Press Releases

Silicon Laboratories Results Exceed Expectations
Strong Quarterly Performance and Better Than Seasonal Outlook
We enjoyed a sustained improvement in the strength of bookings as we ended 2011. And with our recent results demonstrating significant share gains, we have a lot to look forward to in 2012

AUSTIN, Texas--(BUSINESS WIRE)--Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported fourth quarter revenue of $126.7 million, a 13 percent increase compared to the same period last year. GAAP and non-GAAP earnings per share of $0.29 and $0.49, respectively, exceeded expectations and represented solid double-digit sequential growth.

Financial Highlights

Business trends were robust throughout the quarter, with new product cycles driving revenue upside. Solid operating performance also translated to better than anticipated profitability.

Fourth quarter revenue increased more than 6 percent sequentially to $126.7 million. GAAP gross margin was 60.9 percent. R&D investment increased to $34.7 million, and SG&A was flat at $27.3 million. Operating income improved meaningfully from the same period last year to 12 percent. GAAP net income was 10 percent of revenue for the quarter. Diluted GAAP earnings of 29 cents represented a 12 percent increase compared to the third quarter.

The following non-GAAP results exclude the impact of stock compensation expense and certain other one-time items. Gross margin remained stable at 61.2 percent. R&D investment increased to $29.6 million due primarily to increased tape out activity, and as planned, SG&A remained flat at $22.5 million. Operating income improved to 20 percent of revenue, and net income improved to 17 percent of revenue. The solid operational performance resulted in diluted earnings per share of 49 cents, an 11 percent sequential increase, and well above guidance. The company ended the quarter with $325 million in cash, cash equivalents and investments due to continued healthy cash flow from operations.

Reconciling charges are set forth in the financial measures table included below.

Business Highlights

Fourth quarter revenue upside was driven by new product cycles in video and touch controllers, as well as better than anticipated demand for SLIC devices and many of the company’s Broad-based products.

The company’s video products exceeded the full year revenue target and exited the year positioned to further expand its strong market share position as customers ramp 2012 TV models into production. iDTVs featuring the company’s latest generation products were on display at the Consumer Electronics Show, demonstrating the form factor and performance advantages available when using Silicon Labs silicon tuner technology.

Similarly, the company’s touch controllers designed into mobile handsets exceeded initial forecasts, shipping throughout Europe, China and India during the fourth quarter. This rapid ramp in a major mobile handset platform was strong validation for the company’s touch technology and a good foundation for expanding market share in 2012.

The company’s non-consumer products also delivered solid performance in the quarter, including MCUs, which remained stable, and isolation and wireless products which grew significantly as new customer programs ramped. Timing products delivered excellent year over year growth again at 30 percent, but slowed in the fourth quarter in conjunction with the near-term weakness in the telecom equipment market.

“We enjoyed a sustained improvement in the strength of bookings as we ended 2011. And with our recent results demonstrating significant share gains, we have a lot to look forward to in 2012,” said Necip Sayiner, president and CEO of Silicon Laboratories. “We believe we have both the diversity to weather any lingering macro weakness and the product cycles to get us back into a mode of consistently outperforming our peers.”

The company expects revenue for the first quarter to be in the range of $120 million to $125 million.

Webcast and Conference Call

A conference call discussing the quarterly results will follow this press release at 7:30 a.m. central time. An audio webcast will be available simultaneously on Silicon Laboratories’ website under Investor Relations (www.silabs.com). A replay will be available after the call at the same website listed above or by calling 1 (855) 859-2056 or +1 (404) 537-3406 (international) and by entering 42298945. The replay will be available through February 8th.

About Silicon Laboratories Inc.

Silicon Laboratories Inc. is a leading designer of high-performance, analog-intensive, mixed-signal integrated circuits (ICs) for a broad range of applications. Silicon Laboratories’ diverse portfolio of highly integrated, patented solutions is developed by a world-class engineering team with expertise in cutting-edge mixed-signal design. The company has design, engineering, marketing, sales and applications offices throughout North America, Europe and Asia. For more information about Silicon Laboratories, please visit www.silabs.com.

