Silicon Laboratories Inc.
SILICON LABORATORIES INC (Form: 8-K, Received: 10/25/2017 08:03:43)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): October 25, 2017

 

SILICON LABORATORIES INC.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

 

000-29823

 

74-2793174

(State or Other Jurisdiction

 

(Commission File Number)

 

(IRS Employer

of Incorporation)

 

 

 

Identification No.)

 

400 West Cesar Chavez, Austin, TX

 

78701

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (512) 416-8500

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. o

 

 

 



 

Item 2.02. Results of Operations and Financial Condition

 

On October 25, 2017, Silicon Laboratories Inc. (“Silicon Laboratories”) issued a press release describing its results of operations for its fiscal quarter ended September 30, 2017. A copy of the press release is attached as Exhibit 99 to this report.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits.

 

99                         Press Release of Silicon Laboratories Inc. dated October 25, 2017

 

Use of Non-GAAP Financial Information

 

From time to time, Silicon Laboratories provides certain non-GAAP financial measures as additional information relating to its operating results. The non-GAAP financial measurements provided in the press release furnished herewith do not replace the presentation of Silicon Laboratories’ GAAP financial results. These additional measurements merely provide supplemental information to assist investors in analyzing Silicon Laboratories’ financial position and results of operations; however, these measures are not in accordance with, or an alternative to, GAAP and may be different from non-GAAP measures used by other companies.

 

Non-GAAP financial measures used by Silicon Laboratories include non-GAAP gross margin, non-GAAP research and development expense, non-GAAP selling, general and administrative expense, non-GAAP operating income, non-GAAP interest expense, non-GAAP net income and non-GAAP diluted earnings per share. Silicon Laboratories has chosen to provide this information to investors because it believes that such supplemental information enables them to perform meaningful comparisons of past, present and future operating results, and as a means to highlight the results of core ongoing operations.

 

Non-GAAP financial measures are adjusted by the following items:

 

·                   Stock compensation expense — represents charges for employee stock awards issued under Silicon Laboratories’ stock-based compensation plans. Stock compensation expense is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

 

·                   Intangible asset amortization — primarily represents charges for the amortization of intangibles assets, such as core and developed technology, customer relationships and trademarks, acquired in connection with business combinations. Intangible asset amortization is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

 

·                   Acquisition related items — primarily including the following: charges for the fair value write-up associated with inventory acquired; adjustments to the fair value of acquisition-related contingent consideration; and acquisition-related costs to effect a business combination, such as costs for attorneys, investment bankers, accountants and other third party service providers. Acquisition related items are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

 

·                   Termination costs and impairments — primarily include costs associated with certain employee terminations and asset impairments. Termination costs and impairments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

 

2



 

·                   Non-cash interest expense — represents charges for the amortization of the debt discount on Silicon Laboratories’ convertible senior notes. Such interest expense is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

 

·                   Income tax adjustments — primarily include the following: the current and deferred income tax effects of the above non-GAAP adjustments; other indirect impacts of excluding stock-based compensation; and the income tax impact of certain intercompany license arrangements for technology acquired in business combinations. Income tax adjustments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

 

Pursuant to the requirements of Regulation G, we have provided in the press release furnished with this report a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

 

The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  The information contained therein and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Silicon Laboratories, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

99

 

Press Release of Silicon Laboratories Inc. dated October 25, 2017

 

4



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

SILICON LABORATORIES INC.

 

 

 

 

 

 

October 25, 2017

 

/s/ John C. Hollister

Date

 

John C. Hollister

 

 

Senior Vice President and

 

 

Chief Financial Officer

 

 

(Principal Financial Officer)

 

5


Exhibit 99

 

 

Silicon Labs Announces Third Quarter 2017 Results

 

— Achieves All-Time Record Revenue —

 

AUSTIN, Texas — Oct. 25, 2017 — Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its third quarter ended September 30, 2017. Revenue in the third quarter ended at the high end of guidance at $199 million, up from $190 million in the second quarter, and establishing a new all-time record. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.46 and $0.90, respectively.

 

“We are very pleased with our third quarter results, achieving record revenue in IoT and Infrastructure, and in total,” said Tyson Tuttle, CEO of Silicon Labs. “Our portfolio is well positioned in high-quality growth markets, including IoT, infrastructure, green energy, and data communications, where we generate more than 70% of our total revenue, offering a long runway for growth and share gains.”

 

Third Quarter Financial Highlights

 

·                   IoT revenue established a record, increasing to $100 million, up 2% sequentially and 23% year-on-year.

·                   Infrastructure revenue increased to $39 million, up 2% sequentially and 1% year-on-year.

·                   Broadcast revenue increased to $43 million, up 17% sequentially and 6% year-on-year.

·                   Access revenue declined to $17 million, down 3% sequentially and year-on-year.

 

On a GAAP basis:

 

·                   GAAP gross margin was 58.7%.

·                   GAAP R&D expenses were $52 million.

·                   GAAP SG&A expenses were $40 million.

·                   GAAP operating income as a percentage of revenue was 12.6%.

