News Releases & Briefs

Silicon Labs Announces Third Quarter Results

Revenue and Earnings Exceed Guidance

We delivered another record revenue quarter in Infrastructure, with continued strength in IoT and Broadcast automotive, and a less than expected decline in Broadcast consumer.

AUSTIN, Texas--(BUSINESS WIRE)--Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and system solutions for a smarter, more connected world, today reported financial results for its third quarter ended October 3, 2015. Revenue in the third quarter was just above the high end of guidance at $156.2 million, down from $164.9 million in the second quarter. Non-GAAP earnings per share for the third quarter were $0.51 versus the Company’s third quarter guidance range of $0.39 to $0.45.

Third Quarter Financial Highlights

On a GAAP basis:

Gross margin was 59.8 percent
R&D expenses were $46.5 million
SG&A expenses were $35.7 million
Operating income as a percentage of revenue was 7.2 percent
Diluted earnings per share were $0.23

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

Gross margin was 60.2 percent
R&D expenses were $36.6 million
SG&A expenses were $31.4 million
Operating income as a percentage of revenue was 16.7 percent
Diluted earnings per share were $0.51

Business Highlights

IoT product revenue declined slightly to $65.3 million, delivering 25% year-on-year growth
Infrastructure product revenue established a new record at $31.1 million
Broadcast revenue declined less than expected to $36.5 million
Access revenue declined to $23.3 million, as expected

Product Highlights

Announced the BGM111 Blue Gecko module with our pre-installed Bluetooth Smart software stack and BGScript™ scripting language, providing a plug-and-play wireless connectivity solution with a seamless SoC migration path.
Released our sixth-generation iWRAP™ software supported by our simple-to-use scripting language, easing the complexity of adding Bluetooth 3.0 connectivity to audio accessories.
Introduced a new voice-enabled remote control reference design to address the growing demand for voice control in the connected home.
Released a new version of the Simplicity Studio™ development platform featuring a new real-time Energy Profiler tool to help developers optimize their designs for low energy.
Delivered our highly anticipated Thread wireless software stack built on our many years of expertise and the industry’s most advanced mesh networking software development tools.
Launched the Si8920 isolated amplifier, providing the industry’s fastest current sensing capability for power control systems including industrial motor drives and inverters.
Introduced the Si5348 network synchronizer clock, providing the industry’s lowest jitter timing solution to drive pervasive adoption of SyncE and IEEE 1588 network synchronization.
Received a favorable, final determination on the International Trade Commission investigation initiated by Cresta Technology.

Business Outlook

The company expects revenue in the fourth quarter to be in the range of $156 million to $161 million. Fourth quarter diluted earnings per share are expected to be between $0.05 and $0.11 on a GAAP basis and between $0.45 and $0.51 on a non-GAAP basis.

“Strong top line performance combined with favorable opex drove a solid beat in third quarter EPS,” said Tyson Tuttle, CEO of Silicon Labs. “We delivered another record revenue quarter in Infrastructure, with continued strength in IoT and Broadcast automotive, and a less than expected decline in Broadcast consumer.

“Despite the challenging macro environment, we are confident in our strategy and proud of our accomplishments. We have a rich product pipeline and see strong demand for our silicon and software. We are engaging with top industry leaders who are rapidly adopting our IoT solutions and propelling our design win activity to record levels. We are executing on our vision and strategy and excited about what lies ahead.”

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 39717394. The replay will be available through November 26, 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; 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 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						Nine Months Ended
	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014
Revenues	$	156,194		$	158,144		$	484,755		$	458,753
Cost of revenues		62,759			62,033			197,523			176,874
Gross margin		93,435			96,111			287,232			281,879
Operating expenses:
Research and development		46,483			42,517			140,805			126,846
Selling, general and administrative		35,729			43,990			118,989			114,618
Operating expenses		82,212			86,507			259,794			241,464
Operating income		11,223			9,604			27,438			40,415
Other income (expense):
Interest income		186			231			544			733
Interest expense		(687	)		(768	)		(2,160	)		(2,346	)
Other income (expense), net		(280	)		42			218			103
Income before income taxes		10,442			9,109			26,040			38,905
Provision for income taxes		467			3,501			2,112			10,908

Net income	$	9,975		$	5,608		$	23,928		$	27,997

Earnings per share:
Basic	$	0.24		$	0.13		$	0.56		$	0.65
Diluted	$	0.23		$	0.13		$	0.55		$	0.64

Weighted-average common shares outstanding:
Basic		42,331			43,112			42,522			43,218
Diluted		42,795			43,815			43,135			44,030



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

Non-GAAP Income Statement Items	Three Months Ended October 3, 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	$	156,194

