0001104659-20-118765 | 10-Q | XBRL Viewer

Fair Value of Financial Instruments - Fair Values of Other Financial Instruments (Details) - USD ($) $ in Millions	Oct. 03, 2020	Jun. 01, 2020	Dec. 28, 2019	Mar. 06, 2017
1.375% Convertible Senior Notes (2022 Notes)
Fair values of other financial instruments
Interest rate (as a percent)	1.375%	1.375%	1.375%	1.375%
Fair value of debt	$ 174.5		$ 524.0
0.625% Convertible Senior Notes (2025 Notes)
Fair values of other financial instruments
Interest rate (as a percent)	0.625%	0.625%
Fair value of debt	$ 575.8

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 03, 2020	Dec. 28, 2019
Current assets:
Cash and cash equivalents	$ 230,358	$ 227,146
Short-term investments	491,428	498,825
Accounts receivable, net	80,460	75,639
Inventories	66,159	73,057
Prepaid expenses and other current assets	69,244	69,192
Total current assets	937,649	943,859
Property and equipment, net	139,673	135,939
Goodwill	631,932	398,402
Other intangible assets, net	178,076	134,279
Other assets, net	55,745	62,374
Total assets	1,943,075	1,674,853
Current liabilities:
Accounts payable	46,228	38,899
Deferred revenue and returns liability	22,323	19,251
Other current liabilities	82,595	79,551
Total current liabilities	151,146	137,701
Convertible debt	561,678	368,257
Other non-current liabilities	60,200	53,844
Total liabilities	773,024	559,802
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; 43,827 and 43,496 shares issued and outstanding at October 3, 2020 and December 28, 2019, respectively	4	4
Additional paid-in capital	183,471	133,793
Retained earnings	984,716	980,608
Accumulated other comprehensive income	1,860	646
Total stockholders' equity	1,170,051	1,115,051
Total liabilities and stockholders' equity	$ 1,943,075	$ 1,674,853

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2020	Sep. 28, 2019	Oct. 03, 2020	Sep. 28, 2019
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 3,162	$ 20,181	$ 3,583	$ 9,550
Net changes to available-for-sale securities
Unrealized gains (losses) arising during the period	(760)	106	1,839	2,738
Reclassification for gains included in net income	(253)	(188)	(475)	(188)
Net changes to cash flow hedges
Unrealized losses arising during the period		(451)	(652)	(395)
Reclassification for losses included in net income	62	174	825	605
Other comprehensive income (loss), before tax	(951)	(359)	1,537	2,760
Provision (benefit) for income taxes	(200)	(75)	323	580
Other comprehensive income (loss)	(751)	(284)	1,214	2,180
Comprehensive income	$ 2,411	$ 19,897	$ 4,797	$ 11,730

Significant Accounting Policies

9 Months Ended

Oct. 03, 2020

Significant Accounting Policies

Significant Accounting Policies

1. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Condensed Consolidated Financial Statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments which, in the opinion of management, are necessary to present fairly the condensed consolidated financial position of Silicon Laboratories Inc. and its subsidiaries (collectively, the “Company”) at October 3, 2020 and December 28, 2019, the condensed consolidated results of its operations for the three and nine months ended October 3, 2020 and September 28, 2019, the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 3, 2020 and September 28, 2019, the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended October 3, 2020 and September 28, 2019, and the Condensed Consolidated Statements of Cash Flows for the nine months ended October 3, 2020 and September 28, 2019. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated results of operations for the three and nine months ended October 3, 2020 are not necessarily indicative of the results to be expected for the full year.

The accompanying unaudited Condensed Consolidated Financial Statements do not include certain footnotes and financial presentations normally required under U.S. generally accepted accounting principles (GAAP). Therefore, these Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 28, 2019, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (SEC) on January 29, 2020.

The Company prepares financial statements on a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2020 will have 53 weeks with the extra week occurring in the first quarter of the year. Fiscal 2019 had 52 weeks. In a 52-week year, each fiscal quarter consists of 13 weeks.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to inventories, goodwill, acquired intangible assets, other long-lived assets, revenue recognition, stock-based compensation and income taxes. Actual results could differ from those estimates, and such differences could be material to the financial statements.

Adoption of New Accounting Standard

The Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, on December 29, 2019, the first day of its fiscal year ending January 2, 2021. The adoption did not have a material impact on its financial statements.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Substantially all of the Company’s contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit (IC) products. This performance obligation is satisfied when control of the product is transferred to the customer, which typically occurs upon delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. The Company has opted to not disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year.

The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer and may include fixed or variable amounts. Variable consideration primarily includes sales made to distributors under agreements allowing certain rights of return, referred to as stock rotation, and credits issued to the distributor due to price protection. The Company estimates variable consideration at the most likely amount to which it expects to be entitled. The estimate is based on information available to the Company, including recent sales activity and pricing data. The Company applies a constraint to its variable consideration estimate which considers both the likelihood of a return and the amount of a potential price concession. Variable consideration that does not meet revenue recognition criteria is deferred. The Company records a right of return asset in prepaid expenses and other current assets for the costs of distributor inventory not meeting revenue recognition criteria. A corresponding deferred revenue and returns liability amount is recorded for unrecognized revenue associated with such costs. The Company’s products carry a one-year replacement warranty. Payments are typically due within 30 days of invoicing and do not include a significant financing component.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity’s own equity and requires the use of the if-converted method for calculating diluted earnings per share. The ASU removes separation models for convertible debt with a cash conversion feature. Such convertible instruments will be accounted for as a single liability measured at amortized cost, as long as no other features require bifurcation and recognition as derivatives. This ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, using one of two retrospective methods. Early adoption is permitted for fiscal periods beginning after December 15, 2020. The Company expects the primary impacts of this new standard will be to potentially increase the carrying value of its convertible debt and reduce its reported interest expense. In addition, should the Company be required to use the if-converted method for calculating diluted earnings per share, the number of shares used in such calculation could potentially increase. The Company will continue to evaluate the effect that the adoption of this ASU will have on its financial statements.

Commitments and Contingencies

9 Months Ended

Oct. 03, 2020

Commitments and Contingencies

Commitments and Contingencies

8. Commitments and Contingencies

Legal Proceedings

The Company is involved in various legal proceedings that have arisen in the normal course of business. While the ultimate results cannot be predicted with certainty, the Company does not expect them to have a material adverse effect on its Consolidated Financial Statements.

Acquisition (Tables)

9 Months Ended

Oct. 03, 2020

Acquisition

Schedule of purchase price allocation

The purchase price was allocated as follows (in thousands):


			Weighted-Average
			Amortization Period
	Amount		(Years)
Intangible assets:
In-process research and development	$	11,753	Not amortized
Developed technology		61,674	8
Customer relationships		2,450	2
Trademarks		661	2
		76,538

Accounts receivable		1,395
Inventory		4,375
Other current assets		1,251
Goodwill		233,530
Other non-current assets		673
Current liabilities		(856)
Non-current liabilities		(97)
Total purchase price	$	316,809

Stockholders' Equity - Reclassified from AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2020	Sep. 28, 2019	Oct. 03, 2020	Sep. 28, 2019
Amounts Reclassified from AOCI
Operating expenses	$ (120,452)	$ (110,270)	$ (364,913)	$ (333,545)
Income before income taxes	3,062	21,866	3,277	38,031
Income tax expense (benefit)	(100)	1,685	(306)	28,481
Net income	3,162	20,181	3,583	9,550
Reclassifications From Accumulated Other Comprehensive Income (Loss)
Amounts Reclassified from AOCI
Income before income taxes	191	14	(350)	(417)
Income tax expense (benefit)	40	3	(73)	(88)
Net income	151	11	(277)	(329)
Reclassifications From Accumulated Other Comprehensive Income (Loss) \| Gains on available-for-sales securities
Amounts Reclassified from AOCI
Interest income and other, net	253	188	475	188
Reclassifications From Accumulated Other Comprehensive Income (Loss) \| Losses on cash flow hedges
Amounts Reclassified from AOCI
Operating expenses	$ (62)	$ (174)	$ (825)	$ (605)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

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+ Details

Balance Sheet Details (Tables)

9 Months Ended

Oct. 03, 2020

Balance Sheet Details

Schedule of Inventories

The following shows the details of selected Condensed Consolidated Balance Sheet items (in thousands):

Inventories


	October 3,		December 28,
	2020		2019
Work in progress	$	50,542	$	52,350
Finished goods		15,617		20,707
	$	66,159	$	73,057

Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Stock-Based Compensation (Details) - USD ($) $ in Thousands	Oct. 03, 2020	Sep. 28, 2019	Oct. 03, 2020	Sep. 28, 2019
Stock-based compensation costs
Stock based compensation costs	$ 14,559	$ 13,788	$ 44,329	$ 40,042
Income tax benefit	884	817	3,010	1,951
Share based compensation costs after tax	13,675	12,971	41,319	38,091
Total unrecognized compensation costs related to awards	89,400		$ 89,400
Weighted-average period of recognition of unrecognized compensation costs			2 years 2 months 12 days
Cost of revenues
Stock-based compensation costs
Stock based compensation costs	390	344	$ 1,101	989
Research and development
Stock-based compensation costs
Stock based compensation costs	7,384	6,474	21,826	19,030
Selling, general and administrative
Stock-based compensation costs
Stock based compensation costs	$ 6,785	$ 6,970	$ 21,402	$ 20,023

Stock-Based Compensation

9 Months Ended

Oct. 03, 2020

Stock-Based Compensation

Stock-Based Compensation

11. Stock-Based Compensation

In fiscal 2009, the stockholders of the Company approved the 2009 Stock Incentive Plan (the “2009 Plan”) and the 2009 Employee Stock Purchase Plan (the “2009 Purchase Plan”). In fiscal 2017, the stockholders of the Company approved amendments to both the 2009 Plan and the 2009 Purchase Plan. These amendments authorized additional shares of common stock for issuance, to comply with changes in applicable law, improve the Company’s corporate governance and to implement other best practices.

Stock-based compensation costs are based on the fair values on the date of grant for stock awards and stock options and on the date of enrollment for the employee stock purchase plans. The fair values of stock awards (such as restricted stock units (RSUs), performance stock units (PSUs) and restricted stock awards (RSAs)) are estimated based on their intrinsic values. The fair values of market stock awards (MSUs) are estimated using a Monte Carlo simulation. The fair values of stock options and employee stock purchase plans are estimated using the Black-Scholes option-pricing model.

The following table presents details of stock-based compensation costs recognized in the Condensed Consolidated Statements of Income (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Cost of revenues	$	390	$	344	$	1,101	$	989
Research and development		7,384		6,474		21,826		19,030
Selling, general and administrative		6,785		6,970		21,402		20,023
		14,559		13,788		44,329		40,042
Income tax benefit		884		817		3,010		1,951
	$	13,675	$	12,971	$	41,319	$	38,091

The Company had approximately $89.4 million of total unrecognized compensation costs related to equity grants from the 2009 Plan as of October 3, 2020 that are expected to be recognized over a weighted-average period of approximately 2.2 years. There were no significant stock-based compensation costs capitalized into assets in any of the periods presented.

Income Taxes (Details) $ in Thousands, kr in Millions	3 Months Ended		9 Months Ended
Income Taxes (Details) $ in Thousands, kr in Millions	Oct. 03, 2020 USD ($)	Sep. 28, 2019 USD ($)	Oct. 03, 2020 USD ($)	Oct. 03, 2020 NOK (kr)	Sep. 28, 2019 USD ($)
Income Taxes
Provision (benefit) for income taxes	$ (100)	$ 1,685	$ (306)		$ 28,481
Effective income tax rate (as a percent)	(3.30%)	7.70%	(9.30%)	(9.30%)	74.90%
Gross unrecognized tax benefits	$ 2,900		$ 2,900
Gross unrecognized tax benefits which would affect the effective tax rate if recognized	$ 2,000		2,000
Norwegian \| 2013 \| Under appeal
Income Taxes
Additional income tax expense			$ 15,200	kr 141.3

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Acquisition

9 Months Ended

Oct. 03, 2020

Acquisition

Acquisitions

6. Acquisition

Redpine Signals

On April 28, 2020, the Company acquired the Wi-Fi® and Bluetooth® business of Redpine Signals. The acquisition will accelerate the Company’s roadmap for Wi-Fi and Bluetooth silicon and software solutions. The purchase price was in excess of the fair value of the net assets acquired and, as a result, the Company recorded goodwill. A portion of the goodwill is deductible for tax purposes. The purchase price was allocated as follows (in thousands):


			Weighted-Average
			Amortization Period
	Amount		(Years)
Intangible assets:
In-process research and development	$	11,753	Not amortized
Developed technology		61,674	8
Customer relationships		2,450	2
Trademarks		661	2
		76,538

Accounts receivable		1,395
Inventory		4,375
Other current assets		1,251
Goodwill		233,530
Other non-current assets		673
Current liabilities		(856)
Non-current liabilities		(97)
Total purchase price	$	316,809

In-process research and development (IPR&D) represents Wi-Fi and Bluetooth technology that had not achieved technological feasibility as of the acquisition date. The fair value of IPR&D was determined using the income approach. The discount rate applied to the projected cash flows was 13.8%, which reflects the risks related to the projects.

Revenues attributable to the Redpine Signals business from the date of acquisition to October 3, 2020 were $5.8 million. Pro forma information related to this acquisition has not been presented because it would not be materially different from amounts reported. The Company recorded approximately $1.5 million of acquisition-related costs in selling, general and administrative expenses during the nine months ended October 3, 2020.

Earnings Per Share (Tables)

9 Months Ended

Oct. 03, 2020

Earnings Per Share

Schedule of computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Net income	$	3,162	$	20,181	$	3,583	$	9,550

Shares used in computing basic earnings per share		43,815		43,358		43,737		43,311

Effect of dilutive securities:
Stock-based awards and convertible debt		513		1,276		517		809
Shares used in computing diluted earnings per share		44,328		44,634		44,254		44,120

Earnings per share:
Basic	$	0.07	$	0.47	$	0.08	$	0.22
Diluted	$	0.07	$	0.45	$	0.08	$	0.22

Debt

9 Months Ended

Oct. 03, 2020

Debt

Debt

7. Debt

0.625% Convertible Senior Notes

On June 1, 2020, the Company completed a private offering of $535 million principal amount convertible senior notes (the “2025 Notes”). The 2025 Notes bear interest semi-annually at a rate of 0.625% per year and mature on June 15, 2025. The Company used $310.0 million of the proceeds to repay in full the outstanding balance under its credit facility and the remainder of the proceeds, along with cash on hand, to repurchase approximately $236.8 million aggregate principal amount of its outstanding 1.375% convertible senior notes.

The 2025 Notes are convertible at an initial conversion rate of 8.1498 shares of common stock per $1,000 principal amount of the 2025 Notes, or approximately 4.4 million shares of common stock, which is equivalent to a conversion price of approximately $122.70 per share. The conversion rate is subject to adjustment under certain circumstances. Holders may convert the 2025 Notes under the following circumstances: during any calendar quarter after the calendar quarter ended on September 30, 2020 if the closing price of the Company’s common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to $159.51 per share, representing 130% of the conversion price of the 2025 Notes; during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of our common stock and the conversion rate on each such trading day; if specified distributions or corporate events occur; if the Notes are called for redemption; or at any time after March 15, 2025. The Company may redeem all or any portion of the 2025 Notes, at its option, on or after June 20, 2023, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period. Upon conversion, the 2025 Notes may be settled in cash, shares of the Company’s common stock or a combination of cash and shares, at the Company’s election.

The Company incurred debt issuance costs of approximately $10.4 million, which was allocated to the liability and equity components in proportion to the allocation of the proceeds. The costs allocated to the liability component are being amortized as interest expense over the term of the 2025 Notes using the effective interest method.

1.375% Convertible Senior Notes

On March 6, 2017, the Company completed a private offering of $400 million principal amount convertible senior notes (the “2022 Notes”). The Notes bear interest semi-annually at a rate of 1.375% per year and mature on March 1, 2022.

The 2022 Notes are convertible at an initial conversion rate of 10.7744 shares of common stock per $1,000 principal amount of the 2022 Notes, or approximately 4.3 million shares of common stock, which is equivalent to a conversion price of approximately $92.81 per share. The conversion rate is subject to adjustment under certain circumstances. Holders may convert the 2022 Notes under the following circumstances: during any calendar quarter after the calendar quarter ended on June 30, 2017 if the closing price of the Company’s common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to $120.66 per share, representing 130% of the conversion price of the 2022 Notes; during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of our common stock and the conversion rate on each such trading day; if specified distributions or corporate events occur; if the 2022 Notes are called for redemption; or at any time after December 1, 2021. The Company may redeem all or any portion of the 2022 Notes, at its option, on or after March 6, 2020, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period. Upon conversion, the 2022 Notes may be settled in cash, shares of the Company’s common stock or a combination of cash and shares, at the Company’s election.

During the nine months ended October 3, 2020, the Company paid $299.1 million in cash to repurchase $254.4 million aggregate principal amount of the 2022 Notes. The Company recognized a loss on debt extinguishment of $4.0 million during the nine months ended October 3, 2020, which was recorded in interest expense in the Condensed Consolidated Statements of Income.

