Press Releases

Silicon Laboratories Results Exceed Expectations
Company Reports Strong Quarterly Performance and Outlook
We’re building a set of capabilities that I feel strongly are going to be the backbone of a very substantial and valuable piece of our business in the future.

AUSTIN, Texas--(BUSINESS WIRE)--Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported first quarter revenue of $125.7 million, a five percent increase compared to the same period last year. GAAP and non-GAAP diluted earnings per share of $0.33 and $0.43, respectively, also exceeded expectations and represented solid growth versus the first quarter of 2011.

Financial Highlights

Strong new product cycles largely offset anticipated seasonal weakness, driving revenue upside. First quarter revenue declined by less than one percent sequentially, setting the stage for a strong start to 2012. On a GAAP-basis, gross margin declined to 59.7 percent. R&D investment was $32.9 million and SG&A expense was $25.4 million. Resulting GAAP operating income was 13 percent, an improvement over the same period a year ago. Net income was 11 percent of revenue. Diluted GAAP earnings per share of 33 cents increased 14 percent sequentially, a six quarter high.

The following non-GAAP results exclude the impact of stock compensation and other one-time items. Significant strength in the company’s video products resulted in a mix shift during the quarter. Gross margin therefore declined to 60.0 percent. R&D remained about flat at $29.3 million, while SG&A increased slightly to $23.3 million. Operating income, therefore, was better than expected at 18 percent of revenue, and net income was 15 percent of revenue. Solid operational results provided significant earnings leverage resulting in diluted earnings per share of 43 cents, a 7.5 percent year on year increase. Reconciling charges are set forth in the financial measures table included below.

The company ended the quarter with $351 million in cash, cash equivalents and investments due to continued healthy cash flow from operations.

Business Highlights

First quarter revenue upside was driven by continued strength in video and touch controllers, as well as solid demand for MCU and power-related products.

The company’s video products ramped into new design wins as TV makers began to build their new models for 2012. Market share gains were behind the more than 30 percent revenue growth compared to the same period a year ago. Continued momentum at the company’s large touch controller customer also contributed to the first quarter performance as demand outpaced original forecasts.

The MCU product line benefitted from some demand recovery in the communications and industrial end markets, growing slightly sequentially despite seasonal weakness in consumer end markets. Isolation and related power product revenue also increased due to market share gains.

“As I take the helm, I see tremendous potential for the business. We have the right team, the product line up and the market runway to become one of the leaders in the semiconductor industry,” said Tyson Tuttle, president and CEO of Silicon Laboratories. “We’re building a set of capabilities that I feel strongly are going to be the backbone of a very substantial and valuable piece of our business in the future.”

The company expects revenue for the second quarter to be up three to seven percent sequentially.

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 71533415. The replay will be available through May 9th.

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 Operations

(In thousands, except per share data)

(Unaudited)

     
    Three Months Ended
    March 31,

2012

    April 2,

2011

Revenues   $ 125,702       $ 119,636  
Cost of revenues     50,606         47,478  
Gross margin     75,096         72,158  
Operating expenses:          
Research and development     32,930         35,359  
Selling, general and administrative     25,402         31,860  
Operating expenses     58,332         67,219  
Operating income     16,764         4,939  
Other income (expense):          
Interest income     497         571  
Interest expense     (33 )       (5 )
Other income (expense), net     (111 )       209  
Income before income taxes     17,117         5,714  
Provision for income taxes     2,797         7,674  
           

Net income (loss)

  $ 14,320       $ (1,960 )
           
Earnings (loss) per share:          
Basic   $ 0.34       $ (0.04 )
Diluted   $ 0.33       $ (0.04 )
           
Weighted-average common shares outstanding:          
Basic     42,458         44,269  
Diluted     43,850         44,269  
           
           

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

           
       
Non-GAAP Income Statement Items   Three Months Ended

March 31, 2012

    GAAP

Measure

   

GAAP

Percent of
Revenue

   

Stock

Compensation
Expense *

   

Termination
Costs **

   

Acquisition
Related
Items

    Non-GAAP

Measure

   

Non-GAAP

Percent of
Revenue

Revenues   $ 125,702                                    
                                         
Gross margin     75,096       59.7 %     $ 360     $ --       $ --       $ 75,456     60.0 %
                                         

Research and development

    32,930       26.2 %       3,602       --         --        

29,328

    23.3 %
                                         

Selling, general and administrative

    25,402      

20.2

%

      3,895      

(868

)

