Skyworks(SWKS) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited consolidated financial statements for Skyworks Solutions, Inc, including statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed notes CONSOLIDATED STATEMENTS OF OPERATIONS The company reported a decrease in net income for both the three and nine months ended June 27, 2025, compared to the prior year, despite a slight increase in net revenue for the three-month period | Metric | Three Months Ended June 27, 2025 (Millions) | Three Months Ended June 28, 2024 (Millions) | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :----- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Net Revenue | $965.0 | $905.5 | $2,986.7 | $3,153.0 | | Gross Profit | $401.0 | $364.1 | $1,234.6 | $1,291.0 | | Operating Income | $110.6 | $130.4 | $389.0 | $578.0 | | Net Income | $105.0 | $120.9 | $335.7 | $535.5 | | Basic EPS | $0.70 | $0.75 | $2.15 | $3.34 | | Diluted EPS | $0.70 | $0.75 | $2.14 | $3.32 | - Net revenue increased by 6.6% for the three months ended June 27, 2025, but decreased by 5.3% for the nine months ended June 27, 2025, compared to the prior year periods[9] - Operating income decreased by 15.2% for the three months and 32.7% for the nine months ended June 27, 2025, year-over-year[9] CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Comprehensive income for the three and nine months ended June 27, 2025, was $105.0 million and $335.6 million, respectively, showing a decrease compared to the prior year periods | Metric | Three Months Ended June 27, 2025 (Millions) | Three Months Ended June 28, 2024 (Millions) | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :----- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Net Income | $105.0 | $120.9 | $335.7 | $535.5 | | Comprehensive Income | $105.0 | $120.9 | $335.6 | $535.4 | - Other comprehensive loss, net of tax, was minimal for both periods, with a slight loss of $0.1 million for the nine months ended June 27, 2025, related to fair value of investments[12] CONSOLIDATED BALANCE SHEETS As of June 27, 2025, total assets decreased to $7,714.6 million from $8,283.3 million at September 27, 2024, primarily due to reductions in cash, marketable securities, and receivables | Metric | As of June 27, 2025 (Millions) | As of September 27, 2024 (Millions) | | :----- | :------------------------------- | :---------------------------------- | | Total Assets | $7,714.6 | $8,283.3 | | Total Liabilities | $2,062.1 | $1,946.6 | | Total Stockholders' Equity | $5,652.5 | $6,336.7 | | Cash and Cash Equivalents | $1,185.9 | $1,368.6 | | Marketable Securities (Current) | $132.0 | $194.1 | | Current Portion of Long-Term Debt | $499.2 | $0.0 | - Current assets decreased from $3,341.0 million to $2,876.4 million, largely due to decreases in cash, marketable securities, receivables, and inventory[14] - Total current liabilities significantly increased from $602.7 million to $1,205.0 million, primarily due to the current portion of long-term debt[14] CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended June 27, 2025, net cash provided by operating activities decreased, while net cash used in investing and financing activities increased significantly | Metric | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :----- | :----------------------------------------- | :----------------------------------------- | | Net Cash Provided by Operating Activities | $1,100.8 | $1,348.6 | | Net Cash Used in Investing Activities | $(102.9) | $(84.5) | | Net Cash Used in Financing Activities | $(1,180.6) | $(719.5) | | Net (Decrease) Increase in Cash and Cash Equivalents | $(182.7) | $544.6 | | Cash and Cash Equivalents at End of Period | $1,185.9 | $1,263.4 | - The decrease in operating cash flow was primarily due to lower net income and a smaller decrease in working capital[88] - Cash used in financing activities increased substantially due to a $752.9 million increase in share repurchases, partially offset by a $300.0 million decrease in debt repayments[90] CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Stockholders' equity decreased from $6,336.7 million to $5,652.5 million, primarily due to significant common stock repurchases and dividend declarations | Metric | As of September 27, 2024 (Millions) | As of June 27, 2025 (Millions) | | :----- | :---------------------------------- | :------------------------------- | | Total