexceedingtargetmetricsunderthefiscalyear2008ManagementIncentivePlan.TheCompanyrecorded$1.7millioninexpenseduringfiscalyear2008asaresultofthisperformance.RestrictedStockAwardswithServiceConditionsTheCompany’sshare-basedcompensationplansprovideforawardsofrestrictedsharesofcommonstockandotherstock-basedincentiveawardstoofficers,otheremployeesandcertainnon-employees.RestrictedstockSkyworksSolutions,Inc.2009AnnualReport101NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)awardsaresubjecttoforfeitureifemploymentterminatesduringtheprescribedretentionperiod(generallywithinfouryearsofthedateofaward).TheCompanygranted10,000,50,000,and38,000sharesofrestrictedstockinthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,respectively,withafouryeargradedvesting.TheremainingunrecognizedcompensationexpenseonrestrictedstockwithserviceconditionsoutstandingatOctober2,2009was$0.4million,andtheweightedaverageperiodoverwhichthecostisexpectedtoberecognizedis2.9years.TheCompanyalsogranted37,500sharesofrestrictedstockduringthefiscalyearendedOctober2,2009thatwillvestoveratwo-yearperiod(100%attheendofyear2).TheremainingunrecognizedcompensationexpenseonrestrictedstockwithserviceconditionsoutstandingatOctober2,2009was$0.1million,andtheweightedaverageperiodoverwhichthecostisexpectedtoberecognizedisapproximately1.7years.Inaddition,duringboththefiscalyearsendedOctober2,2009,andOctober3,2008,underthe2008DirectorLong-TermIncentivePlan,theCompanyissuedatotalof100,000restrictedstockawardstoDirectorswithathree-yeargradedvesting.TheremainingunrecognizedcompensationexpenseonrestrictedstockwithserviceconditionsoutstandingatOctober2,2009was$1.0million.Theweightedaverageperiodoverwhichthecostisexpectedtoberecognizedisapproximately2.4years.RestrictedStockAwardswithMarketConditionsandServiceConditionsTheCompanygranted576,688and606,488sharesofrestrictedstockduringthefiscalyearsendedOctober3,2008,andSeptember28,2007,respectively,withserviceandmarketconditionsonvesting.Iftherestrictedstockrecipientmeetstheserviceconditionbutnotthemarketconditioninyears1,2,3and4,thentherestrictedstockvests0%attheendofyear1,33.3%attheendofyear2,33.3%attheendofyear3and33.3%attheendofyear4.Themarketconditionallowsforacceleratedvestingoftheawardasofthefirst,secondandifnotpreviouslyaccelerated,thethirdanniversariesofthegrantdate.Specifically,iftheCompany’sstockperformancemeetsorexceedsthe60thpercentileofitsselectedpeergroupfortheyearsendedoneachofthefirstthreeanniversariesofthegrantdate,then33.3%oftheawardvestsuponeachanniversary(upto100%).TheCompanycalculatedaderivedserviceperiodofapproximately3.0yearsusingaMonte-CarlosimulationtosimulatearangeofpossiblefuturestockpricesfortheCompanyandthemembersoftheCompany’sselectedpeergroup.TheremainingunrecognizedcompensationexpenseonrestrictedstockwithmarketandserviceconditionsoutstandingatOctober2,2009was$0.6million.Thiscostisexpectedtoberecognizedduringthefirstquarteroffiscal2010.PerformanceUnitswithMilestone-BasedPerformanceConditionsTheCompanygranted56,000,160,500,and223,200performanceunitswithmilestone-basedperformanceconditionstonon-executivesduringthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,respectively.Theperformanceunitswillconverttocommonstockatsuchtimethattheperformanceconditionsaredeemedtobeachieved.Theperformanceunitswillbeexpensedoverimplicitperformanceperiodsrangingfrom11-34months.TheCompanywillutilizebothquantitativeandqualitativecriteriatojudgewhetherthemilestonesareprobableofachievement.Ifthemilestonesaredeemedtobenotprobableofachievement,noexpensewillberecognizeduntilsuchtimeastheybecomeprobableofachievement.Ifamilestoneisinitiallydeemedprobableofachievementandsubsequenttothatdateitisdeemedtobenotprobableofachievement,theCompanywilldiscontinuerecordingexpenseontheunits.Ifthemilestoneisdeemedtobeimprobableofachievement,anyexpenserecordedonthoseperformanceunitswillbereversed.AsofthefiscalyearendedOctober2,2009,October3,2008,andSeptember28,2007,thefairvalueoftheperformanceunitsatthedateofgrantwere$0.6million,$1.4million,and$1.5million,respectively.TheCompanyissued30,419shares,100,466shares,and103,688sharesinfiscal2009,2008,andfiscal2007,respectivelyasaresultofmilestoneachievement.Inaddition,certainothermilestonesweredeemedtobeprobableofachievementthus,theCompanySkyworksSolutions,Inc.2009AnnualReport102NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)recordedtotalcompensationexpenseof$(0.1)million,$1.2million,and$0.7millioninthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,respectively.2007ExecutivePerformanceShareAwardsTheCompanyawarded725,000performancesharesbasedonfuturestockpriceappreciationtoexecutivesduringthefiscalyearendedOctober3,2008.EachexecutivehadtheabilitytoearnNominal(50%ofTarget),Target,Stretch(150%ofTarget),ornosharesdependingonperformancewithinathreeyearperiod.OnNovember6,2007,abasepricewasset(basedonthetrailing60dayaveragestockprice)andstockpricehurdleswereset(basedonappreciationof20%,40%and60%ofthebaseprice).Actualperformancewouldhavebeenmeasuredusingarolling60dayaverageandshareswouldhavebeenlockedinwhenSkyworksmetorexceededastockpricehurdle.Shareswerenotcumulativeandeachtargetedstockpricewasa“hurdle”(therewasnointerpolationforperformancebetweenhurdles).Lockedinshareswouldhavebeendeliveredtotheexecutiveattheendofthethreeyearperiodaslongastheexecutivewasactivelyemployed.IftheNominalstockpricehurdle(1stHurdle)wasnotmetorexceededbytheendofthethreeyearperiodthentheshareswouldhaveexpired.Ifachangeofcontrolhadoccurredwithinthethreeyearperformanceperiodthentheexecutivewouldhavereceivedthehigheroftheactualamountearned(lockedin)orTarget(thelastdayofthe60dayaveragewouldhaveincludedtheclosingpriceonthedateofthetransaction).AsofthefiscalyearendedOctober3,2008,thefairvalueoftheperformanceunitsatthedateofgrantwas$7.5million.TheseawardswereforfeitedbytheexecutivesonJune9,2009andreplacedwiththe2009ExecutiveRestrictedStockandPerformanceShareAwardsasdescribedbelow.2009ExecutiveRestrictedStockandPerformanceShareAwardsOnJune4,2009,theCompanygaveitsexecutivestheopportunitytoforfeittheaforementionedperformancesharesthatwerevaluedonNovember6,2007andtheexecutivesreceivedinitsplaceamodifiedawardwithbotharestrictedstockcomponentandperformancesharecomponent.OnJune10,2009,theCompanymodifiedtheNovember6,2007performancesharesbyissuing337,500restrictedstockawardsbasedonaservicecondition.TheserestrictedshareswillcliffvestonNovember6,2010providedtheexecutivecontinuesemploymentwiththeCompanythroughsuchdate.Theperformanceshareawardcomponentcanbeearnedbytheexecutiveifthefollowingconditionsaremet:ThetargetrelativestockpriceconditionshallbedeemedmetonNovember6,2010ifthepercentagechangeinthepriceoftheCompany’sstockpriceexceedsthe60thpercentileofapeergroupasselectedbytheCompany’scompensationcommittee.Shouldsuchconditionbemettheexecutivewillbeissuedanadditional337,500sharesofcommonstock