Silicon Labs Announces Second Quarter 2013 Results

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Silicon Labs Announces Second Quarter 2013 Results

Record Revenue in Timing and Broadcast Video Product Lines

AUSTIN, Texas--(BUSINESS WIRE)-- Silicon Labs (NAS: SLAB) , a leader in high-performance, analog-intensive, mixed-signal integrated circuits (ICs), today reported results for its second quarter ended June 29, 2013. Overall revenue in the second quarter was $141.5 million, an increase of 4.3 percent compared with the same period a year ago and down 2.6 percent sequentially.


Financial Highlights

On a GAAP basis, gross margins were 62.7 percent, a sequential improvement resulting from a shift in the product mix favoring timing devices. GAAP R&D investment was stable on a sequential basis and increased year over year to $37.4 million. GAAP SG&A expenses increased both sequentially and year over year to $32.4 million. Resulting GAAP operating income as a percentage of revenue decreased sequentially and increased year over year to 13.4 percent. GAAP diluted earnings per share were $0.29, down 37 percent sequentially due primarily to acquisition-related items and income taxes and also down 38 percent year over year.

The non-GAAP results exclude the impact of stock compensation and certain other items as set forth in the reconciliation table below. Non-GAAP gross margins increased sequentially to 62.9 percent. On a non-GAAP basis, R&D increased slightly to $33.6 million, and SG&A decreased to $27.3 million. Non-GAAP operating income in the quarter was 19.9 percent. Non-GAAP diluted earnings per share in the quarter were $0.50, down slightly compared with the second quarter of 2012.

Business Highlights

On July 1, the company closed its acquisition of Energy Micro, a leader in energy-friendly ARM® Cortex™-M based microcontrollers (MCUs) and radios. Adding to Silicon Labs' already strong MCU, radio and software solutions, this strategic acquisition accelerates growth opportunities and positions the company as the foremost innovator in embedded solutions for the growing Internet of Things and green energy markets.

In the Broad-based business, revenue and gross margin results were particularly strong from timing devices. The recently introduced Si50x CMEMS® oscillator product family, featuring the industry's first single-die MEMS oscillator solution and designed to replace crystal oscillators in high-volume applications, is expected to begin generating significant revenue in 2014.

Although revenue from Broadcast products overall was slightly down sequentially, the company achieved record revenue in video products during the second quarter, marking the fourth consecutive quarter of video revenue growth.

"During the quarter, we achieved two important milestones—the strategic acquisition of Energy Micro and the groundbreaking introduction of our new CMEMS technology platform and oscillator product line," said Tyson Tuttle, CEO of Silicon Labs. "We believe these accomplishments will help drive Silicon Labs' growth in our Broad-based products, which represent our fastest growing and largest market opportunity."

The company expects revenue for the third quarter to be in the range of $144 to $149 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 39717385. The replay will be available through Aug. 25.

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; 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; 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 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  Six Months Ended
June 29,

2013

 June 30,

2012

June 29,

2013

 June 30,

2012

Revenues$141,543$135,670$286,918$261,372
Cost of revenues 52,770  52,868  110,773  103,474 
Gross margin88,77382,802176,145157,898
Operating expenses:
Research and development37,38734,24574,96967,175
Selling, general and administrative 32,357  32,178  61,510  57,580 
Operating expenses 69,744  66,423  136,479  124,755 
Operating income19,02916,37939,66633,143
Other income (expense):
Interest income152363487860
Interest expense(831)(32)(1,673)(65)
Other income (expense), net 114  1,079  62  968 
Income before income taxes18,46417,78938,54234,906
Provision (benefit) for income taxes 5,852  (2,720) 5,896  77 

Net income

$12,612 $20,509 $32,646 $34,829 
 
Earnings per share:
Basic$0.30$0.48$0.77$0.82
Diluted$0.29$0.47$0.76$0.80
 
Weighted-average common shares outstanding:
Basic42,55242,65542,37042,556
Diluted43,26943,42343,19143,637
 
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
 
   
Non-GAAP IncomeThree Months Ended
Statement ItemsJune 29, 2013
GAAP

Measure

 GAAP

Percent of Revenue

 Stock

Compensation Expense

 Termination Costs Acquisition Related Items Non-GAAP

Measure

 Non-GAAP

Percent of Revenue

Revenues$141,543
 
Gross margin88,77362.7%$263$--$--$89,03662.9%
 
Research and

development

37,38726.4%3,483315--

33,589

23.7%
 
Selling, general and

administrative

32,357

22.9

%

3,678480

920

27,279

19.3%
 
Operating income19,02913.4%7,42479592028,16819.9%
 
    
Non-GAAP DilutedThree Months Ended
Earnings Per ShareJune 29, 2013
GAAP

Measure

Stock

Compensation Expense

Termination CostsAcquisition Related ItemsNon-GAAP

Measure

Net income$12,612$7,254$715$920$21,501
 
Diluted shares outstanding43,269------43,269
 
Diluted earnings per share$0.29$0.50
 
 
Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 
  June 29,

2013

 December 29,

2012

Assets
Current assets:
Cash and cash equivalents$193,468$105,426
Short-term investments151,423176,565
Accounts receivable, net of allowances for doubtful accounts of

$720 at June 29, 2013 and $670 at December 29, 2012

68,63578,023
Inventories50,65949,579
Deferred income taxes16,38716,652
Prepaid expenses and other current assets 46,356  41,437 
Total current assets526,928467,682
Long-term investments10,19711,369
Property and equipment, net135,006135,271
Goodwill130,265130,265
Other intangible assets, net85,11590,750
Other assets, net 25,510  36,629 
Total assets$913,021 $871,966 
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$25,952$29,622
Current portion of long-term debt5,0005,000
Accrued expenses36,01240,410
Deferred income on shipments to distributors30,55230,259
Income taxes 926  1,087 
Total current liabilities98,442106,378
Long-term debt91,25095,000
Other non-current liabilities 17,978  20,615 
Total liabilities207,670221,993
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;

42,668 and 41,879 shares issued and outstanding at

June 29, 2013 and December 29, 2012, respectively

44
Additional paid-in capital32,83710,122
Retained earnings673,439640,793
Accumulated other comprehensive loss (929) (946)
Total stockholders' equity 705,351  649,973 
Total liabilities and stockholders' equity$913,021 $871,966 
 
 
Silicon Laboratories Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
  Six Months Ended
June 29,

2013

 June 30,

2012

Operating Activities
Net income$32,646$34,829
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment6,6346,749
Amortization of other intangible assets and other assets5,6354,559
Stock-based compensation expense13,68415,865
Income tax benefit (detriment) from employee stock-based awards(489)2,627
Excess income tax benefit from employee stock-based awards(243
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