Stockholders' Equity | $6,336.7 | $5,652.5 | | Retained Earnings | $6,032.9 | $5,621.1 | | Common Stock Shares Outstanding | 159.9 | 148.4 | - The company repurchased 12.6 million shares for $837.7 million during the nine months ended June 27, 2025[55] - Dividends declared totaled $327.0 million for the nine months ended June 27, 2025[58] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed notes covering accounting policies, revenue recognition, fair value measurements, and other key financial statement components 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Skyworks Solutions, Inc is a leading developer of analog and mixed-signal semiconductor products for diverse applications - Skyworks develops, manufactures, and provides analog and mixed-signal semiconductor products for applications including aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, smartphone, tablet, and wearables[20] - The fiscal year ending October 3, 2025 (fiscal 2025) consists of 53 weeks, while the prior fiscal year (2024) had 52 weeks[23] - The company is currently evaluating the impact of recently issued FASB ASUs on its consolidated financial statements and related disclosures[24][25][26] 2. REVENUE RECOGNITION Net revenue increased for the three-month period driven by mobile and Wi-Fi products but decreased over nine months due to lower mobile demand | Geographic Area | Three Months Ended June 27, 2025 (Millions) | Three Months Ended June 28, 2024 (Millions) | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :-------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | United States | $724.7 | $658.5 | $2,295.5 | $2,422.8 | | Taiwan | $75.8 | $80.7 | $195.6 | $226.1 | | China | $64.6 | $75.9 | $193.7 | $232.7 | | South Korea | $45.5 | $52.9 | $140.0 | $158.1 | | Europe, Middle East, and Africa | $44.4 | $31.3 | $133.1 | $87.6 | | Other Asia-Pacific | $10.0 | $6.2 | $28.8 | $25.7 | | Total Net Revenue | $965.0 | $905.5 | $2,986.7 | $3,153.0 | - Net revenue from distributors increased for the three-month period but decreased for the nine-month period, while direct customer revenue showed a similar trend[28] - The company expects revenues to be negatively impacted by a decrease in market share at a significant customer starting in the fourth quarter of fiscal 2025[68] 3. MARKETABLE SECURITIES The company's marketable securities portfolio, primarily available-for-sale, decreased from September 27, 2024, to June 27, 2025 | Security Type | Current (June 27, 2025, Millions) | Current (September 27, 2024, Millions) | Noncurrent (June 27, 2025, Millions) | Noncurrent (September 27, 2024, Millions) | | :------------ | :---------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------------ | | U.S. Treasury and government securities | $53.1 | $39.0 | $18.8 | $11.1 | | Corporate bonds and notes | $78.6 | $155.0 | $0.0 | $0.3 | | Municipal bonds | $0.3 | $0.1 | $0.0 | $0.0 | | Total Marketable Securities | $132.0 | $194.1 | $18.8 | $11.4 | - Contractual maturities of noncurrent available-for-sale marketable securities were within two years or less of issuance[29] 4. FAIR VALUE Total assets at fair value were $1,336.7 million, primarily in Level 1 cash, while the fair value of debt was lower than its carrying amount | Asset Type | Total Fair Value (June 27, 2025, Millions) | Level 1 (June 27, 2025, Millions) | Level 2 (June 27, 2025, Millions) | | :--------- | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Cash and cash equivalents | $1,185.9 | $1,127.7 | $58.2 | | U.S. Treasury and government securities | $71.9 | $51.9 | $20.0 | | Corporate bonds and notes | $78.6 | $0.0 | $78.6 | | Municipal bonds | $0.3 | $0.0 | $0.3 | | Total assets at fair value | $1,336.7 | $1,179.6 | $157.1 | | Debt Type | Carrying Amount (June 27, 2025, Millions) | Estimated Fair Value (June 27, 2025, Millions) | | :-------- | :---------------------------------------- | :--------------------------------------------- | | 1.80% Senior Notes due 2026 | $499.2 | $486.4 | | 3.00% Senior Notes due 2031 | $496.2 | $439.4 | | Total debt under Senior Notes | $995.4 | $925.8 | - No impairment indicators were identified for non-financial assets during the three and nine months ended June 27, 2025, compared to $16.8 million in impairment charges in the prior nine-month period[31] 5. INVENTORY Total inventory decreased from $784.8 