We provide investors with non-GAAP gross profit and gross margin, non-GAAP operating income and operating margin, non-GAAP net income, non-GAAP diluted earnings per share, and non-GAAP free cash flow and free cash flow margin because we believe it is important for investors to be able to closely monitor and understand changes in our ability to generate income from ongoing business operations. We believe these non-GAAP financial measures give investors an additional method to evaluate historical operating performance and identify trends, an additional means of evaluating period-over-period operating performance and a method to facilitate certain comparisons of our operating results to those of our peer companies. We believe that providing non-GAAP operating income and operating margin allows investors to assess the extent to which our ongoing operations impact our overall financial performance. We also believe that providing non-GAAP net income and non-GAAP diluted earnings per share allows investors to assess the overall financial performance of our ongoing operations by eliminating the impact of share-based compensation expense, acquisition-related expenses, amortization of acquisition-related intangibles, settlements, gains, losses, and impairments, restructuring-related charges, and certain tax items which may not occur in each period presented and which may represent non-cash items unrelated to our ongoing operations. We further believe that providing non-GAAP free cash flow and free cash flow margin provide insight into our liquidity, our cash-generating capability, and the amount of cash potentially available to return to shareholders. We believe that disclosing these non-GAAP financial measures contributes to enhanced financial reporting transparency and provides investors with added clarity about complex financial performance measures.
We calculate non-GAAP gross profit by excluding from GAAP gross profit, share-based compensation expense, acquisition-related expenses, amortization of acquisition-related intangibles, and settlements, gains, losses, and impairments. We calculate non-GAAP operating income by excluding from GAAP operating income, share-based compensation expense, acquisition-related expenses, amortization of acquisition-related intangibles, settlements, gains, losses, and impairments, and restructuring-related charges. We calculate non-GAAP net income and diluted earnings per share by excluding from GAAP net income and diluted earnings per share, share-based compensation expense, acquisition-related expenses, amortization of acquisition-related intangibles, settlements, gains, losses, and impairments, restructuring-related charges, and certain tax items. We calculate non-GAAP free cash flow by deducting capital expenditures from GAAP net cash provided by operating activities. We exclude certain items identified above from the respective non-GAAP financial measure referenced above for the reasons set forth with respect to each such excluded item below:
Share-Based Compensation Expense - because (1) the total amount of expense is partially outside of our control because it is based on factors such as stock price volatility and interest rates, which may be unrelated to our performance during the period in which the expense is incurred, (2) it is an expense based upon a valuation methodology premised on assumptions that vary over time, and (3) the amount of the expense can vary significantly between companies due to factors that can be outside of the control of such companies.
Acquisition-Related Expenses and Amortization of Acquisition-Related Intangibles - including such items as, when applicable, fair value adjustments to contingent consideration, fair value charges incurred upon the sale of acquired inventory, acquisition-related expenses, and amortization of acquired intangible assets because they are not considered by management in making operating decisions and we believe that such expenses do not have a direct correlation to our future business operations and thereby including such charges does not necessarily reflect the performance of our ongoing operations for the period in which such charges or reversals are incurred.
Settlements, Gains, Losses, and Impairments - because such settlements, gains, losses, and impairments (1) are not considered by management in making operating decisions, (2) are infrequent in nature, (3) are generally not directly controlled by management, (4) do not necessarily reflect the performance of our ongoing operations for the period in which such charges are recognized, and/or (5) can vary significantly in amount between companies and make comparisons less reliable.
Restructuring and Other Charges - because these charges have no direct correlation to our future business operations and including such charges or reversals does not necessarily reflect the performance of our ongoing operations for the period in which such charges or reversals are incurred.
Certain Income Tax Items - including certain deferred tax charges and benefits that do not result in a current tax payment or tax refund and other adjustments, including but not limited to, items unrelated to the current fiscal year or that are not indicative of our ongoing business operations.
The non-GAAP financial measures presented in the table above should not be considered in isolation and are not an alternative for the respective GAAP financial measure that is most directly comparable to each such non-GAAP financial measure. Investors are cautioned against placing undue reliance on these non-GAAP financial measures and are urged to review and consider carefully the adjustments made by management to the most directly comparable GAAP financial measures to arrive at these non-GAAP financial measures. Non-GAAP financial measures may have limited value as analytical tools because they may exclude certain expenses that some investors consider important in evaluating our operating performance or ongoing business performance. Further, non-GAAP financial measures are likely to have limited value for purposes of drawing comparisons between companies as a result of different companies potentially calculating similarly titled non-GAAP financial measures in different ways because non-GAAP measures are not based on any comprehensive set of accounting rules or principles.