·                   GAAP diluted earnings per share were $0.46.

 

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

 

·                   Non-GAAP gross margin was 58.8%.

·                   Non-GAAP R&D expenses were $41 million.

·                   Non-GAAP SG&A expenses were $32 million.

·                   Non-GAAP operating income as a percentage of revenue was 21.8%.

 



 

·                   Non-GAAP diluted earnings per share were $0.90.

 

Product Highlights

 

·                   Launched the Si72xx magnetic sensor portfolio, featuring the industry’s most flexible, configurable and feature-rich Hall-effect magnetic sensors.

·                   Introduced a comprehensive USB Type-C™ reference design, simplifying the development of rechargeable battery packs used to power portable devices.

·                   Launched the Si5381/82/86 wireless clock family, leveraging Silicon Labs’ DSPLL technology to deliver an advanced timing solution that combines 4G/LTE and Ethernet clocking in a single IC.

·                   Introduced the high-performance Si5332 clock family, offering the industry’s most integrated timing solution for 10/25/100G networking and storage applications.

·                   Launched the Si522xx PCIe clock family, providing ultra-low jitter, high integration and very low power for applications using PCI Express® (PCIe®) Gen 1/2/3/4.

·                   Introduced a new portfolio of Global and Dual Eagle AM/FM receivers and digital radio tuners, and Digital Falcon coprocessors, enabling automakers and Tier 1 suppliers to address all automotive infotainment market segments.

 

Business Outlook

 

The company expects revenue in the fourth quarter to be in the range of $195 million to $201 million, and also estimates the following:

 

On a GAAP basis:

 

·                                           GAAP gross margin at approximately 58.5%.

·                                           GAAP operating expenses at approximately $91.0 million.

·                                           GAAP effective tax rate at 11.0%.

·                                           GAAP diluted earnings per share between $0.40 and $0.46.

 

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

 

·                                           Non-GAAP gross margin at 58.5%.

·                                           Non-GAAP operating expenses at approximately $73.5 million.

·                                           Non-GAAP effective tax rate at 11.0%.

·                                           Non-GAAP diluted earnings per share between $0.83 and $0.89.

 



 

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 on Silicon Labs’ website (www.silabs.com) under Investor Relations. 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 entering conference ID 8462249. The replay will be available through November 25, 2017.

 

About Silicon Labs

 

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for a smarter, more connected world. Our award-winning technologies are shaping the future of the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. Our world-class engineering team creates products focused on performance, energy savings, connectivity and simplicity. 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; cyber-attacks against our products and our networks; 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, the “S” symbol, and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

 

CONTACT: Jalene Hoover, +1 (512) 428-1610, Jalene.Hoover@silabs.com

 



 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,
2017

 

October 1,
2016

 

September 30,
2017

 

October 1,
2016

 

Revenues

 

$

198,723

 

$

178,083

 

$

567,849

 

$

515,016

 

Cost of revenues

 

82,149

 

69,880

 

232,922

 

202,988

 

Gross margin

 

116,574

 

108,203

 

334,927

 

312,028

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

52,000

 

48,437

 

156,756

 

149,118

 

Selling, general and administrative

 

39,606

 

38,034

 

119,587

 

116,716

 

Operating expenses

 

91,606

 

86,471

 

276,343

 

265,834

 

Operating income

 

24,968

 

21,732

 

58,584

 

46,194

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income and other, net

 

1,923

 

273

 

4,094

 

449

 

Interest expense

 

(4,764

)

(643

)

(9,265

)

(1,939

)

Income before income taxes

 

22,127

 

21,362

 

53,413

 

44,704

 

Provision for income taxes

 

2,178

 

1,344

 

1,469

 

3,319

 

Net income

 

$

19,949

 

$

20,018

 

$

51,944

 

$

41,385

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.47

 

$

0.48

 

$

1.23

 

$

0.99

 

Diluted

 

$

0.46

 

$

0.47

 

$

1.20

 

$

0.98

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

42,553

 

41,614

 

42,376

 

41,673

 

Diluted

 

43,374

 

42,307

 

43,194

 

42,263

 

 



 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

 

 

Three Months Ended
September 30, 2017

 

Non-GAAP Income
Statement Items

 

GAAP
Measure

 

GAAP
Percent of
Revenue

 

Stock
Compensation
Expense

 

Intangible
Asset
Amortization

 

Acquisition
Related
Items

 

Non-GAAP
Measure

 

Non-GAAP
Percent of
Revenue

 

Revenues

 

$

198,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

116,574

 

58.7

%

$

281

 

$

 

$

 

$

116,855

 

58.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

52,000

 

26.2

%

5,411

 

5,187

 

 

41,402

 

20.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

39,606

 

19.9

%

5,663

 

1,647

 

161

 

32,135

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

24,968

 

12.6

%

11,355

 

6,834

 

161

 

43,318

 

21.8

%

 

 

 

Three Months Ended
September 30, 2017

 

Non-GAAP
Earnings Per Share

 