million to $706.5 million, primarily driven by a reduction in finished goods and work-in-process inventory | Inventory Component | As of June 27, 2025 (Millions) | As of September 27, 2024 (Millions) | | :------------------ | :------------------------------- | :---------------------------------- | | Raw materials | $37.2 | $30.3 | | Work-in-process | $504.8 | $520.5 | | Finished goods | $164.5 | $234.0 | | Total inventory | $706.5 | $784.8 | - Finished goods inventory saw the largest reduction, decreasing by $69.5 million[35] 6. PROPERTY, PLANT, AND EQUIPMENT, NET Net property, plant, and equipment decreased from $1,280.3 million to $1,213.8 million, as accumulated depreciation exceeded additions | Asset Category | As of June 27, 2025 (Millions) | As of September 27, 2024 (Millions) | | :------------- | :------------------------------- | :---------------------------------- | | Total property, plant, and equipment, gross | $4,292.7 | $4,210.1 | | Accumulated depreciation | $(3,078.9) | $(2,929.8) | | Total property, plant, and equipment, net | $1,213.8 | $1,280.3 | - Gross property, plant, and equipment increased by $82.6 million, while accumulated depreciation increased by $149.1 million[36] 7. GOODWILL AND INTANGIBLE ASSETS Goodwill remained unchanged, while net intangible assets decreased due to amortization, with no impairment noted in the current period | Intangible Asset Type | Net Carrying Amount (June 27, 2025, Millions) | Net Carrying Amount (September 27, 2024, Millions) | | :-------------------- | :-------------------------------------------- | :------------------------------------------------- | | Developed technology and other | $748.0 | $838.9 | | Technology licenses | $93.5 | $26.2 | | In-process research and development | $10.7 | $35.4 | | Total intangible assets, net | $852.2 | $900.5 | - Amortization expense for definite-lived intangible assets was $139.8 million for the nine months ended June 27, 2025, consistent with the prior year[40] - $24.7 million of IPR&D assets were transferred to definite-lived intangible assets during the nine months ended June 27, 2025, to be amortized over 8 years[39] 8. INCOME TAXES The provision for income taxes and the effective tax rate fluctuated significantly due to the geographical mix of earnings, GILTI, and FDII benefits | Metric | Three Months Ended June 27, 2025 (Millions) | Three Months Ended June 28, 2024 (Millions) | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :----- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Provision for income taxes | $7.0 | $12.5 | $69.0 | $42.5 | | Effective tax rate | 6.3% | 9.4% | 17.0% | 7.4% | - The decrease in the three-month provision was due to geographical mix of earnings and lower Global Intangible Low-Taxed Income ("GILTI"), net of foreign tax credits[84] - The increase in the nine-month provision was due to higher foreign taxes and a lower Foreign-Derived Intangible Income ("FDII") benefit, partially offset by decreased GILTI[85] 9. COMMITMENTS AND CONTINGENCIES The company is involved in various legal proceedings, including a recent patent infringement lawsuit, and has long-term capacity reservation agreements - Denso Corporation filed patent infringement litigation against Skyworks in the U.S. and Japan on June 20, 2025, seeking monetary damages and injunctive relief[48] - The company generally indemnifies customers for third-party intellectual property infringement claims and does not expect these obligations to have a material adverse impact[50][51] - Deposits and prepayments under long-term capacity reservation agreements with foundries totaled $90.4 million as of June 27, 2025[53] 10. STOCKHOLDERS' EQUITY The Board approved a new $2.0 billion stock repurchase program, and the company actively repurchased shares and declared dividends - A new $2.0 billion stock repurchase program was approved on February 4, 2025, with approximately $1.2 billion remaining as of June 27, 2025[54][55] | Period | Shares Repurchased (Millions) | Amount (Millions) | | :----- | :---------------------------- | :---------------- | | Three Months Ended June 27, 2025 | 5.2 | $333.4 | | Nine Months Ended June 27, 2025 | 12.6 | $837.7 | | Three Months Ended June 28, 2024 | 0.8 | $77.4 | - Dividends declared totaled $327.0 million ($2.10 per share) for the nine months ended June 27, 2025[58] 11. EARNINGS PER SHARE Basic