The principal balances of the notes were separated into liability and equity components, and recorded initially at fair value. The excess of the principal amounts of the liability components over their carrying amounts represent the debt discount, which are amortized to interest expense over the term of the notes using the effective interest method. The carrying amounts of the liability components was estimated by discounting the contractual cash flows of similar non-convertible debt at an appropriate market rate at the date of issuance.

The carrying amount of the notes consisted of the following (in thousands):


	October 3,		December 28,
	2020		2019
Liability component
Principal	$	680,567	$	400,000
Unamortized debt discount		(110,135)		(27,580)
Unamortized debt issuance costs		(8,754)		(4,163)
Net carrying amount	$	561,678	$	368,257

Equity component
Net carrying amount	$	109,624	$	57,735

The liability components of the notes are recorded in convertible debt on the Consolidated Balance Sheet. The equity components of the notes are recorded in additional paid-in capital. The effective interest rate for the liability component was 5.336% for the 2025 Notes and 4.75% for the 2022 Notes. As of October 3, 2020, the remaining period over which the debt discount and debt issuance costs will be amortized was 4.7 years for the 2025 Notes and 1.4 years for the 2022 Notes.

Interest expense related to the notes was comprised of the following (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Contractual interest expense	$	1,365	$	1,360	$	4,206	$	4,110
Amortization of debt discount		6,041		2,930		13,419		8,716
Amortization of debt issuance costs		546		442		1,527		1,315
	$	7,952	$	4,732	$	19,152	$	14,141

Credit Facility

The Company and certain of its domestic subsidiaries (the “Guarantors”) have a $400 million revolving credit facility with a maturity date of August 7, 2024. The credit facility includes a $25 million letter of credit sublimit and a $10 million swingline loan sublimit. The Company also has an option to increase the size of the borrowing capacity by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured leverage ratio (funded debt secured by assets/EBITDA) to exceed 3.25 to 1.00, subject to certain conditions. On March 27, 2020, the Company borrowed $310 million under the credit facility. On June 1, 2020, the Company repaid in full the outstanding balance of the credit facility.

The credit facility, other than swingline loans, will bear interest at the Eurodollar rate plus an applicable margin or, at the option of the Company, a base rate (defined as the highest of the Wells Fargo prime rate, the Federal Funds rate plus 0.50% and the Eurodollar Base Rate plus 1.00%) plus an applicable margin. Swingline loans accrue interest at the base rate plus the applicable margin for base rate loans. The applicable margins for the Eurodollar rate loans range from 1.00% to 1.75% and for base rate loans range from 0.00% to 0.75%, depending in each case, on the leverage ratio as defined in the credit facility.

The credit facility contains various conditions, covenants and representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default, including financial covenants that the Company must maintain a net leverage ratio (funded indebtedness/EBITDA) of no more than 4.25 to 1, a secured leverage ratio of no more than 3.50 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1. As of October 3, 2020, the Company was in compliance with all covenants of the credit facility. The Company’s obligations under the credit facility are guaranteed by the Guarantors and are secured by a security interest in substantially all assets of the Company and the Guarantors.

Debt - Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands, item in Millions			9 Months Ended
	Jun. 01, 2020 USD ($) D item $ / shares	Mar. 06, 2017 USD ($) D item $ / shares	Oct. 03, 2020 USD ($)	Dec. 28, 2019
Debt
Loss on debt extinguishment \| $			$ (3,977)
Credit Facility
Debt
Repayment of credit facility amount \| $	$ 310,000
0.625% Convertible Senior Notes (2025 Notes)
Debt
Principal amount \| $	$ 535,000
Semi-annual interest rate	0.625%		0.625%
Conversion rate, shares per $1,000 principal	8.1498
Conversion, number of shares of common stock \| item	4.4
Initial conversion price \| $ / shares	$ 122.70
Debt issuance costs \| $	$ 10,400
0.625% Convertible Senior Notes (2025 Notes) \| Conversion of Notes, Holders
Debt
Number of trading days within 30 trading day period	20
Number of consecutive trading days	30
Stock price trigger per share \| $ / shares	$ 159.51
Stock price trigger, as a percentage of conversion price	130.00%
Number of consecutive business days after the 10 consecutive trading day period	5
Number of consecutive trading days before the five consecutive business days	10
Maximum threshold stock price, as a percentage of conversion price	98.00%
0.625% Convertible Senior Notes (2025 Notes) \| Conversion of Notes, Company
Debt
Number of trading days within 30 trading day period	20
Number of consecutive trading days	30
Stock price trigger, as a percentage of conversion price	130.00%
1.375% Convertible Senior Notes (2022 Notes)
Debt
Principal amount \| $		$ 400,000
Semi-annual interest rate	1.375%	1.375%	1.375%	1.375%
Repayment of credit facility amount \| $			$ 299,100
Aggregate principal amount of debt repurchased \| $	$ 236,800		254,400
Conversion rate, shares per $1,000 principal		10.7744
Conversion, number of shares of common stock \| item		4.3
Initial conversion price \| $ / shares		$ 92.81
1.375% Convertible Senior Notes (2022 Notes) \| Interest expense
Debt
Loss on debt extinguishment \| $			$ 4,000
1.375% Convertible Senior Notes (2022 Notes) \| Conversion of Notes, Holders
Debt
Number of trading days within 30 trading day period		20
Number of consecutive trading days		30
Stock price trigger per share \| $ / shares		$ 120.66
Stock price trigger, as a percentage of conversion price		130.00%
Number of consecutive business days after the 10 consecutive trading day period		5
Number of consecutive trading days before the five consecutive business days		10
Maximum threshold stock price, as a percentage of conversion price		98.00%
1.375% Convertible Senior Notes (2022 Notes) \| Conversion of Notes, Company
Debt
Stock price trigger, as a percentage of conversion price		130.00%
Number of consecutive business days after the 10 consecutive trading day period		20
Number of consecutive trading days before the five consecutive business days		30

Fair Value of Financial Instruments - Activity in Level 3 financial instruments (Details) - Significant Unobservable Inputs (Level 3) - Recurring - Auction rate securities $ in Thousands	9 Months Ended
	Oct. 03, 2020 USD ($)
Fair value assets reconciliation of changes
Balance at the beginning of the period	$ 5,647
Loss included in other comprehensive income (loss)	(247)
Balance at the end of the period	$ 5,400

Debt - Interest expense (Details) - Convertible Senior Notes - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2020	Sep. 28, 2019	Oct. 03, 2020	Sep. 28, 2019
Interest expense related to the Notes
Contractual interest expense	$ 1,365	$ 1,360	$ 4,206	$ 4,110
Amortization of debt discount	6,041	2,930	13,419	8,716
Amortization of debt issuance costs	546	442	1,527	1,315
Interest Expense, Total	$ 7,952	$ 4,732	$ 19,152	$ 14,141

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Oct. 03, 2020	Oct. 20, 2020
Document and Entity Information
Entity Registrant Name	SILICON LABORATORIES INC.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Oct. 03, 2020
Document Transition Report	false
Entity File Number	000-29823
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	74-2793174
Entity Address, Address Line One	400 West Cesar Chavez
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	512
Local Phone Number	416-8500
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	SLAB
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,827,430
Entity Central Index Key	0001038074
Current Fiscal Year End Date	--01-02
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

Fair Value of Financial Instruments - Summary of financial instruments (Details) - USD ($) $ in Thousands	Oct. 03, 2020	Dec. 28, 2019
Financial assets and liabilities measured at fair value on a recurring basis
Total short-term investments	$ 491,428	$ 498,825
Recurring
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	121,718	93,704
Total short-term investments	491,428	498,825
Other assets, net	5,400	5,647
Total assets at fair value	618,546	598,176
Recurring \| Money market funds
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	115,033	92,379
Recurring \| Corporate debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	2,350	1,325
Total short-term investments	353,443	326,954
Recurring \| Government debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	4,335
Total short-term investments	137,985	171,871
Recurring \| Auction rate securities
Financial assets and liabilities measured at fair value on a recurring basis
Other assets, net	5,400	5,647
Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	119,368	92,379
Total short-term investments	47,252	85,189
Total assets at fair value	166,620	177,568
Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1) \| Money market funds
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	115,033	92,379
Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1) \| Government debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	4,335
Total short-term investments	47,252	85,189
Recurring \| Significant Other Observable Inputs (Level 2)
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	2,350	1,325
Total short-term investments	444,176	413,636
Total assets at fair value	446,526	414,961
Recurring \| Significant Other Observable Inputs (Level 2) \| Corporate debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total cash equivalents	2,350	1,325
Total short-term investments	353,443	326,954
Recurring \| Significant Other Observable Inputs (Level 2) \| Government debt securities
Financial assets and liabilities measured at fair value on a recurring basis
Total short-term investments	90,733	86,682
Recurring \| Significant Unobservable Inputs (Level 3)
Financial assets and liabilities measured at fair value on a recurring basis
Other assets, net	5,400	5,647
Total assets at fair value	5,400	5,647
Recurring \| Significant Unobservable Inputs (Level 3) \| Auction rate securities
Financial assets and liabilities measured at fair value on a recurring basis
Other assets, net	$ 5,400	$ 5,647

