This report and other documents we have filed with the SEC contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. Words such as "anticipates," "believes," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "seek," "should," "will," "would," and similar expressions or variations or negatives of such words are intended to identify forward-looking statements but are not the exclusive means of identifying forward-looking statements in this report. Additionally, statements concerning future matters such as the possible impacts of the COVID-19 pandemic, the development of new products, enhancements of technologies, sales levels, expense levels, the benefits of acquisitions we have made or may make in the future and other statements regarding matters that are not historical are forward-looking statements. Although forward-looking statements in this report reflect the good faith judgment of our management as of the date the statement is first made, such statements can only be based on facts and factors then known by us. Consequently, forward-looking statements involve inherent risks and uncertainties, and actual results and outcomes may differ materially and adversely from the results and outcomes discussed in, or anticipated by, the forward-looking statements. A number of important factors could cause actual results to differ materially and adversely from those in the forward-looking statements. We urge you to consider the risks and uncertainties discussed in this Quarterly Report on Form 10-Q and the 2021 10-K, under the heading "Risk Factors" and in the other documents we have filed with the SEC in evaluating our forward-looking statements. We have no plans, and undertake no obligation, to revise or update our forward-looking statements to reflect any event or circumstance that may arise after the date of the initial filing of this Quarterly Report on Form 10-Q. We caution readers not to place undue reliance upon any such forward-looking statements.

In this document, the words "we," "our," "ours," and "us" refer only to Skyworks Solutions, Inc., and its subsidiaries and not any other person or entity.

Impact of COVID-19 The COVID-19 pandemic and the resulting economic downturn are affecting business conditions in our industry. The duration, severity, and future impact of the pandemic, including as a result of more contagious variants of the virus that causes COVID-19, continue to be highly uncertain and could still result in significant disruptions to our business operations, as well as negative impacts to our financial condition. Like many companies in the semiconductor industry, we are experiencing various supply constraints due to the pandemic. While we are working with our global supply chain partners to mitigate this risk, the duration and extent of the supply chain disruptions remain uncertain.




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  Table of Contents
RESULTS OF OPERATIONS

Three Months Ended December 31, 2021, and January 1, 2021
The following table sets forth the results of our operations expressed as a
percentage of net revenue:
                                                         Three Months Ended
                                                    December 31,         January 1,
                                                        2021                2021
Net revenue                                                 100.0  %        100.0  %
Cost of goods sold                                           52.7            49.6
Gross profit                                                 47.3            50.4
Operating expenses:
Research and development                                     10.0             8.1
Selling, general, and administrative                          5.4             4.4
Amortization of intangibles                                   2.2             0.2
Restructuring, impairment, and other charges                  0.2               -
Total operating expenses                                     17.8            12.7
Operating income                                             29.5            37.7
Interest expense                                             (0.7)              -
Other income, net                                             0.1               -
Income before income taxes                                   28.9            37.7
Provision for income taxes                                    2.4             4.1
Net income                                                   26.5  %         33.6  %



OVERVIEW

We, together with our consolidated subsidiaries, are empowering the wireless networking revolution. Our highly innovative analog semiconductors are connecting people, places, and things spanning a number of new and previously unimagined applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, smartphone, tablet, and wearable markets.

General

During the three months ended December 31, 2021, the following key factors contributed to our overall results of operations, financial position, and cash flows: •Net revenue slightly increased to $1,510.4 million for the three months ended December 31, 2021, as compared to $1,510.0 million for the corresponding period in fiscal 2021, driven primarily by our prior year fourth quarter acquisition to support high-growth market segments, including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, optical data communication and data center, automotive, and smart home.

•Our ending cash, cash equivalents, and marketable securities balance decreased slightly to $1,016.9 million as of December 31, 2021, from $1,027.2 million as of October 1, 2021. The minimal decrease in cash, cash equivalents, and marketable securities during the three months ended December 31, 2021, was primarily due to the repurchase of 1.7 million shares of common stock for $269.4 million, capital expenditures of $95.8 million, dividend payments of $92.5 million, and repayments of Term Loans (as defined below) of $50.0 million, mostly offset by cash generated from operations of $581.7 million.