and diluted EPS decreased year-over-year for both the three and nine-month periods, primarily due to lower net income | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Nine Months Ended June 27, 2025 | Nine Months Ended June 28, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic EPS | $0.70 | $0.75 | $2.15 | $3.34 | | Diluted EPS | $0.70 | $0.75 | $2.14 | $3.32 | | Weighted Average Shares Outstanding – Basic (Millions) | 150.0 | 160.4 | 156.3 | 160.2 | - The weighted average shares outstanding (basic) decreased by 6.5% for the three-month period and 2.4% for the nine-month period, primarily due to share repurchases[60] 12. SUPPLEMENTAL FINANCIAL INFORMATION Other current assets decreased due to lower prepaid expenses, while other current liabilities increased, driven by accrued taxes and other liabilities | Other Current Assets | As of June 27, 2025 (Millions) | As of September 27, 2024 (Millions) | | :------------------- | :------------------------------- | :---------------------------------- | | Prepaid expenses | $198.4 | $234.8 | | Other | $257.4 | $249.9 | | Total other current assets | $455.8 | $484.7 | | Other Current Liabilities | As of June 27, 2025 (Millions) | As of September 27, 2024 (Millions) | | :------------------------ | :------------------------------- | :---------------------------------- | | Accrued customer liabilities | $181.0 | $192.2 | | Accrued taxes | $64.7 | $52.5 | | Short-term operating lease liabilities | $36.0 | $20.2 | | Other | $72.0 | $38.1 | | Total other current liabilities | $353.7 | $303.0 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This section provides management's perspective on the company's financial performance, condition, liquidity, and capital resources OVERVIEW Net revenue increased in the third quarter driven by mobile and Wi-Fi demand, while cash decreased due to share repurchases and dividends - Net revenue increased to $965.0 million for the three months ended June 27, 2025, up from $905.5 million in the prior year, primarily due to increased demand for mobile and Wi-Fi products[67] - Ending cash, cash equivalents, and marketable securities decreased to $1,336.7 million, primarily due to share repurchases, dividend payments, and capital expenditures[67] - Robert A. Schriesheim was appointed interim Chief Financial Officer, effective May 29, 2025[67] Net Revenue Net revenue increased by 6.6% in the three-month period due to higher mobile and Wi-Fi demand but decreased by 5.3% over nine months | Period | Net Revenue (Millions) | Change (%) | | :----- | :--------------------- | :--------- | | Three Months Ended June 27, 2025 | $965.0 | 6.6% | | Three Months Ended June 28, 2024 | $905.5 | - | | Nine Months Ended June 27, 2025 | $2,986.7 | (5.3)% | | Nine Months Ended June 28, 2024 | $3,153.0 | - | - The three-month increase was driven primarily by an increase in demand for mobile and Wi-Fi products[69] - The nine-month decrease was driven primarily by a decrease in demand for mobile products partially offset by an increase in demand for Wi-Fi products[69] Gross Profit Gross profit and margin increased in the three-month period due to higher volumes, but nine-month gross profit decreased on unfavorable product mix | Period | Gross Profit (Millions) | Gross Margin (%) | Change (Gross Profit %) | | :----- | :---------------------- | :--------------- | :---------------------- | | Three Months Ended June 27, 2025 | $401.0 | 41.6% | 10.1% | | Three Months Ended June 28, 2024 | $364.1 | 40.2% | - | | Nine Months Ended June 27, 2025 | $1,234.6 | 41.3% | (4.4)% | | Nine Months Ended June 28, 2024 | $1,291.0 | 40.9% | - | - The increase in gross profit for the three months ended June 27, 2025, was primarily the result of higher unit volumes[71] - The decrease in gross profit for the nine months ended June 27, 2025, was primarily the result of unfavorable product mix and lower average selling prices[71] Research and Development R&D expenses increased significantly due to higher headcount-related costs and engineering prototypes, reflecting increased investment in new technologies | Period | R&D Expense (Millions) | R&D as % of Net Revenue | Change (%) | | :----- | :--------------------- | :---------------------- | :--------- | | Three Months Ended June 27, 2025 | $199.4 | 20.7% | 24.1% | | Three Months Ended June 28, 2024 | $160.7 | 17.7% | - | | Nine