Significant Accounting Policies (Policies)	9 Months Ended
Significant Accounting Policies (Policies)	Oct. 03, 2020
Significant Accounting Policies
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to inventories, goodwill, acquired intangible assets, other long-lived assets, revenue recognition, stock-based compensation and income taxes. Actual results could differ from those estimates, and such differences could be material to the financial statements.
Adoption of New Accounting Standard	Adoption of New Accounting Standard The Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, on December 29, 2019, the first day of its fiscal year ending January 2, 2021. The adoption did not have a material impact on its financial statements.
Revenue Recognition	Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Substantially all of the Company’s contracts with customers contain a single performance obligation, the sale of mixed-signal integrated circuit (IC) products. This performance obligation is satisfied when control of the product is transferred to the customer, which typically occurs upon delivery. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. The Company has opted to not disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year. The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer and may include fixed or variable amounts. Variable consideration primarily includes sales made to distributors under agreements allowing certain rights of return, referred to as stock rotation, and credits issued to the distributor due to price protection. The Company estimates variable consideration at the most likely amount to which it expects to be entitled. The estimate is based on information available to the Company, including recent sales activity and pricing data. The Company applies a constraint to its variable consideration estimate which considers both the likelihood of a return and the amount of a potential price concession. Variable consideration that does not meet revenue recognition criteria is deferred. The Company records a right of return asset in prepaid expenses and other current assets for the costs of distributor inventory not meeting revenue recognition criteria. A corresponding deferred revenue and returns liability amount is recorded for unrecognized revenue associated with such costs. The Company’s products carry a one-year replacement warranty. Payments are typically due within 30 days of invoicing and do not include a significant financing component.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity’s own equity and requires the use of the if-converted method for calculating diluted earnings per share. The ASU removes separation models for convertible debt with a cash conversion feature. Such convertible instruments will be accounted for as a single liability measured at amortized cost, as long as no other features require bifurcation and recognition as derivatives. This ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, using one of two retrospective methods. Early adoption is permitted for fiscal periods beginning after December 15, 2020. The Company expects the primary impacts of this new standard will be to potentially increase the carrying value of its convertible debt and reduce its reported interest expense. In addition, should the Company be required to use the if-converted method for calculating diluted earnings per share, the number of shares used in such calculation could potentially increase. The Company will continue to evaluate the effect that the adoption of this ASU will have on its financial statements.

- Definition

Disclosure of accounting policy for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security. Includes, but is not limited to, methodology used to estimate allowance for credit loss, how writeoff of uncollectible amount is recognized, and determination of past due status and nonaccrual status.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
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-Section 35
-Paragraph 7A
-URI http://asc.fasb.org/extlink&oid=121565518&loc=SL120269220-210453

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-URI http://asc.fasb.org/extlink&oid=121565518&loc=SL120267917-210453

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Section 35
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-URI http://asc.fasb.org/extlink&oid=121648281&loc=SL120267834-210445

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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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+ Details

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Oct. 03, 2020	Dec. 28, 2019
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	250,000	250,000
Common stock, shares issued	43,827	43,496
Common stock, shares outstanding	43,827	43,496

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 03, 2020	Sep. 28, 2019
Operating Activities
Net income	$ 3,583	$ 9,550
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment	12,896	12,675
Amortization of other intangible assets and other assets	32,741	29,891
Amortization of debt discount and debt issuance costs	14,946	10,031
Loss on extinguishment of convertible debt	3,977
Stock-based compensation expense	44,329	40,042
Deferred income taxes	(7,382)	24,531
Changes in operating assets and liabilities:
Accounts receivable	(2,902)	(2,975)
Inventories	11,283	3,512
Prepaid expenses and other assets	(6,162)	23,401
Accounts payable	6,103	6,419
Other current liabilities and income taxes	3,648	(15,602)
Deferred revenue and returns liability	2,643	(667)
Other non-current liabilities	7,260	(5,957)
Net cash provided by operating activities	126,963	134,851
Investing Activities
Purchases of available-for-sale investments	(418,227)	(306,645)
Sales and maturities of available-for-sale investments	427,235	268,140
Purchases of property and equipment	(15,247)	(12,773)
Purchases of other assets	(1,280)	(7,132)
Acquisitions of businesses, net of cash acquired	(316,809)
Net cash used in investing activities	(324,328)	(58,410)
Financing Activities
Proceeds from issuance of debt	845,000
Payments on debt	(618,729)	(1,127)
Repurchases of common stock	(16,287)	(26,716)
Payment of taxes withheld for vested stock awards	(17,562)	(15,693)
Proceeds from the issuance of common stock	8,155	7,108
Net cash provided by (used in) financing activities	200,577	(36,428)
Increase in cash and cash equivalents	3,212	40,013
Cash and cash equivalents at beginning of period	227,146	197,043
Cash and cash equivalents at end of period	$ 230,358	$ 237,056

Acquisition - Redpine Signals (Details) - USD ($) $ in Thousands		9 Months Ended
	Apr. 28, 2020	Oct. 03, 2020	Dec. 28, 2019
Purchase price allocation
Goodwill		$ 631,932	$ 398,402
Developed technology
Purchase price allocation
Weighted-Average Amortization Period (Years)	8 years
Customer relationships
Purchase price allocation
Weighted-Average Amortization Period (Years)	2 years
Trademarks
Purchase price allocation
Weighted-Average Amortization Period (Years)	2 years
Wi-Fi and Bluetooth technology
Purchase price allocation
Discount rate applicable to the projected cash flows (as a percent)	13.80%
Redpine Signals
Purchase price allocation
Intangible assets	$ 76,538
Accounts receivable	1,395
Inventory	4,375
Other current assets	1,251
Goodwill	233,530
Other non-current assets	673
Current liabilities	(856)
Non-current liabilities	(97)
Total purchase price	316,809
Revenue of acquiree since acquisition date		5,800
Redpine Signals \| Selling, general and administrative
Purchase price allocation
Acquisition-related costs		$ 1,500
Redpine Signals \| Developed technology
Purchase price allocation
Intangible assets	61,674
Redpine Signals \| Customer relationships
Purchase price allocation
Intangible assets	2,450
Redpine Signals \| Trademarks
Purchase price allocation
Intangible assets	661
Redpine Signals \| In-process research and development
Purchase price allocation
Intangible assets	$ 11,753

Debt (Tables)

9 Months Ended

Oct. 03, 2020

Debt

Summary of information about the equity and liability components of convertible debt

The carrying amount of the notes consisted of the following (in thousands):


	October 3,		December 28,
	2020		2019
Liability component
Principal	$	680,567	$	400,000
Unamortized debt discount		(110,135)		(27,580)
Unamortized debt issuance costs		(8,754)		(4,163)
Net carrying amount	$	561,678	$	368,257

Equity component
Net carrying amount	$	109,624	$	57,735

Schedule of components of interest expense

Interest expense related to the notes was comprised of the following (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Contractual interest expense	$	1,365	$	1,360	$	4,206	$	4,110
Amortization of debt discount		6,041		2,930		13,419		8,716
Amortization of debt issuance costs		546		442		1,527		1,315
	$	7,952	$	4,732	$	19,152	$	14,141

Fair Value of Financial Instruments - Auction rate securities (Details) - Auction rate securities - Significant Unobservable Inputs (Level 3) $ in Thousands	Oct. 03, 2020 USD ($) item Y	Jul. 04, 2020 USD ($)	Dec. 28, 2019 USD ($)
Weighted Average \| Estimated yield \| Discounted cash flow
Quantitative information for Level 3 Fair Value Measurements Assets
Unobservable Input	0.0195
Weighted Average \| Expected holding period \| Discounted cash flow
Quantitative information for Level 3 Fair Value Measurements Assets
Unobservable Input \| Y	10
Weighted Average \| Estimated discount rate \| Discounted cash flow
Quantitative information for Level 3 Fair Value Measurements Assets
Unobservable Input	0.0200
Recurring
Quantitative information for Level 3 Fair Value Measurements Assets
Fair value balance at the end of the period \| $	$ 5,400	$ 5,400	$ 5,647

Revenues

9 Months Ended

Oct. 03, 2020

Revenues

Revenues

10. Revenues

The Company groups its revenues into two categories, based on the markets and applications in which its products may be used. The following disaggregates the Company's revenue by product category (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Internet of Things	$	133,191	$	129,403	$	366,287	$	360,488
Infrastructure and automotive		88,159		93,891		277,473		257,628
	$	221,350	$	223,294	$	643,760	$	618,116

The Company has combined its previous product groups, Infrastructure, Broadcast and Access, into the Infrastructure and automotive product group. Prior periods were retrospectively adjusted.

