8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 23, 2019

SILICON LABORATORIES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-29823	74-2793174
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)

400 West Cesar Chavez, Austin, TX	78701
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (512) 416-8500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	SLAB	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. ¨

Item 2.02. Results of Operations and Financial Condition

On October 23, 2019, Silicon Laboratories Inc. (“Silicon Laboratories”) issued a press release describing its results of operations for its fiscal quarter ended September 28, 2019. A copy of the press release is attached as Exhibit 99 to this report.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

99	Press Release of Silicon Laboratories Inc. dated October 23, 2019
104	Cover Page Interactive Data File (formatted as Inline XBRL)

Use of Non-GAAP Financial Information

From time to time, Silicon Laboratories provides certain non-GAAP financial measures as additional information relating to its operating results. The non-GAAP financial measurements provided in the press release furnished herewith do not replace the presentation of Silicon Laboratories’ GAAP financial results. These additional measurements merely provide supplemental information to assist investors in analyzing Silicon Laboratories’ financial position and results of operations; however, these measures are not in accordance with, or an alternative to, GAAP and may be different from non-GAAP measures used by other companies.

Non-GAAP financial measures used by Silicon Laboratories include non-GAAP gross margin, non-GAAP research and development expense, non-GAAP selling, general and administrative expense, non-GAAP operating income, non-GAAP interest expense, non-GAAP tax expense, non-GAAP net income and non-GAAP diluted earnings per share. Silicon Laboratories has chosen to provide this information to investors because it believes that such supplemental information enables them to perform meaningful comparisons of past, present and future operating results, and as a means to highlight the results of core ongoing operations.

Non-GAAP financial measures are adjusted by the following items:

· Stock compensation expense – represents charges for employee stock awards issued under Silicon Laboratories’ stock-based compensation plans. Stock compensation expense is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

· Intangible asset amortization – primarily represents charges for the amortization of intangibles assets, such as core and developed technology, customer relationships and trademarks, acquired in connection with business combinations. Intangible asset amortization is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

· Acquisition related items – primarily including the following: charges for the fair value write-up associated with inventory acquired; adjustments to the fair value of acquisition-related contingent consideration; and acquisition-related costs of a business combination, such as costs for attorneys, investment bankers, accountants and other third party service providers. Acquisition related items are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

· Termination costs and fair value adjustments – primarily include costs associated with certain employee terminations, asset impairments and fair value adjustments resulting from observable price changes. Termination costs and fair value adjustments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

· Non-cash interest expense – represents charges for the amortization of the debt discount on Silicon Laboratories’ convertible senior notes. Such interest expense is excluded from non-GAAP financial measures because it is a non-cash expense, and excluding such expense provides meaningful supplemental information regarding core ongoing operations.

· Income tax adjustments – primarily include the following: the effect of the Tax Cuts & Jobs Act of 2017; the current and deferred income tax effects of the above non-GAAP adjustments; other indirect impacts of excluding stock-based compensation; and the income tax impact of certain intercompany license arrangements for technology acquired in business combinations. Income tax adjustments are excluded from non-GAAP financial measures because excluding such amounts provides meaningful supplemental information regarding core ongoing operations.

Pursuant to the requirements of Regulation G, we have provided in the press release furnished with this report a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  The information contained therein and in the accompanying exhibit shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Silicon Laboratories, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EXHIBIT INDEX

Exhibit No.	Description
99	Press Release of Silicon Laboratories Inc. dated October 23, 2019
104	Cover Page Interactive Data File (formatted as Inline XBRL)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SILICON LABORATORIES INC.
October 23, 2019	/s/ John C. Hollister
Date	John C. Hollister
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

EX-99

Exhibit 99

 

Silicon Labs Announces Third Quarter 2019 Results

– Wireless Strength Drives Record IoT Revenue –

AUSTIN, Texas – Oct. 23, 2019 – Silicon Labs (NASDAQ: SLAB), a leading provider of silicon, software and solutions for a smarter, more connected world, today reported financial results for its third quarter ended September 28, 2019. Revenue was at the high end of guidance at $223.3 million, up from $206.7 million in the second quarter. Third quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.45 and $0.96, respectively.

“Third quarter revenue was up eight percent sequentially, with growth across all major product categories, and following the ten percent sequential increase we realized in the second quarter,” said Tyson Tuttle, CEO of Silicon Labs. “Despite macro headwinds, ongoing trade policy uncertainties and current semiconductor industry market conditions, we are pleased to deliver two consecutive quarters of strong revenue growth and a return to target operating model profitability.”

Third Quarter Financial Highlights

· IoT revenue increased to a record $129 million, up 4% sequentially and 3% year-on-year.

