Silicon Labs Announces Third Quarter 2013 Results

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

	Three Months Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Revenues	$	146,933		$	149,461		$	433,851		$	410,833
Cost of revenues		58,772			62,968			169,545			166,442
Gross margin		88,161			86,493			264,306			244,391
Operating expenses:
Research and development		40,662			34,768			115,631			101,943
Selling, general and administrative		37,009			24,495			98,519			82,075
Operating expenses		77,671			59,263			214,150			184,018
Operating income		10,490			27,230			50,156			60,373
Other income (expense):
Interest income		129			243			616			1,103
Interest expense		(813	)		(234	)		(2,486	)		(299	)
Other income (expense), net		(23	)		(161	)		39			807
Income before income taxes		9,783			27,078			48,325			61,984
Provision for income taxes		3,252			17,054			9,148			17,131
Net income	$	6,531		$	10,024		$	39,177		$	44,853

Earnings per share:
Basic	$	0.15		$	0.24		$	0.92		$	1.06
Diluted	$	0.15		$	0.24		$	0.90		$	1.04

Weighted-average common shares outstanding:
Basic		42,684			41,735			42,477			42,279
Diluted		43,922			42,520			43,437			43,261



Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share data)

Non-GAAP Income Statement Items	Three Months Ended September 28, 2013
	GAAP Measure		GAAP Percent of Revenue			Stock Compensation Expense		Intangible Asset Amortization		Termination Costs		Acquisition Related Items		Non-GAAP Measure		Non-GAAP Percent of Revenue
Revenues	$	146,933

Gross margin		88,161		60.0	%	$	269	$	390	$	--	$	955	$	89,775	61.1	%

Research and development		40,662		27.7	%		3,729		3,217		--		--		33,716	22.9	%

Selling, general and administrative		37,009		25.2	%		4,622		729		291		1,604		29,763	20.3	%

Operating income		10,490		7.1	%		8,620		4,336		291		2,559		26,296	17.9	%


Non-GAAP Diluted Earnings Per Share			Three Months Ended September 28, 2013
			GAAP Measure			Stock Compensation Expense		Intangible Asset Amortization		Termination Costs		Acquisition Related Items		Non-GAAP Measure
Net income			$	6,531		$	7,716	$	2,986	$	291	$	2,292	$	19,816

Diluted shares outstanding				43,922			--		--		--		--		43,922

Diluted earnings per share			$	0.15										$	0.45



Silicon Laboratories Inc. Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited)

	September 28, 2013			December 29, 2012
Assets
Current assets:
Cash and cash equivalents	$	116,539		$	105,426
Short-term investments		153,857			176,565
Accounts receivable, net of allowances for doubtful accounts of $717 at September 28, 2013 and $670 at December 29, 2012		68,499			78,023
Inventories		44,817			49,579
Deferred income taxes		17,356			16,652
Prepaid expenses and other current assets		51,097			41,437
Total current assets		452,165			467,682
Long-term investments		10,671			11,369
Property and equipment, net		134,398			135,271
Goodwill		227,289			130,265
Other intangible assets, net		136,054			90,750
Other assets, net		39,150			36,629
Total assets	$	999,727		$	871,966

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	24,885		$	29,622
Current portion of long-term debt		5,000			5,000
Accrued expenses		42,639			40,410
Deferred income on shipments to distributors		29,876			30,259
Income taxes		1,457			1,087
Total current liabilities		103,857			106,378
Long-term debt		91,250			95,000
Other non-current liabilities		70,342			20,615
Total liabilities		265,449			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; 43,093 and 41,879 shares issued and outstanding at September 28, 2013 and December 29, 2012, respectively		4			4
Additional paid-in capital		55,085			10,122
Retained earnings		679,970			640,793
Accumulated other comprehensive loss		(781	)		(946	)
Total stockholders' equity		734,278			649,973
Total liabilities and stockholders' equity	$	999,727		$	871,966



Silicon Laboratories Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)

	Nine Months Ended
	September 28, 2013			September 29, 2012
Operating Activities
Net income	$	39,177		$	44,853
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment		10,050			10,247
Net gain on the purchase of property and equipment		--			(8,457	)
Amortization of other intangible assets and other assets		11,051			11,001
Stock-based compensation expense		22,304			23,796
Income tax benefit (detriment) from employee stock-based awards		(621	)		2,301
Excess income tax benefit from employee stock-based awards		(284	)		(2,470	)
Deferred income taxes		6,790			5,024
Changes in operating assets and liabilities:
Accounts receivable		12,599			(18,470	)
Inventories		6,213			(5,994	)
Prepaid expenses and other assets		(1,606	)		13,283
Accounts payable		(3,017	)		9,113
Accrued expenses		(2,864	)		(797	)
Deferred income on shipments to distributors		(3,169	)		5,267
Income taxes		(1,429	)		(4,378	)
Net cash provided by operating activities		95,194			84,319

Investing Activities
Purchases of available-for-sale investments		(164,317	)		(138,822	)
Proceeds from sales and maturities of available-for-sale investments		186,936			209,972
Purchases of property and equipment		(8,984	)		(99,720	)
Purchases of other assets		(3,499	)		(6,146	)
Acquisition of businesses, net of cash acquired		(86,441	)		(71,852	)
Net cash used in investing activities		(76,305	)		(106,568	)

Financing Activities
Proceeds from issuance of common stock, net of shares withheld for taxes		11,900			3,035
Excess income tax benefit from employee stock-based awards		284			2,470
Repurchases of common stock		(7,776	)		(51,040	)
Proceeds from issuance of long-term debt, net		--			98,325
Payments on debt		(12,184	)		--
Net cash provided by (used) in financing activities		(7,776	)		52,790

Increase in cash and cash equivalents		11,113			30,541
Cash and cash equivalents at beginning of period		105,426			94,964
Cash and cash equivalents at end of period	$	116,539		$	125,505

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