Gross margin		93,435		59.8	%	$	249	$	390		$	--		$	--		$	94,074	60.2	%

Research and development		46,483		29.8	%		4,623		5,250			--			--			36,610	23.4	%

Selling, general and administrative		35,729		22.8	%		4,350		1,219			(1,351	)		118			31,393	20.1	%

Operating income		11,223		7.2	%		9,222		6,859			(1,351	)		118			26,071	16.7	%


Non-GAAP Earnings Per Share	Three Months Ended October 3, 2015
	GAAP Measure		Stock Compensation Expense*			Intangible Asset Amortization*		Acquisition Related Items*			Termination Costs*			Tax Impact of Adjustments			Non-GAAP Measure
Net income	$	9,975	$	9,222		$	6,859	$	(1,351	)	$	118		$	(2,996	)	$	21,827

Diluted shares outstanding		42,795																42,795

Diluted earnings per share	$	0.23															$	0.51

* Represents pre-tax amounts


Unaudited Forward-Looking Statements Regarding Business Outlook

Business Outlook	Three Months Ending January 2, 2016
	High		Low
Estimated GAAP diluted earnings per share	$	0.11	$	0.05

Estimated non-GAAP charges		0.40		0.40

Estimated non-GAAP diluted earnings per share	$	0.51	$	0.45



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

	October 3, 2015			January 3, 2015
Assets
Current assets:
Cash and cash equivalents	$	135,640		$	141,706
Short-term investments		112,670			193,489
Accounts receivable, net of allowances for doubtful accounts of $695 at October 3, 2015 and $786 at January 3, 2015		61,030			70,367
Inventories		51,957			52,631
Deferred income taxes		19,155			21,173
Prepaid expenses and other current assets		48,903			49,171
Total current assets		429,355			528,537
Long-term investments		7,240			7,419
Property and equipment, net		130,283			132,820
Goodwill		263,925			228,781
Other intangible assets, net		121,208			115,021
Other assets, net		26,040			29,983
Total assets	$	978,051		$	1,042,561

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	30,306		$	38,922
Current portion of long-term debt		10,000			10,000
Accrued expenses		50,080			73,646
Deferred income on shipments to distributors		37,881			38,662
Income taxes		1,074			2,084
Total current liabilities		129,341			163,314
Long-term debt		70,000			77,500
Other non-current liabilities		37,234			43,691
Total liabilities		236,575			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; 41,570 and 42,225 shares issued and outstanding at October 3, 2015 and January 3, 2015, respectively		4			4
Additional paid-in capital		--			29,501
Retained earnings		742,091			728,633
Accumulated other comprehensive loss		(619	)		(82	)
Total stockholders' equity		741,476			758,056
Total liabilities and stockholders' equity	$	978,051		$	1,042,561



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

	Nine Months Ended
	October 3, 2015			September 27, 2014
Operating Activities
Net income	$	23,928		$	27,997
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment		9,293			9,512
Amortization of other intangible assets and other assets		21,686			13,090
Stock-based compensation expense		30,798			28,173
Income tax benefit from stock-based awards		1,727			413
Excess income tax benefit from stock-based awards		(2,118	)		(654	)
Deferred income taxes		1,571			3,894
Changes in operating assets and liabilities:
Accounts receivable		12,097			769
Inventories		2,259			(1,591	)
Prepaid expenses and other assets		8,409			12,627
Accounts payable		(5,686	)		5,074
Accrued expenses		(280	)		28,756
Deferred income on shipments to distributors		(2,825	)		6,215
Income taxes		(3,413	)		(4,898	)
Other non-current liabilities		(10,031	)		(21,790	)
Net cash provided by operating activities		87,415			107,587

Investing Activities
Purchases of available-for-sale investments		(55,433	)		(137,373	)
Proceeds from sales and maturities of available-for-sale investments		136,262			100,009
Purchases of property and equipment		(7,281	)		(5,500	)
Purchases of other assets		(5,291	)		(3,339	)
Acquisition of business, net of cash acquired		(76,899	)		--
Net cash used in investing activities		(8,642	)		(46,203	)

Financing Activities
Proceeds from issuance of common stock, net of cash paid for withheld taxes		(77	)		8,559
Excess income tax benefit from stock-based awards		2,118			654
Repurchases of common stock		(71,448	)		(50,942	)
Payment of acquisition-related contingent consideration		(4,464	)		--
Proceeds from issuance of long-term debt, net		81,238			--
Payments on debt		(92,206	)		(3,750	)
Net cash used in financing activities		(84,839	)		(45,479	)

Increase (decrease) in cash and cash equivalents		(6,066	)		15,905
Cash and cash equivalents at beginning of period		141,706			95,800
Cash and cash equivalents at end of period	$	135,640		$	111,705

Contact:

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