     

(949

)

     

23,324

    18.6 %
                                         
Operating income     16,764       13.3 %       7,857       (868 )       (949 )       22,804     18.1 %
                                         
Net income     14,320       11.4 %       6,470       (1,133 )       (949 )       18,708     14.9 %
           
           
Non-GAAP Diluted Earnings Per Share         Three Months Ended

March 31, 2012

     
          GAAP

Measure

   

Stock

Compensation
Expense *

   

Termination
Costs **

   

Acquisition
Related
Items

    Non-GAAP

Measure

     
Net income         $ 14,320       $ 6,470     $ (1,133 )     $ (949 )     $ 18,708      
                                         
Diluted shares outstanding       43,850                           43,850      
                                         
Diluted earnings per share     $ 0.33                         $ 0.43      
                                           

* Excludes stock compensation recognized in connection with terminations costs.

** Termination costs include the reversal of previously recognized stock compensation for modified stock awards.

           

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

           
    March 31,

2012

    December 31,

2011

Assets          
Current assets:          
Cash and cash equivalents   $ 98,038       $ 94,964  
Short-term investments     235,299         212,526  

Accounts receivable, net of allowances for doubtful accounts of $925 at March 31, 2012 and $725 at December 31, 2011

    61,425         55,351  
Inventories     34,295         34,778  
Deferred income taxes     4,941         11,563  
Prepaid expenses and other current assets     47,527         43,867  
Total current assets     481,525         453,049  
Long-term investments     17,729         17,477  
Property and equipment, net     24,008         25,141  
Goodwill     115,489         115,489  
Other intangible assets, net     57,725         60,005  
Other assets, net     36,334         34,830  
Total assets   $ 732,810       $ 705,991  
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable   $ 29,965       $ 26,354  
Accrued expenses     30,810         30,857  
Deferred income on shipments to distributors     28,269         24,962  
Income taxes     1,302         665  
Total current liabilities     90,346         82,838  
Long-term obligations and other liabilities     19,053         24,214  
Total liabilities     109,399         107,052  
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; 42,835 and 42,068 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively

    4         4  
Additional paid-in capital     24,251         14,749  
Retained earnings     600,973         586,653  
Accumulated other comprehensive loss     (1,817 )       (2,467 )
Total stockholders' equity     623,411         598,939  
Total liabilities and stockholders' equity   $ 732,810       $ 705,991  
           
     

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

     
    Three Months Ended
    March 31,

2012

    April 2,

2011

Operating Activities          
Net income (loss)   $ 14,320       $ (1,960 )

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

         
Depreciation of property and equipment     3,543         3,253  
Amortization of other intangible assets and other assets     2,280         3,057  
Stock-based compensation expense     6,693         9,473  
Income tax benefit from employee stock-based awards     2,656         1,184  
Excess income tax benefit from employee stock-based awards     (2,426 )       (1,142 )
Deferred income taxes     3,101         1,366  
Changes in operating assets and liabilities:          
Accounts receivable     (6,074 )       (11,704 )
Inventories     447         (759 )
Prepaid expenses and other assets     4,581         (4,499 )
Accounts payable     4,209         (4,787 )
Accrued expenses     (5,087 )       (1,634 )
Deferred income on shipments to distributors     3,307         2,293  
Income taxes     (5,403 )       3,233  
Net cash provided by (used in) operating activities     26,147         (2,626 )
Investing Activities          
Purchases of available-for-sale investments     (82,845 )       (31,492 )
Proceeds from sales and maturities of marketable securities     60,518         55,092  
Purchases of property and equipment     (2,428 )       (2,697 )
Purchases of other assets     (850 )       (584 )
Acquisition of business, net of cash acquired     --         (27,546 )
Net cash used in investing activities     (25,605 )       (7,227 )
Financing Activities          
Proceeds from issuance of common stock, net of shares withheld for taxes     106         (3,580 )
Excess income tax benefit from employee stock-based awards     2,426         1,142  
Repurchases of common stock     --         (606 )
Payments on debt     --         (7,174 )
Net cash provided by (used in) financing activities     2,532         (10,218 )
           
Increase (decrease) in cash and cash equivalents     3,074         (20,071 )
Cash and cash equivalents at beginning of period     94,964         138,567  
Cash and cash equivalents at end of period   $ 98,038       $ 118,496  

 

Contact:

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