A portion of the Company's sales are made to distributors under agreements allowing certain rights of return and/or price protection related to the final selling price to the end customers. These factors impact the timing and uncertainty of revenues and cash flows. During the three months ended October 3, 2020 and September 28, 2019 and the nine months ended October 3, 2020 and September 28, 2019, the Company recognized revenue of $18.4 million, $14.1 million, $16.1 million and $16.9 million, respectively, from performance obligations that were satisfied in previous reporting periods.

The following disaggregates the Company's revenue by sales channel (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Distributors	$	172,476	$	163,556	$	502,955	$	448,864
Direct customers		48,874		59,738		140,805		169,252
	$	221,350	$	223,294	$	643,760	$	618,116

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Stockholders' Equity (Tables)

9 Months Ended

Oct. 03, 2020

Stockholders' Equity

Schedule of reclassifications out of accumulated other comprehensive income (loss)

The following table summarizes the effect on net income from reclassifications out of accumulated other comprehensive income (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
Reclassification	2020		2019		2020		2019
Gains on available-for-sales securities to:
Interest income and other, net	$	253	$	188	$	475	$	188

Losses on cash flow hedges to:
Operating expenses		(62)		(174)		(825)		(605)
		191		14		(350)		(417)

Income tax expense (benefit)		(40)		(3)		73		88
Total reclassifications	$	151	$	11	$	(277)	$	(329)

Stockholders' Equity

9 Months Ended

Oct. 03, 2020

Stockholders' Equity

Stockholders' Equity

9. Stockholders’ Equity

Common Stock

The Company issued 0.5 million shares of common stock during the nine months ended October 3, 2020.

Share Repurchase Program

In April 2020, the Board of Directors terminated the Company's existing share repurchase program, effective immediately, which had an authorization amount of $200 million and a termination date of December 2020. The Company repurchased 0.2 million shares and 0.3 million shares of its common stock for $16.3 million and $26.7 million during the nine months ended October 3, 2020 and September 28, 2019, respectively. These shares were retired upon repurchase.

Reclassifications From Accumulated Other Comprehensive Income

The following table summarizes the effect on net income from reclassifications out of accumulated other comprehensive income (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
Reclassification	2020		2019		2020		2019
Gains on available-for-sales securities to:
Interest income and other, net	$	253	$	188	$	475	$	188

Losses on cash flow hedges to:
Operating expenses		(62)		(174)		(825)		(605)
		191		14		(350)		(417)

Income tax expense (benefit)		(40)		(3)		73		88
Total reclassifications	$	151	$	11	$	(277)	$	(329)

Fair Value of Financial Instruments (Tables)

9 Months Ended

Oct. 03, 2020

Fair Value of Financial Instruments

Summary of valuation of the financial instruments

The following summarizes the valuation of the Company’s financial instruments (in thousands). The tables do not include either cash on hand or assets and liabilities that are measured at historical cost or any basis other than fair value.


	Fair Value Measurements
	at October 3, 2020 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	115,033	$	—	$	—	$	115,033
Corporate debt securities		—		2,350		—		2,350
Government debt securities		4,335		—		—		4,335
Total cash equivalents	$	119,368	$	2,350	$	—	$	121,718

Short-term investments:
Government debt securities	$	47,252	$	90,733	$	—	$	137,985
Corporate debt securities		—		353,443		—		353,443
Total short-term investments	$	47,252	$	444,176	$	—	$	491,428

Other assets, net:
Auction rate securities	$	—	$	—	$	5,400	$	5,400
Total	$	—	$	—	$	5,400	$	5,400

Total	$	166,620	$	446,526	$	5,400	$	618,546


	Fair Value Measurements
	at December 28, 2019 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	92,379	$	—	$	—	$	92,379
Corporate debt securities		—		1,325		—		1,325
Total cash equivalents	$	92,379	$	1,325	$	—	$	93,704

Short-term investments:
Government debt securities	$	85,189	$	86,682	$	—	$	171,871
Corporate debt securities		—		326,954		—		326,954
Total short-term investments	$	85,189	$	413,636	$	—	$	498,825

Other assets, net:
Auction rate securities	$	—	$	—	$	5,647	$	5,647
Total	$	—	$	—	$	5,647	$	5,647

Total	$	177,568	$	414,961	$	5,647	$	598,176

Schedule of maturities of the Company's available-for-sale investments

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at October 3, 2020 (in thousands):


			Fair
	Cost		Value
Due in one year or less	$	349,278	$	350,447
Due after one year through ten years		228,563		230,349
Due after ten years		38,350		37,750
	$	616,191	$	618,546

Schedule of available-for-sale investments in continuous unrealized loss position by length of time

The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands):


	Less Than 12 Months				12 Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
As of October 3, 2020	Value		Losses		Value		Losses		Value		Losses
Government debt securities	$	18,940	$	(9)	$	—	$	—	$	18,940	$	(9)
Corporate debt securities		61,215		(59)		—		—		61,215		(59)
Auction rate securities		—		—		5,400		(600)		5,400		(600)
	$	80,155	$	(68)	$	5,400	$	(600)	$	85,555	$	(668)


	Less Than 12 Months				12 Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
As of December 28, 2019	Value		Losses		Value		Losses		Value		Losses
Government debt securities	$	11,947	$	(19)	$	7,183	$	(7)	$	19,130	$	(26)
Corporate debt securities		68,116		(81)		20		—		68,136		(81)
Auction rate securities		—		—		5,647		(353)		5,647		(353)
	$	80,063	$	(100)	$	12,850	$	(360)	$	92,913	$	(460)

Summary of quantitative information about level 3 fair value measurements

Auction rate securities


Fair Value at
October 3, 2020				Weighted
(000s)		Valuation Technique	Unobservable Input	Average
$	5,400	Discounted cash flow	Estimated yield	1.95	%

			Expected holding period	10 years

			Estimated discount rate	2.00	%

Summary of activity in Level 3 financial instruments

The following summarizes the activity in Level 3 financial instruments for the three and nine months ended October 3, 2020 (in thousands):

Assets


	Three Months		Nine Months
Auction Rate Securities	Ended		Ended
Beginning balance	$	5,400	$	5,647
Loss included in other comprehensive income (loss)		—		(247)
Balance at October 3, 2020	$	5,400	$	5,400

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2020	Sep. 28, 2019	Oct. 03, 2020	Sep. 28, 2019
Condensed Consolidated Statements of Income
Revenues	$ 221,350	$ 223,294	$ 643,760	$ 618,116
Costs of revenues	91,276	89,204	258,209	241,103
Gross profit	130,074	134,090	385,551	377,013
Operating expenses:
Research and development	71,969	62,552	214,030	187,974
Selling, general and administrative	48,483	47,718	150,883	145,571
Operating expenses	120,452	110,270	364,913	333,545
Operating income	9,622	23,820	20,638	43,468
Other income (expense):
Interest income and other, net	2,044	3,172	8,562	9,691
Interest expense	(8,604)	(5,126)	(25,923)	(15,128)
Income before income taxes	3,062	21,866	3,277	38,031
Provision (benefit) for income taxes	(100)	1,685	(306)	28,481
Net income	$ 3,162	$ 20,181	$ 3,583	$ 9,550
Net income
Basic (in dollars per share)	$ 0.07	$ 0.47	$ 0.08	$ 0.22
Diluted (in dollars per share)	$ 0.07	$ 0.45	$ 0.08	$ 0.22
Weighted-average common shares outstanding:
Basic (in shares)	43,815	43,358	43,737	43,311
Diluted (in shares)	44,328	44,634	44,254	44,120

Income Taxes

9 Months Ended

Oct. 03, 2020

Income Taxes

Income Taxes

12. Income Taxes

Provision (benefit) for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Income tax expense (benefit) was $(0.1) million and $1.7 million for the three months ended October 3, 2020 and September 28, 2019, resulting in effective tax rates of (3.3)% and 7.7%, respectively. Income tax expense (benefit) was $(0.3) million and $28.5 million for the nine months ended October 3, 2020 and September 28, 2019, resulting in effective tax rates of (9.3)% and 74.9%, respectively. The decrease in the effective tax rate for the three months ended October 3, 2020 as compared to the prior period was primarily due to the impact of permanent tax differences relative to the decreased current period pre-tax book income. The significant decrease in the effective tax rate for the nine months ended October 3, 2020 as compared to the prior period was primarily due to the impact in the prior period of a change in the Company’s position related to the treatment of stock-based compensation within its intercompany cost-sharing arrangement.

