QORVO, INC. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions, and are not historical facts and typically are identified by use of terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management's current judgment and expectations, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required underU.S. federal securities laws. Our business is subject to numerous risks and uncertainties, including those relating to fluctuations in our operating results; our substantial dependence on developing new products and achieving design wins; our dependence on a few large customers for a substantial portion of our revenue; a loss of revenue if contracts withthe United States government or defense and aerospace contractors are canceled or delayed or if defense spending is reduced; our dependence on third parties; risks related to sales through distributors; risks associated with the operation of our manufacturing facilities; business disruptions; poor manufacturing yields; increased inventory risks and costs due to timing of customer forecasts; our inability to effectively manage or maintain evolving relationships with platform providers; risks from international sales and operations; economic regulation inChina ; changes in government trade policies, including imposition of tariffs and export restrictions; our ability to implement innovative technologies; underutilization of manufacturing facilities as a result of industry overcapacity; we may not be able to borrow funds under our credit facility or secure future financing; we may not be able to generate sufficient cash to service all of our debt; restrictions imposed by the agreements governing our debt; volatility in the price of our common stock; damage to our reputation or brand; fluctuations in the amount and frequency of our stock repurchases; our acquisitions and other strategic investments, including our recent acquisitions ofActive-Semi International, Inc. ("Active-Semi") andCavendish Kinetics Limited ("Cavendish") and our pending acquisitions ofCustom MMIC Design Services, Inc. ("Custom MMIC") andDecawave Limited ("Decawave"), could fail to achieve financial or strategic objectives; our ability to attract, retain and motivate key employees; our reliance on our intellectual property portfolio; claims of infringement of third-party intellectual property rights; security breaches and other similar disruptions compromising our information; theft, loss or misuse of personal data by or about our employees, customers or third parties; warranty claims, product recalls and product liability; and risks associated with environmental, health and safety regulations and climate change. These and other risks and uncertainties, which are described in more detail in our most recent Annual Report on Form 10-K and in other reports and statements that we file with theSEC , could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.
OVERVIEW
Company
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is intended to help the reader understand the
consolidated results of operations and financial condition of Qorvo . MD&A is
provided as a supplement to, and should be read in conjunction with, our
Condensed Consolidated Financial Statements and accompanying Notes to Condensed
Consolidated Financial Statements.
Qorvo® is a product and technology leader at the forefront of the growing global
demand for always-on connectivity. We combine a broad portfolio of innovative
radio frequency ("RF") solutions, highly differentiated semiconductor
technologies, systems-level expertise and global manufacturing scale to supply a
diverse group of customers in expanding markets, including smartphones and other
mobile devices, defense and aerospace, Wi-Fi customer premises equipment,
cellular base stations, and multiple Internet of Things ("IoT") applications
including the smart home and connected car.
We design, develop, manufacture and market our products to leading
• Mobile Products (MP) - MP is a global supplier of cellular RF and Wi-Fi
solutions for a variety of mobile devices, including smartphones, wearables,
laptops, tablets and cellular-based applications for the IoT.
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• Infrastructure and Defense Products (IDP) - IDP is a global supplier of RF,
system-on-a-chip and power management solutions for cellular base station,
smart home, IoT, defense and automotive applications.
As ofDecember 28, 2019 , our reportable segments are MP and IDP. These business segments are based on the organizational structure and information reviewed by our Chief Executive Officer, who is our chief operating decision maker ("CODM"), and are managed separately based on the end markets and applications they support. The CODM allocates resources and evaluates the performance of each operating segment primarily based on non-GAAP operating income (see Note 11 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for additional information regarding our operating segments).
THIRD QUARTER FISCAL 2020 FINANCIAL HIGHLIGHTS:
• Quarterly revenue increased 4.4% as compared to the third quarter of fiscal
2019, primarily due to higher demand for our mobile products in support of
customers based in
partially offset by lower demand from our largest end customer as well as
lower demand for our base station products as a result of trade restrictions.
• Gross margin for the third quarter of fiscal 2020 was 42.4% as compared to
40.7% for the third quarter of fiscal 2019, primarily due to gross margin
improvements related to lower intangible amortization expense and favorable
changes in product mix, partially offset by average selling price erosion and
lower factory utilization.
• Operating income was
compared to
was primarily due to lower operating expenses, higher revenue and higher gross
margin.