Months Ended June 27, 2025 | $562.4 | 18.8% | 20.1% | | Nine Months Ended June 28, 2024 | $468.1 | 14.8% | - | - The increase in research and development expenses was primarily related to increases in headcount-related expenses and costs for engineering prototypes[73] - This reflects the company's increased investment in developing new technologies and products[73] Selling, General, and Administrative SG&A expenses increased for both periods, mainly due to higher headcount-related expenses and professional services costs | Period | SG&A Expense (Millions) | SG&A as % of Net Revenue | Change (%) | | :----- | :---------------------- | :----------------------- | :--------- | | Three Months Ended June 27, 2025 | $89.3 | 9.2% | 25.4% | | Three Months Ended June 28, 2024 | $71.2 | 7.9% | - | | Nine Months Ended June 27, 2025 | $259.9 | 8.7% | 14.6% | | Nine Months Ended June 28, 2024 | $226.7 | 7.2% | - | - The increase in selling, general, and administrative expenses was primarily related to increases in headcount-related expenses and professional services costs[75] Amortization of Intangibles Amortization expense of intangibles remained consistent compared to the corresponding periods in the prior fiscal year | Period | Amortization of Intangibles (Millions) | Change (%) | | :----- | :------------------------------------- | :--------- | | Three Months Ended June 27, 2025 | $0.2 | 0% | | Three Months Ended June 28, 2024 | $0.2 | - | | Nine Months Ended June 27, 2025 | $0.7 | 0% | | Nine Months Ended June 28, 2024 | $0.7 | - | - Amortization expense was stable across the periods presented[76] Restructuring, Impairment, and Other Charges Charges for the nine-month period increased by 29.1%, primarily due to restructuring costs associated with the Chief Executive Officer transition | Period | Charges (Millions) | Change (%) | | :----- | :----------------- | :--------- | | Three Months Ended June 27, 2025 | $1.5 | (6.3)% | | Three Months Ended June 28, 2024 | $1.6 | - | | Nine Months Ended June 27, 2025 | $22.6 | 29.1% | | Nine Months Ended June 28, 2024 | $17.5 | - | - The increase in nine-month charges was primarily due to restructuring charges incurred in connection with the transition of the Chief Executive Officer[78] Interest Expense Interest expense for the nine-month period decreased by 15.1%, attributed to debt repayments in prior periods | Period | Interest Expense (Millions) | Change (%) | | :----- | :-------------------------- | :--------- | | Three Months Ended June 27, 2025 | $6.6 | 0% | | Three Months Ended June 28, 2024 | $6.6 | - | | Nine Months Ended June 27, 2025 | $20.2 | (15.1)% | | Nine Months Ended June 28, 2024 | $23.8 | - | - The decrease in nine-month interest expense was due to debt repayments in prior periods that reduced the amount of outstanding indebtedness[80] Other Income, Net Other income decreased for the three-month period due to foreign currency losses but increased over nine months from higher interest income | Period | Other Income, Net (Millions) | Change (%) | | :----- | :--------------------------- | :--------- | | Three Months Ended June 27, 2025 | $8.0 | (16.7)% | | Three Months Ended June 28, 2024 | $9.6 | - | | Nine Months Ended June 27, 2025 | $35.9 | 50.8% | | Nine Months Ended June 28, 2024 | $23.8 | - | - The three-month decrease was primarily due to an increase in foreign currency remeasurement losses partially offset by interest income[81] - The nine-month increase was primarily due to an increase in interest income generated from cash, cash equivalents, and marketable securities[82] Provision for Income Taxes The income tax provision decreased for the three-month period but increased over nine months due to shifts in geographical earnings and tax benefits | Period | Provision for Income Taxes (Millions) | Change (%) | | :----- | :------------------------------------ | :--------- | | Three Months Ended June 27, 2025 | $7.0 | (44.0)% | | Three Months Ended June 28, 2024 | $12.5 | - | | Nine Months Ended June 27, 2025 | $69.0 | 62.4% | | Nine Months Ended June 28, 2024 | $42.5 | - | - The decrease in income tax expense for the three months was primarily due to the geographical mix of worldwide earnings and a decrease in GILTI[84] - The increase in income tax expense for the nine months was primarily due to higher foreign taxes and a lower FDII