Silicon Laboratories Inc.
Jul 25, 2013

Silicon Labs Announces Second Quarter 2013 Results

Record Revenue in Timing and Broadcast Video Product Lines

AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (NASDAQ: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported results for its second quarter ended June 29, 2013. Overall revenue in the second quarter was $141.5 million, an increase of 4.3 percent compared with the same period a year ago and down 2.6 percent sequentially.

Financial Highlights

On a GAAP basis, gross margins were 62.7 percent, a sequential improvement resulting from a shift in the product mix favoring timing devices. GAAP R&D investment was stable on a sequential basis and increased year over year to $37.4 million. GAAP SG&A expenses increased both sequentially and year over year to $32.4 million. Resulting GAAP operating income as a percentage of revenue decreased sequentially and increased year over year to 13.4 percent. GAAP diluted earnings per share were $0.29, down 37 percent sequentially due primarily to acquisition-related items and income taxes and also down 38 percent year over year.

The non-GAAP results exclude the impact of stock compensation and certain other items as set forth in the reconciliation table below. Non-GAAP gross margins increased sequentially to 62.9 percent. On a non-GAAP basis, R&D increased slightly to $33.6 million, and SG&A decreased to $27.3 million. Non-GAAP operating income in the quarter was 19.9 percent. Non-GAAP diluted earnings per share in the quarter were $0.50, down slightly compared with the second quarter of 2012.

Business Highlights

On July 1, the company closed its acquisition of Energy Micro, a leader in energy-friendly ARM® Cortex™-M based microcontrollers (MCUs) and radios. Adding to Silicon Labs' already strong MCU, radio and software solutions, this strategic acquisition accelerates growth opportunities and positions the company as the foremost innovator in embedded solutions for the growing Internet of Things and green energy markets.

In the Broad-based business, revenue and gross margin results were particularly strong from timing devices. The recently introduced Si50x CMEMS® oscillator product family, featuring the industry's first single-die MEMS oscillator solution and designed to replace crystal oscillators in high-volume applications, is expected to begin generating significant revenue in 2014.

Although revenue from Broadcast products overall was slightly down sequentially, the company achieved record revenue in video products during the second quarter, marking the fourth consecutive quarter of video revenue growth.

"During the quarter, we achieved two important milestones—the strategic acquisition of Energy Micro and the groundbreaking introduction of our new CMEMS technology platform and oscillator product line," said Tyson Tuttle, CEO of Silicon Labs. "We believe these accomplishments will help drive Silicon Labs' growth in our Broad-based products, which represent our fastest growing and largest market opportunity."

The company expects revenue for the third quarter to be in the range of $144 to $149 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 Labs' 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 (855) 859-2056 or 1 (404) 537-3406 (international) and by entering 39717385. The replay will be available through Aug. 25.

About Silicon Labs

Silicon Labs is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal ICs. Developed by a world-class engineering team with unsurpassed expertise in mixed-signal design, Silicon Labs' diverse portfolio of patented semiconductor solutions offers customers significant advantages in performance, size and power consumption. For more information about Silicon Labs, please visit www.silabs.com.

Forward-Looking Statements

This press release contains forward-looking statements based on Silicon Labs' current expectations. The words "believe," "estimate," "expect," "intend," "anticipate," "plan," "project," "will" and similar phrases as they relate to Silicon Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Labs 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 Labs may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing our distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with our accounts receivable; dependence on key personnel; stock price volatility; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Labs' business and results of operations to risks of natural disasters, epidemics, war and political unrest; debt-related risks; capital-raising risks; the competitive and cyclical nature of the semiconductor industry; average selling prices of products may decrease significantly and rapidly; information technology risks; conflict mineral risks and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. Silicon Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. References in this press release to Silicon Labs shall mean Silicon Laboratories Inc.

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
June 29,

2013

  June 30,

2012

June 29,

2013

  June 30,

2012

Revenues $ 141,543 $ 135,670 $ 286,918 $ 261,372
Cost of revenues   52,770     52,868     110,773     103,474  
Gross margin 88,773 82,802 176,145 157,898
Operating expenses:
Research and development 37,387 34,245 74,969 67,175
Selling, general and administrative   32,357     32,178     61,510     57,580  
Operating expenses   69,744     66,423     136,479     124,755  
Operating income 19,029 16,379 39,666 33,143
Other income (expense):
Interest income 152 363 487 860
Interest expense (831 ) (32 ) (1,673 ) (65 )
Other income (expense), net   114     1,079     62     968  
Income before income taxes 18,464 17,789 38,542 34,906
Provision (benefit) for income taxes   5,852     (2,720 )   5,896     77  

Net income

$ 12,612   $ 20,509   $ 32,646   $ 34,829  
 
Earnings per share:
Basic $ 0.30 $ 0.48 $ 0.77 $ 0.82
Diluted $ 0.29 $ 0.47 $ 0.76 $ 0.80
 