• Capital expenditures decreased to
fiscal 2020 as compared to
Our capital expenditures in the third quarter of fiscal 2020 included
strategic investments in premium filter capacity and gallium nitride ("GaN")
technology capabilities.
• During the third quarter of fiscal 2020, we repurchased approximately 1.3
million shares of our common stock for approximately
• During the third quarter of fiscal 2020, we completed the acquisition of the
remaining issued and outstanding capital of Cavendish for a total purchase
price of$305.9 million . On theOctober 4, 2019 acquisition date, our previously held equity interest was remeasured, which resulted in the recognition of a gain of$43.0 million .
• During the third quarter of fiscal 2020, we issued
principal amount of 4.375% senior notes due 2029 (the "2029 Notes").
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Table of Contents RESULTS OF OPERATIONS Consolidated
The following table presents a summary of our results of operations for the
three and nine months ended
Three Months Ended
December 28, % of December 29, % of Increase Percentage
2019 Revenue 2018 Revenue (Decrease) Change
Revenue $ 869,073 100.0 % $ 832,330 100.0 % $ 36,743 4.4 %
Cost of goods sold 500,962 57.6 493,967 59.3 6,995 1.4
Gross profit 368,111 42.4 338,363 40.7 29,748 8.8
Research and
development 122,851 14.1 109,985 13.2 12,866 11.7
Selling, general and
administrative 81,205 9.4 125,604 15.1 (44,399 ) (35.3 )
Other operating expense 10,986 1.3 21,617 2.6 (10,631 ) (49.2 )
Operating income $ 153,069 17.6 % $ 81,157 9.8 % $ 71,912 88.6 %
Nine Months Ended
Increase Percentage
December 28, 2019 % of Revenue December 29, 2018 % of Revenue (Decrease) Change
Revenue $ 2,451,369 100.0 % $ 2,409,443 100.0 % $ 41,926 1.7 %
Cost of goods sold 1,465,387 59.8 1,480,833 61.5 (15,446 ) (1.0 )
Gross profit 985,982 40.2 928,610 38.5 57,372 6.2
Research and
development 357,385 14.6 337,636 14.0 19,749 5.8
Selling, general and
administrative 258,458 10.5 401,041 16.6 (142,583 ) (35.6 )
Other operating expense 49,077 2.0 37,514 1.6 11,563 30.8
Operating income $ 321,062 13.1 % $ 152,419 6.3 % $ 168,643 110.6 %
Revenue increased for the three months ended December 28, 2019 , as compared to
the three months ended December 29, 2018 , primarily due to higher demand for our
mobile products in support of customers based in China and higher demand from a
Korea -based customer, partially offset by lower demand from our largest end
customer as well as lower demand for our base station products as a result of
trade restrictions.
Revenue increased for the nine months ended December 28, 2019 , as compared to
the nine months ended December 29, 2018 , primarily due to higher demand from a
Korea -based customer, higher demand for our mobile products from Huawei
Technologies Co., Ltd. and its affiliates ("Huawei") and sales of our
programmable power management products as a result of the acquisition of
Active-Semi. This increase was offset by lower demand for our base station
products as a result of trade restrictions and lower demand for our Wi-Fi
products.
On May 16, 2019 , we suspended shipments of products to Huawei after the Bureau
of Industry and Security ("BIS") of the U.S. Department of Commerce added Huawei
Technologies Co., Ltd. and over 100 of its affiliates to the BIS's Entity List.
Subsequently, we restarted shipments from outside the U.S. of certain products
that are not subject to the Export Administration Regulations ("EAR") to Huawei
in compliance with the BIS order. We have also applied for a license to ship
other products that are subject to the EAR, as required by the rules governing
the Entity List. Our sales to Huawei will continue to be impacted by trade
restrictions.
Gross margin for the three months ended December 28, 2019 was 42.4%, as compared
to 40.7% for the three months ended December 29, 2018 . This increase was
primarily due to gross margin improvements related to lower intangible
amortization expense and favorable changes in product mix, partially offset by
average selling price erosion and lower factory utilization.
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Gross margin for the nine months endedDecember 28, 2019 was 40.2%, as compared to 38.5% for the nine months endedDecember 29, 2018 . This increase was primarily due to lower intangible amortization expense, favorable changes in product mix and lower manufacturing costs, partially offset by average selling price erosion, lower factory utilization and increased restructuring charges.