Our earnings release contains forward-looking estimates of non-GAAP diluted earnings per share for the first quarter of our 2024 fiscal year (“Q1 2024”). We provide this non-GAAP measure to investors on a prospective basis for the same reasons (set forth above) that we provide it to investors on a historical basis. We are unable to provide a reconciliation of our forward-looking estimate of Q1 2024 GAAP diluted earnings per share to a forward-looking estimate of Q1 2024 non-GAAP diluted earnings per share because certain information needed to make a reasonable forward-looking estimate of GAAP diluted earnings per share for Q1 2024 (other than estimated share-based compensation expense of $0.25 to $0.35 per diluted share, estimated amortization of intangibles of $0.25 to $0.35 per diluted share and certain tax items of -$0.20 to $0.00 per diluted share) is difficult to predict and estimate and is often dependent on future events that may be uncertain or outside of our control. Such events may include unanticipated changes in our GAAP effective tax rate, unanticipated one-time charges related to asset impairments (fixed assets, inventory, intangibles, or goodwill), unanticipated acquisition-related expenses, unanticipated settlements, gains, losses, and impairments, and other unanticipated non-recurring items not reflective of ongoing operations. The probable significance of these unknown items, in the aggregate, is estimated to be in the range of $0.00 to $0.15 in quarterly earnings per diluted share on a GAAP basis. Our forward-looking estimates of both GAAP and non-GAAP measures of our financial performance may differ materially from our actual results and should not be relied upon as statements of fact.
[a] |
The following table summarizes the expense recognized in accordance with ASC 718 - Compensation, Stock Compensation (in millions): |
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
|
|
September 29,
|
|
September 30,
|
|
September 29,
|
|
September 30,
|
||||
| Cost of goods sold |
$ |
7.2 |
|
$ |
4.1 |
|
$ |
20.7 |
|
$ |
26.9 |
| Research and development |
|
25.1 |
|
|
19.4 |
|
|
94.8 |
|
|
93.8 |
| Selling, general, and administrative |
|
17.6 |
|
|
13.5 |
|
|
69.6 |
|
|
74.5 |
| Total share-based compensation |
$ |
49.9 |
|
$ |
37.0 |
|
$ |
185.1 |
|
$ |
195.2 |
| SKYWORKS SOLUTIONS, INC. |
||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
|
|
|
|
|
|
||
| (in millions) |
|
September 29,
|
|
September 30,
|
||
| Assets |
|
|
|
|
||
| Cash, cash equivalents, and marketable securities |
|
$ |
738.5 |
|
$ |
586.8 |
| Accounts receivable, net |
|
|
864.3 |
|
|
1,094.0 |
| Inventory |
|
|
1,119.7 |
|
|
1,212.1 |
| Property, plant, and equipment, net |
|
|
1,390.1 |
|
|
1,604.8 |
| Goodwill and intangible assets, net |
|
|
3,398.8 |
|
|
3,621.4 |
| Other assets |
|
|
915.3 |
|
|
754.7 |
| Total assets |
|
$ |
8,426.7 |
|
$ |
8,873.8 |
|
|
|
|
|
|
||
| Liabilities and Equity |
|
|
|
|
||
| Accounts payable |
|
$ |
159.2 |
|
$ |
274.2 |
| Accrued and other liabilities |
|
|
892.6 |
|
|
941.5 |
| Debt |
|
|
1,292.2 |
|
|
2,189.1 |
| Stockholders’ equity |
|
|
6,082.7 |
|
|
5,469.0 |
| Total liabilities and equity |
|
$ |
8,426.7 |
|
$ |