Forward-Looking Statements

This press release contains forward-looking statements based on Silicon Laboratories’ current expectations. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan,” “project,” “will” and similar phrases as they relate to Silicon Laboratories are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Laboratories and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: risks that Silicon Laboratories may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; volatile stock price; average selling prices of products may decrease significantly and rapidly; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; inventory-related risks; risks associated with acquisitions; difficulties managing international activities; difficulties managing our manufacturers and subcontractors; risks that Silicon Laboratories may not be able to manage strains associated with its growth; credit risks associated with our accounts receivable; dependence on key personnel; risks associated with divestitures; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Laboratories’ business and results of operations to risks of natural disasters, epidemics, war and political unrest; the competitive and cyclical nature of the semiconductor industry and other factors that are detailed in Silicon Laboratories’ filings with the SEC. Silicon Laboratories disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Note to editors: Silicon Laboratories, Silicon Labs and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

Silicon Laboratories Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
                 
    Three Months Ended   Year Ended
    December 31,

2011

  January 1,

2011

  December 31,

2011

  January 1,

2011

Revenues   $ 126,692     $ 111,891     $ 491,625     $ 493,341  
Cost of revenues     49,513       40,800       193,179       169,097  
Gross margin     77,179       71,091       298,446       324,244  
Operating expenses:                
Research and development     34,705       32,621       135,953       123,821  
Selling, general and administrative     27,251       27,456       112,419       113,752  
Operating expenses     61,956       60,077       248,372       237,573  
Operating income     15,223       11,014       50,074       86,671  
Other income (expense):                
Interest income     427       479       1,859       2,318  
Interest expense     (23 )     (11 )     (37 )     (77 )
Other income (expense), net     152       24       444       (1,253 )
Income before income taxes     15,779       11,506       52,340       87,659  
Provision (benefit) for income taxes     2,974       (1,377 )     16,868       14,417  

Net income

  $ 12,805     $ 12,883     $ 35,472     $ 73,242  
                 
Earnings per share:                
Basic   $ 0.31     $ 0.29     $ 0.82     $ 1.63  
Diluted   $ 0.29     $ 0.28     $ 0.79     $ 1.57  
                 
Weighted-average common shares outstanding:                
Basic     41,979       43,834       43,421       44,845  
Diluted     43,410       45,658       44,832       46,742  
                                 
                                 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
                             
Non-GAAP Income Statement Items   Three Months Ended

December 31, 2011

   

GAAP
Measure

 

GAAP
Percent of
Revenue

 

Stock
Compensation
Expense

 

Acquisition
Related
Items

 

Termination
Costs and
Impairments

 

Non-
GAAP
Measure

 

Non-
GAAP
Percent of
Revenue

Revenues   $ 126,692                        
                             
Gross margin     77,179     60.9 %   $ 304   $ --     $ --   $ 77,483   61.2 %
                             

Research and development

    34,705     27.4 %     3,588     --       1,553    

29,564

  23.3 %
                             

Selling, general and administrative

    27,251    

21.5

%

    5,000    

(560

)

    345    

22,466

  17.7 %
                             
Operating income     15,223     12.0 %     8,892     (560 )     1,898     25,453   20.1 %
                             
Net income     12,805     10.1 %     7,629     (560 )     1,510     21,384   16.9 %
                             
                             
Non-GAAP Diluted Earnings Per Share       Three Months Ended

December 31, 2011

   
       

GAAP
Measure

 

Stock
Compensation
Expense

 

Acquisition
Related
Items

 

Termination
Costs and
Impairments

 

Non-
GAAP
Measure

   
Net income       $ 12,805     $ 7,629   $ (560 )   $ 1,510   $ 21,384    
                             
Diluted shares outstanding         43,410                   43,410    
                             
Diluted earnings per share       $ 0.29                 $ 0.49    
                                   
                                   
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
         
    December 31,

2011

  January 1,

2011

Assets        
Current assets:        
Cash and cash equivalents   $ 94,964     $ 138,567  
Short-term investments     212,526       227,295  

