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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