Silicon Laboratories Inc.
Apr 27, 2011

Silicon Laboratories Reports First Quarter Results

Strong Growth from Broadcast and Broad-based Products

AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported a seven percent sequential increase in first quarter revenue to $119.6 million due to strength in its broadcast and broad-based product lines.

Financial Highlights

Revenue returned to growth in the first quarter, countering typical seasonal weakness in consumer markets with strong new product cycles.

During the quarter, the company completed the acquisition of SpectraLinear, a timing IC provider, and GAAP results include approximately $11.7 million in charges related to the acquisition, as well as typical non-cash stock compensation charges. GAAP gross margin was impacted by product mix as well as $1.1 million in acquisition charges, resulting in 60.3 percent gross margin for the first quarter. Operating expenses included $5.1 million in acquisition-related charges and ended the quarter at $35.4 million in R&D investment and $31.9 million in SG&A expense. This resulted in a fully diluted GAAP loss of four cents per share.

The following non-GAAP results exclude the impact of acquisition-related charges and stock compensation expense. Non-GAAP gross margin was 61.6 percent for the quarter, down sequentially as anticipated due to product mix. Operating expenses increased only modestly, with R&D at $29.7 million and SG&A about flat at $23.2 million. Fully diluted non-GAAP earnings per share were better than expected at $0.40. The reconciling charges are set forth in the financial measures table included below.

Business Highlights

The company's better than seasonal performance was driven by an aggressive ramp of its innovative silicon TV tuner into iDTVs by five top TV makers during the quarter. The company's timing products also achieved record revenue again which, when combined with strong growth in MCU products, enabled high single-digit sequential growth in the broad-based product category. Record design wins and expanding portfolios in both timing and MCUs created market share momentum at both existing and new customers.

"The improving complexion of our revenue base, and the momentum we currently have with our bookings and design wins have so far outweighed the industry-wide concerns that have developed following the tragedy in Japan," said Necip Sayiner, president and CEO of Silicon Laboratories. "We continue to have confidence in the annual growth targets we set in January and view the Q1 results as strong progress towards those goals."

The company guided revenue for the second quarter in the range of $124 to $130 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 (800) 642-1687 or +1 (706) 645-9291 (international) and by entering 59263865. The replay will be available through May 11, 2011.

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 Operations
(In thousands, except per share data)
(Unaudited)
 
  Three Months Ended
April 2,

2011

  April 3,

2010

Revenues $ 119,636 $ 126,719
Cost of revenues   47,478     43,129  
Gross margin 72,158 83,590
Operating expenses:
Research and development 35,359 29,922
Selling, general and administrative   31,860     28,003  
Operating expenses   67,219     57,925  
Operating income 4,939 25,665
Other income (expense):
Interest income 571 666
Interest expense (5 ) (23 )
Other income (expense), net   209     (297 )
Income before income taxes 5,714 26,011
Provision for income taxes   7,674     4,932  

Net income (loss)

$ (1,960 ) $ 21,079  
 
Earnings (loss) per share:
Basic $ (0.04 ) $ 0.46
Diluted $ (0.04 ) $ 0.44
 
Weighted-average common shares outstanding:
Basic 44,269 45,816
Diluted 44,269 47,926
 
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
 
Non-GAAP Income Statement     Three Months Ended
Items April 2, 2011
 

GAAP
Measure

 

GAAP
Percent of
Revenue

 

Stock
Compensation
Expense

 

Acquisition
Related Costs

 

Non-GAAP
Measure

 

Non-GAAP
Percent of
Revenue

Revenues $ 119,636
 
Gross margin 72,158 60.3 % $ 338 $ 1,149 $ 73,645 61.6 %
 
Research and development 35,359 29.6 % 3,994 1,618 29,747 24.9 %
 
Selling, general and

administrative

31,860

26.6

%

5,141 3,526

23,193

19.4 %
 
Operating income 4,939 4.1 % 9,473 6,293 20,705 17.3 %
 
Provision for income taxes 7,674 1,027 (5,425 ) 3,276
 
               
Non-GAAP Diluted Earnings Three Months Ended
Per Share April 2, 2011

GAAP
Measure

Stock
Compensation
Expense

Acquisition
Related Costs

Non-GAAP
Measure

Net income (loss) $ (1,960 ) $ 8,446 $ 11,718 $ 18,204
 
 

