Press Releases

Silicon Laboratories Reports Record Revenue
Company Delivers Strong Quarterly Performance and Outlook
Our Broad-based business has achieved critical mass, and with double-digit annual growth rates, it is on track to be the majority of our business as we exit the year

AUSTIN, Texas--(BUSINESS WIRE)--Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported record third quarter revenue of $149.5 million, an impressive 25 percent increase compared to the third quarter of 2011. The company believes market share gains across the portfolio and record design win activity are enabling the business to outperform the end markets.

Financial Highlights

Third quarter revenue was up ten percent sequentially due to both organic growth and the additional revenue from an acquisition completed during the quarter. On a GAAP-basis, gross margin was 57.9 percent, which included one-time charges associated with the acquisition. R&D investment increased to $34.8 million, and SG&A expense decreased to $24.5 million. SG&A expense declined primarily due to an $8.1 million gain from the purchase of the company’s headquarters. Resulting GAAP operating income increased to 18.2 percent. Diluted GAAP earnings per share declined to $0.24 and included other charges related to the acquisition of Ember and a net gain from the purchase of the headquarters buildings.

The following non-GAAP results exclude the impact of stock compensation and other one-time items. Gross margin was 61.0 percent for the quarter. Operating expenses decreased to 39.1 percent of sales. R&D increased to $31.7 million, and SG&A increased to $26.7 million due to the acquisition and increased variable compensation. Operating income, therefore, was better than expected at 21.9 percent of revenue. Strong revenue growth and operating performance resulted in significant earnings leverage. Diluted earnings per share for the quarter was 61 cents, a 20 percent sequential increase. Reconciling charges are set forth in the financial measures table included below.

The company repurchased $14.9 million of stock and ended the quarter with $285 million in cash, cash equivalents and investments due to continued healthy cash flow from operations.

Business Highlights

All of the company’s major product categories, Access, Broadcast and Broad-based, grew sequentially again in the third quarter. The company believes it is benefiting from growth trends in energy efficiency, the “Internet of Everything”, and the explosion in demand for bandwidth, all of which drive an increasing need for mixed-signal ICs.

The Broad-based business was up 15 percent as the company’s microcontroller (MCU) products posted record revenue. The increase, driven by both organic growth and the acquisition of ZigBee® wireless products, resulted from market share gains in communications infrastructure, consumer devices, smart energy, home automation and security. The company’s power products benefited from customers’ power system re-designs, growing 20 percent sequentially.

The Broadcast business increased in both audio and video as consumer equipment makers continued to build ahead of the holidays. Design win traction remains very strong, with the company’s video products closing on the majority of 2013 TV models, enabling continued share gains into next year. The Access products also posted sequential growth due to new ramps in PBX systems, voice over cable and Power over Ethernet applications.

“Our Broad-based business has achieved critical mass, and with double-digit annual growth rates, it is on track to be the majority of our business as we exit the year,” said Tyson Tuttle, president and CEO of Silicon Laboratories. “We’ve aligned our product focus to capitalize on the most important trends impacting mixed-signal ICs, and I feel good about extending the breadth and quality of the growth we’re seeing in the business into 2013.”

The company expects revenue for the fourth quarter to be in the range of $145 to $150 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 39712936. The replay will be available through November 7.

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       Nine Months Ended
    September 29,

2012

    October 1,

2011

      September 29,

2012

    October 1,

2011

Revenues   $ 149,461       $ 119,100         $ 410,833       $ 364,933  
Cost of revenues     62,968         46,203           166,442         143,666  
Gross margin     86,493         72,897           244,391         221,267  
Operating expenses:                        
Research and development     34,768         31,715           101,943         101,248  
Selling, general and administrative     24,495         27,254           82,075         85,168  
Operating expenses     59,263         58,969           184,018         186,416  
Operating income     27,230         13,928           60,373         34,851  
Other income (expense):                        
Interest income     243         388           1,103         1,432  
Interest expense     (234 )       (4 )         (299 )       (14 )
Other income (expense), net     (161 )       (81 )         807         292  
Income before income taxes     27,078         14,231           61,984         36,561  
Provision for income taxes     17,054         2,976           17,131         13,894  
                                         

Net income

  $ 10,024       $ 11,255         $ 44,853       $ 22,667  
                         
Earnings per share:                        
Basic   $ 0.24       $ 0.26         $ 1.06       $ 0.52  
Diluted   $ 0.24       $ 0.26         $ 1.04       $ 0.50  
                         
Weighted-average common shares outstanding:                        
Basic     41,735         42,834           42,279         43,902  
Diluted     42,520         43,919           43,261         45,305  
                                         
     
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
     
Non-GAAP Income Statement Items   Three Months Ended

September 29, 2012

    GAAP

Measure

    GAAP

Percent of Revenue

    Stock

Compensation Expense *

    Termination Costs    

Acquisition Related
Items

    Headquarters Purchase

Items

    Non-GAAP

Measure

   