Uncertain Tax Positions

As of October 3, 2020, the Company had gross unrecognized tax benefits, inclusive of interest, of $2.9 million, of which $2.0 million would affect the effective tax rate if recognized. During the nine months ended October 3, 2020, the Company did not release any of its unrecognized tax benefits.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision (benefit) for income taxes. These amounts were not material for any of the periods presented.

Following the completion of the Norwegian Tax Administration (“NTA”) examination of the Company’s Norwegian subsidiary for income tax matters relating to fiscal years 2013 - 2016, the Company received an assessment from the NTA in December 2017 concerning an adjustment to its 2013 taxable income related to the pricing of an intercompany transaction. The Company is currently appealing the assessment. The adjustment to the pricing of the intercompany transaction results in approximately 141.3 million Norwegian kroner, or $15.2 million additional Norwegian income tax. The Company disagrees with the NTA’s assessment and believes the Company’s position on this matter is more likely than not to be sustained. The Company plans to exhaust all available administrative remedies, and if unable to resolve this matter through administrative remedies with the NTA, the Company plans to pursue judicial remedies.

The Company believes that it has accrued adequate reserves related to all matters contained in tax periods open to examination. Should the Company experience an unfavorable outcome in the NTA matter, however, such an outcome could have a material impact on its financial statements.

Tax years 2015 through 2020 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company is not currently under audit in any major taxing jurisdiction.

The Company does not expect material changes to its gross unrecognized tax benefits in the next 12 months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Stock-Based Compensation (Tables)

9 Months Ended

Oct. 03, 2020

Stock-Based Compensation

Schedule of stock-based compensation costs recognized in the Condensed Consolidated Statements of Income

The following table presents details of stock-based compensation costs recognized in the Condensed Consolidated Statements of Income (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Cost of revenues	$	390	$	344	$	1,101	$	989
Research and development		7,384		6,474		21,826		19,030
Selling, general and administrative		6,785		6,970		21,402		20,023
		14,559		13,788		44,329		40,042
Income tax benefit		884		817		3,010		1,951
	$	13,675	$	12,971	$	41,319	$	38,091

Earnings Per Share

9 Months Ended

Oct. 03, 2020

Earnings Per Share

Earnings Per Share

2. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Net income	$	3,162	$	20,181	$	3,583	$	9,550

Shares used in computing basic earnings per share		43,815		43,358		43,737		43,311

Effect of dilutive securities:
Stock-based awards and convertible debt		513		1,276		517		809
Shares used in computing diluted earnings per share		44,328		44,634		44,254		44,120

Earnings per share:
Basic	$	0.07	$	0.47	$	0.08	$	0.22
Diluted	$	0.07	$	0.45	$	0.08	$	0.22

The Company intends to settle the principal amount of its convertible senior notes in cash and any excess value in shares in the event of a conversion. Accordingly, shares issuable upon conversion of the principal amount have been excluded from the calculation of diluted earnings per share. If the market value of the notes under certain prescribed conditions exceeds the conversion amount, the excess is included in the denominator for the computation of diluted earnings per share using the treasury stock method. For the three months ended October 3, 2020 and September 28, 2019 and the nine months ended October 3, 2020 and September 28, 2019, approximately 0.1 million, 0.6 million, 0.2 million and 0.3 million shares, respectively, were included in the denominator for the calculation of diluted earnings per share. See Note 7, Debt, to the Condensed Consolidated Financial Statements for additional information.

Derivative Financial Instruments

9 Months Ended

Oct. 03, 2020

Derivative Financial Instruments

Derivative Financial Instruments

4. Derivative Financial Instruments

The Company uses derivative financial instruments to manage certain exposures to the variability of foreign currency exchange rates and interest rates. The Company’s objective is to offset increases and decreases in expenses resulting from these exposures with gains and losses on the derivative contracts, thereby reducing volatility of earnings. The Company does not use derivative contracts for speculative or trading purposes. The Company recognizes derivatives, on a gross basis, in the Consolidated Balance Sheet at fair value. Cash flows from derivatives are classified according to the nature of the cash receipt or payment in the Consolidated Statement of Cash Flows.

Cash Flow Hedges

Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on operating expenses denominated in currencies other than the U.S. dollar. Changes in the fair value of the contracts are recorded in accumulated other comprehensive income in the Consolidated Balance Sheet and subsequently reclassified into earnings in the period during which the hedged transaction is recognized. The reclassified amount is reported in the same financial statement line item as the hedged item. If the foreign currency forward contracts are terminated or can no longer qualify as hedging instruments prior to maturity, the fair value of the contracts recorded in accumulated other comprehensive income may be recognized in the Consolidated Statement of Income based on an assessment of the contracts at the time of termination.

The Company has entered into foreign currency forward contracts for a portion of its forecasted operating expenses denominated in the Norwegian Krone. As of October 3, 2020, all contracts have matured. The fair value of the contracts, contract losses recognized in other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income into earnings were not material for any of the periods presented.

Interest Rate Swaps

The Company uses interest rate swap agreements to manage exposure to interest rate risks. The effective portion of the gain or loss on the interest rate swap is recorded in accumulated other comprehensive loss as a separate component of stockholders’ equity and is subsequently recognized as interest expense in the Consolidated Statement of Income when the hedged exposure affects earnings. If the credit facility or the interest rate swap agreement is terminated prior to maturity, the fair value of the interest rate swap recorded in accumulated other comprehensive loss may be recognized in the Consolidated Statement of Income based on an assessment of the agreements at the time of termination.

The Company entered into an interest rate swap agreement with an original notional value of $310 million in connection with borrowing from its credit facility on March 27, 2020. The Company terminated the swap agreement on June 1, 2020 in connection with the repayment in full of its credit facility. The termination of the swap agreement resulted in the reclassification of $0.4 million of unrealized losses that were previously recorded in accumulated other comprehensive income into earnings.

Non-designated Hedges

Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-U.S. dollar balance sheet exposures. The Company recognizes gains and losses on the foreign currency forward contracts in interest income and other, net in the Consolidated Statement of Income in the same period as the remeasurement loss and gain of the related foreign currency denominated asset or liability. The Company does not apply hedge accounting to these foreign currency forward contracts.

As of October 3, 2020, the Company held three foreign currency forward contracts denominated in Singapore Dollars with a notional value of $17.5 million. The fair value of foreign contracts and contract losses recognized in income were not material for any of the periods presented.

Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Revenues (Details) - USD ($) $ in Thousands	Oct. 03, 2020	Sep. 28, 2019	Oct. 03, 2020	Sep. 28, 2019
Revenues
Revenues	$ 221,350	$ 223,294	$ 643,760	$ 618,116
Revenue from performance obligations that were satisfied in previous reporting periods	18,400	14,100	16,100	16,900
Distributors
Revenues
Revenues	172,476	163,556	502,955	448,864
Direct customers
Revenues
Revenues	48,874	59,738	140,805	169,252
Internet of Things
Revenues
Revenues	133,191	129,403	366,287	360,488
Infrastructure and automotive
Revenues
Revenues	$ 88,159	$ 93,891	$ 277,473	$ 257,628

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Topic 280
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-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Significant Accounting Policies (Details)	9 Months Ended	12 Months Ended
Significant Accounting Policies (Details)	Oct. 03, 2020	Dec. 28, 2019
Significant Accounting Policies
Length of fiscal year	371 days	364 days
Number of days in each fiscal quarter for 52-week fiscal year	91 days
Low end of range
Significant Accounting Policies
Length of fiscal year	364 days
High end of range
Significant Accounting Policies
Length of fiscal year	371 days

Revenues (Tables)

9 Months Ended

Oct. 03, 2020

Revenues

Schedule of disaggregation of revenue by product category

The following disaggregates the Company's revenue by product category (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Internet of Things	$	133,191	$	129,403	$	366,287	$	360,488
Infrastructure and automotive		88,159		93,891		277,473		257,628
	$	221,350	$	223,294	$	643,760	$	618,116

Schedule of disaggregation of revenue by sales channel

The following disaggregates the Company's revenue by sales channel (in thousands):


	Three Months Ended				Nine Months Ended
	October 3,		September 28,		October 3,		September 28,
	2020		2019		2020		2019
Distributors	$	172,476	$	163,556	$	502,955	$	448,864
Direct customers		48,874		59,738		140,805		169,252
	$	221,350	$	223,294	$	643,760	$	618,116

