Silicon Laboratories Inc.
Jul 30, 2008

Silicon Laboratories Reports Outstanding Quarterly Performance

Company Grows Revenue by 38 Percent, More than Doubles Earnings and Exceeds Non-GAAP Operating Income TargetAUSTIN, Texas, Jul 30, 2008 (BUSINESS WIRE) -- Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported better than expected second quarter revenue of $104.6 million, a 38 percent increase over the same period last year. The company more than doubled quarterly earnings per share when compared to the same quarter last year and achieved non-GAAP operating income of 27 percent, which is above the company's target model.

Financial Results

The company delivered favorable results across the board during the second quarter. Revenue of $104.6 million exceeded the company's upward guidance revision and represented a seven percent sequential increase. GAAP gross margin was 63.1 percent, GAAP operating income increased by 64 percent sequentially to $18.2 million, and GAAP diluted earnings per share from continuing operations increased significantly to $0.29.

The following non-GAAP results exclude non-cash charges for stock compensation. Non-GAAP gross margin of 63.5 percent was considerably above the company's target range of 60 to 62 percent. Operating expenses were slightly lower than expected, resulting in non-GAAP operating income of $28.3 million or 27 percent of revenue, demonstrating very strong operating performance. It also marks a near tripling of non-GAAP operating income from the same period last year. Non-GAAP diluted earnings per share from continuing operations were $0.47, representing a greater than 20 percent sequential increase. The reconciling charges are set forth in the financial measures table included below.

During the second quarter, the company continued execution of its share repurchase program, completing repurchases totaling $33 million bringing the quarter ending cash, cash equivalents and investments balance to $450 million.

"Management is committed to building a business with the valuable combination of growth, profitability and a strong balance sheet," said Bill Bock, chief financial officer of Silicon Laboratories. "When we last delivered $104 million in quarterly revenue in late 2005 it included the cellular business that we divested last year. We have already achieved the same revenue scale, replacing the volume of the cellular business with other growth products. And, we are considerably more profitable, have more revenue per employee, fewer outstanding shares and an even better cash position."

Business Summary

Revenue growth in the second quarter was driven primarily by the company's voice and embedded modem products. Market share expansion and product refresh cycles supporting the transition to high definition set-top boxes were largely behind the sequential gains.

The company's MCU products had a record quarter, growing double-digits sequentially. The company shipped its one hundred millionth MCU and one hundred thousandth cumulative development kit during the quarter, significant milestones for this rapidly growing business.

Broadcast handset revenue increased, backed by solid design win additions among the top five handset makers. The competitiveness of the company's broadcast products, the adoption of value added products such as transmitters, AM/FM and embedded antenna tuners and the diversified customer base are all benefiting the business.

"Our ability to deliver top-line growth, well above the industry growth rate, while maintaining an attractive gross margin profile demonstrates the power of a diversified business model based on compelling, differentiated technology," said Necip Sayiner, president and chief executive officer of Silicon Laboratories. "We increased a number of our product line growth targets for 2008 and we are seeing new products ramp that we believe will drive growth in 2009."

The company also announced today the close of the acquisition of Integration Associates, which will add close to 100 engineers and a number of new products to the Silicon Labs portfolio. For the third quarter of 2008, the company is guiding revenue in the range of $111 to $115 million, which includes $5 to $6 million of Integration Associates revenue for the approximate two month stub period of consolidated operations.

Webcast and Conference Call

A conference call discussing the second quarter results will follow this press release today 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 1-800-333-1872 or +1 203-369-3250 (international). Replays will be available through August 13, 2008.

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, dependence on a limited number of products and customers; 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 and divestitures; 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  Six Months Ended
                                ------------------ -------------------
                                July 5,   June 30, July 5,  June 30,
                                   2008     2007     2008      2007
                                --------- -------- -------- ----------
Revenues                         $104,620  $75,597 $202,799   $149,411
Cost of revenues                   38,587   30,233   76,419     58,672
                                --------- -------- -------- ----------
Gross profit                       66,033   45,364  126,380     90,739
Operating expenses:
   Research and development        23,378   22,145   48,051     46,952
   Selling, general and
    administrative                 24,486   21,282   49,095     45,574
                                --------- -------- -------- ----------
Operating expenses                 47,864   43,427   97,146     92,526
                                --------- -------- -------- ----------
Operating income (loss)            18,169    1,937   29,234    (1,787)
Other income (expense):
   Interest income                  2,406    7,032    7,204     10,867
   Interest expense                 (109)    (167)    (254)      (398)
   Other income (expense), net      (355)     (51)    (497)      (170)
                                --------- -------- -------- ----------
Income from continuing
 operations before income taxes    20,111    8,751   35,687      8,512
Provision for income taxes          5,468    1,859   10,230      2,366
                                --------- -------- -------- ----------
Income from continuing
 operations                        14,643    6,892   25,457      6,146
Income from discontinued
 operations, net of income
 taxes                                 --      581       --    156,940
                                --------- -------- -------- ----------
Net income                        $14,643   $7,473  $25,457   $163,086
                                ========= ======== ======== ==========
Basic earnings per share:
   Income from continuing
    operations                      $0.30    $0.13    $0.51      $0.11
   Net income                       $0.30    $0.14    $0.51      $2.97