Operating Expenses
Research and development expense increased$12.9 million , or 11.7%, for the three months endedDecember 28, 2019 as compared to the three months endedDecember 29, 2018 , primarily due to higher personnel costs as well as the addition of Active-Semi and Cavendish expenses. Research and development expense increased$19.7 million , or 5.8%, for the nine months endedDecember 28, 2019 as compared to the nine months endedDecember 29, 2018 , primarily due to higher personnel costs and the addition of Active-Semi and Cavendish expenses. Selling, general and administrative expense decreased$44.4 million , or 35.3%, for the three months endedDecember 28, 2019 as compared to the three months endedDecember 29, 2018 , primarily due to lower intangible amortization, partially offset by higher personnel costs and the addition of Active-Semi expenses. Selling, general and administrative expense decreased$142.6 million , or 35.6%, for the nine months endedDecember 28, 2019 as compared to the nine months endedDecember 29, 2018 , primarily due to lower intangible amortization, partially offset by higher personnel costs and the addition of Active-Semi expenses. Other operating expense decreased$10.6 million for the three months endedDecember 28, 2019 as compared to the three months endedDecember 29, 2018 , primarily due to lower restructuring expenses and lower start-up costs as compared to the three months endedDecember 29, 2018 , partially offset by expenses related to the acquisitions of Active-Semi and Cavendish. Other operating expense increased$11.6 million for the nine months endedDecember 28, 2019 as compared to the nine months endedDecember 29, 2018 , primarily due to expenses related to the acquisitions of Active-Semi and Cavendish. These costs were partially offset by lower start-up costs and restructuring expenses as compared to the nine months endedDecember 29, 2018 . Segment Product Revenue, Operating Income and Operating Income as a Percentage of Revenue Mobile Products Three Months Ended (In thousands, except December 28, December 29, Percentage percentages) 2019 2018 Increase Change Revenue$ 662,109 $ 602,312 $ 59,797 9.9 % Operating income 219,778 180,394 39,384 21.8 Operating income as a % of revenue 33.2 % 30.0 % Nine Months Ended (In thousands, except December 28, December 29, Percentage percentages) 2019 2018 Increase Change Revenue$ 1,841,468 $ 1,754,930 $ 86,538 4.9 % Operating income 553,144 466,513 86,631 18.6 Operating income as a % of revenue 30.0 % 26.6 % MP revenue increased$59.8 million , or 9.9%, for the three months endedDecember 28, 2019 as compared to the three months endedDecember 29, 2018 , primarily due to higher demand for our mobile products in support of customers based inChina , higher demand from aKorea -based customer and higher demand fromHuawei . These increases were partially offset by lower demand from our largest end customer.
MP revenue increased
MP operating income increased$39.4 million , or 21.8%, for the three months endedDecember 28, 2019 as compared to the three months endedDecember 29, 2018 , primarily due to higher revenue and higher gross margin. Gross margin was positively impacted by favorable changes in product mix, partially offset by average selling price erosion and lower factory utilization. 33
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MP operating income increased$86.6 million , or 18.6%, for the nine months endedDecember 28, 2019 as compared to the nine months endedDecember 29, 2018 , primarily due to higher gross margin and higher revenue. Gross margin was positively impacted by favorable changes in product mix and lower manufacturing costs, partially offset by average selling price erosion and lower factory utilization.
Infrastructure and Defense Products
Three Months Ended
December 28, December 29, Percentage
(In thousands, except percentages) 2019 2018 Decrease Change
Revenue $ 206,964 $ 230,018 $ (23,054 ) (10.0 )%
Operating income 32,628 80,861 (48,233 ) (59.6 )
Operating income as a % of revenue 15.8 % 35.2 %
Nine Months Ended
December 28, December 29, Percentage
(In thousands, except percentages) 2019 2018 Decrease Change
Revenue $ 609,901 $ 654,513 $ (44,612 ) (6.8 )%
Operating income 97,721 192,376 (94,655 ) (49.2 )
Operating income as a % of revenue 16.0 % 29.4 %
IDP revenue decreased $23.1 million , or 10.0%, for the three months ended
December 28, 2019 as compared to the three months ended December 29, 2018 ,
primarily due to lower demand for our base station products as a result of trade
restrictions, partially offset by higher demand for our defense and aerospace
products as well as sales of our programmable power management products as a
result of the acquisition of Active-Semi.