Net Revenue
                                 Three Months Ended
                         December 31,             January 1,
                             2021        Change      2021
(dollars in millions)
Net revenue             $     1,510.4      -%    $  1,510.0


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Table of Contents We market and sell our products directly to OEMs of communications and electronics products, third-party original design manufacturers and contract manufacturers, and indirectly through electronic components distributors. We generally experience seasonal peaks during our fourth and first fiscal quarters (which correspond to the second half of the calendar year), primarily as a result of increased worldwide production of consumer electronics in anticipation of increased holiday sales, whereas our second and third fiscal quarters are typically lower and in line with seasonal industry trends.

The slight increase in net revenue for the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was driven primarily by our prior year fourth quarter acquisition to support high-growth market segments, including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, optical data communication and data center, automotive, and smart home.



Gross Profit
                                  Three Months Ended
                         December 31,             January 1,
                             2021        Change      2021
(dollars in millions)
Gross profit            $      714.7     (6.2)%  $    761.7
% of net revenue                47.3  %                50.4  %

Gross profit represents net revenue less cost of goods sold. Our cost of goods sold consists primarily of purchased materials, labor, and overhead (including depreciation, share-based compensation, and amortization of acquisition intangibles, including inventory step-up expense) associated with product manufacturing. As part of our normal course of business, we intend to improve gross profit with efforts to increase unit volumes, improve manufacturing efficiencies, lower manufacturing costs of existing products, and by introducing new and higher value-added products.

The decrease in gross profit for the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily the result of an increase in amortization of acquisition intangibles, including inventory step-up, due to additional intangible assets acquired during fiscal 2021.

Research and Development


                                    Three Months Ended
                            December 31,            January 1,
                                2021       Change      2021
(dollars in millions)
Research and development   $     151.1     24.3  % $    121.6
% of net revenue                  10.0  %                 8.1  %

Research and development expenses consist primarily of direct personnel costs including share-based compensation expense, costs for pre-production evaluation, and testing of new devices, masks, engineering prototypes, and design tool costs.

The increase in research and development expenses for the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily related to headcount-related expenses, including share-based compensation, as a result of our increased investment in developing new technologies and products. The increase in headcount was partially due to our acquisition in fiscal 2021.

Selling, General, and Administrative


                                                 Three Months Ended
                                        December 31,             January 1,
                                            2021        Change      2021

(dollars in millions) Selling, general, and administrative $ 82.0 23.1 % $ 66.6 % of net revenue

                               5.4   %                 4.4  %

Selling, general, and administrative expenses include legal and related costs, accounting, treasury, human resources, information systems, customer service, bad debt expense, sales commissions, share-based compensation expense, advertising, marketing, costs associated with business combinations completed or contemplated during the period, and other costs.



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Table of Contents The increase in selling, general, and administrative expenses for the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily related to increases in headcount-related expenses, including share-based compensation. The increase in headcount was primarily due to our acquisition in fiscal 2021.

Amortization of Intangibles


                                                   Three Months Ended
                                          December 31,               January 1,
                                              2021        Change        2021
           (dollars in millions)
           Amortization of intangibles   $     33.3      1,089.3  % $     2.8
           % of net revenue                     2.2   %                   0.2  %

The increase in amortization expense for the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily due to additional intangible assets acquired during fiscal 2021.



Interest Expense
                                  Three Months Ended
                         December 31,              January 1,
                             2021        Change       2021
(dollars in millions)
Interest expense        $     (11.0)     100.0  % $      -
% of net revenue               (0.7)  %                  -    %

The increase in interest expense for the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was due to the issuance of the Notes (as defined below) in May 2021 and the borrowing of the Term Loans (as defined above) in July 2021.

Provision for Income Taxes


                                        Three Months Ended
                               December 31,              January 1,
                                   2021        Change       2021

(dollars in millions) Provision for income taxes $ 36.2 (41.2) % $ 61.6 % of net revenue

                      2.4   %                  4.1  %

We recorded a provision for income taxes of $36.2 million (which consisted of $18.4 million and $17.8 million related to United States and foreign income taxes, respectively) for the three months ended December 31, 2021.

