News Releases & Briefs

Silicon Labs Announces Record Revenue in Q2

Broadcast Products to Drive Sequential Revenue Decline in Q3

We delivered another record quarter, and are encouraged by the traction we are seeing in our strategic growth businesses including our Internet of Things, Infrastructure and Broadcast automotive products

AUSTIN, Texas--(BUSINESS WIRE)--Silicon Labs (NASDAQ: SLAB), a leading provider of microcontroller, wireless connectivity, analog and sensor solutions for the Internet of Things (IoT), today reported financial results for its second quarter ended July 4, 2015. Revenue in the second quarter was within guidance and established a new record at $164.9 million, up from $163.7 million in the first quarter.

Second Quarter Financial Highlights

On a GAAP basis:

Gross margin was 59.1 percent
R&D expenses were $47.5 million
SG&A expenses were $41.0 million
Operating income as a percentage of revenue was 5.5 percent
Diluted earnings per share were $0.17

On a non-GAAP basis (results exclude the impact of stock compensation, amortization from acquired intangible assets and certain other items as set forth in the reconciliation tables below):

Gross margin was 60.3 percent
R&D expenses were $37.4 million
SG&A expenses were $32.7 million
Operating income as a percentage of revenue was 17.8 percent
Diluted earnings per share were $0.56

Business Highlights

IoT products delivered an all-time high revenue quarter at $68.9 million
Infrastructure products established record revenue at $30.3 million
Broadcast revenue was down, at $39.4 million, with weakness in consumer partially offset by a record in automotive
Access revenue was consistent with expectations at $26.3 million

Product Highlights

Announced our highly anticipated Thread networking solution, delivering a wireless software stack built upon our many years of expertise and the industry’s most advanced mesh networking software development tools.
Introduced the easy-to-use Bluetooth Smart Ready® BT121 module, offering a dual-mode solution for applications requiring Bluetooth Smart and Bluetooth Classic connectivity.
Announced EFM32™ Happy Gecko microcontrollers, providing an energy-friendly, plug-and-play solution for adding USB connectivity to battery-powered IoT applications.
Released the next generation of the Simplicity Studio™ development environment, enabling concurrent MCU and wireless design for IoT applications.
Introduced the Si5380 clock IC, the industry’s most highly integrated timing solution for wireless infrastructure applications including small and macro cell base stations.
Announced the Si88xx family of high-speed, multi-channel digital isolators designed to provide a highly integrated solution for signal and power isolation.
Introduced the industry’s first complete Wireless M-Bus platform solution designed to simplify the development of wirelessly connected smart meters in the European market.

Business Outlook

The company expects revenue in the third quarter to be in the range of $151 million to $156 million. Third quarter diluted earnings per share are expected to be between $0.04 and $0.10 on a GAAP basis and between $0.39 and $0.45 on a non-GAAP basis.

“We delivered another record quarter, and are encouraged by the traction we are seeing in our strategic growth businesses including our Internet of Things, Infrastructure and Broadcast automotive products,” said Tyson Tuttle, CEO of Silicon Labs. “However, we believe macro trends continue to stifle the global demand for TVs, with the latest market estimates calling for a reduction in unit demand for 2015. Accordingly, we expect third quarter Broadcast revenue to decline again by approximately 15 percent, counter to typical seasonality.”

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 on Silicon Labs' 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 (404) 537-3406 (international) and entering conference ID 39717393. The replay will be available through August 28, 2015.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and system solutions for the Internet of Things, Infrastructure, industrial automation, consumer and automotive markets. We solve the electronics industry’s toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity. Backed by our world-class engineering teams with strong software and mixed-signal design expertise, Silicon Labs empowers developers with the tools and technologies they need to advance quickly and easily from initial idea to final product. www.silabs.com

Forward-Looking Statements

This press release contains forward-looking statements based on Silicon Labs' current expectations. The words "believe," "estimate," "expect," "intend," "anticipate," "plan," "project," "will" and similar phrases as they relate to Silicon Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Labs 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 Labs may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; risks associated with acquisitions and divestitures; risks related to the successful completion of the development and implementation of Bluegiga’s technology; risks associated with the development of modules and the Company’s limited operating history with modules; risks that the acquisition may not yield the expected benefits due to the failure to properly integrate the acquired business and employees; risks that our competitors that supply products incorporated in Bluegiga’s modules may disrupt such supply; risks that the acquired business’ products and processes under development may fail to achieve market acceptance; risks of disputes regarding the acquired business and intellectual property; product liability risks; difficulties managing our distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with our accounts receivable; dependence on key personnel; stock price volatility; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Labs' business and results of operations to risks of natural disasters, epidemics, war and political unrest; debt-related risks; capital-raising risks; the competitive and cyclical nature of the semiconductor industry; average selling prices of products may decrease significantly and rapidly; information technology risks; conflict mineral risks and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. Silicon Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. References in this press release to Silicon Labs shall mean Silicon Laboratories Inc.