(50%onNovember6,2010and50%onNovember6,2011shouldtheexecutivecontinueemploymentwiththeCompanythroughsuchdates).ThestretchrelativestockpriceconditionshallbedeemedmetonNovember6,2010ifthepercentagechangeinthepriceoftheCompany’sstockpriceexceedsthe70thpercentileofapeergroupasselectedbytheCompany’scompensationcommittee.Shouldsuchconditionbemettheexecutivewillbegrantedanadditional337,500sharesofcommonstock(50%onNovember6,2010and50%onNovember6,2011shouldtheexecutivecontinueemploymentwiththeCompanythroughsuchdates).ThemeasurementperiodforboththeaforementionedtargetrelativestockpriceconditionandthestretchstockpriceconditionwasdeemedtohavestartedonNovember6,2007,andwillendonNovember6,2010.Compensationexpenseof$4.7millionhasbeenrecordedratablybetweenNovember6,2007andthefiscalyearendedOctober2,2009.TheamountofadditionalcompensationexpensethatwillberecordedasaresultofthemodificationoftheNovember6,2007performanceshareawardsandthereplacementofthoseawardswiththe2009ExecutiveRestrictedStockandPerformanceShareAwardswillbe$1.7million(assumingallserviceandperformanceconditionsareachieved).2009OperatingMarginPerformanceAwardsTheCompanyawarded846,456performancesharestoexecutivesandkeyemployeesbasedonoperatingmarginperformanceforfiscalyear2009.EachparticipanthastheabilitytoearnMinimum(50%ofTarget),Target,SkyworksSolutions,Inc.2009AnnualReport103NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)Stretch,orMaximum(200%ofTarget),dependingonperformanceaspubliclyannouncedbytheCompanyfollowingthefiscalyearend.Uponachievementoftheperformancetarget,theparticipantswillearnthecorrespondingnumberofsharesissuedasfollows:One-thirdontheinitialissuancedateanniversaryofNovember4,2009andone-thirdoneachofthesecondandthirdanniversaryoftheinitialissuancedate,providingtheemployeeisactivelyemployed.AsofthefiscalyearendedOctober2,2009,thefairvalueoftheperformanceunitsatthedateofgrantwas$6.7million.AtOctober2,2009,theCompanyhadrecordedtotalcompensationexpenseof$2.7million.Share-BasedCompensationPlansforDirectorTheCompanyhasfourshare-basedcompensationplansunderwhichoptionsandrestrictedstockhavebeengrantedfornon-employeedirectors—the1994Non-QualifiedStockOptionPlan,the1997Directors’Non-QualifiedStockOptionPlan,theDirectors’2001StockOptionPlan,andthe2008Directors’Long-TermIncentivePlan.Underthefourplans,atotalof2.2millionshareshavebeenauthorizedforoptiongrants.Underthecurrent2008Directors’Long-TermIncentivePlan,atotalof0.4millionsharesareavailablefornewgrantsasofOctober2,2009.The2008Directors’Long-TermIncentivePlanisstructuredtoprovideoptionsandrestrictedcommonstocktonon-employeedirectorsasfollows:anewdirectorreceivesatotalof25,000optionsand12,500sharesofrestrictedcommonstockuponbecomingamemberoftheBoard;andcontinuingdirectorsreceive12,500sharesofrestrictedcommonstockaftereachAnnualMeetingofStockholders.Underthisplan,theoptionpriceisthefairmarketvalueatthetimetheoptionisgranted.Alloptionsgrantedareexercisableat25%peryearbeginningoneyearfromthedateofgrant.Themaximumcontractualtermofthedirectorplansis10years(excludingthe2008Directors’Long-TermIncentivePlanwhichhasamaximumcontractualtermof7years).AsofOctober2,2009,atotalof0.8millionoptionsataweightedaverageexercisepriceof$9.89persharewereoutstandingunderthesefourplans,and0.7millionoptionswereexercisableataweightedaverageexercisepriceof$10.40pershare.TheremainingunrecognizedcompensationexpenseondirectorstockoptionsatOctober2,2009was$0.2millionandtheweightedaverageperiodoverwhichthecostisexpectedtoberecognizedisapproximately1.1years.Therewere105,000optionsexercisedundertheseplansduringthefiscalyearendedOctober2,2009,and60,000optionsexercisedundertheseplansduringboththefiscalyearsendedOctober3,2008andSeptember28,2007.Theabove-mentionedactivityfortheshare-basedcompensationplansfordirectorsisincludedintheoptiontablesbelow.DistributionandDilutiveEffectofOptionsThefollowingtableillustratesthegrantdilutionandexercisedilution:October2,2009October3,2008September28,2007FiscalYearsEnded(Inthousands)Sharesofcommonstockoutstanding...................172,815165,592161,101Granted........................................3,5963,0023,192Cancelled/forfeited................................(4,702)(3,628)(4,495)Expired........................................———Netoptionsgranted...............................(1,106)(626)(1,303)Grantdilution(1).................................(0.6)%(0.4)%(0.8)%Exercised.......................................5,2032,5821,707Exercisedilution(2)...............................3.0%1.6%1.1%(1)Thepercentageforgrantdilutioniscomputedbasedonnetoptionsgrantedasapercentageofsharesofcommonstockoutstanding.SkyworksSolutions,Inc.2009AnnualReport104NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)(2)Thepercentageforexercisedilutioniscomputedbasedonoptionsexercisedasapercentageofsharesofcommonstockoutstanding.GeneralOptionInformationAsummaryofstockoptiontransactionsfollows(sharesinthousands):SharesAvailableforGrantSharesWeightedAverageExercisePriceofSharesunderPlanOptionsOutstandingBalanceoutstandingatSeptember29,2006.........15,03130,878$12.17Granted(1)...............................(4,524)3,1926.78Exercised................................—(1,707)4.84Cancelled/forfeited(2).......................3,247(4,495)12.47Additionalsharesreserved....................———BalanceoutstandingatSeptember28,2007.........13,75427,868$11.96Granted(1)...............................(5,965)3,0029.25Exercised................................—(2,582)6.99Cancelled/forfeited(2).......................826(3,628)17.52Additionalsharesreserved....................720——BalanceoutstandingatOctober3,2008............9,33524,660$11.38Granted(1)...............................(9,342)3,5967.33Exercised................................—(5,203)7.43Cancelled/forfeited(2).......................2,478(4,702)16.32Additionalsharesreserved....................12,500——BalanceoutstandingatOctober2,2009............14,97118,351$10.44(1)“Granted”under“SharesAvailableforGrant”includesrestrictedandperformancestockawardsfortheyearsendedOctober2,2009,October3,2008,andSeptember28,2007of3.8million,2.0million,and0.9millionshares,respectively.Pursuanttotheplanunderwhichtheywereawarded,theserestrictedandperformancestockgrantsaredeemedequivalenttotheissueof5.7million,3.0million,and1.3millionstockoptions,respectively.(2)“Cancelled”under“SharesAvailableforGrant”donotincludeanycancellationsunderterminatedplans.FortheyearsendedOctober2,2009,October3,2008andSeptember28,2007,cancellationsunderterminatedplanswere3.0million,2.5million,and1.6millionshares,respectively.