Silicon Laboratories Inc.
Oct 24, 2013

Silicon Labs Announces Third Quarter 2013 Results

Record Revenue for Broadcast Video and Solid Results for Broad-based Products

AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (NASDAQ: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported financial results for its third quarter ended Sept. 28, 2013. Overall revenue in the third quarter was $146.9 million, an increase of 3.8 percent sequentially and a 1.7 percent decrease compared with the same period a year ago.

Financial Highlights

On a GAAP basis, gross margins were 60.0 percent. GAAP R&D investment increased on a sequential basis and year over year to $40.7 million. GAAP SG&A expenses increased both sequentially and year over year to $37.0 million. Resulting GAAP operating income as a percentage of revenue decreased both sequentially and year over year to 7.1 percent. GAAP diluted earnings per share were $0.15, down 48.3 percent sequentially and down 37.5 percent year over year due primarily to Energy Micro acquisition-related items.

The non-GAAP results exclude the impact of stock compensation, amortization from acquired intangible assets and certain other items as set forth in the reconciliation table below. Non-GAAP gross margins decreased sequentially to 61.1 percent. On a non-GAAP basis, R&D expenses increased to $33.7 million, and SG&A expenses increased to $29.8 million. Non-GAAP operating income in the quarter was 17.9 percent. Non-GAAP diluted earnings per share in the quarter were $0.45, down sequentially and year over year.

Business Highlights

Silicon Labs reported record revenue for Broadcast video products and solid performance for microcontroller (MCU) and timing products. Revenue from Broad-based products, which include MCU, timing, power and sensor products, represented 50 percent of total revenue in the third quarter, up 6.5 percent sequentially.

The company continues to expand its position in the Internet of Things (IoT) market with solid design win activity in home automation, smart energy and smart metering applications. Silicon Labs completed its first quarter with Energy Micro as a key part of the company. The teams and operational systems are fully integrated, and the product development roadmaps are aligned to enable the next generation of energy-friendly microcontrollers and radios. During the quarter, Silicon Labs introduced a new family of 8-bit MCUs optimized for cost-sensitive motor control and industrial applications.

Revenue from Broadcast products, including audio and video tuner product lines, represented 35 percent of total revenue in the third quarter and delivered another growth quarter.

In the third quarter, Silicon Labs introduced a new family of TV tuners offering the industry's highest performance and integration, as well as lowest system cost. These TV tuners are based on five generations of patented architectural enhancements and a production history of more than 200 million silicon tuners shipped to date, solidifying Silicon Labs' No. 1 position in the video tuner market. Continuing to diversify its Broadcast video revenue, the company also announced the world's most advanced digital video broadcast (DVB) demodulators for TVs and set-top boxes.

"We achieved record revenue in the third quarter for our industry-leading Broadcast video products, as well as solid results for our Broad-based products," said Tyson Tuttle, CEO of Silicon Labs. "The integration of Energy Micro further strengthens our Broad-based portfolio and our leadership position in low-energy MCU solutions for the Internet of Things."

The company expects revenue for the fourth quarter to be in the range of $140 million to $145 million, with declines in Broadcast video reflecting weak end-customer demand and pronounced seasonality.

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 (404) 537-3406 (international) and by entering 39717386. The replay will be available through Nov. 24.

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 Nine Months Ended
September 28,

2013

  September 29,

2012

September 28,

2013

  September 29,

2012

Revenues $ 146,933 $ 149,461 $ 433,851 $ 410,833
Cost of revenues   58,772     62,968     169,545     166,442  
Gross margin 88,161 86,493 264,306 244,391
Operating expenses:
Research and development 40,662 34,768 115,631 101,943
Selling, general and administrative   37,009     24,495     98,519     82,075  
Operating expenses   77,671     59,263     214,150     184,018  
Operating income 10,490 27,230 50,156 60,373
Other income (expense):
Interest income 129 243 616 1,103
Interest expense (813 ) (234 ) (2,486 ) (299 )
Other income (expense), net   (23 )   (161 )   39     807  
Income before income taxes 9,783 27,078 48,325 61,984
Provision for income taxes   3,252     17,054     9,148     17,131  

Net income

$ 6,531   $ 10,024   $ 39,177   $ 44,853  
 
Earnings per share:
Basic $ 0.15 $ 0.24 $ 0.92 $ 1.06
Diluted $ 0.15 $ 0.24 $ 0.90 $ 1.04
 
Weighted-average common shares outstanding:
Basic 42,684 41,735 42,477 42,279
Diluted 43,922 42,520 43,437 43,261
 
 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

   

Non-GAAP Income
Statement Items

Three Months Ended

September 28, 2013

GAAP
Measure

 

GAAP
Percent of
Revenue

 

Stock
Compensation
Expense

 