GAAP
Measure

 

Stock
Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Acquisition
Related
Items*

 

Non-cash
Interest
Expense*

 

Income Tax
Adjustments

 

Non-GAAP
Measure

 

Net income

 

$

19,949

 

$

11,355

 

$

6,834

 

$

161

 

$

2,674

 

$

(1,796

)

$

39,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

43,374

 

 

 

 

 

 

 

 

 

 

 

43,374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.46

 

 

 

 

 

 

 

 

 

 

 

$

0.90

 

 


* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

 

 

Three Months Ending
December 30, 2017

 

 

 

 

 

 

 

Business Outlook

 

GAAP
Measure

 

Non-GAAP
Adjustments

 

Non-GAAP
Measure

 

 

 

 

 

 

 

Gross margin

 

58.5

%

0.0

%

58.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

91.0

 

$

17.5

 

$

73.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

11.0

%

0.0

%

11.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share - low

 

$

0.40

 

$

0.43

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share - high

 

$

0.46

 

$

0.43

 

$

0.89

 

 

 

 

 

 

 

 



 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

September 30,
2017

 

December 31,
2016

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

236,459

 

$

141,106

 

Short-term investments

 

482,396

 

153,961

 

Accounts receivable, net

 

76,188

 

74,401

 

Inventories

 

72,895

 

59,578

 

Prepaid expenses and other current assets

 

37,563

 

61,805

 

Total current assets

 

905,501

 

490,851

 

Long-term investments

 

5,471

 

5,196

 

Property and equipment, net

 

129,075

 

129,559

 

Goodwill

 

288,629

 

276,130

 

Other intangible assets, net

 

89,859

 

103,565

 

Other assets, net

 

59,251

 

76,543

 

Total assets

 

$

1,477,786

 

$

1,081,844

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

38,857

 

$

39,577

 

Accrued expenses

 

60,376

 

50,100

 

Deferred income on shipments to distributors

 

56,701

 

45,568

 

Income taxes

 

4,057

 

4,450

 

Total current liabilities

 

159,991

 

139,695

 

Long-term debt

 

 

72,500

 

Convertible debt

 

338,717

 

 

Other non-current liabilities

 

36,246

 

42,691

 

Total liabilities

 

534,954

 

254,886

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock — $0.0001 par value; 10,000 shares authorized; no shares issued

 

 

 

Common stock — $0.0001 par value; 250,000 shares authorized; 42,562 and 41,889 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively

 

4

 

4

 

Additional paid-in capital

 

87,004

 

24,463

 

Retained earnings

 

856,159

 

801,999

 

Accumulated other comprehensive income (loss)

 

(335

)

492

 

Total stockholders’ equity

 

942,832

 

826,958

 

Total liabilities and stockholders’ equity

 

$

1,477,786

 

$

1,081,844

 

 



 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,
2017

 

October 1,
2016

 

Operating Activities

 

 

 

 

 

Net income

 

$

51,944

 

$

41,385

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

Depreciation of property and equipment

 

11,068

 

9,912

 

Amortization of other intangible assets and other assets

 

20,531

 

21,461

 

Amortization of debt discount and debt issuance costs

 

6,984

 

 

Stock-based compensation expense

 

33,007

 

30,057

 

Income tax shortfall from stock-based awards

 

 

(1,611

)

Deferred income taxes

 

(5,703

)

(1,460

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(1,587

)

(11,322

)

Inventories

 

(13,196

)

(1,558

)

Prepaid expenses and other assets

 

23,506

 

7,404

 

Accounts payable

 

1,746

 

1,280

 

Accrued expenses

 

9,720

 

8,930

 

Deferred income on shipments to distributors

 

11,039

 

11,573

 

Income taxes

 

(424

)

1,459

 

Other non-current liabilities

 

(7,269

)

(10,891

)

Net cash provided by operating activities

 

141,366

 

106,619

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

Purchases of available-for-sale investments

 

(471,938

)

(131,741

)

Sales and maturities of available-for-sale investments

 

143,765

 

129,511

 

Purchases of property and equipment

 

(10,494

)

(8,545

)

Purchases of other assets

 

(2,622

)

(4,994

)

Acquisition of business, net of cash acquired

 

(13,658

)

 

Net cash used in investing activities

 

(354,947

)

(15,769

)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Proceeds from issuance of long-term debt, net

 

389,468

 

 

Payments on debt

 

(72,500

)

(5,000

)

Repurchases of common stock

 

 

(40,543

)

Payment of taxes withheld for vested stock awards

 

(14,870

)

(10,148

)

Proceeds from the issuance of common stock

 

6,836

 

8,451

 

Payment of acquisition-related contingent consideration

 

 

(9,500

)

Net cash provided by (used in) financing activities

 

308,934

 

(56,740

)

 

 

 

 

 

 

Increase in cash and cash equivalents

 

95,353

 

34,110

 

Cash and cash equivalents at beginning of period

 

141,106

 

114,085

 

Cash and cash equivalents at end of period

 

$

236,459

 

$

148,195