Silicon Laboratories Inc.
Oct 28, 2009

Silicon Laboratories Reports Record Revenue

Company Increases Revenue 11% Year over Year and Achieves Record Profitability

AUSTIN, Texas, Oct 28, 2009 (BUSINESS WIRE) -- Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported third quarter revenue of $125.9 million, a more than 20 percent sequential increase, and an 11 percent increase over peak revenue levels during the same period in 2008. GAAP diluted earnings per share of $0.47 more than doubled sequentially, and non-GAAP diluted earnings per share increased to $0.67. Strong operating performance resulted in record operating income of 21 percent on a GAAP basis and 30 percent on a non-GAAP basis, and more than $50 million in cash flow from operations.

Third Quarter Financial Results

Third quarter revenue of $125.9 million represents a record revenue level for the company. Third quarter GAAP gross margin increased by more than 200 basis points sequentially to 64.4 percent. R&D investment for the period was $25.9 million, and SG&A was $28.6 million. GAAP diluted earnings per share was $0.47, significantly better than forecasted.

The following non-GAAP results exclude the impact of stock compensation expense. Non-GAAP gross margin increased sequentially by 220 basis points to 64.7 percent. Non-GAAP operating expenses declined sequentially to 35 percent of revenue. On an absolute dollar basis, non-GAAP R&D investment increased to $23.1 million and non-GAAP SG&A expense increased to $20.6 million. Non-GAAP operating income was a record 30 percent. Non-GAAP diluted earnings per share were $0.67, higher than anticipated. The reconciling charges are set forth in the financial tables below.

The quarter ending cash, cash equivalents and investments balance increased sequentially by $67 million, resulting in a total of $403 million. Given the company's very strong cash position, the Board of Directors approved a share repurchase program to acquire up to $150 million of the company's outstanding shares through the end of 2010. The program may be executed on the open market or in private transactions, including structured or accelerated transactions, depending on market conditions.

Business Summary

Five of the company's eight product lines achieved record revenue in the third quarter due to new product cycles and strength at large customers. Notably, the RF business grew in aggregate about 40 percent compared to the same quarter a year ago. An aggressive ramp at the company's largest customer, the addition of new tier one customers and demand in consumer devices for the AM/FM tuners were largely behind the growth.

The broad-based business was up 15 percent compared to the same period last year, led by a strong rebound in the MCU business. Customer demand improved across the board, with a significant part of the recovery coming from customers shipping into consumer applications. The timing and power product lines also grew sequentially, adding a significant number of new design wins and expanding the customer base.

"While we are pleased with the success of the business, I strongly believe that there is far more potential for growth," said Necip Sayiner, president and CEO of Silicon Laboratories. "2009 will be another record year for new product launches, we have an increasing number of developments in the pipeline and we have many more ideas in the funnel. We believe that all of this combined will create new opportunities for us to continue our growth story into 2010 and beyond."

The company guided fourth quarter revenue to be in the range of $124 million to $129 million, a 25 to 30 percent increase year over year.

Webcast and Conference Call

A conference call discussing the 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 1-866-513-1237 or +1-203-369-1979 (international). Replays will be available through November 11, 2009.

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 "guide," "believe," "estimate," "expect," "forecast," "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 Asia 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 (including risks that acquisitions may not yield the expected benefits due to the failure to properly integrate the acquired businesses and employees; risks that the customer base and revenue of the acquired businesses may cease to expand or may decline; risks that the acquired business' products under development may fail to achieve market acceptance; risks of disputes regarding the acquired business; risks that the performance of Silicon Laboratories' existing business may not offset the dilutive effect of an acquisition); risks associated with 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 EndedNine Months Ended
October 3,

2009

October 4,

2008

October 3,

2009

October 4,

2008

Revenues $ 125,913 $ 113,483 $ 313,830 $ 316,282
Cost of revenues 44,878 44,174 117,336 120,593
Gross margin 81,035 69,309 196,494 195,689
Operating expenses:
Research and development 25,904 25,785 77,841 73,836
Selling, general and administrative 28,592 25,940 78,221 75,035
In-process research and development -- 10,250 -- 10,250
Operating expenses 54,496 61,975 156,062 159,121
Operating income 26,539 7,334 40,432 36,568
Other income (expense):
Interest income 546 2,073 2,083 9,277
Interest expense (51 ) (71 ) (154 ) (325 )
Other income (expense), net 8 (43 ) 298 (540 )
Income before income taxes 27,042 9,293 42,659 44,980
Provision for income taxes 4,603 8,139 9,819 18,369

Net income

$ 22,439 $ 1,154 $ 32,840 $ 26,611
Earnings per share:
Basic $ 0.50 $ 0.02 $ 0.73 $ 0.54
Diluted $ 0.47 $ 0.02 $ 0.71 $ 0.53
Weighted-average common shares outstanding:
Basic 45,170 47,331 44,814 49,036
Diluted 47,322 48,385 46,127 50,083