“Cancelled”under“SharesAvailableforGrant”alsoincluderestrictedandperformancegrantscancellationsof1.4million,0.2millionand0.2millionforthefiscalyearsendedOctober2,2009,October3,2008andSeptember28,2007,respectively.Pursuanttotheplanunderwhichtheywereawarded,thesecancellationsaredeemedequivalenttothecancellationof2.1million,0.3millionand0.3millionstockoptionsforthefiscalyearsendedOctober2,2009,October3,2008andSeptember28,2007,respectively.SkyworksSolutions,Inc.2009AnnualReport105NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)Optionsexercisableattheendofeachfiscalyear(sharesinthousands):SharesWeightedAverageExercisePrice2009...................................................11,398$12.202008...................................................17,687$12.862007...................................................20,909$13.72ThefollowingtablesummarizesinformationconcerningcurrentlyoutstandingandexercisableoptionsasofOctober2,2009(sharesandaggregateintrinsicvalueinthousands):RangeofExercisePricesNumberOutstandingWeightedAverageRemainingContractualLife(Years)WeightedAverageExercisePricePerShareAggregateIntrinsicValueOptionsExercisableWeightedAverageRemainingContractualLife(Years)WeightedAverageExercisePriceperShareAggregateIntrinsicValueOptionsOutstandingOptionsExercisable$3.45-$6.73.....4,2955.3$5.71$26,5772,6064.8$5.46$16,795$6.74-$8.48.....3,7077.2$7.2517,2583715.7$7.501,632$8.54-$9.33.....5,0935.9$9.1813,8793,3365.0$9.109,338$9.40-$14.56....2,2863.8$11.072,8672,1153.3$11.132,582$15.18-$21.31...2,3851.5$20.75—2,3851.5$20.75—$21.93-$61.40...5851.2$31.85—5851.2$31.85—18,3515.0$10.44$60,58111,3983.7$12.20$30,347Theaggregateintrinsicvalueintheprecedingtablerepresentsthetotalpretaxintrinsicvalue,basedontheCompany’sclosingstockpriceof$11.90asofOctober2,2009,whichwouldhavebeenreceivedbytheoptionholdershadalloptionholdersexercisedtheiroptionsasofthatdate.TheaggregateintrinsicvalueofoptionsexercisedforthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007were$16.5million,$7.5million,and$4.4million,respectively.TheintrinsicfairvalueofstockoptionsvestedatOctober2,2009,October3,2008,andSeptember28,2007were$39.1million,$54.7million,and$58.8million,respectively.Thetotalnumberofin-the-moneyoptionsexercisableasofOctober2,2009was7.7million.SkyworksSolutions,Inc.2009AnnualReport106NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)RestrictedSharesandPerformanceUnitInformationAsummaryofthesharetransactionsfollows(sharesinthousands):SharesWeightedAverageGrant-DateFairValueBalanceOutstandingatSeptember29,2006......................1,154$5.17Granted...............................................7686.86Vested(1)..............................................(616)5.51Forfeited..............................................(86)5.41BalanceOutstandingatSeptember28,2007......................1,220$6.04Granted...............................................8278.82Vested(1)..............................................(691)6.08Forfeited..............................................(47)6.76BalanceOutstandingatOctober3,2008.........................1,309$7.75Granted...............................................7548.27Vested(1)..............................................(1,023)7.22Forfeited..............................................(125)8.33BalanceOutstandingatOctober2,2009.........................915$8.69(1)RestrictedstockvestedduringthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007were484,997shares,590,092shares,and512,256shares,respectively.PerformanceunitsvestedduringthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007were30,419shares,100,466shares,and103,688shares,respectively.DuringthefiscalyearendedOctober2,2009,238,706sharesofcommonstockwereissuedtocertainkeyemployeesbasedonexceedingtargetmetricsofthefiscalyear2008managementincentiveprogram.ValuationandExpenseInformationunderASC718Thefollowingtablesummarizespre-taxshare-basedcompensationexpenserelatedtoemployeestockoptions,employeestockpurchases,restrictedstockgrants,andperformancestockgrantsforthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007whichwasallocatedasfollows:October2,2009October3,2008September28,2007FiscalYearsEnded(Inthousands)Costofsales....................................3,1292,9741,274Researchanddevelopment..........................6,1958,7005,590Selling,generalandadministrative....................14,14211,5386,873Share-basedcompensationexpenseincludedinoperatingexpenses......................................$23,466$23,212$13,737DuringthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,theCompanycapitalizedshare-basedcompensationexpenseof$0.1million,$(0.1)million,and$0.3million,respectively,ininventory.SkyworksSolutions,Inc.2009AnnualReport107NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)Theweighted-averageestimatedgrantdatefairvalueofemployeestockoptionsgrantedduringthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007were$3.93pershare,$4.78pershare,and$3.82pershare,respectively,usingtheBlackScholesoption-pricingmodelwiththefollowingweighted-averageassumptions:October2,2009October3,2008September28,2007FiscalYearsEndedExpectedvolatility................................60.90%53.87%57.32%Riskfreeinterestrate(7yearcontractuallifeoptions)......2.36%3.08%4.18%Riskfreeinterestrate(10yearcontractuallifeoptions).....2.67%3.54%4.30%Dividendyield...................................0.000.000.00Expectedoptionlife(7yearcontractuallifeoptions).......4.424.424.57Expectedoptionlife(10yearcontractuallifeoptions)......5.795.805.86TheCompanyusedanarithmeticaverageofhistoricalvolatilityandimpliedvolatilitytocalculateitsexpectedvolatilityduringtheyearendedOctober2,2009.Historicalvolatilitywasdeterminedbycalculatingthemeanreversionoftheweekly-adjustedclosingstockpriceoverthe6.36yearsbetweenJune25,2002andNovember4,2008.Theimpliedvolatilitywascalculatedbyanalyzingthe52-weekminimumandmaximumpricesofpubliclytradedcalloptionsontheCompany’scommonstock.TheCompanyconcludedthatanarithmeticaverageofthesetwocalculationsprovidedforthemostreasonableestimateofexpectedvolatilityundertheguidanceofASC718.Therisk-freeinterestrateassumptionisbaseduponobservedTreasurybillinterestrates(riskfree)appropriatefortheexpectedlifeoftheCompany’semployeestockoptions.Theexpectedlifeofemployeestockoptionsrepresentsacalculationbaseduponthehistoricalexercise,cancellationandforfeitureexperiencefortheCompanyoverthe6.25yearsbetweenJune25,2002andOctober3,2008.TheCompanydeemedthatexercise,cancellationandforfeitureexperiencein2008wasconsistentwithhistoricalnormsthusexpectedlifewasnotrecalculatedatOctober2,2009.TheCompanydeterminedthatithadtwopopulationswithuniqueexercisebehavior.Thesepopulationsincludedstockoptionswithacontractuallifeof7yearsand10years,respectively.Asshare-basedcompensationexpenserecognizedintheConsolidatedStatementofOperationsforthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007isactuallybasedonawardsultimatelyexpectedtovest,ithasbeenreducedforannualizedestimatedforfeituresof11.10%,11.79%,and12.85%,respectively.ASC718requiresforfeiturestobeestimatedatthetimeofgrantandrevised,ifnecessary,insubsequentperiodsifactualforfeituresdifferfromthoseestimates.Forfeitureswereestimatedbasedonhistoricalexperience.STOCKOPTIONDISTRIBUTIONThefollowingtablesummarizesinformationconcerningcurrentlyoutstandingoptionsasofOctober2,2009(sharesinthousands):NumberOutstanding%oftotalCommonStockOutstandingStockoptionsheldbyemployeesanddirectors.....................16,7089.67%Stockoptionsheldbynon-employees(excludingdirectors)(1)..........1,6430.95%18,35110.62%SkyworksSolutions,Inc.2009AnnualReport108NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)(1)Duetoapreviousbusinesscombination,certainnon-employeesholdSkyworksstockoptions.AsofOctober2,2009,October3,2008,andSeptember28,2007,non-employees,excludingdirectors,held1.6million,4.1million,and6.4millionoptionsataweightedaverageexercisepricepershareof$21.18,$20.69,and$20.62,respectively.12.EMPLOYEEBENEFITPLAN,PENSIONSANDOTHERRETIREEBENEFITSTheCompanymaintainsa401(k)plancoveringsubstantiallyallofitsemployees.AlloftheCompany’semployeeswhoareatleast21yearsoldareeligibletoreceivediscretionaryCompanycontributionsunderthe401(k)plan.DiscretionaryCompanycontributionsaredeterminedbytheBoardofDirectorsandmaybeintheformofcashortheCompany’sstock.TheCompanyhasgenerallycontributedamatchofupto4.0%ofanemployee’sannualeligiblecompensation.ForthefiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,theCompanycontributedandrecognizedexpensefor0.7million,0.6million,and0.7millionshares,respectively,oftheCompany’scommonstockvaluedat$4.6million,$5.0million,and$4.8million,respectively,tofundtheCompany’sobligationunderthe401(k)plan.Infiscal2008,theCompanybeganphasingoutitsfundingofretireemedicalbenefits.OnSeptember18,2007,aletterwasmailedtotheparticipantsoftheRetireeHealthPlaninformingthemoftheCompany’splantophaseoutthePlanoverathreeyearperiodeffectiveJanuary2008.Skyworkscontributionswillbephasedoutonthefollowingbasis:CalendarYearSkyworks2008........................Employerportionofcontributionwillbereducedby20%2009........................Employerportionofcontributionwillbereducedby40%2010........................Employerportionofcontributionwillbereducedby80%2011........................Employerportionofcontributionwillbereducedby100%TheCompanyincurrednetperiodicbenefitcostsof$0.2millionforpensionbenefitsduringthefiscalyearendedOctober2,2009,and$0.1millionforpensionbenefitsineachofthefiscalyearsendingOctober3,2008,andSeptember28,2007,respectively.TheCompanyrealizedacreditof$0.4millionforthefiscalyearendedOctober2,2009relatedtothecurtailmentoftheretireemedicalbenefitshealthplan,andincurrednetperiodicbenefitcostof$0.1millionineachofthefiscalyearsendingOctober3,2008andSeptember28,2007,respectively.TheCompanyadoptedASC715-Compensation-RetirementBenefits(“ASC715”)onSeptember28,2007,ontherequiredprospectivebasis.InaccordancewithASC715,thefundedstatusasofSeptember28,2007,isrecordedasaliabilityintheaccompanyingconsolidatedbalancesheet.ThefundedstatusoftheCompany’sprincipaldefinedbenefitandretireemedicalbenefitplansareasfollows(inthousands):October2,2009October3,2008October2,2009October3,2008PensionBenefitsFiscalYearsEndedRetireeMedicalBenefitsFiscalYearsEndedBenefitobligationatendoffiscalyear..........$3,120$3,229$431$843Fairvalueofplanassetsatendoffiscalyear.....2,6522,961——Fundedstatus.............................$(468)$(268)$(431)$(843)SkyworksSolutions,Inc.2009AnnualReport109NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)13.COMMITMENTSTheCompanyhasvariousoperatingleasesprimarilyforcomputerequipmentandbuildings.Rentexpenseamountedto$8.0million,$8.6million,and$8.5millioninfiscalyearsendedOctober2,2009,October3,2008,andSeptember28,2007,respectively.Purchaseoptionsmaybeexercised,atfairmarketvalue,atvarioustimesforsomeoftheseleases.Futureminimumpaymentsunderthesenon-cancelableleasesareasfollows(inthousands):FiscalYear2010................................................................$6,7022011................................................................2,9102012................................................................8222013................................................................132014................................................................—Thereafter............................................................—$10,447TheCompanyisattemptingtosubletcertainpropertiesthatwerevacatedupontheexitofthebasebandproductareaand,ifsuccessful,futureoperatingleasecommitmentswillbepartiallyoffsetbyproceedsreceivedfromthesubleases.Inaddition,theCompanyhasenteredintolicensingagreementsforintellectualpropertyrightsandmain-tenanceandsupportservices.Pursuanttothetermsoftheseagreements,theCompanyiscommittedtomakingaggregatepaymentsof$4.2million,$3.4million,$1.5million,and$0.6millioninfiscalyears2010,2011,2012and2013,respectively.14.CONTINGENCIESFromtimetotime,variouslawsuits,claimsandproceedingshavebeen,andmayinthefuturebe,institutedorassertedagainsttheCompany,includingthosepertainingtopatentinfringement,intellectualproperty,environ-mental,productliability,safetyandhealth,employmentandcontractualmatters.Additionally,thesemiconductorindustryischaracterizedbyvigorousprotectionandpursuitofintellectualpropertyrights.Fromtimetotime,thirdpartieshaveassertedandmayinthefutureassertpatent,copyright,trademarkandotherintellectualpropertyrightstotechnologiesthatareimportanttoourbusinessandhavedemandedandmayinthefuturedemandthattheCompanylicensetheirtechnology.Theoutcomeoflitigationcannotbepredictedwithcertaintyandsomelawsuits,claimsorproceedingsmaybedisposedofunfavorablytotheCompany.Intellectualpropertydisputesoftenhaveariskofinjunctiverelief,which,ifimposedagainsttheCompany,couldmateriallyandadverselyaffecttheCompany’sfinancialcondition,orresultsofoperations.FromtimetotimetheCompanyisinvolvedinlegalproceedingsintheordinarycourseofbusiness.TheCompanybelievesthatthereisnosuchordinarycourselitigationpendingthatwillhave,individuallyorintheaggregate,amaterialadverseeffectonitsbusiness.15.GUARANTEESANDINDEMNITIESTheCompanyhasnoguarantees.TheCompanygenerallyindemnifiesitscustomersfromthird-partyintellectualpropertyinfringementlitigationclaimsrelatedtoitsproducts,and,onoccasion,alsoprovidesotherindemnitiesrelatedtoproductsales.Inconnectionwithcertainfacilityleases,theCompanyhasindemnifieditslessorsforcertainclaimsarisingfromthefacilityorthelease.TheCompanyindemnifiesitsdirectorsandofficerstothemaximumextentpermittedunderthelawsofthestateofDelaware.Thedurationoftheindemnitiesvaries,andinmanycasesisindefinite.TheindemnitiestoSkyworksSolutions,Inc.2009AnnualReport110NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)customersinconnectionwithproductsalesgenerallyaresubjecttolimitsbasedupontheamountoftherelatedproductsalesandinmanycasesaresubjecttogeographicandotherrestrictions.Incertaininstances,theCompany’sindemnitiesdonotprovideforanylimitationofthemaximumpotentialfuturepaymentstheCompanycouldbeobligatedtomake.TheCompanyhasnotrecordedanyliabilityfortheseindemnitiesintheaccompanyingconsolidatedbalancesheets.16.RESTRUCTURINGANDOTHERCHARGESRestructuringandotherchargesconsistsofthefollowing(inthousands):October2,2009October3,2008September28,2007FiscalYearsEndedAssetimpairments................................