Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following consolidated financial statements of the Company are included herewith:

(1)	Report of Independent Registered Public Accounting Firm	Page 35
(2)	Consolidated Statements of Operations for the three years ended September 29, 2017	Page 36
(3)	Consolidated Statements of Comprehensive Income for the three years ended September 29, 2017	Page 37
(4)	Consolidated Balance Sheets at September 29, 2017, and September 30, 2016	Page 38
(5)	Consolidated Statements of Cash Flows for the three years ended September 29, 2017	Page 39
(6)	Consolidated Statements of Stockholders’ Equity for the three years ended September 29, 2017	Page 40
(7)	Notes to Consolidated Financial Statements	Page 41 through 61

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Skyworks Solutions, Inc.:

We have audited the accompanying consolidated balance sheets of Skyworks Solutions, Inc. and subsidiaries as of September 29, 2017 and September 30, 2016, and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity for each of the years in the three-year period ended September 29, 2017. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule listed in Item 15 of this Form 10-K. We also have audited Skyworks Solutions, Inc.’s internal control over financial reporting as of September 29, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Skyworks Solutions, Inc.’s management is responsible for these consolidated financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule, and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Skyworks Solutions, Inc. and subsidiaries as of September 29, 2017 and September 30, 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended September 29, 2017, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also in our opinion, Skyworks Solutions, Inc. maintained, in all material respects, effective internal control over financial reporting as of September 29, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) .

/s/ KPMG LLP

Boston, Massachusetts

November 13, 2017

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts)

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Net revenue	$	3,651.4			$	3,289.0			$	3,258.4
Cost of goods sold	1,809.6				1,623.8				1,703.9
Gross profit	1,841.8				1,665.2				1,554.5
Operating expenses:
Research and development	355.2				312.4				303.2
Selling, general and administrative	204.6				195.9				191.3
Amortization of intangibles	27.6				33.4				33.5
Restructuring and other charges	0.6				4.8				3.4
Total operating expenses	588.0				546.5				531.4
Operating income	1,253.8				1,118.7				1,023.1
Other income, (expense), net	3.2				(6.6		)		0.5
Merger termination fee	—				88.5				—
Income before income taxes	1,257.0				1,200.6				1,023.6
Provision for income taxes	246.8				205.4				225.3
Net income	$	1,010.2			$	995.2			$	798.3
Earnings per share:
Basic	$	5.48			$	5.27			$	4.21
Diluted	$	5.41			$	5.18			$	4.10
Weighted average shares:
Basic	184.3				188.7				189.5
Diluted	186.7				192.1				194.9
Cash dividends declared and paid per share	$	1.16			$	1.06			$	0.65

See accompanying Notes to Consolidated Financial Statements.

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions)

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Net income	$	1,010.2			$	995.2			$	798.3
Other comprehensive income
Fair value of investments	0.9				—				—
Pension adjustments	0.7				(1.8		)		(0.2		)
Foreign currency translation adjustment	0.8				(0.9		)		(3.1		)
Comprehensive income	$	1,012.6			$	992.5			$	795.0

See accompanying Notes to Consolidated Financial Statements.

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

	As of
	September 29, 2017				September 30, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	1,616.8			$	1,083.8
Receivables, net of allowance for doubtful accounts of $0.5 and $0.5, respectively	454.7				416.6
Inventory	493.5				424.0
Other current assets	68.7				77.7
Total current assets	2,633.7				2,002.1
Property, plant and equipment, net	882.3				806.3
Goodwill	883.0				873.3
Intangible assets, net	67.8				67.0
Deferred tax assets, net	66.5				54.1
Other assets	40.3				52.6
Total assets	$	4,573.6			$	3,855.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	258.4			$	110.4
Accrued compensation and benefits	68.1				42.3
Other current liabilities	61.4				57.5
Total current liabilities	387.9				210.2
Long-term tax liabilities	92.9				71.8
Other long-term liabilities	27.1				32.0
Total liabilities	507.9				314.0
Commitments and contingencies (Note 11 and Note 12)
Stockholders’ equity:
Preferred stock, no par value: 25.0 shares authorized, no shares issued	—				—
Common stock, $0.25 par value: 525.0 shares authorized; 226.0 shares issued and 183.1 shares outstanding as of September 29, 2017, and 222.5 shares issued and 184.9 shares outstanding as of September 30, 2016	45.8				46.2
Additional paid-in capital	2,893.8				2,686.0
Treasury stock, at cost	(1,925.0		)		(1,443.5		)
Retained earnings	3,059.6				2,263.6
Accumulated other comprehensive loss	(8.5		)		(10.9		)
Total stockholders’ equity	4,065.7				3,541.4
Total liabilities and stockholders’ equity	$	4,573.6			$	3,855.4

See accompanying Notes to Consolidated Financial Statements.

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Cash flows from operating activities:
Net income	$	1,010.2			$	995.2			$	798.3
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	88.5				78.0				99.8
Depreciation	227.2				214.4				162.3
Amortization of intangible assets	27.6				33.4				33.5
Contribution of common shares to savings and retirement plans	15.0				18.0				20.9
Deferred income taxes	2.2				—				(3.9		)
Excess tax benefit from share-based compensation	(40.8		)		(43.7		)		(57.3		)
Other	0.3				0.3				0.5
Changes in assets and liabilities net of acquired balances:
Receivables, net	(37.1		)		121.4				(222.2		)
Inventory	(69.2		)		(147.3		)		3.6
Other current and long-term assets	3.3				(20.4		)		(39.2		)
Accounts payable	147.8				(181.5		)		90.5
Other current and long-term liabilities	96.3				27.9				106.0
Net cash provided by operating activities	1,471.3				1,095.7				992.8
Cash flows from investing activities:
Capital expenditures	(303.3		)		(189.3		)		(430.1		)
Payments for acquisitions, net of cash acquired	(13.7		)		(55.6		)		(24.6		)
Purchased intangibles	(12.1		)		(6.0		)		—
Maturity of investments	3.2				—				—
Net cash used in investing activities	(325.9		)		(250.9		)		(454.7		)
Cash flows from financing activities:
Payments for obligations recorded for business combinations	—				(76.5		)		—
Excess tax benefit from share-based compensation	40.8				43.7				57.3
Repurchase of common stock - payroll tax withholdings on equity awards	(49.2		)		(73.3		)		(54.2		)
Repurchase of common stock - share repurchase program	(432.3		)		(525.6		)		(237.3		)
Dividends paid	(214.6		)		(201.0		)		(123.1		)
Net proceeds from exercise of stock options	53.8				28.1				57.0
Deferred payments for intangible assets	(5.5		)		—				—
Payments of contingent consideration	(5.4		)		—				—
Net cash used in financing activities	(612.4		)		(804.6		)		(300.3		)
Net increase in cash and cash equivalents	533.0				40.2				237.8
Cash and cash equivalents at beginning of period	1,083.8				1,043.6				805.8
Cash and cash equivalents at end of period	$	1,616.8			$	1,083.8			$	1,043.6
Supplemental cash flow disclosures:
Income taxes paid	$	163.2			$	165.9			$	126.1

See accompanying Notes to Consolidated Financial Statements.

