Silicon Laboratories Inc.
Apr 28, 2010

Silicon Laboratories Beats Expectations

Broad-based Business Momentum Accelerating

AUSTIN, Texas, Apr 28, 2010 (BUSINESS WIRE) -- Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported first quarter revenue of $126.7 million, beating expectations and setting a record for first quarter performance. The company also exceeded expectations on gross margin and earnings per share.

Financial Highlights

First quarter revenue of $126.7 million was a 51 percent increase over the same period in 2009 and flat sequentially, a better than seasonal result. First quarter GAAP gross margin increased considerably to 66 percent. R&D investment for the first quarter was $29.9 million. SG&A decreased to $28 million. Other income, principally interest income on invested cash, was under $1 million. GAAP operating income was more than 20 percent for the third consecutive quarter. Fully diluted earnings per share was $0.44, up dramatically from $0.01 during the same period last year.

The following non-GAAP results exclude the impact of stock compensation expense and other one-time charges. Non-GAAP gross margin for the quarter was up again at 66.2 percent. Non-GAAP operating expenses increased as expected to 38 percent. R&D investment increased to $25.8 million due to a record number of new product tape outs and increased hiring. SG&A expense decreased to $22.3 million. Non-GAAP operating income exceeded 28 percent of revenue. Non-GAAP diluted earnings per share for the first quarter was $0.62, well above expectations and nearly triple the result of the same period last year. The reconciling charges are set forth in the financial measures table included below.

Share repurchases during the quarter totaled approximately $25 million. The company ended the quarter with $447 million in cash, cash equivalents and investments due to continued healthy cash flow from operations.

Business Summary

Strong performance for the quarter was led by the company's broad-based products, which were up 11 percent sequentially. Strength in networking equipment and customer expansion resulted in another record quarter for timing products. The embedded mixed-signal products also had a record quarter, with particular strength in MCU coming from recovery in demand among communications and industrial customers. Record development kit shipments were driven by wireless applications in home security, metering and home automation.

Strength in the company's consumer audio products partially offset a better than seasonal decline in handsets and portable media players, enabling the broadcast products overall to be down by only 10 percent. Design traction continued for the company's video products, and the company achieved first revenue for the silicon tuner in the first quarter. The access product category remained a steady performer and was about flat sequentially.

"Q1 was a great start to 2010," said Necip Sayiner, president and CEO of Silicon Laboratories. "Our products are delivering on the growth we had anticipated with very attractive gross margins. We are executing on a record number of exciting new product developments and have been able to attract an increasing number of talented employees to the company. Our financial strength is giving us the ability to continue to invest and capitalize on a number of untapped strategic opportunities."

The company guided revenues for the second quarter in the range of $131 to $135 million.

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- 888-562-2923 or +1 203-369-3750 (international). Replays will be available through May 12, 2010.

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
April 3,

2010

April 4,

2009

Revenues $ 126,719 $ 83,701
Cost of revenues 43,129 33,023
Gross margin 83,590 50,678
Operating expenses:
Research and development 29,922 26,069
Selling, general and administrative 28,003 23,442
Operating expenses 57,925 49,511
Operating income 25,665 1,167
Other income (expense):
Interest income 666 882
Interest expense (23 ) (52 )
Other income (expense), net (297 ) (52 )
Income before income taxes 26,011 1,945
Provision for income taxes 4,932 1,274

Net income

$ 21,079 $ 671
Earnings per share:
Basic $ 0.46 $ 0.02
Diluted $ 0.44 $ 0.01
Weighted-average common shares outstanding:
Basic 45,816 44,633
Diluted 47,926 45,083

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

Non-GAAP Income
Statement Items

Three Months Ended

April 3, 2010

GAAP

Measure

GAAP
Percent of
Revenue

Stock
Compensation
Expense

Non-GAAP

Measure

Non-GAAP
Percent of
Revenue

Revenues $ 126,719
Gross margin 83,590 66.0 % $ 356 $ 83,946 66.2 %
Research and development 29,922 23.6 % 4,164 25,758 20.3 %
Selling, general and

administrative

28,003

22.1

%

5,736

22,267

17.6 %
Operating expenses 57,925 45.7 % 9,900 48,025 37.9 %
Operating income 25,665 20.3 % 10,256 35,921 28.3 %

Non-GAAP Diluted
Earnings Per Share

Three Months Ended

April 3, 2010

GAAP

Measure

Stock
Compensation
Expense

Non-GAAP

Measure

Net income $ 21,079 $ 8,769 $ 29,848
Diluted shares outstanding 47,926 -- 47,926
Diluted earnings per share $ 0.44 $ 0.62

Non-GAAP Diluted
Earnings Per Share

Three Months Ended

April 4, 2009

GAAP

Measure

Stock
Compensation
Expense

Termination
Costs and
Impairments

Non-GAAP

Measure

Net income $ 671 $ 8,641 $ 732 $ 10,044
Diluted shares outstanding 45,083 -- -- 45,083
Diluted earnings per share $ 0.01 $ 0.22

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

April 3,

2010

January 2,

2010

Assets

Current assets:
Cash and cash equivalents $ 152,200 $ 195,737
Short-term investments 268,332 214,486

Accounts receivable, net of allowance for doubtful
accounts of $575 at April 3, 2010 and $567 at
January 2, 2010

56,932 56,128
Inventories 27,652 31,512
Deferred income taxes 7,908 7,620
Prepaid expenses and other current assets 21,161 18,515
Total current assets 534,185 523,998
Long-term investments 25,991 24,676
Property and equipment, net 26,654 27,785
Goodwill 105,109 105,109
Other intangible assets, net 40,037 41,886
Other assets, net 20,397 19,384
Total assets $ 752,373 $ 742,838
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 28,491 $ 28,759
Accrued expenses 24,443 25,399
Deferred income on shipments to distributors 28,420 28,470
Income taxes 1,056 6,011
Total current liabilities 82,410 88,639
Long-term obligations and other liabilities 24,327 24,403
Total liabilities 106,737 113,042
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; 45,790 and 45,772 shares issued and
outstanding at April 3, 2010 and January 2, 2010,
respectively

5 5
Additional paid-in capital 122,052 128,262
Retained earnings 526,964 505,885
Accumulated other comprehensive loss (3,385 ) (4,356 )
Total stockholders' equity 645,636 629,796
Total liabilities and stockholders' equity $ 752,373 $ 742,838

SOURCE: Silicon Laboratories Inc.

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

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