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, 2009

GAAP

Measure

GAAP

Percent of
Revenue

Stock

Compensation
Expense

Non-GAAP

Measure

Non-GAAP

Percent of
Revenue

Revenues $125,913
Gross margin 81,035 64.4% $ 375 $81,410 64.7%
Research and development 25,904 20.6% 2,829 23,075 18.3%
Selling, general and

administrative

28,592

22.7%

7,973

20,619

16.4%
Operating expenses 54,496 43.3% 10,802 43,694 34.7%
Operating income 26,539 21.1% 11,177 37,716 30.0%

Non-GAAP Diluted
Earnings Per Share

Three Months Ended

October 3, 2009

GAAP

Measure

Stock

Compensation
Expense

Non-GAAP

Measure

Net Income $22,439 $9,484

$31,923

Diluted shares outstanding 47,322 -- 47,322
Diluted earnings per share $ 0.47 $ 0.67

Non-GAAP Income
Statement Items

Three Months Ended

July 4, 2009

GAAP

Measure

GAAP

Percent of
Revenue

Stock

Compensation
Expense

Non-GAAP

Measure

Non-GAAP

Percent of
Revenue

Revenues $104,216
Gross margin 64,781 62.2% $ 372 $65,153 62.5%

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

October 3,

2009

January 3,

2009

Assets
Current assets:
Cash and cash equivalents $ 149,072 $ 172,272

Short-term investments

228,935 101,267

Accounts receivable, net of allowance for doubtful accounts of $645 at October 3, 2009 and $1,011 at January 3, 2009

61,487 36,144
Inventories 33,510 28,293
Deferred income taxes 7,437 6,439
Prepaid expenses and other current assets 17,869 18,297
Total current assets 498,310 362,712
Long-term investments 25,344 51,821
Property, equipment and software, net 28,698 30,496
Goodwill 105,109 105,515
Other intangible assets, net 43,804 49,728
Other assets, net 16,894 23,973
Total assets $ 718,159 $ 624,245
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 26,840 $ 22,274
Accrued expenses 30,176 29,119
Deferred income on shipments to distributors 31,966 21,599
Income taxes -- 4
Total current liabilities 88,982 72,996
Long-term obligations and other liabilities 50,513 48,789
Total liabilities 139,495 121,785
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; 45,577 and 44,613 shares issued and outstanding at October 3, 2009 and January 3, 2009, respectively

5 4
Additional paid-in capital 117,555 75,711
Retained earnings 465,633 432,793
Accumulated other comprehensive loss (4,529 ) (6,048 )
Total stockholders' equity 578,664 502,460
Total liabilities and stockholders' equity $ 718,159 $ 624,245

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended
October 3,

2009

October 4,

2008

Operating Activities
Net income $ 32,840 $ 26,611
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of property, equipment and software 9,021 7,927
Loss (gain) on disposal of property, equipment and software 32 (15 )
Amortization of other intangible assets and other assets 5,924 5,118
Stock compensation expense 32,176 30,393
In-process research and development -- 10,250
Income tax benefit from employee stock-based awards 1,672 1,108
Excess income tax benefit from employee stock-based awards (1,378 ) (810 )
Deferred income taxes 626 339
Changes in operating assets and liabilities:
Accounts receivable (25,016 ) (5,838 )
Inventories (5,256 ) (1,367 )
Prepaid expenses and other assets 3,444 8,930
Accounts payable 5,656 (1,258 )
Accrued expenses 3,801 (6,922 )
Deferred income on shipments to distributors 10,367 965
Income taxes 4,246 5,654
Net cash provided by operating activities 78,155 81,085
Investing Activities
Purchases of available-for-sale investments (182,039 ) (151,470 )
Proceeds from sales and maturities of available-for-sale investments 80,312 271,824
Proceeds from sales of trading securities 2,600 --
Purchases of property, equipment and software (6,991 ) (7,861 )
Proceeds from the sale of assets -- 14,265
Purchases of other assets (2,763 ) (4,828 )
Acquisitions of businesses, net of cash acquired (2,800 ) (74,560 )
Net cash provided by (used in) investing activities (111,681 ) 47,370
Financing Activities
Proceeds from issuance of common stock 26,322 7,649
Excess income tax benefit from employee stock-based awards 1,378 810
Repurchases of common stock (12,325 ) (246,031 )
Repurchases of stock to satisfy employee tax withholding (5,049 ) (3,980 )
Net cash provided by (used in) financing activities 10,326 (241,552 )
Decrease in cash and cash equivalents (23,200 ) (113,097 )
Cash and cash equivalents at beginning of period 172,272 264,408
Cash and cash equivalents at end of period $ 149,072 $ 151,311

SOURCE: Silicon Laboratories Inc.

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

Copyright Business Wire 2009