Note to editors: Silicon Laboratories, Silicon Labs, the “S” symbol, the Silicon Laboratories logo, the Silicon Labs logo, EFM32 and Simplicity Studio 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						Six Months Ended
	July 4, 2015			June 28, 2014			July 4, 2015			June 28, 2014
Revenues	$	164,856		$	154,918		$	328,561		$	300,609
Cost of revenues		67,428			56,255			134,764			114,841
Gross margin		97,428			98,663			193,797			185,768
Operating expenses:
Research and development		47,465			41,844			94,322			84,329
Selling, general and administrative		40,960			36,017			83,260			70,628
Operating expenses		88,425			77,861			177,582			154,957
Operating income		9,003			20,802			16,215			30,811
Other income (expense):
Interest income		166			200			358			502
Interest expense		(728	)		(780	)		(1,473	)		(1,578	)
Other income (expense), net		90			(6	)		498			61
Income before income taxes		8,531			20,216			15,598			29,796
Provision for income taxes		956			5,937			1,645			7,407

Net income	$	7,575		$	14,279		$	13,953		$	22,389

Earnings per share:
Basic	$	0.18		$	0.33		$	0.33		$	0.52
Diluted	$	0.17		$	0.32		$	0.32		$	0.51

Weighted-average common shares outstanding:
Basic		42,823			43,462			42,617			43,271
Diluted		43,461			44,218			43,305			44,137


Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)

Non-GAAP Income Statement Items	Three Months Ended July 4, 2015
	GAAP Measure		GAAP Percent of Revenue			Stock Compensation Expense		Intangible Asset Amortization		Acquisition Related Items		Termination Costs			Non- GAAP Measure		Non-GAAP Percent of Revenue
Revenues	$	164,856

Gross margin		97,428		59.1	%	$	229	$	390	$	1,324	$	--		$	99,371	60.3	%

Research and development		47,465		28.8	%		4,960		5,116		--		--			37,389	22.7	%

Selling, general and administrative		40,960		24.8	%		5,868		1,219		767		392			32,714	19.8	%

Operating income		9,003		5.5	%		11,057		6,725		2,091		392			29,268	17.8	%


Non-GAAP Earnings Per Share	Three Months Ended July 4, 2015
	GAAP Measure		Stock Compensation Expense*			Intangible Asset Amortization*		Acquisition Related Items*		Termination Costs*		Tax Impact of Adjustments			Non- GAAP Measure
Net income	$	7,575	$	11,057		$	6,725	$	2,091	$	392	$	(3,379	)	$	24,461

Diluted shares outstanding		43,461														43,461

Diluted earnings per share	$	0.17													$	0.56

* Represents pre-tax amounts


Unaudited Forward-Looking Statements Regarding Business Outlook

Business Outlook	Three Months Ending October 3, 2015
	High		Low
Estimated GAAP diluted earnings per share	$	0.10	$	0.04

Estimated non-GAAP charges		0.35		0.35

Estimated non-GAAP diluted earnings per share	$	0.45	$	0.39


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

	July 4, 2015			January 3, 2015
Assets
Current assets:
Cash and cash equivalents	$	125,051		$	141,706
Short-term investments		147,556			193,489
Accounts receivable, net of allowances for doubtful accounts of $624 at July 4, 2015 and $786 at January 3, 2015		71,403			70,367
Inventories		60,746			52,631
Deferred income taxes		17,815			21,173
Prepaid expenses and other current assets		59,025			49,171
Total current assets		481,596			528,537
Long-term investments		7,179			7,419
Property and equipment, net		130,994			132,820
Goodwill		263,925			228,781
Other intangible assets, net		128,196			115,021
Other assets, net		24,041			29,983
Total assets	$	1,035,931		$	1,042,561

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	34,553		$	38,922
Current portion of long-term debt		10,000			10,000
Accrued expenses		49,327			73,646
Deferred income on shipments to distributors		38,573			38,662
Income taxes		942			2,084
Total current liabilities		133,395			163,314
Long-term debt		74,562			77,500
Other non-current liabilities		41,761			43,691
Total liabilities		249,718			284,505
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; 42,908 and 42,225 shares issued and outstanding at July 4, 2015 and January 3, 2015, respectively		4			4
Additional paid-in capital		44,152			29,501
Retained earnings		742,586			728,633
Accumulated other comprehensive loss		(529	)		(82	)
Total stockholders' equity		786,213			758,056
Total liabilities and stockholders' equity	$	1,035,931		$	1,042,561


Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Six Months Ended
	July 4, 2015			June 28, 2014
Operating Activities
Net income	$	13,953		$	22,389
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment		6,029			6,427
Amortization of other intangible assets and other assets		14,697			8,839
Stock-based compensation expense		21,576			18,559
Income tax benefit from stock-based awards		2,781			377
Excess income tax benefit from stock-based awards		(2,056	)		(589	)
Deferred income taxes		3,892			4,665
Changes in operating assets and liabilities:
Accounts receivable		1,724			3,082
Inventories		(6,534	)		(123	)
Prepaid expenses and other assets		452			3,394
Accounts payable		(3,359	)		3,846
Accrued expenses		(1,027	)		19,697
Deferred income on shipments to distributors		(2,132	)		2,584
Income taxes		(7,171	)		(5,130	)
Other non-current liabilities		(5,622	)		(24,599	)
Net cash provided by operating activities		37,203			63,418

Investing Activities
Purchases of available-for-sale investments		(46,908	)		(117,744	)
Proceeds from sales and maturities of available-for-sale investments		92,759			61,803
Purchases of property and equipment		(4,714	)		(3,339	)
Purchases of other assets		(1,871	)		(2,726	)
Acquisition of business, net of cash acquired		(76,899	)		--
Net cash used in investing activities		(37,633	)		(62,006	)

Financing Activities
Proceeds from issuance of common stock, net of cash paid for withheld taxes		1,684			8,943
Excess income tax benefit from stock-based awards		2,056			589
Repurchases of common stock		(10,418	)		(10,954	)
Payment of acquisition-related contingent consideration		(4,464	)		--
Payments on debt		(5,083	)		(2,500	)
Net cash used in financing activities		(16,225	)		(3,922	)

Decrease in cash and cash equivalents		(16,655	)		(2,510	)
Cash and cash equivalents at beginning of period		141,706			95,800
Cash and cash equivalents at end of period	$	125,051		$	93,290

Contact:

Silicon Labs
Jalene Hoover, +1 512-428-1610
Jalene.Hoover@silabs.com