$5,616$—$—Restructuringandothercharges......................10,3665675,730$15,982$567$5,7302009RESTRUCTURINGCHARGESANDOTHEROnJanuary22,2009,theCompanyimplementedarestructuringplantorealignitscostsgivencurrentbusinessconditions.TheCompanyexiteditsmobiletransceiverproductareaandreducedglobalheadcountbyapprox-imately4%,or150employeeswhichresultedinareductiontoannualoperatingexpendituresofapproximately$20million.TheCompanyrecordedvariouschargesassociatedwiththisaction.Intotal,theyrecorded$16.0mil-lionofrestructuringandotherchargesand$3.5millionininventorywrite-downsthatwerechargedtocostofgoodssold.The$16.0millionchargeincludesthefollowing:$4.5millionrelatedtoseveranceandbenefits,$5.6millionrelatedtotheimpairmentofcertainlong-livedassetswhichwerewrittendowntotheirsalvagevalues,$2.1millionrelatedtotheexitofcertainoperatingleases,$2.3millionrelatedtotheimpairmentoftechnologylicensesanddesignsoftware,and$1.5millionrelatedtoothercharges.Thesechargestotal$16.0millionandarerecordedinrestructuringandothercharges.TheCompanymadecashpaymentsrelatedtotherestructuringplanof$5.9millionduringthefiscalyearendedOctober2,2009.Activityandliabilitybalancesrelatedtothefiscal2009restructuringactionsareasfollows(inthousands):FacilityClosingsLicenseandSoftwareWrite-offsandOtherWorkforceReductionsAssetImpairmentsTotalChargedtocostsandexpenses......$1,967$3,892$4,507$5,616$15,982Other.........................9(368)161—(198)Non-cashitems..................—(955)—(5,616)(6,571)Cashpayments..................(766)(983)(4,185)—(5,934)Restructuringbalance,October2,2009........................$1,210$1,586$483$—$3,279TheremainingrestructuringreserveatOctober2,2009of$3.3millionisclassifiedasothercurrentliabilities.TheCompanyanticipatescompletingtherestructuringplanandremittingtheremainingpaymentswithinthenextfifteenmonths.SkyworksSolutions,Inc.2009AnnualReport111NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)17.EARNINGSPERSHAREOctober2,2009October3,2008September28,2007FiscalYearsEnded(Inthousands,exceptpershareamounts)Netincome.....................................$93,289$111,006$57,650Weightedaveragesharesoutstanding—basic............167,047161,878159,993Effectofdilutivestockoptionsandrestrictedstock........2,0932,1721,071DilutiveeffectofJuniorNotes.......................—705—DilutiveeffectofConvertibleNotes...................523——Weightedaveragesharesoutstanding—diluted..........169,663164,755161,064Netincomepershare—basic.......................$0.56$0.69$0.36Effectofdilutivestockoptions.......................0.010.01—Netincomepershare—diluted......................$0.55$0.68$0.36Basicearningspershareiscalculatedbydividingnetincomebytheweightedaveragenumberofcommonsharesoutstanding.Dilutedearningspershareincludesthedilutiveeffectofequitybasedawardsusingthetreasurystockmethod,theJuniorNotesonanif-convertedbasis,andthe2007ConvertibleNotesusingthetreasurystockmethod,iftheireffectisdilutive.Equitybasedawardsexercisableforapproximately16.5millionsharesand23.0millionshareswereoutstandingbutnotincludedinthecomputationofearningspershareforthefiscalyearendedOctober2,2009andOctober3,2008,respectively,astheireffectwouldhavebeenanti-dilutive.JuniorNotesconvertibleintoapproximately5.5millionsharesandequitybasedawardsexercisableforapproximately19.3millionshareswereoutstandingbutnotincludedinthecomputationofearningspershareforthefiscalyearendedSeptember28,2007astheireffectwouldhavebeenanti-dilutive.IftheCompanyhadearnedatleast$78.8millioninnetincomeforthefiscalyearendedSeptember28,2007theJuniorNoteswouldhavebeendilutivetoearningspershare.Inaddition,theCompanyissued$200.0millionaggregateprincipalamountofconvertiblesubordinatednotes(“2007ConvertibleNotes”)inMarch2007.These2007ConvertibleNotescontaincashsettlementprovisions,whichpermittheapplicationofthetreasurystockmethodindeterminingpotentialsharedilutionoftheconversionspreadshouldthesharepriceoftheCompany’scommonstockexceed$9.52.IthasbeentheCompany’shistoricalpracticetocashsettletheprincipalandinterestcomponentsofconvertibledebtinstruments,anditistheCompany’sintentiontocontinuetodosointhefuture,includingsettlementofthe2007ConvertibleNotesissuedinMarch2007.TheseshareshavenotbeenincludedinthecomputationofearningspershareforthefiscalyearendedOctober3,2008orSeptember28,2007astheireffectwouldhavebeenanti-dilutive.18.SEGMENTINFORMATIONANDCONCENTRATIONSInaccordancewithASC280-SegmentReporting(“ASC280”),theCompanyhasonereportableoperatingsegmentwhichdesigns,develops,manufacturesandmarketsproprietarysemiconductorproducts,includingintellectualproperty,formanufacturersofwirelesscommunicationproducts.ASC280establishesstandardsforthewaypublicbusinessenterprisesreportinformationaboutoperatingsegmentsinannualfinancialstatementsandininterimreportstoshareholders.Themethodfordeterminingwhatinformationtoreportisbasedonmanagement’sorganizationofsegmentswithintheCompanyformakingoperatingdecisionsandassessingfinancialperformance.Inevaluatingfinancialperformance,managementusessalesandoperatingprofitastheSkyworksSolutions,Inc.2009AnnualReport112NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)measureofthesegments’profitorloss.AlloftheCompany’soperatingsegmentssharesimilareconomiccharacteristicsastheyhaveasimilarlongtermbusinessmodel,andhavesimilarresearchanddevelopmentexpensesandsimilarselling,generalandadministrativeexpenses,thus,theCompanyhasconcludedatOctober2,2009thatithasonlyonereportableoperatingsegment.TheCompanywillre-assessitsconclusionsatleastannually.GEOGRAPHICINFORMATIONNetrevenuesbygeographicareaarepresentedbaseduponthecountryofdestination.Netrevenuesbygeographicareaareasfollows(inthousands):October2,2009October3,2008September28,2007FiscalYearsEndedUnitedStates....................................$76,435$79,952$66,868OtherAmericas..................................26,07810,63611,230TotalAmericas.................................102,51390,58878,098China.........................................414,208410,645293,035SouthKorea....................................174,744184,208128,253Taiwan........................................48,44386,544101,107OtherAsia-Pacific................................23,09836,00598,200TotalAsia-Pacific...............................660,493717,402620,595Europe,MiddleEastandAfrica......................39,57152,02743,051$802,577$860,017$741,744TheCompany’srevenuesbygeographydonotnecessarilycorrelatetoendmarketdemandbyregion.Forexample,iftheCompanysellsapoweramplifiermoduletoacustomerinSouthKorea,thesaleisrecordedwithintheSouthKoreaaccountalthoughthatcustomer,inturn,mayintegratethatmoduleintoaproductsoldtoaserviceprovider(itscustomer)inAfrica,China,Europe,theMiddleEast,theAmericas,orwithinSouthKorea.Geographicproperty,plantandequipmentbalances,includingpropertyheldforsale,arebasedonthephysicallocationswithintheindicatedgeographicareasandareasfollows(inthousands):October2,2009October3,2008AsofUnitedStates................................................