SKYWORKS SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

	Shares of common stock			Par value of common stock				Shares of treasury stock			Value of treasury stock				Additional paid-in capital				Retained earnings				Accumulated other comprehensive loss				Total stockholders’ equity
Balance at October 3, 2014	189.2			$	47.3			25.0			$	(553.1	)		$	2,248.2			$	794.9			$	(4.9	)		$	2,532.4
Net income	—			—				—			—				—				798.3				—				798.3
Exercise and settlement of share based awards and related tax benefit, net of shares withheld for taxes	4.0			1.0				0.8			(54.2		)		156.7				—				—				103.5
Share-based compensation expense	—			—				—			—				89.6				—				—				89.6
Share repurchase program	(2.9	)		(0.7		)		2.9			(237.3		)		0.7				—				—				(237.3		)
Dividends declared	—			—				—			—				—				(124.0		)		—				(124.0		)
Other comprehensive loss	—			—				—			—				—				—				(3.3		)		(3.3		)
Balance at October 2, 2015	190.3			$	47.6			28.7			$	(844.6	)		$	2,495.2			$	1,469.2			$	(8.2	)		$	3,159.2
Net income	—			—				—			—				—				995.2				—				995.2
Exercise and settlement of share based awards and related tax benefit, net of shares withheld for taxes	2.6			0.6				0.9			(73.3		)		109.1				—				—				36.4
Share-based compensation expense	—			—				—			—				79.7				—				—				79.7
Share repurchase program	(8.0	)		(2.0		)		8.0			(525.6		)		2.0				—				—				(525.6		)
Dividends declared	—			—				—			—				—				(200.8		)		—				(200.8		)
Other comprehensive loss	—			—				—			—				—				—				(2.7		)		(2.7		)
Balance at September 30, 2016	184.9			$	46.2			37.6			$	(1,443.5	)		$	2,686.0			$	2,263.6			$	(10.9	)		$	3,541.4
Net income	—			—				—			—				—				1,010.2				—				1,010.2
Exercise and settlement of share based awards and related tax benefit, net of shares withheld for taxes	2.9			0.7				0.6			(49.2		)		118.2				—				—				69.7
Share-based compensation expense	—			—				—			—				88.5				—				—				88.5
Share repurchase program	(4.7	)		(1.1		)		4.7			(432.3		)		1.1				—				—				(432.3		)
Dividends declared	—			—				—			—				—				(214.2		)		—				(214.2		)
Other comprehensive income	—			—				—			—				—				—				2.4				2.4
Balance at September 29, 2017	183.1			$	45.8			42.9			$	(1,925.0	)		$	2,893.8			$	3,059.6			$	(8.5	)		$	4,065.7

See accompanying Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Skyworks Solutions, Inc., together with its consolidated subsidiaries (“Skyworks” or the “Company”), is empowering the wireless networking revolution. The Company’s highly innovative analog semiconductors are connecting people, places, and things, spanning a number of new and previously unimagined applications within the automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet and wearable markets.

The Company has evaluated subsequent events through the date of issuance of the audited consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

All Skyworks subsidiaries are included in the Company’s consolidated financial statements and all intercompany balances are eliminated in consolidation.

FISCAL YEAR

The Company’s fiscal year ends on the Friday closest to September 30. Fiscal years 2017, 2016 and 2015 each consisted of 52 weeks and ended on September 29, 2017, September 30, 2016 and October 2, 2015, respectively.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, expenses, comprehensive income and accumulated other comprehensive loss during the reporting period. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Significant judgment is required in determining the reserves for and fair value of items such as allowance for doubtful accounts, overall fair value assessments of assets and liabilities, particularly those classified as Level 2 or Level 3 in the fair value hierarchy, inventory, intangible assets associated with business combinations, share-based compensation, loss contingencies, and income taxes. In addition, significant judgment is required in determining whether a potential indicator of impairment of long-lived assets exists and in estimating future cash flows for any necessary impairment testing. Actual results could differ significantly from these estimates.

CASH AND CASH EQUIVALENTS

The Company invests excess cash in time deposits, certificate of deposits and money market funds which primarily consist of United States treasury obligations, United States agency obligations, and repurchase agreements collateralized by United States government and agency obligations. The Company considers highly liquid investments with original maturities of 90 days or less when purchased as cash equivalents.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company maintains general allowances for doubtful accounts related to potential losses that could arise due to customers’ inability to make required payments. These reserves require management to apply judgment in deriving these estimates. In addition, the Company performs ongoing credit evaluations of its customers’ financial condition and if it becomes aware of any specific receivables which may be uncollectable, it performs additional analysis including, but not limited to, factors such as a customer’s credit worthiness, intent and ability to pay and overall financial position, and reserves are recorded if deemed necessary. If the data the Company uses to calculate the allowance for doubtful accounts does not reflect the future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and results of operations could be materially affected.

INVESTMENTS

The Company classifies its investment in marketable securities as “available for sale”. Available for sale securities are carried at fair value with unrealized holding gains or losses recorded in other comprehensive income. Gains or losses are included in earnings in the period in which they are realized.

DERIVATIVES

The Company may utilize derivative financial instruments to manage market risks associated with fluctuations in foreign currency exchange rates on specific transactions that occur in the normal course of business. The criteria the Company uses for designating

an instrument as a hedge is the instrument’s effectiveness in risk reduction. To receive hedge accounting treatment, hedges must be highly effective at offsetting the impact of the hedge transaction. All derivatives, whether designated as hedging relationships or not, are recorded at fair value and are included as either an asset or liability on the balance sheet.

FAIR VALUE

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principle or most advantageous market in an orderly transaction between market participants at the measurement date. Applicable accounting guidance provides a hierarchy for inputs used in measuring fair value that prioritize the use of observable inputs over the use of unobservable inputs, when such observable inputs are available. The three levels of inputs that may be used to measure fair value are as follows:

•	Level 1 - Quoted prices in active markets for identical assets or liabilities.

•	Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data.

•	Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by the Company.

It is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. When available, the Company uses quoted market prices to measure fair value. If market prices are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

The Company measures certain assets and liabilities at fair value on a recurring basis in three levels, based on the market in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. It recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred.

The carrying value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities approximates fair value due to short-term maturities of these assets and liabilities.

INVENTORY

Inventory is stated at the lower of cost or market on a first-in, first-out basis.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are carried at cost less accumulated depreciation, with significant renewals and betterments being capitalized and retired equipment written off in the respective periods. Maintenance and repairs are expensed as incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives, which range from five to thirty years for buildings and improvements and three to ten years for machinery and equipment. Leasehold improvements are depreciated over the lesser of the economic life or the life of the associated lease.

VALUATION OF LONG-LIVED ASSETS

Definite lived intangible assets are carried at cost less accumulated amortization. Amortization is calculated based on the pattern of benefit to be recognized from the underlying asset over its estimated useful life. Carrying values for long-lived assets and definite lived intangible assets are reviewed for possible impairment as circumstances warrant. Factors considered important that could result in an impairment review include significant underperformance relative to expected, historical or projected future operating results, significant changes in the manner of use of assets or the Company’s business strategy, or significant negative industry or economic trends. In addition, impairment reviews are conducted at the judgment of management whenever asset/asset group values are deemed to be unrecoverable relative to future undiscounted cash flows expected to be generated by that particular asset/asset group. The determination of recoverability is based on an estimate of undiscounted cash flows expected to result from the use of an asset/asset group and its eventual disposition. Such estimates require management to exercise judgment and make assumptions regarding factors such as future revenue streams, operating expenditures, cost allocation and asset utilization levels, all of which collectively impact future operating performance. The Company’s estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to its business model or changes in its operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value of an asset/asset group, the Company

would recognize an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset or asset group.

GOODWILL

Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually as of the first day of the fourth fiscal quarter for impairment or more frequently if indicators of impairment exist during the fiscal year. The Company assesses its conclusion regarding segments and reporting units in conjunction with its annual goodwill impairment test, and has determined that it has one reporting unit for the purposes of allocating and testing goodwill.

The goodwill impairment test is a two-step process. The first step of the Company’s impairment analysis compares its fair value to its net book value to determine if there is an indicator of impairment. In the Company’s calculation of fair value, it considers the closing price of its common stock on the selected testing date, the number of shares of its common stock outstanding and other marketplace activity such as a related control premium. If the calculated fair value is determined to be less than the book value of the Company, then the Company performs step two of the impairment analysis. Step two of the analysis compares the implied fair value of the Company’s goodwill to its book value. If the book value of the Company’s goodwill exceeds its implied fair value, an impairment loss is recognized equal to that excess.

BUSINESS COMBINATIONS

The Company uses the acquisition method of accounting for business combinations and recognizes assets acquired and liabilities assumed at their fair values on the date acquired. Goodwill represents the excess of the purchase price over the fair value of the net assets. The fair values of the assets and liabilities acquired are determined based upon the Company’s valuation using a combination of market, income or cost approaches. The valuation involves making significant estimates and assumptions, which are based on detailed financial models including the projection of future cash flows, the weighted average cost of capital and any cost savings that are expected to be derived in the future.