Weighted-average common shares outstanding:
Basic 42,552 42,655 42,370 42,556
Diluted 43,269 43,423 43,191 43,637
 
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
 
     
Non-GAAP Income Three Months Ended
Statement Items June 29, 2013
GAAP

Measure

  GAAP

Percent of Revenue

  Stock

Compensation Expense

  Termination Costs   Acquisition Related Items   Non-GAAP

Measure

  Non-GAAP

Percent of Revenue

Revenues $ 141,543
 
Gross margin 88,773 62.7 % $ 263 $ -- $ -- $ 89,036 62.9 %
 
Research and

development

37,387 26.4 % 3,483 315 --

33,589

23.7 %
 
Selling, general and

administrative

32,357

22.9

%

3,678 480

920

27,279

19.3 %
 
Operating income 19,029 13.4 % 7,424 795 920 28,168 19.9 %
 
       
Non-GAAP Diluted Three Months Ended
Earnings Per Share June 29, 2013
GAAP

Measure

Stock

Compensation Expense

Termination Costs Acquisition Related Items Non-GAAP

Measure

Net income $ 12,612 $ 7,254 $ 715 $ 920 $ 21,501
 
Diluted shares outstanding 43,269 -- -- -- 43,269
 
Diluted earnings per share $ 0.29 $ 0.50
 
 
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 
    June 29,

2013

  December 29,

2012

Assets
Current assets:
Cash and cash equivalents $ 193,468 $ 105,426
Short-term investments 151,423 176,565
Accounts receivable, net of allowances for doubtful accounts of

$720 at June 29, 2013 and $670 at December 29, 2012

68,635 78,023
Inventories 50,659 49,579
Deferred income taxes 16,387 16,652
Prepaid expenses and other current assets   46,356     41,437  
Total current assets 526,928 467,682
Long-term investments 10,197 11,369
Property and equipment, net 135,006 135,271
Goodwill 130,265 130,265
Other intangible assets, net 85,115 90,750
Other assets, net   25,510     36,629  
Total assets $ 913,021   $ 871,966  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 25,952 $ 29,622
Current portion of long-term debt 5,000 5,000
Accrued expenses 36,012 40,410
Deferred income on shipments to distributors 30,552 30,259
Income taxes   926     1,087  
Total current liabilities 98,442 106,378
Long-term debt 91,250 95,000
Other non-current liabilities   17,978     20,615  
Total liabilities 207,670 221,993
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;

42,668 and 41,879 shares issued and outstanding at

June 29, 2013 and December 29, 2012, respectively

4 4
Additional paid-in capital 32,837 10,122
Retained earnings 673,439 640,793
Accumulated other comprehensive loss   (929 )   (946 )
Total stockholders' equity   705,351     649,973  
Total liabilities and stockholders' equity $ 913,021   $ 871,966  
 
 
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
    Six Months Ended
June 29,

2013

  June 30,

2012

Operating Activities
Net income $ 32,646 $ 34,829
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment 6,634 6,749
Amortization of other intangible assets and other assets 5,635 4,559
Stock-based compensation expense 13,684 15,865
Income tax benefit (detriment) from employee stock-based awards (489 ) 2,627
Excess income tax benefit from employee stock-based awards (243 ) (2,450 )
Deferred income taxes 9,277 1,625
Changes in operating assets and liabilities:
Accounts receivable 9,388 (17,315 )
Inventories (1,028 ) (1,299 )
Prepaid expenses and other assets 5,023 4,806
Accounts payable (2,271 ) 8,766
Accrued expenses (6,013 ) (5,203 )
Deferred income on shipments to distributors 293 1,372
Income taxes   (6,439 )   (13,672 )
Net cash provided by operating activities 66,097 41,259
 
Investing Activities
Purchases of available-for-sale investments (121,994 ) (105,169 )
Proceeds from sales and maturities of available-for-sale investments 146,870 186,514
Purchases of property and equipment (6,498 ) (5,095 )
Purchases of other assets   (2,438 )   (7,919 )
Net cash provided by investing activities 15,940 68,331
 
Financing Activities
Proceeds from issuance of common stock, net of shares withheld for taxes 9,512 2,922
Excess income tax benefit from employee stock-based awards 243 2,450
Repurchases of common stock -- (36,173 )
Payments on debt   (3,750 )   --  
Net cash provided by (used) in financing activities   6,005     (30,801 )
 
Increase in cash and cash equivalents 88,042 78,789
Cash and cash equivalents at beginning of period   105,426     94,964  
Cash and cash equivalents at end of period $ 193,468   $ 173,753  

Silicon Labs
Deborah Stapleton, +1-650-470-4200
Deborah.Stapleton@silabs.com

Source: Silicon Labs

News Provided by Acquire Media