Silicon Labs Beats Expectations

April 24, 2013

Company Reports Solid Top Line Results and Strong Earnings

AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported first quarter revenue of $145.4 million, a sequential decline of five percent and an increase of 16 percent compared to the same period a year ago. GAAP diluted earnings per share were up five percent sequentially and an impressive 39 percent year over year. Non-GAAP diluted earnings per share also increased by 37 percent compared to the first quarter of 2012.

Financial Highlights

First quarter revenue declined seasonally, but market share gains enabled significant year over year growth in all major product lines. Gross margin declined sequentially due to product mix and on a GAAP-basis was 60.1 percent. GAAP R&D investment increased to $37.6 million while GAAP SG&A expense decreased to $29.2 million. Resulting GAAP operating income declined to 14.2 percent. GAAP diluted earnings per share increased again to $0.46.

The following non-GAAP results exclude the impact of stock compensation and certain other items as set forth in the reconciliation table below. Gross margin declined sequentially to 60.3 percent for the quarter. Operating expenses increased modestly to 41.7 percent of revenue. R&D and SG&A remained relatively flat at $32.5 million and $28.0 million, respectively, due to disciplined spending. Operating income for the quarter was 18.6 percent. Diluted earnings per share for the quarter were 59 cents.

Business Highlights

The company was able to grow all of its major product lines year over year through increased market share and expansion into new markets. The Broadcast products were up 7 percent sequentially, due to strong growth in both the video and audio products. The company secured record design wins with its market leading video products and grew sequentially as customers ramped up for the new model year.

In the first quarter, the broad-based products were up 15 percent year over year. A 10 percent sequential decline was due primarily to the decline of the touch controller business in handsets. Microcontrollers were down seasonally, and along with the timing and power products were impacted by softness in industrial markets. However, the company secured a record number of broad-based design wins driving confidence in the long-term prospects for continued market share gains.

"Our strategic products are all growing," said Tyson Tuttle, president and CEO of Silicon Labs. "We expect our historical headwinds will be a much smaller percent of our revenue as we exit the second quarter. We're also demonstrating good operating expense control and have a very active R&D pipeline — the right ingredients for another growth year."

Allowing for accelerated declines in legacy handset-related products, the company expects revenue for the second quarter to be $140 to $146 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 ( 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 39714733. The replay will be available through May 8.

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

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; stock price volatility; 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; product liability risks; inventory-related risks; risks associated with acquisitions and divestitures; difficulties managing international activities; difficulties managing our distributors, manufacturers and subcontractors; 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; 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; information technology risks; conflict mineral risks; the competitive and cyclical nature of the semiconductor industry 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)
      Three Months Ended
      March 30,     March 31,
      2013     2012
Revenues     $ 145,375       $ 125,702  
Cost of revenues       58,003         50,606  
Gross margin       87,372         75,096  
Operating expenses:            
Research and development       37,582         32,930  
Selling, general and administrative       29,153         25,402  
Operating expenses       66,735         58,332  
Operating income       20,637         16,764  
Other income (expense):            
Interest income       335         497  
Interest expense       (842 )       (33 )
Other income (expense), net       (52 )       (111 )
Income before income taxes       20,078         17,117  
Provision for income taxes       44         2,797  

Net income

    $ 20,034       $ 14,320  
Earnings per share:            
Basic     $ 0.47       $ 0.34  
Diluted     $ 0.46       $ 0.33  
Weighted-average common shares outstanding:            
Basic       42,186         42,458  
Diluted       43,110         43,850  
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
Non-GAAP Income Statement Items     Three Months Ended

March 30, 2013




Percent of Revenue


Compensation Expense

    Termination Costs and Impairments     Acquisition Related Items     Non-GAAP



Percent of Revenue

Revenues     $ 145,375                                    
Gross margin       87,372       60.1 %     $ 253     $ --     $ --       $ 87,625     60.3 %
Research and


      37,582       25.9 %       3,339       1,700       --        


    22.4 %
Selling, general and





      2,668       1,187      





    19.3 %
Operating expenses       66,735       45.9 %       6,007       2,887       (2,750 )       60,591     41.7 %
Operating income       20,637       14.2 %       6,260       2,887       (2,750 )       27,034     18.6 %
Non-GAAP Diluted Earnings Per Share           Three Months Ended