$100,254$114,794Mexico....................................................61,45556,378Other.....................................................5902,188$162,299$173,360CONCENTRATIONSFinancialinstrumentsthatpotentiallysubjecttheCompanytoconcentrationofcreditriskconsistprincipallyoftradeaccountsreceivable.Tradereceivablesareprimarilyderivedfromsalestomanufacturersofcommunicationsandconsumerproducts.Ongoingcreditevaluationsofcustomers’financialconditionareperformedandcollateral,suchaslettersofcreditandbankguarantees,arerequiredwheneverdeemednecessary.SkyworksSolutions,Inc.2009AnnualReport113NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)AsofOctober2,2009,Motorola,Inc.,LGElectronics,andSamsungElectronicsCo.accountedforapproximately12%,11%and11%,respectively,oftheCompany’sgrossaccountsreceivable.AsofOctober3,2008,Motorola,Inc.,SamsungElectronicsCo.,andSonyEricssonMobileComm.ABaccountedforapproximately14%,12%and10%,respectively,oftheCompany’sgrossaccountsreceivable.Thefollowingcustomersaccountedfor10%ormoreofnetrevenues:October2,2009October3,2008September28,2007FiscalYearsEndedSonyEricssonMobileCommunicationsAB.............12%18%22%SamsungElectronicsCo............................15%14%11%AsianInformationTechnology,Inc....................11%11%11%Motorola,Inc....................................**16%*Customersaccountedforlessthan10%ofnetrevenues.19.QUARTERLYFINANCIALDATA(UNAUDITED)FirstQuarterSecondQuarterThirdQuarterFourthQuarterYear(Inthousands,exceptpersharedata)Fiscal2009(2)Netrevenues.................$210,228$172,990$191,213$228,146$802,577Grossprofit..................83,86764,87576,95092,528318,220Netincome..................22,024(4,589)19,84956,00593,289Persharedata(1)Netincome,basic............0.13(0.03)0.120.330.56Netincome,diluted..........0.13(0.03)0.120.320.55Fiscal2008Netrevenues.................$210,533$201,708$215,210$232,566$860,017Grossprofit..................82,33880,36786,43493,824342,963Netincome..................19,07816,67320,46654,789111,006Persharedata(1)Netincome,basic............0.120.100.130.330.69Netincome,diluted..........0.120.100.120.330.68(1)Earningspersharecalculationsforeachofthequartersarebasedontheweightedaveragenumberofsharesoutstandingandincludedcommonstockequivalentsineachperiod.Therefore,thesumsofthequartersdonotnecessarilyequalthefullyearearningspershare.(2)Duringthesecondquarteroffiscal2009,theCompanyimplementedarestructuringplantoreduceglobalheadcountbyapproximately4%,or150employees.Thetotalchargesrelatedtotheplanwere$19.4million.Duetoaccountingclassifications,thechargesassociatedwiththeplanarerecordedinvariouslinesandaresummarizedasfollows:Costofgoodssoldadjustmentsincludeapproximately$3.5millionofinventorywrite-downs.Restructuringandotherchargesprimarilyconsistedof$4.5millionrelatedtoseveranceandbenefits,$5.6millionrelatedtotheimpairmentoflong-livedassets,$2.0millionrelatedtoleaseobligations,$2.3millionrelatedtotheimpairmentoftechnologylicensesanddesignsoftwareand$1.5millionrelatedtoothercharges.SkyworksSolutions,Inc.2009AnnualReport114NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTheBoardofDirectorsandStockholdersSkyworksSolutions,Inc.:WehaveauditedtheaccompanyingconsolidatedbalancesheetsofSkyworksSolutions,Inc.andsubsidiariesasofOctober2,2009andOctober3,2008,andtherelatedconsolidatedstatementsofoperations,cashflows,andstockholders’equityandcomprehensiveincome(loss)foreachoftheyearsinthethree-yearperiodendedOctober2,2009.Inconnectionwithourauditoftheconsolidatedfinancialstatements,wealsohaveauditedthefinancialstatementschedulelistedinItem15ofthe2009Form10-K.WealsohaveauditedSkyworksSolutionsInc.’sinternalcontroloverfinancialreportingasofOctober2,2009,basedoncriteriaestablishedinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO).SkyworksSolutions,Inc.’smanagementisresponsiblefortheseconsolidatedfinancialstatementsandfinancialstatementschedule,formaintainingeffectiveinternalcontroloverfinancialreporting,andforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedintheaccompanyingManagementReportonInternalControloverFinancialReporting.Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsandfinancialstatementschedule,andanopinionontheCompany’sinternalcontroloverfinancialreportingbasedonouraudits.WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheauditstoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatementandwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditsoftheconsolidatedfinancialstatementsincludedexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements,assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,andevaluatingtheoverallfinancialstatementpresentation.Ourauditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk.Ourauditsalsoincludedperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditsprovideareasonablebasisforouropinions.Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionofSkyworksSolutions,Inc.andsubsidiariesasofOctober2,2009andOctober3,2008,andtheresultsoftheiroperationsandtheircashflowsforeachoftheyearsinthethree-yearperiodendedOctober2,2009,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.Alsoinouropinion,therelatedfinancialstatementschedule,whenconsideredinrelationtothebasicconsolidatedfinancialstatementstakenasawhole,presentsfairly,inallmaterialrespects,theinformationsetforththerein.Alsoinouropinion,SkyworksSolutions,Inc.andsubsidiariesmaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofOctober2,2009,basedoncriteriaestablishedinInternalControl—IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission./s/KPMGLLPBoston,MassachusettsNovember30,2009SkyworksSolutions,Inc.2009AnnualReport115CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURENone.MARKETFORREGISTRANT’SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERSANDISSUERPURCHASESOFEQUITYSECURITIESOurcommonstockistradedontheNASDAQGlobalSelectMarketunderthesymbol“SWKS”.Thefollowingtablesetsforththerangeofhighandlowsalepricesforourcommonstockfortheperiodsindicated,asreportedbytheNASDAQGlobalSelectMarket.ThenumberofstockholdersofrecordofSkyworks’commonstockasofNovember16,2009,wasapproximately30,146.HighLowFiscalyearendedOctober2,2009:Firstquarter...................................................$7.51$3.81Secondquarter.................................................8.844.07Thirdquarter..................................................10.508.02Fourthquarter..................................................14.289.50FiscalyearendedOctober3,2008:Firstquarter...................................................