EMPLOYEE RETIREMENT BENEFIT PLANS

The funded status of benefit pension plans, or the balance of plan assets and benefit obligations, is recognized on the consolidated balance sheet and pension liability adjustments, net of tax, are recorded in Accumulated Other Comprehensive Income. The Company determines discount rates considering the rates of return on high-quality fixed income investments, and the expected long-term rate of return on pension plan assets by considering the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. Decreases in discount rates lead to increases in benefit obligations that, in turn, could lead to an increase in amortization cost through amortization of actuarial gain or loss. A decline in the market values of plan assets will generally result in a lower expected rate of return, which would result in an increase of future retirement benefit costs.

REVENUE RECOGNITION

Revenue from product sales is recognized when there is persuasive evidence of an arrangement, the price to the buyer is fixed and determinable, delivery and transfer of title have occurred in accordance with the shipping terms specified in the arrangement with the customer and collectability is reasonably assured. Revenue from license fees and intellectual property is recognized when due and payable, and all other criteria previously noted have been met. The Company ships product on consignment to certain customers and only recognizes revenue when the customer notifies the Company that the inventory has been consumed. Revenue recognition is deferred in all instances where the earnings process is incomplete. Certain product sales are made to electronic component distributors under agreements allowing for price protection and stock rotation on unsold products. Reserves for sales returns and allowances are recorded based on historical experience or pursuant to contractual arrangements necessitating revenue reserves.

SHARE-BASED COMPENSATION

The Company recognizes compensation expense for all share-based payment awards made to employees and directors including non-qualified employee stock options, share awards and units, employee stock purchase plan and other special share-based awards based on estimated fair values.

The fair value of share-based payment awards is amortized over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The Company uses a straight-line attribution method for all grants that include only a service condition. Awards with both performance and service conditions are expensed over the service period for each separately vesting tranche.

Share-based compensation expense recognized during the period includes actual expense on vested awards and expense associated with unvested awards that has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if

necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company reviews actual forfeitures at least annually.

The Company determines the fair value of share-based option awards based on the Company’s closing stock price on the date of grant using a Black-Scholes options pricing model. Under the Black-Scholes model, a number of highly complex and subjective variables are used including, but not limited to: the expected stock price volatility over the term of the award, the risk-free rate, the expected life of the award and dividend yield. The determination of fair value of restricted and certain performance share awards and units is based on the value of the Company’s stock on the date of grant with performance awards and units adjusted for the actual outcome of the underlying performance condition.

For more complex performance awards including units with market-based performance conditions the Company employs a Monte Carlo simulation valuation method to calculate the fair value of the awards based on the most likely outcome. Under the Monte Carlo simulation, a number of highly complex and subjective variables are used including, but not limited to: the expected stock price volatility over the term of the award, a correlation coefficient, the risk-free rate, the expected life of the award, and dividend yield.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred.

LOSS CONTINGENCIES

The Company records its best estimates of a loss contingency when it is considered probable and the amount can be reasonably estimated. When a range of loss can be reasonably estimated with no best estimate in the range, the minimum estimated liability related to the claim is recorded. As additional information becomes available, the Company assesses the potential liability related to the potential pending loss contingency and revises its estimates. Loss contingencies are disclosed if there is at least a reasonable possibility that a loss or an additional loss may have been incurred and legal costs are expensed as incurred.

RESTRUCTURING

A liability for post-employment benefits is recorded when payment is probable, the amount is reasonably estimable, and the obligation relates to rights that have vested or accumulated.

FOREIGN CURRENCIES

The Company’s primary functional currency is the United States dollar. Gains and losses related to foreign currency transactions, conversion of foreign denominated cash balances and translation of foreign currency financial statements are included in current results. For certain foreign entities that utilize local currencies as their functional currency, the resulting unrealized translation gains and losses are reported as currency translation adjustment through other comprehensive income (loss) for each period.

INCOME TAXES

The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. This method also requires the recognition of future tax benefits such as net operating loss carry forwards, to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The carrying value of the Company’s net deferred tax assets assumes the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in its Consolidated Statement of Operations. Management evaluates the realizability of the deferred tax assets and assesses the adequacy of the valuation allowance quarterly. Likewise, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, an adjustment to the deferred tax assets would increase income or decrease the carrying value of goodwill in the period such determination was made.

The determination of recording or releasing tax valuation allowances is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate future taxable income against which benefits of its deferred tax assets may or may not be realized. This assessment requires management to exercise significant judgment and make estimates

with respect to its ability to generate revenues, gross profits, operating income and taxable income in future periods. Amongst other factors, management must make assumptions regarding overall business and semiconductor industry conditions, operating efficiencies, the Company’s ability to develop products to its customers’ specifications, technological change, the competitive environment and changes in regulatory requirements which may impact its ability to generate taxable income and, in turn, realize the value of its deferred tax assets.

The calculation of the Company’s tax liabilities includes addressing uncertainties in the application of complex tax regulations and is based on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The Company recognizes liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its recognition threshold and measurement attribute of whether it is more likely than not that the positions the Company has taken in tax filings will be sustained upon tax audit, and the extent to which, additional taxes would be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period in which it is determined the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. The Company recognizes any interest or penalties, if incurred, on any unrecognized tax benefits as a component of income tax expense.

EARNINGS PER SHARE

Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share incorporate the potentially dilutive incremental shares issuable upon the assumed exercise of stock options, the assumed vesting of outstanding restricted stock units and performance stock units, and the assumed issuance of common stock under the stock purchase plan using the treasury share method.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In November 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-17, Balance Sheet Classification of Deferred Taxes, which eliminates the current requirement to present deferred tax assets and liabilities as current and non-current in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as non-current. The Company adopted this accounting standard update early, on a prospective basis, at the beginning of the fourth quarter of fiscal year 2017. All deferred tax assets and liabilities as of September 29, 2017, have been classified as non-current in the accompanying Consolidated Balance Sheets and the notes thereto. The adoption at the beginning of the fourth quarter of fiscal 2017 resulted in a $13.6 million decrease in current deferred tax assets, a $12.6 million increase in other assets on the Balance Sheet and a $0.5 million decrease to both current and non-current deferred tax liabilities. No prior periods were retrospectively adjusted.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The Company will adopt this guidance during the first quarter of fiscal year 2019. The new guidance is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has established a cross-functional team to assess the potential impact of the new revenue standard. The assessment process consists of reviewing its current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to the Company’s revenue contracts and identifying appropriate changes to the Company’s business processes, systems and controls to support revenue recognition and disclosure requirements under the new standard. The Company is currently evaluating the potential impact on its business processes, systems, controls and its consolidated financial statements of the new revenue standard and does not anticipate significant changes to its statement of operations. The Company’s assessment will be completed during fiscal 2018 at which time the method of adoption will be selected.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for fiscal years beginning after December 15, 2018, with early adoption permitted. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented. The Company is evaluating the effect that ASU 2016-02 will have on the consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The updated guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company will adopt ASU 2016-09 in the first quarter of

fiscal 2018, and anticipates changes to its diluted share count, its tax provision, share-based compensation expense and cash flow from operations.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) (“ASU 2016-15”). This ASU provides guidance on the presentation and classification of specific cash flow items to improve consistency within the statement of cash flows. The effective date for the standard is for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect that ASU 2016-15 will have on the consolidated financial statements and related disclosures.

In October 2016, the FASB issued ASU No. 2016-16, Income taxes (Topic 74): Intra-entity transfers of an asset other than inventory (“ASU 2016-16”). This ASU provides guidance that changes the accounting for income tax effects of intra-entity transfers of assets other than inventory. Under the new guidance, the selling (transferring) entity is required to recognize a current tax expense or benefit upon transfer of the asset. Similarly, the purchasing (receiving) entity is required to recognize a deferred tax asset or deferred tax liability, as well as the related deferred tax benefit or expense, upon receipt of the asset. The effective date for the standard is for fiscal years beginning after December, 15, 2017, on a modified retrospective basis, and early adoption is permitted. The Company is currently evaluating the effect ASU 2016-16 will have on the consolidated financial statements as well as whether to adopt the new guidance early.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. The annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments are to be applied on a prospective basis. The effective date for adoption of this standard is for the first annual or interim goodwill impairment test in the fiscal year beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not anticipate the adoption of ASU 2017-04 to have a material effect on the consolidated financial statements or related disclosures.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The effective date for the standard is for interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

There have been no other recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to the Company.