Accounts receivable, net of allowance for doubtful accounts of $725 at December 31, 2011 and $772 at January 1, 2011

    55,351       45,030  
Inventories     34,778       39,450  
Deferred income taxes     11,563       9,140  
Prepaid expenses and other current assets     43,867       34,447  
Total current assets     453,049       493,929  
Long-term investments     17,477       17,500  
Property and equipment, net     25,141       29,945  
Goodwill     115,489       112,296  
Other intangible assets, net     60,005       53,242  
Other assets, net     34,830       20,746  
Total assets   $ 705,991     $ 727,658  
         
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable   $ 26,354     $ 24,433  
Accrued expenses     30,857       25,604  
Deferred income on shipments to distributors     24,962       26,127  
Income taxes     665       3,692  
Total current liabilities     82,838       79,856  
Long-term obligations and other liabilities     24,214       22,372  
Total liabilities     107,052       102,228  
Commitments and contingencies        
Stockholders' equity:        

Preferred stock--$0.0001 par value; 10,000 shares authorized; no shares issued and outstanding

    --       --  

Common stock--$0.0001 par value; 250,000 shares authorized; 42,068 and 43,933 shares issued and outstanding at December 31, 2011 and January 1, 2011, respectively

    4       4  
Additional paid-in capital     14,749       49,947  
Retained earnings     586,653       579,127  
Accumulated other comprehensive loss     (2,467 )     (3,648 )
Total stockholders' equity     598,939       625,430  
Total liabilities and stockholders' equity   $ 705,991     $ 727,658  
                 
                 
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
         
    Year Ended
    December 31,

2011

  January 1,

2011

Operating Activities        
Net income   $ 35,472     $ 73,242  
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation of property and equipment     13,570       11,797  
Amortization of other intangible assets and other assets     11,030       7,494  
Impairment of long-lived assets     1,322       --  
Stock-based compensation expense     36,115       40,324  
Income tax benefit from employee stock-based awards     2,814       3,295  
Excess income tax benefit from employee stock-based awards     (2,404 )     (2,412 )
Deferred income taxes     (445 )     (552 )
Changes in operating assets and liabilities:        
Accounts receivable     (8,562 )     11,342  
Inventories     5,334       (7,811 )
Prepaid expenses and other assets     (5,948 )     (5,300 )
Accounts payable     (2,176 )     (777 )
Accrued expenses     (1,320 )     (2,590 )
Deferred income on shipments to distributors     (1,915 )     (2,343 )
Income taxes     5,855       (7,774 )
Net cash provided by operating activities     88,742       117,935  
Investing Activities        
Purchases of available-for-sale investments     (178,676 )     (357,777 )
Proceeds from sales and maturities of marketable securities     193,474       352,779  
Purchases of property and equipment     (8,690 )     (13,850 )
Purchases of other assets     (4,018 )     (8,372 )
Acquisitions of businesses, net of cash acquired     (27,262 )     (28,021 )
Net cash used in investing activities     (25,172 )     (55,241 )
Financing Activities        
Proceeds from issuance of common stock, net of shares withheld for taxes     7,660       18,055  
Excess income tax benefit from employee stock-based awards     2,404       2,412  
Repurchases of common stock     (110,063 )     (140,331 )
Payments on debt     (7,174 )     --  
Net cash used in financing activities     (107,173 )     (119,864 )
         
Decrease in cash and cash equivalents     (43,603 )     (57,170 )
Cash and cash equivalents at beginning of period     138,567       195,737  
Cash and cash equivalents at end of period   $ 94,964     $ 138,567  

 

Contact:

Silicon Laboratories Inc.
Shannon Pleasant, 512-464-9254
shannon.pleasant@silabs.com