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Silicon Laboratories Reports Strong Fourth Quarter Performance

January 25, 2006

GAAP operating income for the fourth quarter was $17.8 million or 16.2 percent of revenue. Excluding stock compensation expense, adjusted operating income for the fourth quarter was $20.2 million, or 18.4 percent of revenue, and adjusted diluted net income per share was $0.31. The reconciling charges are set forth in the reconciliation of GAAP to non-GAAP financial measures table included below. The company increased cash and investments by approximately $28 million to $364 million at year end.

Business Summary

Revenue growth in the fourth quarter was due to robust wireless demand across the customer base. Driven primarily by the Aero® transceiver products, mobile handset revenue increased by 14 percent sequentially and represented approximately 47 percent of revenue. There continued to be strong momentum for new products including the EDGE transceiver, tri-band PA, the FM tuner and the AeroFONE® single-chip phone.

The broad-based mixed-signal business declined slightly and represented a little more than half of the revenue in the fourth quarter and for the year. Key growth areas for the business in 2005 included the ProSLIC® telephony interface for VoIP, which grew by greater than 60 percent year over year, and microcontrollers, which grew by more than 30 percent year over year. The company also sampled hundreds of new customers who are evaluating recently introduced broad-based mixed-signal products including the new VCXO family, the SiRX™ set-top box receiver and the ISOmodem® fax modem.

"The business performed very well in the fourth quarter and we anticipate continued strength in our wireless business due to strong market demand," said Necip Sayiner, president and CEO of Silicon Laboratories. "Customer feedback has validated that our new products are highly differentiated, and we are building momentum to put our business on a solid growth trajectory."

In 2005, Silicon Laboratories expanded design, sales and support offices to more than 20 locations around the world. Cumulative patents either filed or issued increased to more than 600 and the number of employees worldwide increased to 651. The product portfolio doubled including the addition of broadcast, timing, digital power and new wireless products.

For the first quarter of 2006, the company anticipates revenue of $110 to $114 million.

Conference Call Today

A conference call discussing the fourth quarter results will follow the 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 1-800-295-0889 (U.S.) or +1 402-220-3774 (international). These replays will be available through February 15, 2006.

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 decades of cumulative 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.

Cautionary Language

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, especially for mobile handset products; dependence on a limited number of products and customers; risks associated with shifting market demand from GSM/GPRS to EDGE and WCDMA; difficulties developing new products that achieve market acceptance; risks that Silicon Laboratories may not be able to manage strains associated with its growth; dependence on key personnel; difficulties managing our manufacturers and subcontractors; difficulties managing international activities; credit risks associated with our accounts receivable; geographic concentration of manufacturers, assemblers, test service providers and customers in the Pacific Rim that subjects Silicon Laboratories' business and results of operations to risks of natural disasters, epidemics, war and political unrest; product development risks; inventory-related risks; intellectual property litigation risks; risks associated with acquisitions; 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, ProSLIC, Aero, AeroFONE, ISOmodem, SiRX and the Silicon Laboratories logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

Silicon Laboratories Inc.
Consolidated Statements of Income
(in thousands, except per share data)

                        Three Months Ended       Twelve Months Ended
                     ------------------------  -----------------------
                     December 31, January 1,   December 31, January 1,
                         2005        2005          2005        2005
                     ------------ -----------  ------------ ----------
                     (Unaudited)  (Unaudited)  (Unaudited)

Revenues                $109,856     $95,462      $425,689   $456,225
Cost of revenues          49,499      43,121       193,904    206,320
                     ------------ -----------  ------------ ----------
Gross profit              60,357      52,341       231,785    249,905
Operating expenses:
 Research and
  development             23,692      20,711       101,222     78,056
 Selling, general
  and administrative      18,898      15,426        72,553     65,164
                     ------------ -----------  ------------ ----------
Operating expenses        42,590      36,137       173,775    143,220
                     ------------ -----------  ------------ ----------
Operating income          17,767      16,204        58,010    106,685
Other income
 (expense):
 Interest income           2,743       1,194         8,285      3,054
 Interest expense           (191)        (68)         (322)      (311)
 Other income
  (expense), net             (91)        169          (332)     2,148
                     ------------ -----------  ------------ ----------
Income
 before income taxes      20,228      17,499        65,641    111,576
Provision
 for income taxes          4,965       4,570        18,135     34,883
                     ------------ -----------  ------------ ----------
Net income               $15,263     $12,929       $47,506    $76,693
                     ============ ===========  ============ ==========
Net income
 per share:
 Basic                     $0.28       $0.25         $0.89      $1.49
 Diluted                   $0.27       $0.24         $0.86      $1.39
Weighted-average
 common shares
  outstanding:
 Basic                    54,210      52,008        53,399     51,471
 Diluted                  56,206      54,632        55,485     54,983


Certain prior period amounts of the amortization of stock compensation
expense have been reclassified to conform to the current period
presentation.


Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)

                                                 Three Months Ended
                                               -----------------------
                                               December 31, January 1,
                                                   2005        2005
                                               ------------ ----------
GAAP operating income                              $17,767    $16,204
Stock compensation amortization:
 Cost of revenues                                       58         13
 Research and development                            1,081        659
 Selling, general and administrative                 1,274        182
                                               ------------ ----------
Adjusted operating income                          $20,180    $17,058
                                               ============ ==========

Adjusted operating income %                           18.4%      17.9%
                                               ------------ ----------


                                                 Three Months Ended
                                               -----------------------
                                               December 31, January 1,
                                                   2005        2005
                                               ------------ ----------
GAAP net income                                    $15,263    $12,929
Stock compensation amortization:
 Cost of revenues                                       58         13
 Research and development                            1,081        659
 Selling, general and administrative                 1,274        182
                                               ------------ ----------
Adjusted net income                                $17,676    $13,783
                                               ============ ==========

GAAP diluted shares outstanding                     56,206     54,632
Adjusted diluted net income per share                $0.31      $0.25
                                               ------------ ----------


Estimated Stock Compensation Expense Under SFAS 123R
(in thousands)

                                        Three Months Ended
                                          April 1, 2006
                                        ------------------
Cost of revenues                               $382
Research and development                      4,431
Selling, general and administrative           5,391
                                        ------------------
Impact on operating income                   10,204
Provision for income taxes                   (1,907)
                                        ------------------
Impact on net income                         $8,297
                                        ==================


Silicon Laboratories Inc.
Consolidated Balance Sheets
(in thousands, except per share data)

                                               December 31, January 1,
                                                   2005        2005
                                               ------------ ----------
                    ASSETS                     (Unaudited)
Current assets:
 Cash and cash equivalents                        $255,369    $48,636
 Short-term investments                            108,341    228,470
 Accounts receivable, net of allowance
  for doubtful accounts of $1,088
  at December 31, 2005 and January 1, 2005          68,824     46,272
 Inventories                                        23,132     38,405
 Deferred income taxes                              11,505      9,878
 Prepaid expenses and other                          9,670      5,244
                                               ------------ ----------
Total current assets                               476,841    376,905
Property, equipment and software, net               32,584     34,559
Goodwill                                            62,877     46,766
Other intangible assets, net                        14,838     15,384
Other assets, net                                   25,863     10,788
                                               ------------ ----------
Total assets                                      $613,003   $484,402
                                               ============ ==========

     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                  $43,846    $37,001
 Accrued expenses                                   11,307     11,913
 Deferred income on shipments to distributors       34,036     25,227
 Income taxes payable                               18,348      8,207
                                               ------------ ----------
Total current liabilities                          107,537     82,348
Long-term obligations and other liabilities          7,418      2,570
                                               ------------ ----------
Total liabilities                                  114,955     84,918

Commitments and contingencies

Stockholders' equity:
  Preferred stock -- $.0001 par value;
   10,000 shares authorized; no shares
   issued and outstanding                               --         --
  Common stock -- $.0001 par value;
   250,000 shares authorized; 54,530 and
   52,508 shares issued and outstanding at
   December 31, 2005 and January 1, 2005,
   respectively                                          5          5
 Additional paid-in capital                        335,284    287,908
 Deferred stock compensation                        (1,105)    (4,787)
 Retained earnings                                 163,864    116,358
                                               ------------ ----------
Total stockholders' equity                         498,048    399,484
                                               ------------ ----------
Total liabilities and stockholders' equity        $613,003   $484,402
                                               ============ ==========

CONTACT: Silicon Laboratories Inc., Austin
Shannon Pleasant, 512-464-9254
investor.relations@silabs.com

SOURCE: Silicon Laboratories Inc.

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