Non-GAAP

Percent of Revenue

Revenues   $ 149,461                                          
                                               
Gross margin     86,493       57.9 %     $ 261     $ --     $ 4,466     $ --       $ 91,220     61.0 %
                                               
Research and

development

    34,768       23.3 %       3,039       --       --      

--

       

31,729

    21.2 %
                                               
Selling, general and

administrative

    24,495      

16.4

%

      4,096      

1,428

     

358

     

(8,113

)

     

26,726

    17.9 %
                                               
Operating expenses     59,263       39.7 %       7,135       1,428       358       (8,113 )       58,455     39.1 %
                                               
Operating income     27,230       18.2 %       7,396       1,428       4,824       (8,113 )       32,765     21.9 %
                                               
                                               
Non-GAAP Diluted Earnings Per Share     Three Months Ended

September 29, 2012

     
          GAAP

Measure

    Stock

Compensation Expense *

    Termination Costs    

Acquisition Related
Items

    Headquarters Purchase

Items

    Non-GAAP

Measure

     
Net income     $ 10,024       $ 6,595     $ 1,136     $ 13,651     $ (5,274 )     $ 26,132      
                                               
Diluted shares outstanding       42,520                                 42,520      
                                               
Diluted earnings per share     $ 0.24                               $ 0.61      

* Excludes stock compensation recognized in connection with terminations costs for our former CEO.

           
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
           
    September 29,

2012

    December 31,

2011

Assets          
Current assets:          
Cash and cash equivalents   $ 125,505       $ 94,964  
Short-term investments     148,573         212,526  

Accounts receivable, net of allowances for doubtful accounts of $789 at September 29, 2012 and $725 at December 31, 2011

    75,749         55,351  
Inventories     42,523         34,778  
Deferred income taxes     15,870         11,563  
Prepaid expenses and other current assets     36,735         43,867  
Total current assets     444,955         453,049  
Long-term investments     11,418         17,477  
Property and equipment, net     136,321         25,141  
Goodwill     130,069         115,489  
Other intangible assets, net     94,611         60,005  
Other assets, net     37,669         34,830  
Total assets   $ 855,043       $ 705,991  
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable   $ 35,476       $ 26,354  
Current portion of long-term debt     5,000         --  
Accrued expenses     41,441         30,857  
Deferred income on shipments to distributors     30,903         24,962  
Income taxes     3,339         665  
Total current liabilities     116,159         82,838  
Long-term debt     95,000         --  
Other non-current liabilities     22,663         24,214  
Total liabilities     233,822         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; 41,706 and 42,068 shares issued and outstanding at September 29, 2012 and December 31, 2011, respectively

    4         4  
Additional paid-in capital     --         14,749  
Retained earnings     622,098         586,653  
Accumulated other comprehensive loss     (881 )       (2,467 )
Total stockholders' equity     621,221         598,939  
Total liabilities and stockholders' equity   $ 855,043       $ 705,991  
                   
     
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
     
    Nine Months Ended
    September 29,

2012

    October 1,

2011

Operating Activities          
Net income   $ 44,853       $ 22,667  
Adjustments to reconcile net income to cash provided by operating activities:          
Depreciation of property and equipment     10,247         10,119  
Net gain on the purchase of property and equipment     (8,457 )       --  
Amortization of other intangible assets and other assets     11,001         8,570  
Stock-based compensation expense     23,796         27,224  
Income tax benefit from employee stock-based awards     2,301         2,301  
Excess income tax benefit from employee stock-based awards     (2,470 )       (2,111 )
Deferred income taxes     5,024         2,011  
Changes in operating assets and liabilities:          
Accounts receivable     (18,470 )       (11,581 )
Inventories     (5,994 )       1,670  
Prepaid expenses and other assets     13,283         227  
Accounts payable     9,113         871  
Accrued expenses     (797 )       819  
Deferred income on shipments to distributors     5,267         1,495  
Income taxes     (4,378 )       1,287  
Net cash provided by operating activities     84,319         65,569  
Investing Activities          
Purchases of available-for-sale investments     (138,822 )       (113,784 )
Proceeds from sales and maturities of marketable securities     209,972         166,262  
Purchases of property and equipment     (99,720 )       (7,472 )
Purchases of other assets     (6,146 )       (891 )
Acquisition of businesses, net of cash acquired     (71,852 )       (27,262 )
Net cash provided by (used in) investing activities     (106,568 )       16,853  
Financing Activities          
Proceeds from issuance of common stock, net of shares withheld for taxes     3,035         2,320  
Excess income tax benefit from employee stock-based awards     2,470         2,111  
Repurchases of common stock     (51,040 )       (110,063 )
Proceeds from issuance of long-term debt, net     98,325         --  
Payments on debt     --         (7,174 )
Net cash provided by (used in) financing activities     52,790         (112,806 )
           
Increase (decrease) in cash and cash equivalents     30,541         (30,384 )
Cash and cash equivalents at beginning of period     94,964         138,567  
Cash and cash equivalents at end of period   $ 125,505       $ 108,183  

 

Contact:

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