3. BUSINESS COMBINATIONS

During the fiscal year ended September 29, 2017, the Company acquired a business for total cash consideration, net of cash acquired, of $13.7 million together with future contingent payments for a total aggregated fair value of $24.8 million. The future contingent consideration payments range from zero to $20.0 million and are based upon the achievement of specified revenue objectives that are payable up to three years from the anniversary of the acquisition, which at closing had a total estimated fair value of $10.7 million. In allocating the total purchase consideration for this acquisition based on the calculated fair value, the Company recorded $9.7 million of goodwill and $16.4 million of identifiable intangibles assets. Intangible assets acquired primarily consisted of developed technology with a weighted average useful life of five years as of the acquisition date. Goodwill resulting from this acquisition is not expected to be tax deductible.

Net revenue and net income from this acquisition has been included in the Consolidated Statements of Operations from the acquisition date through the end of the fiscal year on September 29, 2017, and the impact of the acquisition to the ongoing operations on the Company’s net revenue and net income was not significant. The Company incurred immaterial transaction-related costs during the fiscal year ended September 29, 2017, which were included within the selling, administrative and general expense. Due to the materiality of this acquisition, the disclosures required by the applicable accounting guidance have been excluded.

On October 29, 2015, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”) with PMC-Sierra, Inc. (“PMC”), providing for, subject to the terms and conditions of the Merger Agreement, the cash acquisition

of PMC by the Company. On November 23, 2015, PMC notified the Company that it had terminated the Merger Agreement. As a result, on November 24, 2015, PMC paid the Company a termination fee of $88.5 million pursuant to the Merger Agreement.

4. FAIR VALUE

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company measures certain assets and liabilities at fair value on a recurring basis such as its financial instruments. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the fiscal year ended September 29, 2017.

During the fiscal year ended September 29, 2017, the auction rate security that the Company carried as a Level 3 asset was redeemed at its par value. Upon receipt of the par value, the Company reversed the difference between the carrying value and par value of this security that it had previously temporarily impaired from accumulated other comprehensive income. There was no gain or loss recognized in earnings during the twelve months ended September 29, 2017, as a result of this transaction.

Contingent consideration related to business combinations is recorded as a Level 3 liability because management uses significant judgments and unobservable inputs to determine the fair value. The Company reassesses the fair value of its contingent consideration liabilities on a quarterly basis and records any fair value adjustments to earnings in the period that they are determined. The increase in Level 3 liabilities during fiscal 2017, relates to the fair value of the contingent consideration associated with a business combination completed during the period, as detailed in Note 3 of these Notes to Consolidated Financial Statements. The fair value of the contingent consideration was determined using a weighted average probability of the expected revenue to be generated from the acquired business over a three-year period, with the contingent payments being made in each of the respective years. The increase in Level 3 liabilities was offset by payments of contingent consideration liabilities and net adjustments to the fair value of contingent consideration liabilities during the fiscal year ended September 29, 2017, which were included in selling, general and administrative expenses.

Assets and liabilities recorded at fair value on a recurring basis consisted of the following (in millions):

	As of September 29, 2017																As of September 30, 2016
					Fair Value Measurements																Fair Value Measurements
	Total				Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3
Assets
Money market funds	$	592.6			$	592.6			$	—			$	—			$	408.7			$	408.7			$	—			$	—
Auction rate security	—				—				—				—				2.3				—				—				2.3
Total	$	592.6			$	592.6			$	—			$	—			$	411.0			$	408.7			$	—			$	2.3
Liabilities
Contingent consideration liability recorded for business combinations	11.9				—				—				11.9				7.9				—				—				7.9
Total	$	11.9			$	—			$	—			$	11.9			$	7.9			$	—			$	—			$	7.9

The following table summarizes changes to the fair value of the Level 3 assets (in millions):

	Auction rate security
Balance as of September 30, 2016	$	2.3
Decreases in Level 3 assets	(2.3		)
Balance as of September 29, 2017	$	—

The following table summarizes changes to the fair value of the Level 3 liabilities (in millions):

	Contingent consideration
Balance as of September 30, 2016	$	7.9
Increases to Level 3 liabilities	10.7
Changes in fair value included in earnings	(1.3		)
Decreases of Level 3 liabilities	(5.4		)
Balance as of September 29, 2017	$	11.9

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company’s non-financial assets and liabilities, such as goodwill, intangible assets, and other long-lived assets resulting from business combinations are measured at fair value using income approach valuation methodologies at the date of acquisition and are subsequently re-measured if there are indicators of impairment.

5. INVENTORY

Inventory consists of the following (in millions):

	As of
	September 29, 2017				September 30, 2016
Raw materials	$	24.6			$	18.5
Work-in-process	330.6				255.5
Finished goods	123.0				140.4
Finished goods held on consignment by customers	15.3				9.6
Total inventory	$	493.5			$	424.0

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment net consists of the following (in millions):

	As of
	September 29, 2017				September 30, 2016
Land and improvements	$	11.6			$	11.6
Buildings and improvements	137.8				133.5
Furniture and fixtures	29.5				29.5
Machinery and equipment	1,715.3				1,533.3
Construction in progress	164.8				59.9
Total property, plant and equipment, gross	2,059.0				1,767.8
Accumulated depreciation	(1,176.7		)		(961.5		)
Total property, plant and equipment, net	$	882.3			$	806.3

7. GOODWILL AND INTANGIBLE ASSETS

The changes to the carrying amount of goodwill are as follows (in millions):

	As of
	September 29, 2017				September 30, 2016
Goodwill at beginning of the period	$	873.3			$	856.7
Goodwill recognized through business combinations (Note 3)	9.7				16.6
Goodwill adjustments	—				—
Goodwill impairment	—				—
Goodwill at the end of the period	$	883.0			$	873.3

The Company performed an impairment test of its goodwill as of the first day of the fourth fiscal quarter in accordance with its regularly scheduled testing. The results of this test indicated that the Company’s goodwill was not impaired. There were no other indicators of impairment noted during the fiscal year ended September 29, 2017.

The Company reviewed its non-amortizing trademarks during the fiscal year ended September 29, 2017, and determined that the useful lives of the trademarks were no longer considered to be indefinite and were not considered impaired. Accordingly, the Company began amortizing the trademarks during the fiscal year ended September 29, 2017, and will continue to amortize these assets on a straight-line basis over the period they will continue to contribute to the ongoing cash flows.

Intangible assets consist of the following (in millions):

		As of												As of
	Weighted average amortization period (years)	September 29, 2017												September 30, 2016
	Gross carrying amount				Accumulated amortization				Net carrying amount				Gross carrying amount				Accumulated amortization				Net carrying amount
Customer relationships	5.0	$	78.5			$	(63.4	)		$	15.1			$	78.5			$	(57.7	)		$	20.8
Developed technology and other	5.0	150.2				(110.9		)		39.3				133.8				(89.2		)		44.6
Trademarks	3.0	1.6				(0.3		)		1.3				1.6				—				1.6
Internally developed software	3.0	12.1				—				12.1				—				—				—
Total intangible assets		$	242.4			$	(174.6	)		$	67.8			$	213.9			$	(146.9	)		$	67.0

The increase in the gross amount of intangible assets is related to internally developed software and the business combination that closed during the period. For further information regarding the acquired intangibles see Note 3, Business Combinations, in these Notes to the Consolidated Financial Statements.

