Silicon Labs Announces First Quarter 2016 Results

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for the Internet of Things, Infrastructure, industrial automation, consumer and automotive markets. We solve the electronics industry’s toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity. Backed by our world-class engineering teams with strong software and mixed-signal design expertise, Silicon Labs empowers developers with the tools and technologies they need to advance quickly and easily from initial idea to final product. www.silabs.com

Forward-Looking Statements

This press release contains forward-looking statements based on Silicon Labs' current expectations. The words "believe," "estimate," "expect," "intend," "anticipate," "plan," "project," "will" and similar phrases as they relate to Silicon Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Labs and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: risks that Silicon Labs may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; risks associated with acquisitions and divestitures; product liability risks; difficulties managing our distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with our accounts receivable; dependence on key personnel; stock price volatility; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Labs' business and results of operations to risks of natural disasters, epidemics, war and political unrest; debt-related risks; capital-raising risks; the competitive and cyclical nature of the semiconductor industry; average selling prices of products may decrease significantly and rapidly; information technology risks; cyber-attacks against our products and our networks; conflict mineral risks and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. Silicon Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. References in this press release to Silicon Labs shall mean Silicon Laboratories Inc.

Note to editors: Silicon Laboratories, Silicon Labs, the “S” symbol, and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

     
Silicon Laboratories Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended

April 2,
2016

   

April 4,
2015

Revenues $ 162,025 $ 163,705
Cost of revenues   66,494     67,336  
Gross margin 95,531 96,369
Operating expenses:
Research and development 49,046 46,857
Selling, general and administrative   39,637     42,300  
Operating expenses   88,683     89,157  
Operating income 6,848 7,212
Other income (expense):
Interest income 271 192
Interest expense (655 ) (745 )
Other income (expense), net   (391 )   408  
Income before income taxes 6,073 7,067
Provision for income taxes   265     689  
 

Net income

$ 5,808   $ 6,378  
 
Earnings per share:
Basic $ 0.14 $ 0.15
Diluted $ 0.14 $ 0.15
 
Weighted-average common shares outstanding:
Basic 41,629 42,412
Diluted 42,199 43,149
 
     
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
   

Non-GAAP Income
Statement Items

Three Months Ended
April 2, 2016

GAAP
Measure

   

GAAP
Percent of
Revenue

   

Stock
Compensation
Expense

   

Intangible
Asset
Amortization

   

Acquisition
Related
Items

   

Termination
Costs

   

Non-
GAAP
Measure

   

Non-GAAP
Percent of
Revenue

Revenues $ 162,025
 
Gross margin 95,531 59.0 % $ 266 $ 390 $ 426 $ -- $ 96,613 59.6 %
 

Research and development

49,046 30.3 % 4,910 5,616 -- --

38,520

23.8 %
 

Selling, general and administrative

39,637

24.5

%

5,168 1,419 (24 )

104

32,970

20.3 %
 
Operating income 6,848 4.2 % 10,344 7,425 402 104 25,123 15.5 %
 
                                             
Non-GAAP

Earnings Per Share

Three Months Ended
April 2, 2016

GAAP
Measure

Stock
Compensation
Expense*

Intangible
Asset
Amortization*

Acquisition
Related
Items*

Termination
Costs*

Income Tax
Adjustments

Non-
GAAP
Measure

Net income $ 5,808 $ 10,344 $ 7,425 $ 402 $ 104 $ (2,618 ) $ 21,465
 

Diluted shares outstanding

42,199

42,199

 

Diluted earnings per share

$ 0.14

$

0.51

 

* Represents pre-tax amounts

 
     

Unaudited Forward-Looking Statements Regarding Business Outlook

   
Business Outlook

Three Months Ending
July 2, 2016

High     Low
Estimated GAAP diluted earnings per share $ 0.29 $ 0.23
 
Estimated non-GAAP charges   0.38   0.38
 
Estimated non-GAAP diluted earnings per share $ 0.67 $ 0.61
 
         
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 

April 2,
2016

January 2,
2016

Assets
Current assets:
Cash and cash equivalents $ 126,690 $ 114,085
Short-term investments 126,824 128,901

Accounts receivable, net of allowances for doubtful accounts of $657 at April 2, 2016 and $671 at January 2, 2016

74,591 73,601
Inventories 48,923 53,895
Prepaid expenses and other current assets   44,222     52,658  
Total current assets 421,250 423,140
Long-term investments 6,845 7,126
Property and equipment, net 130,099 131,132
Goodwill 272,722 272,722
Other intangible assets, net 113,800 121,354
Other assets, net   53,566     55,989  
Total assets $ 998,282   $ 1,011,463  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 42,579 $ 42,127
Current portion of long-term debt 10,000 10,000
Accrued expenses 58,391 52,131
Deferred income on shipments to distributors 41,042 35,448
Income taxes   3,084     2,615  
Total current liabilities 155,096 142,321
Long-term debt 65,000 67,500
Other non-current liabilities   28,739     40,528  
Total liabilities 248,835 250,349
Commitments and contingencies
Stockholders' equity:

Preferred stock – $0.0001 par value; 10,000 shares authorized; no shares issued and outstanding

-- --

Common stock – $0.0001 par value; 250,000 shares authorized; 41,743 and 41,727 shares issued and outstanding at April 2, 2016 and January 2, 2016, respectively

4 4
Additional paid-in capital -- 13,868
Retained earnings 750,256 747,749
Accumulated other comprehensive loss   (813 )   (507 )
Total stockholders' equity   749,447     761,114  
Total liabilities and stockholders' equity $ 998,282   $ 1,011,463  
 
     
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Three Months Ended

April 2,
2016

   

April 4,
2015

Operating Activities
Net income $ 5,808 $ 6,378
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment 3,310 2,987
Amortization of other intangible assets and other assets 7,980 6,521
Stock-based compensation expense 10,344 10,519
Income tax benefit (shortfall) from stock-based awards (1,025 ) 1,773
Excess income tax benefit from stock-based awards (6 ) (1,785 )
Deferred income taxes (38 ) 6,844
Changes in operating assets and liabilities:
Accounts receivable (990 ) 6,564
Inventories 4,580 (6,424 )
Prepaid expenses and other assets 9,159 8,584
Accounts payable 1,559 447
Accrued expenses 6,260 (5,046 )
Deferred income on shipments to distributors 5,558 (1,049 )
Income taxes 494 (8,409 )
Other non-current liabilities   (10,584 )   (3,816 )
Net cash provided by operating activities 42,409 24,088
 
Investing Activities
Purchases of available-for-sale investments (44,547 ) (13,037 )
Proceeds from sales and maturities of available-for-sale investments 46,654 57,739
Purchases of property and equipment (2,303 ) (1,991 )
Purchases of other assets (1,107 ) (935 )
Acquisition of business, net of cash acquired   --     (76,899 )
Net cash used in investing activities (1,303 ) (35,123 )
 
Financing Activities

Payment of taxes withheld for vested stock awards, net of proceeds from the issuance of common stock

(7,523 ) (2,561 )
Excess income tax benefit from stock-based awards 6 1,785
Repurchases of common stock (18,484 ) (10,138 )
Payment of acquisition-related contingent consideration -- (4,464 )
Payments on debt   (2,500 )   (2,583 )
Net cash used in financing activities   (28,501 )   (17,961 )
 
Increase (decrease) in cash and cash equivalents 12,605 (28,996 )
Cash and cash equivalents at beginning of period   114,085     141,706  
Cash and cash equivalents at end of period $ 126,690   $ 112,710  






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