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Cumulative effect of adoption of accounting standard Retained Earnings	Cumulative effect of adoption of accounting standard	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 29, 2018			$ 4	$ 107,517	$ 961,343	$ (1,574)	$ 1,067,290
Balance (in shares) at Dec. 29, 2018			43,088
Increase (Decrease) in Stockholders' Equity
Net income					9,550		9,550
Other comprehensive income (loss)						2,180	2,180
Stock issuances, net of shares withheld for taxes				(8,585)			(8,585)
Stock issuances, net of shares withheld for taxes (in shares)			586
Repurchases of common stock				(26,716)			(26,716)
Repurchases of common stock (in shares)			(301)
Stock-based compensation				40,035			40,035
Balance at Sep. 28, 2019			$ 4	112,251	970,893	606	1,083,754
Balance (in shares) at Sep. 28, 2019			43,373
Balance at Jun. 29, 2019			$ 4	99,665	950,712	890	1,051,271
Balance (in shares) at Jun. 29, 2019			43,344
Increase (Decrease) in Stockholders' Equity
Net income					20,181		20,181
Other comprehensive income (loss)						(284)	(284)
Stock issuances, net of shares withheld for taxes				(1,185)			(1,185)
Stock issuances, net of shares withheld for taxes (in shares)			29
Stock-based compensation				13,771			13,771
Balance at Sep. 28, 2019			$ 4	112,251	970,893	606	1,083,754
Balance (in shares) at Sep. 28, 2019			43,373
Balance at Dec. 28, 2019	$ 525	$ 525	$ 4	133,793	980,608	646	$ 1,115,051
Balance (in shares) at Dec. 28, 2019			43,496				43,496
Increase (Decrease) in Stockholders' Equity
Net income					3,583		$ 3,583
Other comprehensive income (loss)						1,214	1,214
Stock issuances, net of shares withheld for taxes				(9,407)			(9,407)
Stock issuances, net of shares withheld for taxes (in shares)			541
Repurchases of common stock				(16,287)			(16,287)
Repurchases of common stock (in shares)			(210)
Stock-based compensation				44,337			44,337
Convertible debt activity				31,035			31,035
Balance at Oct. 03, 2020			$ 4	183,471	984,716	1,860	$ 1,170,051
Balance (in shares) at Oct. 03, 2020			43,827				43,827
Balance at Jul. 04, 2020			$ 4	173,477	981,554	2,611	$ 1,157,646
Balance (in shares) at Jul. 04, 2020			43,796
Increase (Decrease) in Stockholders' Equity
Net income					3,162		3,162
Other comprehensive income (loss)						(751)	(751)
Stock issuances, net of shares withheld for taxes				(408)			(408)
Stock issuances, net of shares withheld for taxes (in shares)			31
Stock-based compensation				14,538			14,538
Convertible debt activity				(4,136)			(4,136)
Balance at Oct. 03, 2020			$ 4	$ 183,471	$ 984,716	$ 1,860	$ 1,170,051
Balance (in shares) at Oct. 03, 2020			43,827				43,827

Debt - Carrying amount of Notes (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 03, 2020	Dec. 28, 2019
0.625% Convertible Senior Notes (2025 Notes)
Equity component
Effective interest rate	5.336%
Amortization period of debt discount and debt issuance costs	4 years 8 months 12 days
1.375% Convertible Senior Notes (2022 Notes)
Equity component
Effective interest rate	4.75%
Amortization period of debt discount and debt issuance costs	1 year 4 months 24 days
Convertible Senior Notes
Liability component
Principal	$ 680,567	$ 400,000
Unamortized debt discount	(110,135)	(27,580)
Unamortized debt issuance costs	(8,754)	(4,163)
Net carrying amount	561,678	368,257
Equity component
Net carrying amount	$ 109,624	$ 57,735

Fair Value of Financial Instruments - Available-for-sale investments (Details) - USD ($) $ in Thousands	Oct. 03, 2020	Dec. 28, 2019
Cost
Due in one year or less, Cost	$ 349,278
Due after one year through ten years, Cost	228,563
Due after ten years, Cost	38,350
Total Cost	616,191
Fair Value
Due in one year or less, Fair Value	350,447
Due after one year through ten years, Fair Value	230,349
Due after ten years, Fair Value	37,750
Total Fair Value	618,546
Continuous unrealized loss position, Fair Value
Fair value of available-for-sale securities, continuous loss position for less than twelve months	80,155	$ 80,063
Fair value of available-for-sale securities, continuous loss position for twelve months or greater	5,400	12,850
Total fair value of available-for-sale securities, continuous loss position	85,555	92,913
Continuous unrealized loss position, Gross Unrealized Losses
Available-for-sale securities, continuous loss position for less than 12 months, gross unrealized losses	(68)	(100)
Available-for-sale securities, continuous loss position for 12 months or greater, gross unrealized losses	(600)	(360)
Available-for-sale securities, total gross unrealized losses	(668)	(460)
Government debt securities
Continuous unrealized loss position, Fair Value
Fair value of available-for-sale securities, continuous loss position for less than twelve months	18,940	11,947
Fair value of available-for-sale securities, continuous loss position for twelve months or greater		7,183
Total fair value of available-for-sale securities, continuous loss position	18,940	19,130
Continuous unrealized loss position, Gross Unrealized Losses
Available-for-sale securities, continuous loss position for less than 12 months, gross unrealized losses	(9)	(19)
Available-for-sale securities, continuous loss position for 12 months or greater, gross unrealized losses		(7)
Available-for-sale securities, total gross unrealized losses	(9)	(26)
Corporate debt securities
Continuous unrealized loss position, Fair Value
Fair value of available-for-sale securities, continuous loss position for less than twelve months	61,215	68,116
Fair value of available-for-sale securities, continuous loss position for twelve months or greater		20
Total fair value of available-for-sale securities, continuous loss position	61,215	68,136
Continuous unrealized loss position, Gross Unrealized Losses
Available-for-sale securities, continuous loss position for less than 12 months, gross unrealized losses	(59)	(81)
Available-for-sale securities, total gross unrealized losses	(59)	(81)
Auction rate securities
Continuous unrealized loss position, Fair Value
Fair value of available-for-sale securities, continuous loss position for twelve months or greater	5,400	5,647
Total fair value of available-for-sale securities, continuous loss position	5,400	5,647
Continuous unrealized loss position, Gross Unrealized Losses
Available-for-sale securities, continuous loss position for 12 months or greater, gross unrealized losses	(600)	(353)
Available-for-sale securities, total gross unrealized losses	$ (600)	$ (353)

Debt - Credit Facility (Details) - USD ($) $ in Millions	9 Months Ended
Debt - Credit Facility (Details) - USD ($) $ in Millions	Oct. 03, 2020	Mar. 27, 2020
Credit Facility
Debt
Amount borrowed		$ 310
Credit Facility \| Scenario: Company's option to increase borrowing capacity
Debt
Additional increase in borrowing capacity of the line of credit available at the entity's option	$ 250
Additional increase in borrowing capacity based on EBITDA (as a percent)	100.00%
Maximum secured leverage ratio	3.25
Credit Facility \| Scenario: Credit facility debt covenants
Debt
Maximum net leverage ratio	4.25
Maximum secured leverage ratio	3.50
Minimum interest coverage ratio	2.50
Revolving Credit Facility
Debt
Maximum borrowing capacity	$ 400
Revolving credit facility, other than swingline loans \| Federal Funds
Debt
Interest rate margin (as a percent)	0.50%
Revolving credit facility, other than swingline loans \| Eurodollar Base Rate
Debt
Interest rate margin (as a percent)	1.00%
Revolving credit facility, other than swingline loans \| Eurodollar Base Rate \| Low end of range
Debt
Interest rate margin (as a percent)	1.00%
Revolving credit facility, other than swingline loans \| Eurodollar Base Rate \| High end of range
Debt
Interest rate margin (as a percent)	1.75%
Revolving credit facility, other than swingline loans \| Base Rate \| Low end of range
Debt
Interest rate margin (as a percent)	0.00%
Revolving credit facility, other than swingline loans \| Base Rate \| High end of range
Debt
Interest rate margin (as a percent)	0.75%
Letter of Credit
Debt
Maximum borrowing capacity	$ 25
Swingline Loans
Debt
Maximum borrowing capacity	$ 10

Derivative Financial Instruments (Details) $ in Millions	9 Months Ended
Derivative Financial Instruments (Details) $ in Millions	Oct. 03, 2020 USD ($) contract	Mar. 27, 2020 USD ($)
Derivative Financial Instruments
Reclassification of unrealized losses from AOCI into earnings due to termination of swap agreement	$ (0.4)
Non-designated Hedges \| Foreign currency forward contracts \| Singapore Dollars
Derivative Financial Instruments
Number of foreign currency forward contracts held \| contract	3
Derivative, notional amount	$ 17.5
Cash flow hedges \| Interest rate swaps
Derivative Financial Instruments
Derivative, notional amount		$ 310.0

Fair Value of Financial Instruments

9 Months Ended

Oct. 03, 2020

Fair Value of Financial Instruments

Fair Value of Financial Instruments

3. Fair Value of Financial Instruments

The fair values of the Company’s financial instruments are recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The three levels are described below:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Inputs are unobservable for the asset or liability and are developed based on the best information available in the circumstances, which might include the Company’s own data.