Annual amortization expense for the next five fiscal years related to intangible assets is expected to be as follows (in millions):

	2018				2019				2020				2021				2022				Thereafter
Amortization expense	$	19.8			$	18.1			$	15.4			$	8.5			$	0.5			$	5.5

8. INCOME TAXES

Income before income taxes consists of the following components (in millions):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
United States	$	681.2			$	697.5			$	602.1
Foreign	575.8				503.1				421.5
Income before income taxes	$	1,257.0			$	1,200.6			$	1,023.6

The provision for income taxes consists of the following (in millions):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Current tax expense (benefit):
Federal	$	215.7			$	181.8			$	199.5
State	0.3				0.1				(0.5		)
Foreign	24.4				25.8				33.9
	240.4				207.7				232.9
Deferred tax expense (benefit):
Federal	5.0				(0.8		)		(2.0		)
Foreign	1.4				(1.5		)		(5.6		)
	6.4				(2.3		)		(7.6		)
Provision for income taxes	$	246.8			$	205.4			$	225.3

The actual income tax expense is different than that which would have been computed by applying the federal statutory tax rate to income before income taxes. A reconciliation of income tax expense as computed at the United States federal statutory income tax rate to the provision for income tax expense is as follows (in millions):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Tax expense at United States statutory rate	$	439.9			$	420.2			$	358.3
Foreign tax rate difference	(179.4		)		(164.1		)		(120.9		)
Research and development credits	(16.3		)		(33.7		)		(15.0		)
Change in tax reserve	12.6				18.9				25.5
Change in valuation allowance	11.8				13.9				4.4
Domestic production activities deduction	(19.8		)		(19.1		)		(19.7		)
Audit settlements and adjustments	—				(21.4		)		—
Other, net	(2.0		)		(9.3		)		(7.3		)
Provision for income taxes	$	246.8			$	205.4			$	225.3

The Company operates in foreign jurisdictions with income tax rates lower than the United States tax rate of 35.0%. The Company’s tax benefits related to foreign earnings taxed at a rate less than the United States federal rate were $179.4 million and $164.1 million for the fiscal years ended September 29, 2017, and September 30, 2016, respectively.

The Company concluded a Canadian examination of its federal income tax returns for fiscal years 2010 and 2011 during fiscal 2017. As a result, the Company decreased the reserve for uncertain tax positions which resulted in the recognition of an income tax benefit of $1.2 million in fiscal 2017.

During the fiscal year ended September 30, 2016, the Company concluded an IRS examination of its federal income tax returns for fiscal years 2012 and 2013. The Company agreed to various adjustments to its fiscal year 2012 and 2013 tax returns that resulted in the recognition of tax expense of $2.6 million during the fiscal year ended September 30, 2016. With the conclusion of the audit, the Company decreased the reserve for uncertain tax positions, which resulted in the recognition of an income tax benefit of $24.0 million in fiscal 2016.

In December 2015, the United States Congress enacted the Protecting Americans from Tax Hikes Act of 2015, extending numerous tax provisions that had expired. This legislation included a permanent extension of the federal research and experimentation tax credit. As a result of the enactment of this legislation, $11.6 million of federal research and experimentation tax credits that were earned in the fiscal year ended October 2, 2015 reduced the Company’s tax expense and tax rate during the fiscal year ended September 30, 2016.

The federal tax credit available under the Internal Revenue Code for research and development expenses expired on December 31, 2014. As of October 2, 2015, the United States Congress had not taken action to extend the Research and Experimentation Tax Credit.

Accordingly, the income tax provision for the year ended October 2, 2015, did not reflect the impact of any research and development tax credits that would have been earned after December 31, 2014, had the federal tax credit not expired.

On December 19, 2014, the Tax Increase Prevention Act of 2014 was signed into law, extending the Research and Experimentation Tax Credit to reinstate and retroactively extend credits earned in calendar year 2014. As a result of the enactment of this law, $11.0 million of federal research and development tax credits that were earned in fiscal 2014 reduced the tax rate during fiscal 2015. These credits were not reflected in the fiscal 2014 tax rate.

On October 2, 2010, the Company expanded its presence in Asia by launching operations in Singapore. The Company operates under a tax holiday in Singapore, which is effective through September 30, 2020 and is conditional upon the Company’s compliance with certain employment and investment thresholds in Singapore. The impact of the tax holiday decreased Singapore’s taxes by $37.4 million and $30.8 million for the fiscal years ended September 29, 2017, and September 30, 2016, respectively, which resulted in tax benefits of $0.20 and $0.16 of diluted earnings per share, respectively.

Deferred income tax assets and liabilities consist of the tax effects of temporary differences related to the following (in millions):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016
Deferred tax assets:
Inventory	$	7.4			$	8.1
Bad debts	0.1				0.2
Accrued compensation and benefits	7.1				5.4
Product returns, allowances and warranty	5.2				8.6
Restructuring	0.1				0.8
Intangible assets	10.6				11.6
Share-based and other deferred compensation	40.2				40.2
Net operating loss carry forwards	7.7				7.4
Non-United States tax credits	20.1				14.7
State tax credits	71.0				64.0
Property, plant and equipment	7.9				—
Other, net	2.7				5.6
Deferred tax assets	180.1				166.6
Less valuation allowance	(90.9		)		(79.1		)
Net deferred tax assets	89.2				87.5
Deferred tax liabilities:
Prepaid insurance	(0.9		)		(0.8		)
Property, plant and equipment	(24.8		)		(16.5		)
Intangible assets	(6.2		)		(8.4		)
Net deferred tax liabilities	(31.9		)		(25.7		)
Total net deferred tax assets	$	57.3			$	61.8

In accordance with GAAP, management has determined that it is more likely than not that a portion of its historic and current year income tax benefits will not be realized. As of September 29, 2017, the Company has maintained a valuation allowance of $90.9 million. This valuation allowance is comprised of $71.0 million related to United States state tax credits, and $19.9 million related to foreign deferred tax assets. The Company does not anticipate sufficient taxable income or tax liability to utilize these state and foreign credits. If these benefits are recognized in a future period the valuation allowance on deferred tax assets will be reversed and up to a $90.9 million income tax benefit may be recognized. The Company will need to generate $141.6 million of future United States federal taxable income to utilize its United States deferred tax assets as of September 29, 2017. The Company believes that future reversals of taxable temporary differences, and its forecast of continued earnings in its domestic and foreign jurisdictions, support its decision to not record a valuation allowance on other deferred tax assets.

Deferred tax assets are recognized for foreign operations when management believes it is more likely than not that the deferred tax assets will be recovered during the carry forward period. The Company will continue to assess its valuation allowance in future periods.

As of September 29, 2017, the Company has United States federal net operating loss carry forwards of approximately $8.8 million. The utilization of these net operating losses is subject to certain annual limitations as required under Internal Revenue Code section 382 and similar state income tax provisions. The United States federal net operating loss carry forwards expire at various dates through 2035. The Company also has state income tax credit carry forwards of $71.0 million, net of federal benefits, for which the Company has provided a valuation allowance. The state tax credits relate primarily to California research tax credits that can be carried forward indefinitely.

The Company has continued to expand its operations and increase its investments in numerous international jurisdictions. These activities will increase the Company’s earnings attributable to foreign jurisdictions. As of September 29, 2017, no provision has been made for United States federal, state, or additional foreign income taxes related to approximately $2,260.4 million of undistributed earnings of foreign subsidiaries which have been or are intended to be permanently reinvested due to its foreign operations. It is not practicable to determine the United States federal income tax liability, if any, which would be payable if such earnings were not permanently reinvested.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in millions):

	Unrecognized tax benefits
Balance at September 30, 2016	$	79.7
Decreases based on positions related to prior years	(0.9		)
Increases based on positions related to current year	14.5
Decreases relating to settlements with taxing authorities	(2.6		)
Decreases relating to lapses of applicable statutes of limitations	(0.3		)
Balance at September 29, 2017	$	90.4

Of the total unrecognized tax benefits at September 29, 2017, $72.9 million would impact the effective tax rate, if recognized. The remaining unrecognized tax benefits would not impact the effective tax rate, if recognized, due to the Company’s valuation allowance and certain positions that were required to be capitalized.

The Company concluded a Canadian examination of its federal income tax returns for fiscal years 2010 and 2011 during fiscal 2017. As a result, the Company decreased the uncertain tax positions by $2.6 million in fiscal 2017.

