Silicon Laboratories Reports Strong Second Quarter Performance; Company Announces Share Repurchase Program
The repurchase program allows for repurchases to be made in open market or privately negotiated transactions subject to market conditions, applicable legal requirements and other factors.
Quarterly Business Highlights
The diversity of Silicon Laboratories' product portfolio is driving growth opportunities across a wide variety of markets and customers. Both the broad-based mixed-signal and mobile handset businesses grew sequentially in the second quarter driven by strong market demand and market share gains. The broad-based mixed-signal business experienced growth across all major product lines including modems, ProSLIC® voice over IP solutions, mixed-signal microcontrollers (MCUs) and timing solutions.
Strength in the handset market resulted in nine percent sequential growth in mobile handset revenues for the second quarter. Penetration of the company's FM tuner continued throughout the quarter across a broad set of handset customers. Silicon Laboratories also reported additional design wins with the Aero® IIe EDGE transceiver.
"Product execution is our main priority, and we're starting to see the results of this in customer engagements on new products and strong demand for existing products," said Necip Sayiner, president and CEO of Silicon Laboratories. "The expansion of our portfolio, the access to new markets and large customers and the potential of our R&D pipeline give me a great deal of confidence in the future growth and profitability potential of our business."
Financial Highlights
GAAP operating income for the second quarter was $11.3 million. Non-GAAP operating income for the second quarter was $23.8 million or 19.3 percent of revenue. GAAP net income for the second quarter was $10.1 million or 18 cents per fully diluted share. Non-GAAP net income per fully diluted share, excluding pro-forma charges, was 37 cents. The reconciling charges are set forth in the reconciliation of GAAP to non-GAAP financial measures table included below. The company's cash and short-term investments totaled approximately $407 million at quarter end.
For the third quarter of 2006, the company anticipates revenue of $122 to $127 million.
Conference Call Today
A conference call discussing the second quarter results will follow the 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 (888) 673-3571 or 402-220-6434 (international). These replays will be available through August 14th, 2006.
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 decades of cumulative 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.
Cautionary Language
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, especially for mobile handset products; dependence on a limited number of products and customers; risks associated with shifting market demand from GSM/GPRS to EDGE and WCDMA; difficulties developing new products that achieve market acceptance; risks that Silicon Laboratories may not be able to manage strains associated with its growth; dependence on key personnel; difficulties managing our manufacturers and subcontractors; difficulties managing international activities; credit risks associated with our accounts receivable; geographic concentration of manufacturers, assemblers, test service providers and customers in the Pacific Rim that subjects Silicon Laboratories' business and results of operations to risks of natural disasters, epidemics, war and political unrest; product development risks; inventory-related risks; intellectual property litigation risks; risks associated with acquisitions; 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, ProSLIC, Aero and the Silicon Laboratories logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.
Silicon Laboratories Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
Three Months Ended Six Months Ended
------------------- -------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues $123,504 $107,156 $238,044 $211,920
Cost of revenues 52,996 48,576 104,296 97,136
--------- --------- --------- ---------
Gross profit 70,508 58,580 133,748 114,784
Operating expenses:
Research and development 30,467 21,374 58,024 40,927
Selling, general and
administrative 26,163 19,297 50,865 36,175
In-process research and
development 2,600 -- 2,600 --
--------- --------- --------- ---------
Operating expenses 59,230 40,671 111,489 77,102
--------- --------- --------- ---------
Operating income 11,278 17,909 22,259 37,682
Other income (expense):
Interest income 3,623 1,992 6,826 3,404
Interest expense (225) (45) (400) (101)
Other income (expense), net 45 (178) 291 (193)
--------- --------- --------- ---------
Income before income taxes 14,721 19,678 28,976 40,792
Provision for income taxes 4,584 4,064 7,775 7,805
--------- --------- --------- ---------
Net income $ 10,137 $ 15,614 $ 21,201 $ 32,987
========= ========= ========= =========
Net income per share:
Basic $ 0.18 $ 0.29 $ 0.38 $ 0.62
Diluted $ 0.18 $ 0.28 $ 0.37 $ 0.60
Weighted-average common shares
outstanding:
Basic 55,842 53,149 55,460 52,807
Diluted 57,858 55,027 57,761 55,196
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)
Three Months Ended
-------------------
July 1, July 2,
2006 2005
--------- ---------
GAAP operating income $ 11,278 $ 17,909
Stock compensation adjustments:
Cost of revenues 219 10
Research and development 4,756 479
Selling, general and administrative 4,942 2,078
In-process research and development 2,600 --
--------- ---------
Non-GAAP operating income $ 23,795 $ 20,476
--------- ---------
Non-GAAP operating income % 19.3% 19.1%
--------- ---------
Three Months Ended
-------------------
July 1, July 2,
2006 2005
--------- ---------
GAAP net income $ 10,137 $ 15,614
Stock compensation adjustments:
Cost of revenues 219 10
Research and development 4,756 479
Selling, general and administrative 4,942 2,078
Provision for income taxes (1,403) (965)
In-process research and development 2,600 --
--------- ---------
Non-GAAP net income $ 21,251 $ 17,216
--------- ---------
Diluted shares outstanding 57,858 55,027
Non-GAAP diluted net income per share $ 0.37 $ 0.31
--------- ---------
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
July 1, December 31,
2006 2005
------------ ------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 179,205 $ 100,504
Short-term investments 227,764 263,206
Accounts receivable, net of allowance for
doubtful accounts of $1,088 at July 1,
2006 and December 31, 2005 75,686 68,824
Inventories 38,187 23,132
Deferred income taxes 14,118 11,505
Prepaid expenses and other 15,173 9,670
------------ ------------
Total current assets 550,133 476,841
Property, equipment and software, net 30,854 32,584
Goodwill 69,856 62,877
Other intangible assets, net 22,545 14,838
Other assets, net 39,302 25,863
------------ ------------
Total assets $ 712,690 $ 613,003
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 47,626 $ 43,846
Accrued expenses 15,637 11,307
Deferred income on shipments to
distributors 39,046 34,036
Income taxes payable 12,935 18,348
------------ ------------
Total current liabilities 115,244 107,537
Long-term obligations and other liabilities 15,377 7,418
------------ ------------
Total liabilities 130,621 114,955
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; 55,987 and 54,530
shares issued and outstanding at July 1,
2006 and December 31, 2005, respectively 6 5
Additional paid-in capital 396,998 335,284
Deferred stock compensation - (1,105)
Retained earnings 185,065 163,864
------------ ------------
Total stockholders' equity 582,069 498,048
------------ ------------
Total liabilities and stockholders' equity $ 712,690 $ 613,003
============ ============
Certain prior period amounts have been reclassified to conform to the current period presentation.
CONTACT: Silicon Laboratories Inc.
Shannon Pleasant, 512-464-9254
investor.relations@silabs.com
www.silabs.com
SOURCE: Silicon Laboratories Inc.