	Fair Value Measurements
	at October 3, 2020 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	115,033	$	—	$	—	$	115,033
Corporate debt securities		—		2,350		—		2,350
Government debt securities		4,335		—		—		4,335
Total cash equivalents	$	119,368	$	2,350	$	—	$	121,718

Short-term investments:
Government debt securities	$	47,252	$	90,733	$	—	$	137,985
Corporate debt securities		—		353,443		—		353,443
Total short-term investments	$	47,252	$	444,176	$	—	$	491,428

Other assets, net:
Auction rate securities	$	—	$	—	$	5,400	$	5,400
Total	$	—	$	—	$	5,400	$	5,400

Total	$	166,620	$	446,526	$	5,400	$	618,546


	Fair Value Measurements
	at December 28, 2019 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	92,379	$	—	$	—	$	92,379
Corporate debt securities		—		1,325		—		1,325
Total cash equivalents	$	92,379	$	1,325	$	—	$	93,704

Short-term investments:
Government debt securities	$	85,189	$	86,682	$	—	$	171,871
Corporate debt securities		—		326,954		—		326,954
Total short-term investments	$	85,189	$	413,636	$	—	$	498,825

Other assets, net:
Auction rate securities	$	—	$	—	$	5,647	$	5,647
Total	$	—	$	—	$	5,647	$	5,647

Total	$	177,568	$	414,961	$	5,647	$	598,176

Valuation methodology

The Company’s cash equivalents and short-term investments that are classified as Level 2 are valued using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments in active markets; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Investments classified as Level 3 are valued using a discounted cash flow model. The assumptions used in preparing the discounted cash flow model include estimates for interest rates, amount of cash flows, expected holding periods of the securities and a discount to reflect the Company’s inability to liquidate the securities. The Company’s derivative instruments are valued using discounted cash flow models. The assumptions used in preparing the valuation models include quoted interest swap rates, foreign exchange rates, forward and spot prices for currencies, and market observable data of similar instruments.

Available-for-sale investments

The Company’s investments are reported at fair value, with unrealized gains and losses, net of tax, recorded as a component of accumulated other comprehensive income in the Consolidated Balance Sheet. The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at October 3, 2020 (in thousands):


			Fair
	Cost		Value
Due in one year or less	$	349,278	$	350,447
Due after one year through ten years		228,563		230,349
Due after ten years		38,350		37,750
	$	616,191	$	618,546


	Less Than 12 Months				12 Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
As of October 3, 2020	Value		Losses		Value		Losses		Value		Losses
Government debt securities	$	18,940	$	(9)	$	—	$	—	$	18,940	$	(9)
Corporate debt securities		61,215		(59)		—		—		61,215		(59)
Auction rate securities		—		—		5,400		(600)		5,400		(600)
	$	80,155	$	(68)	$	5,400	$	(600)	$	85,555	$	(668)


	Less Than 12 Months				12 Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
As of December 28, 2019	Value		Losses		Value		Losses		Value		Losses
Government debt securities	$	11,947	$	(19)	$	7,183	$	(7)	$	19,130	$	(26)
Corporate debt securities		68,116		(81)		20		—		68,136		(81)
Auction rate securities		—		—		5,647		(353)		5,647		(353)
	$	80,063	$	(100)	$	12,850	$	(360)	$	92,913	$	(460)

The gross unrealized losses as of October 3, 2020 and December 28, 2019 were due primarily to changes in market interest rates and the illiquidity of the Company’s auction-rate securities. The Company’s auction-rate securities have been illiquid since 2008 when auctions for the securities failed because sell orders exceeded buy orders. These securities have a contractual maturity date of 2046. The Company is unable to predict if these funds will become available before their maturity date.

The Company records an allowance for credit loss when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, the Company reviews factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, the Company’s intent to sell or the likelihood that it would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. As of October 3, 2020, there were no material declines in the market value of available-for-sale investments due to credit-related factors.

At October 3, 2020 and December 28, 2019, there were no material unrealized gains associated with the Company’s available-for-sale investments.

Level 3 fair value measurements

The following summarizes quantitative information about Level 3 fair value measurements.

Auction rate securities


Fair Value at
October 3, 2020				Weighted
(000s)		Valuation Technique	Unobservable Input	Average
$	5,400	Discounted cash flow	Estimated yield	1.95	%

			Expected holding period	10 years

			Estimated discount rate	2.00	%

Significant changes in any of the unobservable inputs used in the fair value measurement of auction rate securities in isolation could result in a significantly lower or higher fair value measurement. An increase in expected yield would result in a higher fair value measurement, whereas an increase in expected holding period or estimated discount rate would result in a lower fair value measurement. Generally, a change in the assumptions used for expected holding period is accompanied by a directionally similar change in the assumptions used for estimated yield and discount rate.

The following summarizes the activity in Level 3 financial instruments for the three and nine months ended October 3, 2020 (in thousands):

Assets


	Three Months		Nine Months
Auction Rate Securities	Ended		Ended
Beginning balance	$	5,400	$	5,647
Loss included in other comprehensive income (loss)		—		(247)
Balance at October 3, 2020	$	5,400	$	5,400

Fair values of other financial instruments

The Company’s debt is recorded at cost, but is measured at fair value for disclosure purposes. The fair value of the Company’s convertible senior notes is determined using observable market prices. The notes are traded in less active markets and are therefore classified as a Level 2 fair value measurement. As of October 3, 2020 and December 28, 2019, the fair value of the 1.375% convertible senior notes was $174.5 million and $524.0 million, respectively. The fair value of the 0.625% convertible senior notes as of October 3, 2020 was $575.8 million.

The Company’s other financial instruments, including cash, accounts receivable and accounts payable, are recorded at amounts that approximate their fair values due to their short maturities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Balance Sheet Details (Details) - USD ($) $ in Thousands	Oct. 03, 2020	Dec. 28, 2019
Inventories
Work in progress	$ 50,542	$ 52,350
Finished goods	15,617	20,707
Inventories	$ 66,159	$ 73,057

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 03, 2020	Sep. 28, 2019	Oct. 03, 2020	Sep. 28, 2019
Earnings Per Share
Net income	$ 3,162	$ 20,181	$ 3,583	$ 9,550
Shares used in computing basic earnings (loss) per share	43,815	43,358	43,737	43,311
Effect of dilutive securities:
Stock-based awards and convertible debt	513	1,276	517	809
Shares used in computing diluted earnings (loss) per share	44,328	44,634	44,254	44,120
Earnings (loss) per share:
Basic (in dollars per share)	$ 0.07	$ 0.47	$ 0.08	$ 0.22
Diluted (in dollars per share)	$ 0.07	$ 0.45	$ 0.08	$ 0.22
Shares attributable to dilutive effect of conversion of debt securities	100	600	200	300

Balance Sheet Details

9 Months Ended

Oct. 03, 2020

Balance Sheet Details

Balance Sheet Details

5. Balance Sheet Details

The following shows the details of selected Condensed Consolidated Balance Sheet items (in thousands):

Inventories


	October 3,		December 28,
	2020		2019
Work in progress	$	50,542	$	52,350
Finished goods		15,617		20,707
	$	66,159	$	73,057

Stockholders' Equity - Common Stock and Share Repurchase Program (Details) - USD ($) shares in Thousands, $ in Thousands	9 Months Ended
	Oct. 03, 2020	Sep. 28, 2019	Apr. 30, 2020
Share Repurchase Programs
Value of shares repurchased and retired	$ 16,287	$ 26,716
Common Stock
Common Stock
Number of shares issued during the period	500
Share Repurchase Programs
Number of shares repurchased and retired	210	301
Program Authorization Date October 2017
Share Repurchase Programs
Program amount authorized to repurchase			$ 200,000
Program Authorization Date October 2017 \| Common Stock
Share Repurchase Programs
Number of shares repurchased and retired	200	300
Value of shares repurchased and retired	$ 16,300	$ 26,700