The Company anticipates reversals within the next 12 months related to items such as the lapse of the statute of limitations, audit closures, and other items that occur in the normal course of business. During the fiscal year ended September 29, 2017, the Company recognized $0.3 million of previously unrecognized tax benefits related to the expiration of the statute of limitations and $2.6 million of accrued interest or penalties related to unrecognized tax benefits.

The Company’s major tax jurisdictions as of September 29, 2017, are the United States, California, Canada, Luxembourg, Mexico, Japan, and Singapore. For the United States, the Company has open tax years dating back to fiscal 1999 due to the carry forward of tax attributes. For California, the Company has open tax years dating back to fiscal 1999 due to the carry forward of tax attributes. For Canada, the Company has open tax years dating back to fiscal 2012. For Luxembourg, the Company has open tax years back to fiscal 2011. For Mexico, the Company has open tax years back to fiscal 2009. For Singapore, the Company has open tax years dating back to fiscal 2011. The Company is subject to audit examinations by the respective taxing authorities on a periodic basis, of which the results could impact our financial position, results of operations or cash flows.

9. STOCKHOLDERS’ EQUITY

COMMON STOCK

At September 29, 2017, the Company is authorized to issue 525.0 million shares of common stock, par value $0.25 per share, of which 226.0 million shares are issued and 183.1 million shares are outstanding.

Holders of the Company’s common stock are entitled to dividends in the event declared by the Company’s Board of Directors out of funds legally available for such purpose. Dividends may not be paid on common stock unless all accrued dividends on preferred stock, if any, have been paid or declared and set aside. In the event of the Company’s liquidation, dissolution or winding up, the holders of common stock will be entitled to share pro rata in the assets remaining after payment to creditors and after payment of the liquidation preference plus any unpaid dividends to holders of any outstanding preferred stock.

Each holder of the Company’s common stock is entitled to one vote for each such share outstanding in the holder’s name. No holder of common stock is entitled to cumulate votes in voting for directors. The Company’s restated certificate of incorporation as amended to date, (the “Certificate of Incorporation”) provides that, unless otherwise determined by the Company’s Board of Directors, no holder of stock has any preemptive right to purchase or subscribe for any stock of any class which the Company may issue or sell.

PREFERRED STOCK

The Company’s Certificate of Incorporation has authorized and permits the Company to issue up to 25.0 million shares of preferred stock without par value in one or more series and with rights and preferences that may be fixed or designated by the Company’s Board of Directors without any further action by the Company’s stockholders. The designation, powers, preferences, rights and qualifications, limitations and restrictions of the preferred stock of each series will be fixed by the certificate of designation relating to such series, which will specify the terms of the preferred stock. At September 29, 2017, the Company had no shares of preferred stock issued or outstanding.

SHARE REPURCHASE

On January 17, 2017, the Board of Directors approved a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $500.0 million of its common stock from time to time prior to January 17, 2019, on the open market or in privately negotiated transactions as permitted by securities laws and other legal requirements. This authorized share repurchase program replaced in its entirety the July 19, 2016, share repurchase program. During the fiscal year ended September 29, 2017, the Company paid approximately $432.3 million (including commissions) in connection with the repurchase of 4.7 million shares of its common stock (paying an average price of $92.97 per share) under the January 17, 2017, share repurchase plan and the July 19, 2016, share repurchase plan. As of September 29, 2017, $174.1 million remained available under the January 17, 2017, share repurchase plan.

During the fiscal year ended September 30, 2016, the Company paid approximately $525.6 million (including commissions) in connection with the repurchase of 8.0 million shares of its common stock (paying an average price of $65.70 per share).

DIVIDENDS

On November 6, 2017, the Company announced that the Board of Directors declared a cash dividend on the Company’s common stock of $0.32 per share. This dividend is payable on December 12, 2017, to the Company’s stockholders of record as of the close of business on November 21, 2017. Future dividends are subject to declaration by the Board of Directors. The dividends charged to retained earnings in fiscal 2017 and 2016 were as follows (in millions except per share amounts):

	Fiscal Years Ended
	September 29, 2017								September 30, 2016
	Per Share				Total				Per Share				Total
First quarter	$	0.28			$	51.8			$	0.26			$	49.8
Second quarter	0.28				51.8				0.26				49.3
Third quarter	0.28				51.7				0.26				49.5
Fourth quarter	0.32				58.9				0.28				52.2
	$	1.16			$	214.2			$	1.06			$	200.8

EMPLOYEE STOCK BENEFIT PLANS

As of September 29, 2017, the Company has the following equity compensation plans under which its equity securities were authorized for issuance to its employees and/or directors:

•	the 1999 Employee Long-Term Incentive Plan

•	the 2002 Employee Stock Purchase Plan

•	the Non-Qualified Employee Stock Purchase Plan

•	the 2005 Long-Term Incentive Plan

•	the AATI 2005 Equity Incentive Plan

•	the 2008 Director Long-Term Incentive Plan

•	the 2015 Long-Term Incentive Plan

Except for the 1999 Employee Long-Term Incentive Plan and the Non-Qualified Employee Stock Purchase Plan, each of the foregoing equity compensation plans was approved by the Company’s stockholders.

As of September 29, 2017, a total of 85.3 million shares are authorized for grant under the Company’s share-based compensation plans, with 3.0 million options outstanding. The number of common shares reserved for future awards to employees and directors under these plans was 15.5 million at September 29, 2017. The Company currently grants new equity awards to employees under the 2015 Long-Term Incentive Plan and to non-employee directors under the 2008 Director Long-Term Incentive Plan.

2015 Long-Term Incentive Plan. Under this plan, officers, employees, non-employee directors and certain consultants may be granted stock options, restricted stock awards and units, performance stock awards and units and other share-based awards. The plan has been approved by the stockholders. Under the plan, up to 19.4 million shares have been authorized for grant. A total of 14.8 million shares are available for new grants as of September 29, 2017. The maximum contractual term of options under the plan is seven years from the date of grant. Options granted under the plan are exercisable at the determination of the compensation committee and generally vest ratably over four years. Restricted stock awards and units granted under the plan at the determination of the compensation committee generally vest over four or more years. With respect to restricted stock awards, dividends are accumulated and paid when the underlying shares vest. If the underlying shares are forfeited for any reason, the rights to the dividends with respect to such shares are also forfeited. No dividends or dividend equivalents are paid or accrued with respect to restricted stock unit awards or other awards until the shares underlying such awards become vested and are issued to the award holder. Performance stock awards and units are contingently granted depending on the achievement of certain predetermined performance goals and generally vest over three or more years.

2008 Director Long-Term Incentive Plan. Under this plan, non-employee directors may be granted stock options, restricted stock awards and other share-based awards. The plan has been approved by the stockholders. Under the plan a total of 1.5 million shares have been authorized for grant. A total of 0.7 million shares are available for new grants as of September 29, 2017. The maximum contractual term of options granted under the plan is ten years from the date of grant. Options granted under the plan are generally exercisable over four years. Restricted stock awards and units granted under the plan generally vest over one or more years. With respect to restricted stock awards, dividends are accumulated and paid when the underlying shares vest. If the underlying shares are forfeited for any reason, the rights to the dividends with respect to such shares are also forfeited.

Employee Stock Purchase Plans. The Company maintains a domestic and an international employee stock purchase plan. Under these plans, eligible employees may purchase common stock through payroll deductions of up to 10% of their compensation. The price per share is the lower of 85% of the fair market value of the common stock at the beginning or end of each offering period (generally six months). The plans provide for purchases by employees of up to an aggregate of 9.7 million shares. Shares of common stock purchased under these plans in the fiscal years ended September 29, 2017, September 30, 2016, and October 2, 2015, were 0.2 million, 0.3 million, and 0.3 million, respectively. At September 29, 2017, there are 0.7 million shares available for purchase. The Company recognized compensation expense of $4.5 million, $4.6 million and $4.7 million for the fiscal years ended September 29, 2017, September 30, 2016, and October 2, 2015, respectively, related to the employee stock purchase plan. The unrecognized compensation expense on the employee stock purchase plan at September 29, 2017, was $1.8 million. The weighted average period over which the cost is expected to be recognized is approximately four months.

