Silicon Labs Beats Expectations Company Reports Solid Top Line Results and Strong Earnings Business Wire AUSTIN, Texas -- April 24, 2013 Silicon Labs (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported first quarter revenue of $145.4 million, a sequential decline of five percent and an increase of 16 percent compared to the same period a year ago. GAAP diluted earnings per share were up five percent sequentially and an impressive 39 percent year over year. Non-GAAP diluted earnings per share also increased by 37 percent compared to the first quarter of 2012. Financial Highlights First quarter revenue declined seasonally, but market share gains enabled significant year over year growth in all major product lines. Gross margin declined sequentially due to product mix and on a GAAP-basis was 60.1 percent. GAAP R&D investment increased to $37.6 million while GAAP SG&A expense decreased to $29.2 million. Resulting GAAP operating income declined to 14.2 percent. GAAP diluted earnings per share increased again to $0.46. The following non-GAAP results exclude the impact of stock compensation and certain other items as set forth in the reconciliation table below. Gross margin declined sequentially to 60.3 percent for the quarter. Operating expenses increased modestly to 41.7 percent of revenue. R&D and SG&A remained relatively flat at $32.5 million and $28.0 million, respectively, due to disciplined spending. Operating income for the quarter was 18.6 percent. Diluted earnings per share for the quarter were 59 cents. Business Highlights The company was able to grow all of its major product lines year over year through increased market share and expansion into new markets. The Broadcast products were up 7 percent sequentially, due to strong growth in both the video and audio products. The company secured record design wins with its market leading video products and grew sequentially as customers ramped up for the new model year. In the first quarter, the broad-based products were up 15 percent year over year. A 10 percent sequential decline was due primarily to the decline of the touch controller business in handsets. Microcontrollers were down seasonally, and along with the timing and power products were impacted by softness in industrial markets. However, the company secured a record number of broad-based design wins driving confidence in the long-term prospects for continued market share gains. “Our strategic products are all growing,” said Tyson Tuttle, president and CEO of Silicon Labs. “We expect our historical headwinds will be a much smaller percent of our revenue as we exit the second quarter. We’re also demonstrating good operating expense control and have a very active R&D pipeline – the right ingredients for another growth year.” Allowing for accelerated declines in legacy handset-related products, the company expects revenue for the second quarter to be $140 to $146 million. Webcast and Conference Call A conference call discussing the quarterly results will follow this press release at 7:30 a.m. Central time. An audio webcast will be available simultaneously on Silicon Labs’ website under Investor Relations (www.silabs.com). A replay will be available after the call at the same website listed above or by calling 1 (855) 859-2056 or +1 (404) 537-3406 (international) and by entering 39714733. The replay will be available through May 8. About Silicon Labs Silicon Labs is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal ICs. Developed by a world-class engineering team with unsurpassed expertise in mixed-signal design, Silicon Labs’ diverse portfolio of patented semiconductor solutions offers customers significant advantages in performance, size and power consumption. For more information about Silicon Labs, please visit 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; stock price volatility; average selling prices of products may decrease significantly and rapidly; difficulties developing new products that achieve market acceptance; dependence on a limited number of products and customers; intellectual property litigation risks; product liability risks; inventory-related risks; risks associated with acquisitions and divestitures; difficulties managing international activities; difficulties managing our distributors, manufacturers and subcontractors; risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with our accounts receivable; dependence on key personnel; geographic concentration of manufacturers, assemblers, test service providers and customers in Asia that subjects Silicon Labs’ business and results of operations to risks of natural disasters, epidemics, war and political unrest; debt-related risks; capital-raising risks; information technology risks; conflict mineral risks; the competitive and cyclical nature of the semiconductor industry and other factors that are detailed in the SEC filings of Silicon Laboratories Inc. Silicon Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. References in this press release to Silicon Labs shall mean Silicon Laboratories Inc. Note to editors: Silicon Laboratories, Silicon Labs and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders. Silicon Laboratories Inc. Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Three Months Ended March 30, March 31, 2013 2012 Revenues $ 145,375 $ 125,702 Cost of revenues 58,003 50,606 Gross margin 87,372 75,096 Operating expenses: Research and development 37,582 32,930 Selling, general and administrative 29,153 25,402 Operating expenses 66,735 58,332 Operating income 20,637 16,764 Other income (expense): Interest income 335 497 Interest expense (842 ) (33 ) Other income (expense), net (52 ) (111 ) Income before income taxes 20,078 17,117 Provision for income taxes 44 2,797 Net income $ 20,034 $ 14,320 Earnings per share: Basic $ 0.47 $ 0.34 Diluted $ 0.46 $ 0.33 Weighted-average common shares outstanding: Basic 42,186 42,458 Diluted 43,110 43,850 Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share data) Non-GAAP Three Months Ended Income Statement March 30, 2013 Items GAAP Stock Non-GAAP GAAP Termination Acquisition Non-GAAP Percent of Compensation Costs and Related Percent Measure Revenue Expense Impairments Items Measure of Revenue Revenues $ 145,375 Gross margin 87,372 60.1 % $ 253 $ -- $ -- $ 87,625 60.3 % Research and 37,582 25.9 % 3,339 1,700 -- 32,543 22.4 % development Selling, general and 29,153 20.0 % 2,668 1,187 (2,750 ) 28,048 19.3 % administrative Operating 66,735 45.9 % 6,007 2,887 (2,750 ) 60,591 41.7 % expenses Operating 20,637 14.2 % 6,260 2,887 (2,750 ) 27,034 18.6 % income Non-GAAP Three Months Ended Diluted Earnings Per March 30, 2013 Share GAAP Stock Termination Acquisition Non-GAAP Costs and Related Measure Compensation Impairments Items Measure Expense Net income $ 20,034 $ 5,512 $ 2,598 $ (2,750 ) $ 25,394 Diluted shares outstanding 43,110 -- -- -- 43,110 Diluted earnings per share $ 0.46 $ 0.59 Silicon Laboratories Inc. Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) March 30, December 29, 2013 2012 Assets Current assets: Cash and cash equivalents $ 79,263 $ 105,426 Short-term investments 229,808 176,565 Accounts receivable, net of allowances for doubtful accounts of 72,766 78,023 $673 at March 30, 2013 and $670 at December 29, 2012 Inventories 56,949 49,579 Deferred income taxes 15,411 16,652 Prepaid expenses and other current assets 48,514 41,437 Total current assets 502,711 467,682 Long-term investments 11,189 11,369 Property and equipment, net 135,761 135,271 Goodwill 130,265 130,265 Other intangible assets, net 87,910 90,750 Other assets, net 28,797 36,629 Total assets $ 896,633 $ 871,966 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 31,279 $ 29,622 Current portion of long-term debt 5,000 5,000 Accrued expenses 36,886 40,410 Deferred income on shipments to distributors 29,661 30,259 Income taxes 978 1,087 Total current liabilities 103,804 106,378 Long-term debt 92,500 95,000 Other non-current liabilities 19,419 20,615 Total liabilities 215,723 221,993 Commitments and contingencies Stockholders' equity: Preferred stock--$0.0001 par value; 10,000 shares authorized; no -- -- shares issued and outstanding Common stock--$0.0001 par value; 250,000 shares authorized; 42,401 and 41,879 shares issued and 4 4 outstanding at March 30, 2013 and December 29, 2012, respectively Additional paid-in capital 20,954 10,122 Retained earnings 660,827 640,793 Accumulated other comprehensive loss (875 ) (946 ) Total stockholders' equity 680,910 649,973 Total liabilities and stockholders' equity $ 896,633 $ 871,966 Silicon Laboratories Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended March 30, March 31, 2013 2012 Operating Activities Net income $ 20,034 $ 14,320 Adjustments to reconcile net income to cash provided by operating activities: Depreciation of property and equipment 3,297 3,543 Amortization of other intangible assets and 2,840 2,280 other assets Stock-based compensation expense 6,260 6,693 Income tax benefit (detriment) from employee (363 ) 2,656 stock-based awards Excess income tax benefit from employee (217 ) (2,426 ) stock-based awards Deferred income taxes 7,521 3,101 Changes in operating assets and liabilities: Accounts receivable 5,256 (6,074 ) Inventories (7,350 ) 447 Prepaid expenses and other assets 4,620 4,581 Accounts payable 2,356 4,209 Accrued expenses (4,330 ) (5,087 ) Deferred income on shipments to distributors (598 ) 3,307 Income taxes (9,818 ) (5,403 ) Net cash provided by operating activities 29,508 26,147 Investing Activities Purchases of available-for-sale investments (78,851 ) (82,845 ) Proceeds from sales and maturities of 25,674 60,518 available-for-sale investments Purchases of property and equipment (3,898 ) (2,428 ) Purchases of other assets (1,228 ) (850 ) Net cash used in investing activities (58,303 ) (25,605 ) Financing Activities Proceeds from issuance of common stock, net of 4,915 106 shares withheld for taxes Excess income tax benefit from employee 217 2,426 stock-based awards Payments on debt (2,500 ) -- Net cash provided by financing activities 2,632 2,532 Increase (decrease) in cash and cash (26,163 ) 3,074 equivalents Cash and cash equivalents at beginning of 105,426 94,964 period Cash and cash equivalents at end of period $ 79,263 $ 98,038 Contact: Silicon Labs Shannon Pleasant, 512-464-9254 firstname.lastname@example.org
Silicon Labs Beats Expectations
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