$9.36$8.01Secondquarter.................................................9.036.71Thirdquarter..................................................11.207.28Fourthquarter..................................................10.857.47Skyworkshasnotpaidcashdividendsonitscommonstockandwedonotanticipatepayingcashdividendsintheforeseeablefuture.Ourexpectationistoreinvestorretainallfutureearnings,ifany.ThefollowingtableprovidesinformationregardingrepurchasesofcommonstockmadebyusduringthefiscalquarterendedOctober2,2009:PeriodTotalNumberofSharesPurchasedAveragePricePaidperShareTotalNumberofSharesPurchasedasPartofPubliclyAnnouncedPlansorProgramsMaximumNumber(orApproximatelyDollarValue)ofSharesthatMayYetBePurchasedUnderthePlansorPrograms7/04/09-7/31/09.........——N/A(2)N/A(2)8/01/09-8/28/09.........3,181(1)$11.69N/A(2)N/A(2)8/29/09-10/02/09........25,920(1)$13.22N/A(2)N/A(2)(1)AllsharesofcommonstockreportedinthetableabovewererepurchasedbySkyworksatthefairmarketvalueofthecommonstockasoftheperiodstatedabove,inconnectionwiththesatisfactionoftaxwithholdingobligationsunderrestrictedstockagreementsbetweenSkyworksandcertainofitsemployees.(2)Skyworkshasnopubliclyannouncedplansorprograms.SkyworksSolutions,Inc.2009AnnualReport116COMPARATIVESTOCKPERFORMANCEGRAPHThefollowinggraphshowsthechangeinSkyworks’cumulativetotalstockholderreturnforthelastfivefiscalyears,baseduponthemarketpriceofSkyworks’commonstock,comparedwith:(i)thecumulativetotalreturnontheStandard&Poor’s500Indexand(ii)theStandardandPoor’s500SemiconductorIndex.Thegraphassumesatotalinitialinvestmentof$100onOctober1,2004,andshowsa“TotalReturn”thatassumesreinvestmentofdividends,ifany,andisbasedonmarketcapitalizationatthebeginningofeachperiod.ComparisonofCumulativeFiveYearTotalReturnSkyworks Solutions, Inc.S&P 500 IndexS&P 500 SemiconductorsDOLLARS050100150200250Oct09Oct08Sep07Sep06Sep05Oct04TotalReturnToShareholdersANNUALRETURNPERCENTAGECompany/Index9/30/059/29/069/28/0710/3/0810/2/09YearsEndingSkyworksSolutions,Inc.....................(29.73)(26.07)74.18(17.37)59.30S&P500Index............................10.5710.7916.44(26.47)(4.20)S&P500Semiconductors....................24.20(7.85)17.40(37.99)15.32INDEXEDRETURNSCompany/IndexBasePeriod10/1/049/30/059/29/069/28/0710/3/0810/2/09YearsEndingSkyworksSolutions,Inc.........10070.2751.9590.4974.77119.12S&P500Index................100110.57122.51142.64104.89100.49S&P500Semiconductors........100124.20114.45134.3683.3296.08SkyworksSolutions,Inc.2009AnnualReport117SKYWORKSSOLUTIONS,INC.UNAUDITEDRECONCILIATIONOFNON-GAAPMEASURESOct.2,2009Oct.3,2008Sept.28,2007YearEnded(Inmillions)GAAPoperatingincome....................................$72$90$58Share-basedcompensationexpense[a]........................242314Costofgoodssoldadjustments[b]...........................4—(1)Selling,generalandadministrativeadjustments[b]...............(1)(1)1Restructuring&othercharges[b]............................1616Acquisitionrelatedexpense[c]..............................—2—Amortizationofintangibleassets............................662Non-GAAPoperatingincome................................$121$121$80Non-GAAPoperatingmargin%...............................15.1%14.1%10.8%[a]ThesechargesrepresentexpenserecognizedinaccordancewithAccountingStandardsCodification718—Compensation—StockCompensation.Approximately$3.1million,$6.2millionand$14.2millionwereincludedincostofgoodssold,researchanddevelopmentexpenseandselling,generalandadministrativeexpense,respectively,forthefiscalyearendedOctober2,2009.Approximately$3.0million,$8.7millionand$11.5millionwereincludedincostofgoodssold,researchanddevelopmentexpenseandselling,generalandadministrativeexpense,respectively,forthefiscalyearendedOctober3,2008.ForthefiscalyearendedSeptember28,2007,approximately$1.3million,$5.6millionand$6.8millionwereincludedincostofgoodssold,researchanddevelopmentexpenseandselling,generalandadministrativeexpense,respectively.[b]Duringthesecondquarteroffiscal2009,theCompanyimplementedarestructuringplantoreduceglobalheadcountbyapproximately4%,or150employees.Thetotalchargesrelatedtotheplanwere$19.4million.Duetoaccountingclassifications,thechargesassociatedwiththeplanarerecordedinvariouslinesandaresummarizedasfollows:Costofgoodssoldadjustmentsincludeapproximately$3.5millionofinventorywrite-downs.Restructuringandotherchargesprimarilyconsistedof$4.5millionrelatedtoseveranceandbenefits,$5.6millionrelatedtotheimpairmentoflong-livedassets,$2.0millionrelatedtoleaseobligations,$2.3millionrelatedtotheimpairmentoftechnologylicensesanddesignsoftwareand$1.5millionrelatedtoothercharges.OnOctober2,2006,theCompanyannouncedthatitwasexitingitsbasebandproductarea.ForthefiscalyearsendedOctober2,2009andOctober3,2008,selling,generalandadministrativeadjustmentsof$0.5millionand$1.3million,respectively,representarecoveryofbaddebtexpenseonspecificaccountsreceivableassociatedwithbasebandproduct.Selling,generalandadministrativeadjustmentsof$1.3millionduringfiscal2007representbaddebtexpenseonspecificaccountsreceivableassociatedwithbasebandproduct.Costofgoodssoldadjustmentsduring2007includeacreditof$1.2millionofinventoryrelatedtocontractualobligations.Restructuringandotherchargesof$0.6millionrecordedduringfiscal2008relatetoleaseobligationsassociatedwiththeclosureofcertainlocationsassociatedwiththebasebandproductarea.Restructuringandotherchargesrecordedduringfiscal2007associatedwiththeexitofthebasebandproductareaprimarilyconsistedofthefollowing:$4.5millionrelatedtoleaseobligations,$1.4millionrelatedtothewrite-downoftechnologylicensesanddesignsoftware,$0.5millionrelatedtoseveranceandbenefitsanda$1.5millioncreditrelatedtoothercharges.Inaddition,an$0.8millionchargewasrecordedthatrelatedtoaSkyworksSolutions,Inc.118leaseobligationthatexpiredin2008whichwasassumedfromAlphaIndustries,Inc.inconnectionwiththeMergerin2002.