Stock Options

The following table represents a summary of the Company’s stock options:

	Shares (in millions)			Weighted average exercise price				Weighted average remaining contractual life (in years)		Aggregate intrinsic value (in millions)
Balance outstanding at September 30, 2016	4.8			$	41.42
Granted	0.2			$	77.58
Exercised	(1.8	)		$	29.13
Canceled/forfeited	(0.2	)		$	60.60
Balance outstanding at September 29, 2017	3.0			$	50.36			3.6		$	152.8
Exercisable at September 29, 2017	1.4			$	35.00			2.6		$	95.6

The weighted-average grant date fair value per share of employee stock options granted during the fiscal years ended September 29, 2017, September 30, 2016, and October 2, 2015, was $23.25, $26.30, and $23.26, respectively. The total grant date fair value of the options vested during the fiscal years ending September 29, 2017, September 30, 2016, and October 2, 2015, was $19.3 million, $21.9 million and $16.6 million, respectively.

Restricted and Performance Awards and Units

The following table represents a summary of the Company’s restricted and performance awards and units:

	Shares (In millions)			Weighted average grant date fair value
Non-vested awards outstanding at September 30, 2016	3.6			$	50.25
Granted (1)	1.5			$	72.84
Vested	(1.7	)		$	44.09
Canceled/forfeited	(0.4	)		$	52.03
Non-vested awards outstanding at September 29, 2017	2.9			$	65.50
(1) includes performance shares granted and earned based on maximum performance under the underlying performance metrics

The weighted average grant date fair value per share for awards granted during the fiscal years ended September 29, 2017, September 30, 2016, and October 2, 2015, was $72.84, $62.02, and $57.13, respectively. The total grant date fair value of the awards vested during the fiscal years ending September 29, 2017, September 30, 2016, and October 2, 2015, was $57.9 million, $71.2 million and $57.4 million, respectively.

The following table summarizes the total intrinsic value for stock options exercised and awards vested (in millions):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Awards	$	137.8			$	197.6			$	149.0
Options	$	116.1			$	68.9			$	170.8

Valuation and Expense Information

The following table summarizes pre-tax share-based compensation expense by financial statement line and related tax benefit (in millions):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Cost of goods sold	$	13.6			$	11.3			$	14.5
Research and development	35.3				32.2				45.4
Selling, general and administrative	39.6				34.5				39.9
Total share-based compensation expense	$	88.5			$	78.0			$	99.8
Share-based compensation tax benefit	$	25.1			$	22.5			$	29.3
Capitalized share-based compensation expense	$	4.0			$	3.7			$	2.3

The following table summarizes total compensation costs related to unvested share based awards not yet recognized and the weighted average period over which it is expected to be recognized at September 29, 2017:

	Unrecognized compensation cost for unvested awards (in millions)				Weighted average remaining recognition period (in years)
Awards	$	83.9			1.5
Options	$	20.0			1.6

The fair value of the restricted stock awards and units is equal to the closing market price of the Company’s common stock on the date of grant.

The Company issued performance share units during fiscal 2017, fiscal 2016 and fiscal 2015 that contained market-based conditions. The fair value of these performance share units was estimated on the date of the grant using a Monte Carlo simulation with the following weighted average assumptions:

	Fiscal Year Ended
	September 29, 2017			September 30, 2016			October 2, 2015
Volatility of common stock	39.60	%		38.24	%		37.51	%
Average volatility of peer companies	39.78	%		34.76	%		28.42	%
Average correlation coefficient of peer companies	0.42			0.49			0.55
Risk-free interest rate	0.68	%		0.44	%		0.12	%
Dividend yield	1.44			1.23			0.85

The fair value of each stock option is estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	Fiscal Years Ended
	September 29, 2017			September 30, 2016			October 2, 2015
Expected volatility	40.31	%		42.93	%		45.75	%
Risk-free interest rate	1.60	%		0.98	%		1.33	%
Dividend yield	1.44			1.23			1.16
Expected option life (in years)	4.0			4.0			4.5

The Company used a historical volatility calculated by the mean reversion of the weekly-adjusted closing stock price over the expected life of the options. The risk-free interest rate assumption is based upon observed treasury bill interest rates appropriate for the expected life of the Company’s employee stock options. The dividend yield was calculated based on the annualized dividend and the stock price on the date of grant.

The expected life of employee stock options represents a calculation based upon the historical exercise, cancellation and forfeiture experience for the Company across its demographic population. The Company believes that this historical data is the best estimate of the expected life of a new option and that generally all groups of the Company’s employees exhibit similar behavior.

10. EMPLOYEE BENEFIT PLAN, PENSIONS AND OTHER RETIREE BENEFITS

The Company maintains a 401(k) plan covering substantially all of its employees based in the United States under which all employees at least twenty-one years old are eligible to receive discretionary Company contributions. Discretionary Company contributions in the form of cash are determined by the Board of Directors. The Company has generally contributed a match of up to 4% of an employee’s contributed annual eligible compensation. The Company no longer provides shares of its common stock as contributions to the 401(k) plan.

Defined Benefit Pension:

The Company has a defined benefit pension plan for certain employees in Japan. This plan has been frozen and new employees are not eligible. However, the Company is obligated to make future contributions to fund benefits to the participants with the benefits under the plan being based primarily on a combination of years of service and compensation.

The net amount of the unfunded obligation recognized in other long-term liabilities on the Balance Sheet consists of (in millions):

	Fiscal Year Ended
	September 29, 2017				September 30, 2016
Pension benefit obligations at the end of the fiscal year	$	17.0			$	19.0
Fair value of plan assets at the end of the fiscal year	11.5				11.4
Funded status	$	(5.5	)		$	(7.6	)

The pension obligation and the net periodic benefit costs associated with the pension have an immaterial impact to the Company’s results of operations and financial position and accordingly, the disclosures required have been excluded from this Annual Report on Form 10-K.

11. COMMITMENTS

The Company has various operating leases primarily for buildings, computers and equipment. Rent expense amounted to $20.6 million, $19.5 million, and $16.5 million in the fiscal years ended September 29, 2017, September 30, 2016, and October 2, 2015, respectively. Future minimum payments under these non-cancelable leases are as follows (in millions):

		2018				2019			2020			2021			2022			Thereafter			Total
Future minimum payments		$	21.2			19.1			15.7			11.7			3.7			13.2			$	84.6

12. CONTINGENCIES

Legal Matters

From time to time, various lawsuits, claims and proceedings have been, and may in the future be, instituted or asserted against the Company, including those pertaining to patent infringement, intellectual property, environmental hazards, product liability and warranty, safety and health, employment and contractual matters.

The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights. From time to time, third parties have asserted and may in the future assert patent, copyright, trademark and other intellectual property rights to technologies that are important to the Company’s business and have demanded and may in the future demand that the Company license their technology. The outcome of any such litigation cannot be predicted with certainty and some such lawsuits, claims or proceedings may be disposed of unfavorably to the Company. Generally speaking, intellectual property disputes often have a risk of injunctive relief, which, if imposed against the Company, could materially and adversely affect the Company’s financial condition, or results of operations. From time to time the Company may also be involved in legal proceedings in the ordinary course of business.

The Company monitors the status of legal proceedings and other contingencies on an ongoing basis to ensure loss contingencies are recognized and/or disclosed in its financial statements and footnotes. The Company has recorded an immaterial loss contingency to selling, general and administrative expense. The Company does not believe there are any pending legal proceedings that are reasonably possible to result in a material loss. The Company is engaged in various legal actions in the normal course of business and, while

there can be no assurances, the Company believes the outcome of all pending litigation involving the Company will not have, individually or in the aggregate, a material adverse effect on its business.

13. GUARANTEES AND INDEMNITIES

The Company has made no significant contractual guarantees for the benefit of third parties. However, the Company generally indemnifies its customers from third-party intellectual property infringement litigation claims related to its products, and, on occasion, also provides other indemnities related to product sales. In connection with certain facility leases, the Company has indemnified its lessors for certain claims arising from the facility or the lease.