March 30, 2013




Compensation Expense

    Termination Costs and Impairments     Acquisition Related Items     Non-GAAP


Net income           $ 20,034       $ 5,512     $ 2,598     $ (2,750 )     $ 25,394      
Diluted shares outstanding       43,110         --       --       --         43,110      
Diluted earnings per share     $ 0.46                         $ 0.59      
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
      March 30,     December 29,
      2013     2012
Current assets:            
Cash and cash equivalents     $ 79,263       $ 105,426  
Short-term investments       229,808         176,565  
Accounts receivable, net of allowances for doubtful accounts of

$673 at March 30, 2013 and $670 at December 29, 2012

      72,766         78,023  
Inventories       56,949         49,579  
Deferred income taxes       15,411         16,652  
Prepaid expenses and other current assets       48,514         41,437  
Total current assets       502,711         467,682  
Long-term investments       11,189         11,369  
Property and equipment, net       135,761         135,271  
Goodwill       130,265         130,265  
Other intangible assets, net       87,910         90,750  
Other assets, net       28,797         36,629  
Total assets     $ 896,633       $ 871,966  
Liabilities and Stockholders' Equity            
Current liabilities:            
Accounts payable     $ 31,279       $ 29,622  
Current portion of long-term debt       5,000         5,000  
Accrued expenses       36,886         40,410  
Deferred income on shipments to distributors       29,661         30,259  
Income taxes       978         1,087  
Total current liabilities       103,804         106,378  
Long-term debt       92,500         95,000  
Other non-current liabilities       19,419         20,615  
Total liabilities       215,723         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;

42,401 and 41,879 shares issued and outstanding at

March 30, 2013 and December 29, 2012, respectively

      4         4  
Additional paid-in capital       20,954         10,122  
Retained earnings       660,827         640,793  
Accumulated other comprehensive loss       (875 )       (946 )
Total stockholders' equity       680,910         649,973  
Total liabilities and stockholders' equity     $ 896,633       $ 871,966  
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
      Three Months Ended
      March 30,     March 31,
      2013     2012
Operating Activities            
Net income     $ 20,034       $ 14,320  
Adjustments to reconcile net income to cash provided by operating activities:            
Depreciation of property and equipment       3,297         3,543  
Amortization of other intangible assets and other assets       2,840         2,280  
Stock-based compensation expense       6,260         6,693  
Income tax benefit (detriment) from employee stock-based awards       (363 )       2,656  
Excess income tax benefit from employee stock-based awards       (217 )       (2,426 )
Deferred income taxes       7,521         3,101  
Changes in operating assets and liabilities:            
Accounts receivable       5,256         (6,074 )
Inventories       (7,350 )       447  
Prepaid expenses and other assets       4,620         4,581  
Accounts payable       2,356         4,209  
Accrued expenses       (4,330 )       (5,087 )
Deferred income on shipments to distributors       (598 )       3,307  
Income taxes       (9,818 )       (5,403 )
Net cash provided by operating activities       29,508         26,147  
Investing Activities            
Purchases of available-for-sale investments       (78,851 )       (82,845 )
Proceeds from sales and maturities of available-for-sale investments       25,674         60,518  
Purchases of property and equipment       (3,898 )       (2,428 )
Purchases of other assets       (1,228 )       (850 )
Net cash used in investing activities       (58,303 )       (25,605 )
Financing Activities            
Proceeds from issuance of common stock, net of shares withheld for taxes       4,915         106  
Excess income tax benefit from employee stock-based awards       217         2,426  
Payments on debt       (2,500 )       --  
Net cash provided by financing activities       2,632         2,532  
Increase (decrease) in cash and cash equivalents       (26,163 )       3,074  
Cash and cash equivalents at beginning of period       105,426         94,964  
Cash and cash equivalents at end of period     $ 79,263       $ 98,038  


Silicon Labs
Shannon Pleasant, 512-464-9254

Source: Silicon Laboratories Inc.

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