GAAP
Measure

Dilutive Securities Excluded
Due to Net Loss

Non-GAAP
Measure

Diluted shares outstanding 44,269 1,776 46,045
 
 
Diluted earnings (loss) per share $ (0.04 ) $ 0.40  
 
 
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 
    April 2,

2011

  January 1,

2011

Assets
Current assets:
Cash and cash equivalents $ 118,496 $ 138,567
Short-term investments 203,785 227,295
Accounts receivable, net of allowance for doubtful accounts of

$724 at April 2, 2011 and $772 at January 1, 2011

58,493 45,030
Inventories 41,057 39,450
Deferred income taxes 9,461 9,140
Prepaid expenses and other current assets   39,922     34,447  
Total current assets 471,214 493,929
Long-term investments 16,965 17,500
Property and equipment, net 29,464 29,945
Goodwill 117,215 112,296
Other intangible assets, net 68,836 53,242
Other assets, net   29,816     20,746  
Total assets $ 733,510   $ 727,658  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 20,371 $ 24,433
Accrued expenses 26,492 25,604
Deferred income on shipments to distributors 28,896 26,127
Income taxes   3,922     3,692  
Total current liabilities 79,681 79,856
Long-term obligations and other liabilities   23,540     22,372  
Total liabilities 103,221 102,228
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;

44,513 and 43,933 shares issued and outstanding at

April 2, 2011 and January 1, 2011, respectively

4 4
Additional paid-in capital 56,534 49,947
Retained earnings 577,167 579,127
Accumulated other comprehensive loss   (3,416 )   (3,648 )
Total stockholders' equity   630,289     625,430  
Total liabilities and stockholders' equity $ 733,510   $ 727,658  
 
 
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
    Three Months Ended
April 2,

2011

  April 3,

2010

Operating Activities
Net income (loss) $ (1,960 ) $ 21,079
Adjustments to reconcile net income (loss) to cash provided by (used in) operating

activities:

Depreciation of property and equipment 3,253 2,879
Amortization of other intangible assets and other assets 3,057 1,849
Stock-based compensation expense 9,473 10,256
Income tax benefit from employee stock-based awards 1,184 1,286
Excess income tax benefit from employee stock-based awards (1,142 ) (800 )
Deferred income taxes 1,366 616
Changes in operating assets and liabilities:
Accounts receivable (11,704 ) (804 )
Inventories (759 ) 3,832
Prepaid expenses and other assets (4,499 ) (973 )
Accounts payable (4,787 ) 1,046
Accrued expenses (1,634 ) (1,110 )
Deferred income on shipments to distributors 2,293 (50 )
Income taxes   3,233     (7,991 )
Net cash provided by (used in) operating activities (2,626 ) 31,115
Investing Activities
Purchases of available-for-sale investments (31,492 ) (121,357 )
Proceeds from sales and maturities of marketable securities 55,092 67,697
Purchases of property and equipment (2,697 ) (1,747 )
Purchases of other assets (584 ) (3,436 )
Acquisition of business, net of cash acquired   (27,546 )   --  
Net cash used in investing activities (7,227 ) (58,843 )
Financing Activities
Proceeds from issuance of common stock, net of shares withheld for taxes (3,580 ) 7,483
Excess income tax benefit from employee stock-based awards 1,142 800
Repurchases of common stock (606 ) (24,092 )
Payments on debt   (7,174 )   --  
Net cash used in financing activities   (10,218 )   (15,809 )
 
Decrease in cash and cash equivalents (20,071 ) (43,537 )
Cash and cash equivalents at beginning of period   138,567     195,737  
Cash and cash equivalents at end of period $ 118,496   $ 152,200  

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

Source: Silicon Laboratories Inc.

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