benefit[85] LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased by $182.7 million, driven by lower operating cash flow and increased financing activities, particularly share repurchases | (in millions) | Nine Months Ended June 27, 2025 | Nine Months Ended June 28, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Cash and cash equivalents at beginning of period | $1,368.6 | $718.8 | | Net cash provided by operating activities | $1,100.8 | $1,348.6 | | Net cash used in investing activities | $(102.9) | $(84.5) | | Net cash used in financing activities | $(1,180.6) | $(719.5) | | Cash and cash equivalents at end of period | $1,185.9 | $1,263.4 | - Cash, cash equivalents, and marketable securities totaled $1,336.7 million as of June 27, 2025, a decrease of $237.4 million from September 27, 2024[91] - The company has outstanding $500.0 million of Notes Due 2026 and $500.0 million of Notes Due 2031, and a Revolving Credit Agreement for up to $750.0 million[92] Cash provided by operating activities | Metric | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :----- | :----------------------------------------- | :----------------------------------------- | | Net cash provided by operating activities | $1,100.8 | $1,348.6 | - The $247.8 million decrease in cash provided by operating activities was primarily related to lower net income and a smaller decrease in working capital[88] Cash used in investing activities | Metric | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :----- | :----------------------------------------- | :----------------------------------------- | | Net cash used in investing activities | $(102.9) | $(84.5) | | Capital expenditures | $(139.0) | $(74.2) | | Purchases of marketable securities | $(415.9) | $(25.7) | | Sales and maturities of marketable securities | $473.9 | $25.3 | - The $18.4 million increase in cash used in investing activities was primarily related to an increase in purchases of marketable securities and capital expenditures[89] Cash used in financing activities | Metric | Nine Months Ended June 27, 2025 (Millions) | Nine Months Ended June 28, 2024 (Millions) | | :----- | :----------------------------------------- | :----------------------------------------- | | Net cash used in financing activities | $(1,180.6) | $(719.5) | | Repurchase of common stock - stock repurchase program | $(830.2) | $(77.3) | | Payments of debt | $0.0 | $(300.0) | - The $461.1 million increase in cash used in financing activities was primarily related to an increase of $752.9 million in share repurchases[90] Liquidity - Cash, cash equivalents, and marketable securities totaled $1,336.7 million as of June 27, 2025, representing a decrease of $237.4 million from September 27, 2024[91] - The company has outstanding $500.0 million of Notes Due 2026 and $500.0 million of Notes Due 2031[92] - A Revolving Credit Agreement for up to $750.0 million is available, with no outstanding borrowings as of June 27, 2025[92] ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section outlines the company's exposure to investment, interest rate, and foreign exchange rate risks, concluding that current exposures are not material Investment and Interest Rate Risk The company's investment portfolio is diversified across high-credit-rating securities with short-term maturities to manage interest rate and credit risk - The investment portfolio consists of approximately $1,185.9 million in cash and cash equivalents and $150.8 million in marketable securities as of June 27, 2025[97] - Investments are diversified across several types of securities with high credit ratings and have short-term maturity periods to dampen the impact of market or interest rate risk[98] - A hypothetical reduction of 100 basis points in interest rates would result in an immaterial reduction of interest income[99] Foreign Exchange Rate Risk The company primarily conducts business in USD, limiting foreign exchange risk, and did not use hedging contracts during the reported periods - Substantially all sales to customers and arrangements with third-party manufacturers provide for pricing and payment in United States dollars[101] - A percentage of international operational expenses are denominated in foreign currencies, and exchange rate volatility could impact operating costs[101] - The company had not entered into any outstanding foreign currency forward or