The decrease in income tax expense for the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily due to a decrease in income from operations and an increase in windfall tax deductions.

LIQUIDITY AND CAPITAL RESOURCES


                                                          Three Months Ended
                                                     December 31,       January 1,
(in millions)                                            2021              2021

Cash and cash equivalents at beginning of period $ 882.9 $ 566.7 Net cash provided by operating activities

               581.7                485.1
Net cash used in investing activities                   (98.0)              (111.0)
Net cash used in financing activities                  (490.2)              (323.6)

Cash and cash equivalents at end of period $ 876.4 $ 617.2

Cash provided by operating activities: Cash provided by operating activities consists of net income for the period adjusted for certain non-cash items and changes in certain operating assets and liabilities. The $96.6 million increase in cash provided by operating activities during the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily related to favorable changes in working capital of $96.2 million, due primarily to changes in accounts receivable.


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Table of Contents

Cash used in investing activities: Cash used in investing activities consists primarily of capital expenditures and cash paid related to the purchase of marketable securities, offset by cash received related to the sale or maturity of marketable securities. The $13.0 million decrease in cash used in investing activities during the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily related to a $23.1 million decrease in cash used for capital expenditures, partially offset by an $8.6 million decrease in the net sales of marketable securities.

Cash used in financing activities: Cash used in financing activities consists primarily of proceeds and payments related to our long-term borrowings and cash transactions related to equity. The $166.6 million increase in cash used in financing activities during the three months ended December 31, 2021, as compared with the corresponding period in fiscal 2021, was primarily related to an increase of $73.8 million in stock repurchase activity, a $50.0 million repayment of Term Loans, an increase of $32.4 million related to the minimum statutory payroll tax withholdings upon vesting of employee performance and restricted stock awards, and an increase of $9.5 million in dividend payments.

Liquidity:

Cash, cash equivalents, and marketable securities totaled $1,016.9 million as of December 31, 2021, representing a decrease of $10.3 million from October 1, 2021. We have outstanding $500.0 million of Notes Due 2023, $500.0 million of Notes Due 2026, and $500.0 million of Notes Due 2031 (the "Notes"). We have a term credit agreement (the "Term Credit Agreement") providing for a $1.0 billion term loan facility (the "Term Loan Facility"). On July 26, 2021, the Company borrowed $1.0 billion in aggregate principal amount of term loans (the "Term Loans") under the Term Loan Facility to finance a portion of the purchase price for the Infrastructure and Automotive business of Silicon Laboratories Inc. and to pay fees and expenses incurred in connection therewith. During the three months ended December 31, 2021, we repaid $50.0 million of outstanding borrowings under the Term Loans. As of December 31, 2021, there were $700.0 million of borrowings outstanding under the Term Credit Agreement. We have a Revolving Credit Agreement (the "Revolving Credit Agreement") under which we may borrow up to $750.0 million for general corporate purposes and working capital needs of the Company and its subsidiaries. As of December 31, 2021, there were no borrowings outstanding under the revolving credit facility (the "Revolver"). The Revolving Credit Agreement expires July 26, 2026.

Based on our historical results of operations, we expect that our cash, cash equivalents, and marketable securities on hand, the cash we expect to generate from operations, and funds from our Revolver, will be sufficient to fund our short-term and long-term liquidity requirements primarily arising from: research and development, capital expenditures, potential acquisitions, working capital, quarterly cash dividend payments (if such dividends are declared by the Board of Directors), outstanding commitments, and other liquidity requirements associated with existing operations. However, we cannot be certain that our cash on hand, cash generated from operations, and funds from our Revolver will be available in the future to fund all of our capital and operating requirements. In addition, any future strategic investments and significant acquisitions may require additional cash and capital resources. If we are unable to obtain sufficient cash or capital to meet our needs on a timely basis and on favorable terms, our business and operations could be materially and adversely affected.

Our invested cash balances primarily consist of highly liquid marketable securities that are available to meet near-term cash requirements including: term deposits, certificates of deposit, money market funds, U.S. Treasury securities, agency securities, corporate debt securities, and commercial paper.

Our contractual obligations disclosure in the 2021 10-K has not materially changed since we filed that report.

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