Silicon Laboratories Reports Record Revenue

October 24, 2012

Company Delivers Strong Quarterly Performance and Outlook

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

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

Source: Silicon Laboratories Inc.

News Provided by Acquire Media

Release Details

Silicon Laboratories Reports Record Revenue