options contracts for the three and nine months ended June 27, 2025, or June 28, 2024[102] ITEM 4: CONTROLS AND PROCEDURES This section confirms the effectiveness of disclosure controls and reports no material changes to internal control over financial reporting Evaluation of Disclosure Controls and Procedures As of June 27, 2025, management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level - Management, with the participation of the chief executive officer and interim chief financial officer, evaluated and concluded that the company's disclosure controls and procedures were effective as of June 27, 2025[103] - Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized, and reported within specified time periods[103] Changes in Internal Control Over Financial Reporting There were no material changes to the company's internal control over financial reporting during the third quarter of fiscal 2025 - There were no changes to the company's internal control over financial reporting that occurred during the third quarter of fiscal 2025 that have materially affected or are reasonably likely to materially affect it[104] PART II. OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS This section refers to Note 9 for details on legal proceedings, including a patent infringement lawsuit filed by Denso Corporation in June 2025 - Refer to Note 9 of the Notes to Consolidated Financial Statements for a detailed discussion of legal proceedings[106] - On June 20, 2025, Denso Corporation filed patent infringement litigation against the Company in the U.S. and Japan, seeking monetary damages and injunctive relief[48] ITEM 1A: RISK FACTORS The company faces significant international business risks, potential market share loss, litigation, manufacturing disruptions, and senior management transition risks - The company derives significant revenues from customers and has suppliers located outside the United States, exposing it to risks such as recession, currency controls, and global economic and political conditions[108] - The imposition of or changes to tariffs and any retaliatory measures could negatively impact trade, operating costs, and demand for products[108][111] - The company is subject to risks of litigation, including a putative class action lawsuit and two derivative action lawsuits filed in March and April 2025[113] - Manufacturing processes are complex and subject to disruption, including the planned closure of the Woburn facility and relocation of the Singapore Filter Manufacturing Facility[114][115] - Recent senior management transitions, including a new Chief Executive Officer and interim Chief Financial Officer, involve inherent risks that could disrupt operations[117] ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the quarter, the company repurchased 5.3 million shares, primarily under its $2.0 billion stock repurchase program | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (Millions) | | :----- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------ | | 03/29/25 - 04/25/25 | 2,697,935 | $58.06 | 2,697,176 | $1,300 | | 04/26/25 - 05/23/25 | 2,412,786 | $69.36 | 2,399,397 | $1,200 | | 05/24/25 - 06/27/25 | 200,876 | $69.42 | 150,000 | $1,200 | | Total (3 months) | 5,311,597 | $62.76 (approx) | 5,246,573 | - | - The stock repurchase program approved on February 4, 2025, authorized the repurchase of up to $2.0 billion of common stock, with approximately $1.2 billion remaining available as of June 27, 2025[118][55] - Repurchases include shares withheld for payroll tax withholdings on equity awards, in addition to shares repurchased under the stock repurchase program[120][121][122] ITEM 6: EXHIBITS This section lists the exhibits filed with the 10-Q report, including corporate governance documents, executive agreements, and XBRL data files - Key exhibits include the Restated Certificate of Incorporation, executive offer letters, and certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act[124] - The report includes Inline XBRL Instance Document and Taxonomy Extension documents for data tagging and presentation[124] SIGNATURES SIGNATURES The report was duly signed on August 5, 2025, by the President and CEO and the Interim CFO - The report was signed by Philip G. Brace, President and Chief Executive Officer, and Robert A. Schriesheim, Interim Chief Financial Officer, on August 5, 2025[128]