[c]Duringfiscal2008,SkyworksacquiredFreescaleSemiconductor’spoweramplifierandfront-endmoduleproductline.Thepurchaseaccountingchargesrecognizedduringfiscal2008includeda$0.7millionchargetocostofsalesrelatedtothesaleofacquisitionrelatedinventoryand$4.5millionamortizationofacquisitionrelatedintangibles.Ofthe$4.5million,$0.9millionwasincludedincostofsales.Amortizationexpenseof$2.4millionrelatedtopreviousbusinesscombinations.SKYWORKSSOLUTIONS,INC.DISCUSSIONREGARDINGTHEUSEOFNON-GAAPFINANCIALMEASURESThisdocumentcontainsoperatingincomeandoperatingmarginwhichhavenotbeencalculatedinaccordancewithUnitedStatesGenerallyAcceptedAccountingPrinciples(GAAP).Wecalculatesuchnon-GAAPoperatingincomeandoperatingmarginbyexcludingcertainexpensesandotheritemsfromtherespectiveGAAPfinancialmeasure.Managementusescertainnon-GAAPfinancialmeasures,includingoperatingincomeandoperatingmargintoevaluateouroperatingperformanceandcompareitagainstpastperiods,makeoperatingdecisions,forecastforfutureperiods,compareoperatingperformanceagainstpeercompaniesanddeterminepaymentsundercertaincompensationprograms.Thesenon-GAAPfinancialmeasuresprovidemanagementwithadditionalmeanstounderstandandevaluatetheoperatingresultsandtrendsinourongoingbusinessbyeliminatingcertainnon-recurringexpenses(whichmaynotoccurineachperiodpresented)andotheritemsthatmanagementbelievesmightotherwisemakecomparisonsofourongoingbusinesswithpriorperiodsmoredifficult,obscuretrendsinongoingoperationsorreducemanagement’sabilitytomakeusefulforecasts.Weprovideinvestorswithnon-GAAPfinancialmeasuresbecausewebelieveitisimportantforinvestorstobeabletocloselymonitorandunderstandchangesinourabilitytogenerateincomefromongoingbusinessoperations.Webelievethesenon-GAAPfinancialmeasuresgiveinvestorsamoreeffectivemethodtoevaluatehistoricaloperatingperformanceandidentifytrends,additionalmeansofevaluatingperiod-over-periodoperatingperformanceandamethodtofacilitatecertaincomparisonsofoperatingresultstopeercompanies.Wefurtherbelievethatprovidingnon-GAAPoperatingincomeandoperatingmarginallowsinvestorstobetterassesstheoverallfinancialperfor-manceofongoingoperationsandcontributestoenhancedfinancialreportingtransparencyandprovidesinvestorswithaddedclarity.Wecalculatenon-GAAPoperatingincomebyexcludingfromGAAPoperatingincome,stockcompensationexpense,restructuring-relatedcharges,acquisition-relatedexpensesandcertaindeferredexecutivecompensation,whichmaynotoccurinallperiodsforwhichfinancialinformationispresented.Wecalculatenon-GAAPoperatingmarginbydividingnon-GAAPoperatingincomebyGAAPrevenue.Weexcludetheitemsidentifiedabovefromnon-GAAPoperatingincomeforthereasonssetforthwithrespecttoeachsuchexcludeditembelow:StockCompensation—because(1)thetotalamountofexpenseispartiallyoutsideofourcontrolbecauseitisbasedonfactorssuchasstockpricevolatilityandinterestrates,whichmaybeunrelatedtoourperformanceduringtheperiodinwhichtheexpenseisincurred,(2)itisanexpensebaseduponavaluationmethodologypremisedonassumptionsthatvaryovertime,and(3)theamountoftheexpensecanvarysignificantlybetweencompaniesduetofactorsthatcanbeoutsideofthecontrolofsuchcompanies.Restructuring-RelatedCharges—because,totheextentsuchchargesimpactaperiodpresented,webelievethattheyhavenodirectcorrelationtofuturebusinessoperationsandincludingsuchchargesdoesnotaccuratelyreflecttheperformanceofourongoingoperationsfortheperiodinwhichsuchchargesareincurred.Acquisition-RelatedExpenses—including,whenapplicable,amortizationofacquiredintangibleassets,becausetheyarenotconsideredbymanagementinmakingoperatingdecisionsandwebelievethatsuchexpensesdonothaveadirectcorrelationtofuturebusinessoperationsandtherebyincludingsuchchargesdoesnotaccuratelyreflecttheperformanceofourongoingoperationsfortheperiodinwhichsuchchargesareincurred.SkyworksSolutions,Inc.119DeferredExecutiveCompensation—includingchargesrelatedtoanycontingentobligationpursuanttoanexecutiveseveranceagreementbecausewebelievetheperiodoverwhichtheobligationisamortizedmaynotreflecttheperiodofbenefitandthatsuchexpensehasnodirectcorrelationwithourrecurringbusinessoperationsandincludingsuchexpensesdoesnotaccuratelyreflectthecompensationexpensefortheperiodinwhichincurred.Non-GAAPoperatingincomeandoperatingmarginpresentedinthisdocumentshouldnotbeconsideredinisolationandarenotalternativesfortherespectiveGAAPmeasures.Investorsarecautionedagainstplacingunduerelianceonthesenon-GAAPfinancialmeasuresandareurgedtoreviewandconsidercarefullytheadjustmentsmadebymanagementtothecorrespondingGAAPfinancialmeasure.Non-GAAPfinancialmeasuresmayhavelimitedvalueasanalyticaltoolsbecausetheymayexcludecertainexpensesthatsomeinvestorsconsiderimportantinevaluatingoperatingperformanceorongoingbusiness.Further,non-GAAPfinancialmeasuresarelikelytohavelimitedvalueforpurposesofdrawingcomparisonsbetweencompaniesbecausedifferentcompaniesmaycalculatesimilarlytitlednon-GAAPfinancialmeasuresindifferentwaysbecausenon-GAAPmeasuresarenotbasedonanycomprehensivesetofaccountingrulesorprinciples.SkyworksSolutions,Inc.120Executive ManagementDAVID J. ALDRICHPresident, Chief Executive Officer and DirectorBRUCE J. FREYMANVice President, Worldwide OperationsLIAM K. GRIFFINSenior Vice President, Sales and MarketingGEORGE M. LEVANVice President, Human ResourcesDONALD W. PALETTEVice President and Chief Financial OfficerTHOMAS S. SCHILLERVice President, Corporate DevelopmentNIEN-TSU SHENVice President, QualityDAVID C. STASEYVice President, Analog ComponentsMARK V.B. TREMALLOVice President, General Counsel and SecretaryGREGORY L. WATERSExecutive Vice President and General Manager,Front-End SolutionsCorporate HeadquartersSkyworks Solutions, Inc.20 Sylvan RoadWoburn, MA 01801(781) 376-3000www.skyworksinc.comBoard of DirectorsDAVID J. McLACHLANChairmanRetired Chief Financial Officer and Senior Advisor to Chairman and Chief Executive OfficerGenzyme CorporationDAVID J. ALDRICHPresident and Chief Executive OfficerSkyworks Solutions, Inc.KEVIN L. BEEBEPresident and Chief Executive Officer2BPartners, LLCStrategic and operational advisor to private equity and investment bank clientsMOIZ M. BEGUWALARetired Senior Vice President and General ManagerWireless CommunicationsConexant Systems, Inc.TIMOTHY R. FUREYChief Executive OfficerMarketBridgeBALAKRISHNAN S. IYERDirector, Retired Senior Vice President and Chief Financial OfficerConexant Systems, Inc.THOMAS C. LEONARDRetired Chairman and Chief Executive OfficerAlpha Industries, Inc.DAVID P. McGLADEChief Executive Officer and Deputy ChairmanIntelsat Global S.A.ROBERT A. SCHRIESHEIMChief Financial OfficerHewitt Associates, Inc.Transfer Agent and RegistrarAmerican Stock Transfer & Trust Company59 Maiden LaneNew York, NY 10038(877) 366-6437 (United States and Canada)(212) 936-5100 (outside United States)www.amstock.comOur transfer agent can help you with a vari-ety of stockholder related services including change of address, lost stock certificates, stock transfers, account status and other administrative matters.Investor RelationsYou can contact Skyworks’ Investor Rela-tions team directly to order an Investor’s Kit or to ask investment-oriented questions about Skyworks at:Investor RelationsSkyworks Solutions, Inc.5221 California AvenueIrvine, CA 92617(949) 231-4700You can also view this annual report along with other financial-related information and other public filings with the U.S. Securities and Exchange Commission at: www.skyworksinc.com.Annual MeetingThe annual meeting of stockholders will be held on May 11, 2010 in Bedford, Massachusetts.Common StockSkyworks common stock is traded on the NASDAQ Global Select Market© under the symbol SWKS.Independent Registered Public AccountantsKPMG LLPBoston, MassachusettsCorporate Information20 Sylvan RoadWoburn, MA 01801(781) 376-3000www.skyworksinc.com

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