The Company indemnifies its directors and officers to the maximum extent permitted under the laws of the state of Delaware. The duration of the indemnities varies, and in many cases is indefinite. The indemnities to customers in connection with product sales generally are subject to limits based upon the amount of the related product sales and in many cases are subject to geographic and other restrictions. In certain instances, the Company’s indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities in the accompanying consolidated balance sheets and does not expect that such obligations will have a material adverse impact on its financial condition or results of operations.

14. RESTRUCTURING AND OTHER CHARGES

As of September 29, 2017, the Company implemented immaterial restructuring plans and recorded $0.6 million related to employee severance and other costs. The Company anticipates making substantially all of the cash payments during the fiscal year, and does not expect any further contingencies related to the restructuring plan. Charges associated with the restructuring plan are categorized in the "Other restructuring programs" in the table below.

As of September 30, 2016, the Company recorded restructuring and other charges of approximately $4.8 million primarily related to restructuring plans to reduce redundancies associated with acquisitions during the year. The Company does not anticipate any material charges in future periods related to these plans.

As of October 2, 2015, the Company recorded restructuring and other charges of approximately $3.4 million related to costs associated with organizational restructuring plans initiated in the fiscal year. The Company does not anticipate any material charges in future periods related to these plans.

The following tables present a summary of the Company's restructuring activity (in millions):

	Balance at October 3, 2014				Current Charges				Cash Payments				Balance at October 2, 2015
Other restructuring
Employee severance costs, lease and other contractual obligations	$	0.5			$	3.4			$	(3.5	)		$	0.4
Total	$	0.5			$	3.4			$	(3.5	)		$	0.4
	Balance at October 2, 2015				Current Charges				Cash Payments				Balance at September 30, 2016
FY16 restructuring programs
Employee severance costs	$	—			$	4.8			$	(2.4	)		$	2.4
Other restructuring
Employee severance costs, lease and other contractual obligations	0.4				—				(0.4		)		—
Total	$	0.4			$	4.8			$	(2.8	)		$	2.4
	Balance at September 30, 2016				Current Charges				Cash Payments				Balance at September 29, 2017
FY16 restructuring programs
Employee severance costs	$	2.4			$	—			$	(2.4	)		$	—
Other restructuring
Employee severance costs, lease and other contractual obligations	—				0.6				(0.4		)		0.2
Total	$	2.4			$	0.6			$	(2.8	)		$	0.2

15. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share amounts):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
Net income	$	1,010.2			$	995.2			$	798.3
Weighted average shares outstanding – basic	184.3				188.7				189.5
Dilutive effect of equity based awards	2.4				3.4				5.4
Weighted average shares outstanding – diluted	186.7				192.1				194.9
Net income per share – basic	$	5.48			$	5.27			$	4.21
Net income per share – diluted	$	5.41			$	5.18			$	4.10
Anti-dilutive common stock equivalents	0.6				1.5				0.3

Basic earnings per share are calculated by dividing net income by the weighted average number of shares of the Company’s common stock outstanding during the period. The calculation of diluted earnings per share includes the dilutive effect of equity based awards that were outstanding during the fiscal years ending September 29, 2017, September 30, 2016, and October 2, 2015, using the treasury stock method. Certain of the Company’s outstanding share-based awards, noted in the table above, were excluded because they were anti-dilutive, but they could become dilutive in the future.

16. SEGMENT INFORMATION AND CONCENTRATIONS

The Company considers itself to be a single reportable operating segment which designs, develops, manufactures and markets similar proprietary semiconductor products, including intellectual property. In reaching this conclusion, management considers the definition of the chief operating decision maker (“CODM”), how the business is defined by the CODM, the nature of the information provided to the CODM and how that information is used to make operating decisions, allocate resources and assess performance. The Company’s

CODM is the president and chief executive officer. The results of operations provided to and analyzed by the CODM are at the consolidated level and accordingly, key resource decisions and assessment of performance is performed at the consolidated level. The Company assesses its determination of operating segments at least annually.

GEOGRAPHIC INFORMATION

Net revenue by geographic area presented based upon the country of destination are as follows (in millions):

	Fiscal Years Ended
	September 29, 2017				September 30, 2016				October 2, 2015
United States	$	73.0			$	63.3			$	66.8
Other Americas	36.3				28.8				33.0
Total Americas	109.3				92.1				99.8
China	3,017.9				2,324.6				2,249.2
Taiwan	50.2				474.2				506.9
South Korea	133.7				94.8				100.0
Other Asia-Pacific	287.5				252.2				249.7
Total Asia-Pacific	3,489.3				3,145.8				3,105.8
Europe, Middle East and Africa	52.8				51.1				52.8
Total	$	3,651.4			$	3,289.0			$	3,258.4

The Company’s revenues by geography do not necessarily correlate to end market demand by region. For example, the Company’s revenues reflected in the China line item above include sales of products to a company that is not headquartered in China but that manufactures its products in China for sale to consumers throughout the world, including in the United States, Europe, China, and other markets in Asia. The Company’s revenue to external customers is generated principally from the sale of semiconductor products that facilitate various wireless communication applications. Accordingly, the Company considers its product offerings to be similar in nature and therefore not segregated for reporting purposes.

Net property, plant and equipment balances, based on the physical locations within the indicated geographic areas are as follows (in millions):

	As of
	September 29, 2017				September 30, 2016
Mexico	$	465.9			$	355.9
Japan	166.4				180.1
United States	126.9				140.5
Singapore	112.1				121.6
Rest of world	11.0				8.2
	$	882.3			$	806.3

CONCENTRATIONS

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade accounts receivable. Trade accounts receivable are primarily derived from sales to manufacturers of communications and consumer products and electronic component distributors. Ongoing credit evaluations of customers’ financial condition are performed and collateral, such as letters of credit and bank guarantees, are required whenever deemed necessary.

In fiscal 2017, Foxconn Technology Group (together with its affiliates and other suppliers to a large OEM for use in multiple applications including smartphones, tablets, routers, desktop and notebook computers, “Foxconn”), Samsung Electronics (“Samsung”), and Huawei Technology Co., Ltd. each constituted more than ten percent of the Company’s net revenue. In fiscal 2016, Foxconn and Samsung constituted more than ten percent of the Company’s net revenue. In fiscal 2015, Foxconn constituted more than ten percent of the Company’s net revenue.

The Company’s greater than ten percent customers comprised the following percentages of net revenue:

		Fiscal Years Ended
		September 29, 2017		September 30, 2016		October 2, 2015
Company A		39%		40%		44%
Company B		12%		10%		*
Company C		10%		*		*
* Customer did not represent greater than ten percent of net revenue

At September 29, 2017, the Company’s three largest accounts receivable balances comprised 53% of aggregate gross accounts receivable. This concentration was 54% and 62% at September 30, 2016, and October 2, 2015, respectively.

17. QUARTERLY FINANCIAL DATA (UNAUDITED)

Net income and earnings per share for the first fiscal quarter of 2016 include other income related to the receipt of the PMC merger termination fee as detailed in Note 3, Business Combinations, in these Notes to the Consolidated Financial Statements. The following table summarizes the quarterly and annual results (in millions, except per share data):

	First quarter				Second quarter				Third quarter				Fourth quarter				Fiscal year
Fiscal 2017
Net revenue	$	914.3			$	851.7			$	900.8			$	984.6			$	3,651.4
Gross profit	463.9				425.4				453.6				498.9				1,841.8
Net income	257.8				224.9				246.2				281.3				1,010.2
Per share data (1)
Net income, basic	$	1.39			$	1.22			$	1.34			$	1.53			$	5.48
Net income, diluted	$	1.38			$	1.20			$	1.32			$	1.51			$	5.41
Fiscal 2016
Net revenue	$	926.8			$	775.1			$	751.7			$	835.4			$	3,289.0
Gross profit	472.1				390.4				378.3				424.4				1,665.2
Net income	355.3				208.1				185.0				246.8				995.2
Per share data (1)
Net income, basic	$	1.87			$	1.09			$	0.98			$	1.33			$	5.27
Net income, diluted	$	1.82			$	1.08			$	0.97			$	1.31			$	5.18

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(1)	Earnings per share calculations for each of the quarters are based on the weighted average number of shares outstanding and included common stock equivalents in each period. Therefore, the sums of the quarters do not necessarily equal the full year earnings per share.