IDP revenue decreased $44.6 million , or 6.8%, for the nine months ended
December 28, 2019 as compared to the nine months ended December 29, 2018 ,
primarily due to lower demand for our base station products as a result of trade
restrictions and lower demand for our Wi-Fi products, partially offset by sales
of our programmable power management products as a result of the acquisition of
Active-Semi.
IDP operating income decreased $48.2 million , or 59.6%, for the three months
ended December 28, 2019 as compared to the three months ended December 29, 2018 ,
primarily due to higher operating expenses, lower gross margin and lower
revenue. The increase in operating expenses was primarily due to higher
personnel costs and the addition of Active-Semi expenses. Gross margin was
negatively impacted by lower factory utilization, unfavorable changes in product
mix and inventory charges.
IDP operating income decreased $94.7 million , or 49.2%, for the nine months
ended December 28, 2019 as compared to the nine months ended December 29, 2018 ,
primarily due to higher operating expenses, lower gross margin and lower
revenue. The increase in operating expenses was primarily due to higher
personnel costs and the addition of Active-Semi expenses. Gross margin was
negatively impacted by lower factory utilization, inventory charges and average
selling price erosion.
See Note 11 of the Notes to Condensed Consolidated Financial Statements for a
reconciliation of segment operating income to the consolidated operating income
for the three and nine months ended December 28, 2019 and December 29, 2018 .
OTHER (EXPENSE) INCOME AND INCOME TAXES
Three Months Ended Nine Months Ended
December 28, December 29, December 28, December 29,
(In thousands) 2019 2018 2019 2018
Interest expense $ (16,900 ) $ (9,562 ) $ (41,457 ) $ (33,604 )
Interest income 2,874 2,814 8,112 7,788
Other income (expense) 44,148 (3,520 ) 42,737 (85,007 )
Income tax (expense) benefit (21,835 ) (1,372 ) (46,519 ) 30,012
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Interest Expense During the three and nine months endedDecember 28, 2019 , we recorded interest expense of$18.3 million and$45.8 million , respectively, primarily related to the 5.50% senior notes dueJuly 15, 2026 (the "2026 Notes") and the 2029 Notes, which was partially offset by$1.4 million and$4.4 million , respectively, of capitalized interest. During the three months endedDecember 29, 2018 , we recorded interest expense of$11.5 million primarily related to the 7.00% senior notes dueDecember 1, 2025 (the "2025 Notes") and the 2026 Notes, which was partially offset by$1.9 million of capitalized interest. During the nine months endedDecember 29, 2018 , we recorded interest expense of$40.8 million primarily related to the 6.75% senior notes dueDecember 1, 2023 (the "2023 Notes"), the 2025 Notes and the 2026 Notes, which was partially offset by$7.2 million of capitalized interest. Other Income (Expense) During the three and nine months endedDecember 28, 2019 , we recorded a gain of$43.0 million related to the remeasurement of our previously held equity interest in Cavendish in connection with our purchase of the remaining issued and outstanding capital of the entity (see Note 4 of the Notes to Condensed Consolidated Financial Statements for information regarding the Cavendish acquisition). During the three and nine months endedDecember 29, 2018 , we recorded a loss on debt extinguishment of$1.8 million and$84.0 million , respectively. Income Taxes Our provision for income taxes for the three and nine months endedDecember 28, 2019 andDecember 29, 2018 was calculated by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for those respective periods. For the three and nine months endedDecember 28, 2019 , we recorded income tax expense of$21.8 million and$46.5 million , respectively, which was comprised primarily of tax expense related to international operations generating pre-tax book income and the reversal of the permanent reinvestment assertion with regards to unrepatriated foreign earnings, offset by a tax benefit related to domestic and international operations generating pre-tax book losses and domestic tax credits. For the three months endedDecember 29, 2018 , we recorded income tax expense of$1.4 million , which was comprised primarily of tax expense related to international operations generating pre-tax book income, partially offset by tax benefit related to domestic and international operations generating pre-tax book losses. For the nine months endedDecember 29, 2018 , we recorded income tax benefit of$30.0 million , which was comprised primarily of tax benefit related to domestic and international operations generating pre-tax book losses, a tax incentive granted inSingapore and adjustments in the provisional estimates required by the Tax Cuts and Jobs Act, partially offset by a tax expense related to international operations generating pre-tax book income. A valuation allowance remained against certain domestic and foreign net deferred tax assets as it is more likely than not that the related deferred tax assets will not be realized.