Intangible
Asset
Amortization

 

Termination
Costs

 

Acquisition
Related
Items

 

Non-GAAP
Measure

 

Non-GAAP
Percent of
Revenue

Revenues $ 146,933
 
Gross margin 88,161 60.0 % $ 269 $ 390 $ -- $ 955 $ 89,775 61.1 %
 
Research and

development

40,662 27.7 % 3,729 3,217 -- --

33,716

22.9 %
 

Selling, general and

administrative

37,009

25.2

%

4,622 729 291

1,604

29,763

20.3 %
 
Operating income 10,490 7.1 % 8,620 4,336 291 2,559 26,296 17.9 %
 
                             
Non-GAAP Diluted Earnings Per Share     Three Months Ended

September 28, 2013

 

GAAP
Measure

Stock
Compensation
Expense

Intangible
Asset
Amortization

Termination
Costs

Acquisition
Related
Items

Non-GAAP
Measure

Net income $ 6,531 $ 7,716 $ 2,986 $ 291 $ 2,292 $ 19,816
 
Diluted shares outstanding

 

43,922 -- -- -- -- 43,922
 
Diluted earnings per share $ 0.15 $ 0.45
   
 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 
September 28,

2013

December 29,

2012

Assets
Current assets:
Cash and cash equivalents $ 116,539 $ 105,426
Short-term investments 153,857 176,565
Accounts receivable, net of allowances for doubtful accounts of

$717 at September 28, 2013 and $670 at December 29, 2012

68,499 78,023
Inventories 44,817 49,579
Deferred income taxes 17,356 16,652
Prepaid expenses and other current assets   51,097     41,437  
Total current assets 452,165 467,682
Long-term investments 10,671 11,369
Property and equipment, net 134,398 135,271
Goodwill 227,289 130,265
Other intangible assets, net 136,054 90,750
Other assets, net   39,150     36,629  
Total assets $ 999,727   $ 871,966  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 24,885 $ 29,622
Current portion of long-term debt 5,000 5,000
Accrued expenses 42,639 40,410
Deferred income on shipments to distributors 29,876 30,259
Income taxes   1,457     1,087  
Total current liabilities 103,857 106,378
Long-term debt 91,250 95,000
Other non-current liabilities   70,342     20,615  
Total liabilities 265,449 221,993
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;

43,093 and 41,879 shares issued and outstanding at

September 28, 2013 and December 29, 2012, respectively

4 4
Additional paid-in capital 55,085 10,122
Retained earnings 679,970 640,793
Accumulated other comprehensive loss   (781 )   (946 )
Total stockholders' equity   734,278     649,973  
Total liabilities and stockholders' equity $ 999,727   $ 871,966  
 
 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
Nine Months Ended
September 28,

2013

  September 29,

2012

Operating Activities
Net income $ 39,177 $ 44,853
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment 10,050 10,247
Net gain on the purchase of property and equipment -- (8,457 )
Amortization of other intangible assets and other assets 11,051 11,001
Stock-based compensation expense 22,304 23,796
Income tax benefit (detriment) from employee stock-based awards (621 ) 2,301
Excess income tax benefit from employee stock-based awards (284 ) (2,470 )
Deferred income taxes 6,790 5,024
Changes in operating assets and liabilities:
Accounts receivable 12,599 (18,470 )
Inventories 6,213 (5,994 )
Prepaid expenses and other assets (1,606 ) 13,283
Accounts payable (3,017 ) 9,113
Accrued expenses (2,864 ) (797 )
Deferred income on shipments to distributors (3,169 ) 5,267
Income taxes   (1,429 )   (4,378 )
Net cash provided by operating activities 95,194 84,319
 
Investing Activities
Purchases of available-for-sale investments (164,317 ) (138,822 )
Proceeds from sales and maturities of available-for-sale investments 186,936 209,972
Purchases of property and equipment (8,984 ) (99,720 )
Purchases of other assets (3,499 ) (6,146 )
Acquisition of businesses, net of cash acquired   (86,441 )   (71,852 )
Net cash used in investing activities (76,305 ) (106,568 )
 
Financing Activities
Proceeds from issuance of common stock, net of shares withheld for taxes 11,900 3,035
Excess income tax benefit from employee stock-based awards 284 2,470
Repurchases of common stock (7,776 ) (51,040 )
Proceeds from issuance of long-term debt, net -- 98,325
Payments on debt   (12,184 )   --  
Net cash provided by (used) in financing activities   (7,776 )   52,790  
 
Increase in cash and cash equivalents 11,113 30,541
Cash and cash equivalents at beginning of period   105,426     94,964  
Cash and cash equivalents at end of period $ 116,539   $ 125,505  

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

Source: Silicon Laboratories Inc.

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