Diluted earnings per share:
   Income from continuing
    operations                      $0.29    $0.12    $0.50      $0.11
   Net income                       $0.29    $0.13    $0.50      $2.90

Weighted-average common shares
outstanding:
   Basic                           48,510   54,901   49,858     54,856
   Diluted                         49,705   56,312   50,901     56,308

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

----------------- ----------------------------------------------------
Non-GAAP Income                    Three Months Ended
 Statement Items                      July 5, 2008
----------------- ----------------------------------------------------
                                                              Non-GAAP
                               GAAP        Stock       Non-    Percent
                    GAAP   Percent of   Compensation    GAAP     of
                  Measure     Revenue      Expense    Measure  Revenue
                  -------- ------------ ------------  ------- --------
Revenues          $104,620

Gross profit        66,033        63.1%         $380  $66,413    63.5%

Operating income    18,169        17.4%       10,176   28,345    27.1%


----------------- ----------------------------------------------------
Non-GAAP Income                    Three Months Ended
 Statement Items                     June 30, 2007
----------------- ----------------------------------------------------
                                                              Non-GAAP
                               GAAP        Stock       Non-    Percent
                    GAAP   Percent of   Compensation    GAAP     of
                  Measure     Revenue      Expense    Measure  Revenue
                  -------- ------------ ------------  ------- --------
Revenues           $75,597

Operating income     1,937         2.5%       $8,621  $10,558    14.0%


----------------- ----------------------------------
Non-GAAP Diluted
 Earnings Per             Three Months Ended
 Share                       July 5, 2008
----------------- ----------------------------------
                              Stock
                    GAAP   Compensation   Non-GAAP
                  Measure     Expense     Measure
                  -------- ------------ ------------
Income from
 continuing
 operations        $14,643       $8,711      $23,354

Diluted shares
 outstanding        49,705           --       49,705

Diluted earnings
 per share from
 continuing
 operations          $0.29                     $0.47


----------------- ----------------------------------
Non-GAAP Diluted
 Earnings Per             Three Months Ended
 Share                      April 5, 2008
----------------- ----------------------------------
                              Stock
                    GAAP   Compensation   Non-GAAP
                  Measure     Expense     Measure
                  -------- ------------ ------------
Income from
 continuing
 operations        $10,814       $8,974      $19,788

Diluted shares
 outstanding        52,000           --       52,000

Diluted earnings
 per share from
 continuing
 operations          $0.21                     $0.38

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

                                              July 5,     December 29,
                                               2008           2007
                                          --------------- ------------
                                            (Unaudited)
                 Assets
Current assets:
   Cash and cash equivalents                     $274,054     $264,408
   Short-term investments                         118,381      308,566
   Accounts receivable, net of allowance
    for doubtful accounts of $612 at July
    5, 2008 and $517 at December 29, 2007          51,732       51,211
   Inventories                                     29,608       28,587
   Deferred income taxes                            6,274        6,025
   Prepaid expenses and other current
    assets                                         16,906       33,895
                                          --------------- ------------
Total current assets                              496,955      692,692
Long-term investments                              57,960           --
Property, equipment and software, net              27,984       28,157
Goodwill                                           73,096       73,199
Other intangible assets, net                       16,004       18,077
Other assets, net                                  31,149       28,121
                                          --------------- ------------
Total assets                                     $703,148     $840,246
                                          =============== ============

  Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                               $31,121      $33,321
   Accrued expenses                                19,136       26,397
   Deferred income on shipments to
    distributors                                   24,796       28,448
   Income taxes                                       976        5,226
                                          --------------- ------------
Total current liabilities                          76,029       93,392
Long-term obligations and other
 liabilities                                       47,801       43,309
                                          --------------- ------------
Total liabilities                                 123,830      136,701

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; 47,917 and
    52,810 shares issued and outstanding
    at July 5, 2008 and December 29,
    2007, respectively                                  5            5
   Additional paid-in capital                     156,494      303,682
   Retained earnings                              425,315      399,858
   Accumulated other comprehensive loss           (2,496)           --
                                          --------------- ------------
Total stockholders' equity                        579,318      703,545
                                          --------------- ------------
Total liabilities and stockholders'
 equity                                          $703,148     $840,246
                                          =============== ============

SOURCE: Silicon Laboratories Inc.

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