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated by operations is our primary source of liquidity. As ofDecember 28, 2019 , we had working capital of approximately$1,576.5 million , including$1,097.7 million in cash and cash equivalents, compared to working capital of approximately$1,249.2 million atMarch 30, 2019 , including$711.0 million in cash and cash equivalents. The increase in working capital was primarily due to the issuance of$550.0 million aggregate principal amount of the 2029 Notes in the third quarter of fiscal 2020 and the$100.0 million draw on the Term Loan (as defined in "Commitments and Contingencies" below) in the first quarter of fiscal 2020. These increases to working capital were partially offset by the acquisition of Active-Semi in the first quarter of fiscal 2020 and the acquisition of Cavendish in the third quarter of fiscal 2020. Our$1,097.7 million of total cash and cash equivalents as ofDecember 28, 2019 includes approximately$573.1 million held by our foreign subsidiaries, of which$485.1 million is held byQorvo International Pte. Ltd. inSingapore . If the undistributed earnings of our foreign subsidiaries are needed in theU.S. , we may be required to pay state income and/or foreign local withholding taxes to repatriate these earnings. Stock Repurchases OnOctober 31, 2019 , we announced that our Board of Directors authorized a new share repurchase program (see Note 8 of the Notes to Condensed Consolidated Financial Statements for information regarding the new share repurchase program). During the nine months endedDecember 28, 2019 , we repurchased approximately 5.1 million shares of our common stock for approximately$390.1 million under our prior and current share repurchase programs. As ofDecember 28, 2019 ,$890.9 million remained available for repurchases under the current program. 35
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Cash Flows from Operating Activities Operating activities for the nine months endedDecember 28, 2019 generated cash of$731.3 million , compared to$623.0 million for the nine months endedDecember 29, 2018 , primarily due to favorable changes in working capital driven by improvements in days sales outstanding during the nine months endedDecember 28, 2019 . Cash Flows from Investing Activities Net cash used in investing activities was$623.1 million for the nine months endedDecember 28, 2019 , compared to$205.5 million for the nine months endedDecember 29, 2018 , primarily due to the acquisitions of Active-Semi and Cavendish. Cash Flows from Financing Activities Net cash provided by financing activities was$279.1 million for the nine months endedDecember 28, 2019 , compared to net cash used in financing activities of$691.5 million for the nine months endedDecember 29, 2018 . During the nine months endedDecember 29, 2018 , cash disbursed in connection with the retirement of all of the 2023 Notes and a majority of the 2025 Notes was partially offset by cash proceeds received from the issuance of the 2026 Notes. During the nine months endedDecember 28, 2019 , we received cash proceeds of$559.0 million from the issuance of the 2029 Notes and$100.0 million from the draw on the Term Loan.
COMMITMENTS AND CONTINGENCIES
2023 Notes and 2025 Notes OnNovember 19, 2015 , we issued$450.0 million aggregate principal amount of the 2023 Notes and$550.0 million aggregate principal amount of the 2025 Notes. The 2023 Notes were, and the 2025 Notes are, senior unsecured obligations of the Company and guaranteed, jointly and severally, by certain of ourU.S. subsidiaries (the "Guarantors"). With respect to the 2023 Notes, interest was payable semi-annually onJune 1 andDecember 1 of each year at a rate of 6.75% per annum, and with respect to the 2025 Notes, interest is payable onJune 1 andDecember 1 of each year at a rate of 7.00% per annum. Interest paid on the 2025 Notes during the three and nine months endedDecember 28, 2019 was$0.8 million and$1.6 million , respectively. Interest paid on the 2025 Notes during the three months endedDecember 29, 2018 was$4.0 million , and interest paid on the 2023 Notes and 2025 Notes during the nine months endedDecember 29, 2018 was$45.5 million .
In fiscal years 2018 and 2019, we retired all of the issued and outstanding 2023
Notes and
See Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the 2023 Notes and the 2025 Notes.