8,873.8 |
| SKYWORKS SOLUTIONS, INC. |
|||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
| (in millions) |
September 29,
|
|
September 30,
|
|
September 29,
|
|
September 30,
|
||||||||
| Cash flow from operating activities |
|
|
|
|
|
|
|
||||||||
| Net income |
$ |
244.8 |
|
|
$ |
302.2 |
|
|
$ |
982.8 |
|
|
$ |
1,275.2 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
| Share-based compensation |
|
49.9 |
|
|
|
37.0 |
|
|
|
185.1 |
|
|
|
195.2 |
|
| Depreciation |
|
92.0 |
|
|
|
104.8 |
|
|
|
387.8 |
|
|
|
394.4 |
|
| Amortization of intangible assets, including inventory step-up |
|
51.2 |
|
|
|
76.6 |
|
|
|
225.9 |
|
|
|
295.7 |
|
| Deferred income taxes |
|
(64.8 |
) |
|
|
38.2 |
|
|
|
(151.2 |
) |
|
|
68.4 |
|
| Asset impairment charges |
|
47.5 |
|
|
|
20.7 |
|
|
|
64.5 |
|
|
|
20.7 |
|
| Amortization of debt discount and issuance costs |
|
1.1 |
|
|
|
1.0 |
|
|
|
4.0 |
|
|
|
4.0 |
|
| Other, net |
|
(1.4 |
) |
|
|
3.6 |
|
|
|
(3.5 |
) |
|
|
(1.5 |
) |
| Changes in assets and liabilities: |
|
|
|
|
|
|
|
||||||||
| Receivables, net |
|
(137.4 |
) |
|
|
(308.4 |
) |
|
|
229.8 |
|
|
|
(337.8 |
) |
| Inventory |
|
115.8 |
|
|
|
(109.5 |
) |
|
|
90.8 |
|
|
|
(337.3 |
) |
| Accounts payable |
|
11.2 |
|
|
|
(1.2 |
) |
|
|
(87.1 |
) |
|
|
31.3 |
|
| Other current and long-term assets and liabilities |
|
(44.2 |
) |
|
|
71.3 |
|
|
|
(72.5 |
) |
|
|
(183.7 |
) |
| Net cash provided by operating activities |
|
365.7 |
|
|
|
236.3 |
|
|
|
1,856.4 |
|
|
|
1,424.6 |
|
| Cash flow from investing activities |
|
|
|
|
|
|
|
||||||||
| Capital expenditures |
|
(70.1 |
) |
|
|
(141.8 |
) |
|
|
(210.3 |
) |
|
|
(489.4 |
) |
| Purchased intangibles |
|
(7.1 |
) |
|
|
(4.0 |
) |
|
|
(25.8 |
) |
|
|
(20.3 |
) |
| Purchases of marketable securities |
|
(6.7 |
) |
|
|
(5.8 |
) |
|
|
(288.8 |
) |
|
|
(97.2 |
) |
| Sales and maturities of marketable securities |
|
5.1 |
|
|
|
4.1 |
|
|
|
294.0 |
|
|
|
220.3 |
|
| Other |
|
0.6 |
|
|
|
0.1 |
|
|
|
6.5 |
|
|
|
7.7 |
|
| Net cash used in investing activities |
|
(78.2 |
) |
|
|
(147.4 |
) |
|
|
(224.4 |
) |
|
|
(378.9 |
) |
| Cash flow from financing activities |
|
|
|
|
|
|
|
||||||||
| Repurchase of common stock — payroll tax withholdings on equity awards |
|
(2.3 |
) |
|
|
(3.3 |
) |
|
|
(35.9 |
) |
|
|
(88.5 |
) |
| Repurchase of common stock — stock repurchase program |
|
— |
|
|
|
(80.3 |
) |
|
|
(175.3 |
) |
|
|
(886.8 |
) |
| Dividends paid |
|
(108.4 |
) |
|
|
(99.4 |
) |
|
|
(405.2 |
) |
|
|
(373.1 |
) |
| Net proceeds from exercise of stock options |
|
3.8 |
|
|
|
3.3 |
|
|
|
5.1 |
|
|
|
6.4 |
|
| Proceeds from employee stock purchase plan |
|
16.6 |
|
|
|
13.8 |
|
|
|
32.1 |
|
|
|
29.4 |
|
| Payments of debt |
|
(200.0 |
) |
|
|
— |
|
|
|
(900.0 |
) |
|
|
(50.0 |
) |
| Net cash used in financing activities |
|
(290.3 |
) |
|
|
(165.9 |
) |
|
|
(1,479.2 |
) |
|
|
(1,362.6 |
) |
| Net increase (decrease) in cash and cash equivalents |
|
(2.8 |
) |
|
|
(77.0 |
) |
|
|
152.8 |
|
|
|
(316.9 |
) |
| Cash and cash equivalents at beginning of period |
|
721.6 |
|
|
|
643.0 |
|
|
|
566.0 |
|
|
|
882.9 |
|
| Cash and cash equivalents at end of period |
$ |
718.8 |
|
|
$ |
566.0 |
|
|
$ |
718.8 |
|
|
$ |
566.0 |
|