2026 Notes OnJuly 16, 2018 , we issued$500.0 million aggregate principal amount of the 2026 Notes. OnAugust 28, 2018 andMarch 5, 2019 , we completed offerings of an additional$130.0 million and$270.0 million , respectively, aggregate principal amount of the 2026 Notes. The 2026 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by each of the Guarantors. Interest on the 2026 Notes is payable onJanuary 15 andJuly 15 of each year at a rate of 5.50% per annum. We paid no interest on the 2026 Notes during the three months endedDecember 28, 2019 and paid interest of$24.8 million on the 2026 Notes during the nine months endedDecember 28, 2019 .
See Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the 2026 Notes.
2029 Notes OnSeptember 30, 2019 , we issued$350.0 million aggregate principal amount of the 2029 Notes. OnDecember 20, 2019 , we completed an offering of an additional$200.0 million aggregate principal amount of the 2029 Notes. The 2029 Notes are senior unsecured obligations of the Company and are guaranteed, jointly and severally, by each of the Guarantors.
Interest on the 2029 Notes is payable on
See Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the 2029 Notes.
Credit Agreement On
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The Credit Agreement included a senior delayed draw term loan of up to$400.0 million (the "Term Loan") and a$300.0 million revolving line of credit (the "Revolving Facility"). In addition, we may request one or more additional tranches of term loans or increases in the Revolving Facility, up to an aggregate of$300.0 million and subject to securing additional funding commitments from the existing or new lenders (the "Incremental Facility," together with the Term Loan and the Revolving Facility, the "Credit Facility"). On the closing date,$100.0 million of the Term Loan was funded, and this amount was subsequently repaid inMarch 2018 . OnJune 17, 2019 , we drew$100.0 million of the Term Loan. The delayed draw availability period for the remaining$200.0 million of the Term Loan expired onDecember 31, 2019 . The Revolving Facility includes a$25.0 million sublimit for the issuance of standby letters of credit and a$10.0 million sublimit for swing line loans. The Credit Facility is available to finance working capital, capital expenditures and other corporate purposes. Our obligations under the Credit Agreement are jointly and severally guaranteed by the Guarantors. Outstanding amounts are due in full on the maturity date ofDecember 5, 2022 (with amounts borrowed under the swing line option due in full no later than ten business days after such loan is made). During the three and nine months endedDecember 28, 2019 , there were no borrowings under the Revolving Facility. Interest paid on the Term Loan during the three and nine months endedDecember 28, 2019 was$0.7 million and$1.6 million , respectively. The Credit Agreement contains various conditions, covenants and representations with which we must be in compliance in order to borrow funds and to avoid an event of default. As ofDecember 28, 2019 , we were in compliance with all the financial covenants under the Credit Agreement.
See Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the Credit Agreement.
Capital Commitments At
Pending Business Acquisitions OnJanuary 13, 2020 , we entered into a definitive agreement to acquire Custom MMIC for a cash purchase price of approximately$105.0 million . In addition, onJanuary 24, 2020 , we entered into a definitive agreement to acquire Decawave for a cash purchase price of approximately$400.0 million .
See Note 15 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the pending business acquisitions.
Future Sources of Funding Our future capital requirements may differ materially from those currently anticipated and will depend on many factors, including market acceptance of and demand for our products, acquisition opportunities, technological advances and our relationships with suppliers and customers. Based on current and projected levels of cash flow from operations, coupled with our existing cash and cash equivalents and our Credit Facility, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements. However, if there is a significant decrease in demand for our products, or in the event that growth is faster than we anticipate, operating cash flows may be insufficient to meet our needs. If existing resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing. We cannot be sure that any additional equity or debt financing will not be dilutive to holders of our common stock. Further, we cannot be sure that additional equity or debt financing, if required, will be available on favorable terms, if at all. Legal We are involved in various legal proceedings and claims that have arisen in the ordinary course of business that have not been fully adjudicated. These actions, when finally concluded and determined, will not, in the opinion of management, have a material adverse effect on our consolidated financial position or results of operations. Taxes We are subject to income and other taxes inthe United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions. Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate. We are subject to audits by tax authorities. While we endeavor to comply with all applicable tax laws, there can be no assurance that a governing tax authority will not have a different interpretation of the law than we do or that we will comply in all respects with applicable tax laws, which could result in additional taxes. There can be no assurance that the outcomes from tax audits will not have an adverse effect on our results of operations in the period during which the review is conducted. 37
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