· Infrastructure revenue increased to $45 million, up 3% sequentially and down 14% year-on-year.

· Broadcast revenue increased to $34 million, up 30% sequentially and down 5% year-on-year.

· Access revenue increased to $15 million, up 23% sequentially and down 10% year-on-year.

On a GAAP basis:

· GAAP gross margin was 60.1%.

· GAAP R&D expenses were $63 million.

· GAAP SG&A expenses were $48 million.

· GAAP operating income as a percentage of revenue was 10.7%.

· GAAP diluted earnings per share were $0.45.

On a non-GAAP basis, excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

· Non-GAAP gross margin was 60.2%.

· Non-GAAP R&D expenses were $49 million.

· Non-GAAP SG&A expenses were $38 million.

· Non-GAAP operating income as a percentage of revenue was 21.1%.

· Non-GAAP diluted earnings per share were $0.96.

Product Results

· Launched a new portfolio of pre-certified Series 2 wireless modules to simplify the development of smart LED lighting, home automation and industrial IoT applications.

· Announced a collaboration with Allegion, a pioneer in security solutions, to expand IoT wireless capabilities to security products for smart homes and commercial buildings.

· Announced the industry’s broadest portfolio of automotive grade timing solutions including AEC-Q100-qualified clock generators, buffers and PCIe devices.

· Introduced the Si834x isolated smart switch family designed to optimize performance in harsh industrial environments while offering best-in-class protection and diagnostic reporting features.

· Enhanced Silicon Labs’ Si479xx automotive tuner family with software-defined radio technology addressing the market need to support all global digital radio standards with a common platform.

Business Highlights

· Hosted the Z-Wave Alliance’s Fall Summit in Austin, convening members, partners and thought leaders for a series of presentations, panels and workshops on the future of Z-Wave technology and the smart home market.

· Announced the acquisition of Qulsar’s IEEE 1588 precision time protocol (PTP) software and module assets enabling Silicon Labs to address the fast-growing IEEE 1588 market with turnkey, carrier-grade solutions simplifying integration and accelerating time to market for a wide range of applications.

· Awarded the Chamberlain Group’s “Innovation and Technology Solutions” supplier award.

· Added Megan Lueders to Silicon Labs’ executive team as Chief Marketing Officer to lead the company’s global marketing team responsible for brand management, sales pipeline acceleration and customer experience.

Business Outlook

The company expects fourth quarter revenue to be in the range of $217 to $227 million, with Infrastructure up, IoT flat, and a decline in Broadcast and Access, and estimates the following:

On a GAAP basis:

· GAAP gross margin at approximately 60.3%.

· GAAP operating expenses at approximately $113 million.

· GAAP effective tax rate of 8.0%.

· GAAP diluted earnings per share between $0.33 and $0.43.

On a non-GAAP basis, and excluding the impact of stock compensation, amortization of acquired intangible assets, non-cash interest expense on convertible notes, and certain other items as set forth in the reconciliation tables below:

· Non-GAAP gross margin at approximately 60.5%.

· Non-GAAP operating expenses at approximately $90 million.

· Non-GAAP effective tax rate at 11.5%.

· Non-GAAP diluted earnings per share between $0.84 and $0.94.

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 on Silicon Labs' website (www.silabs.com) under Investor Relations. A replay will be available after the call at the same website listed above or by calling 1 (877) 344-7529 (US) or (412) 317-0088 (International) and entering access code 10135403. The replay will be available through November 23, 2019.

About Silicon Labs

Silicon Labs (NASDAQ: SLAB) is a leading provider of silicon, software and solutions for a smarter, more connected world. Our award-winning technologies are shaping the future of the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. Our world-class engineering team creates products focused on performance, energy savings, connectivity and simplicity. 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 Silicon Labs’ distributors, manufacturers and subcontractors; inventory-related risks; difficulties managing international activities; risks associated with international activities (including trade barriers); risks that Silicon Labs may not be able to manage strains associated with its growth; credit risks associated with its 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 Silicon Labs’ products and its 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.

CONTACT: Jalene Hoover, +1 (512) 428-1610, Jalene.Hoover@silabs.com

Silicon Laboratories Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Revenues	$	223,294		$	230,243		$	618,116		$	652,733
Cost of revenues		89,204			94,616			241,103			261,577
Gross profit		134,090			135,627			377,013			391,156
Operating expenses:
Research and development		62,552			61,091			187,974			175,414
Selling, general and administrative		47,718			49,406			145,571			148,896
Operating expenses		110,270			110,497			333,545			324,310
Operating income		23,820			25,130			43,468			66,846
Other income (expense):
Interest income and other, net		3,172			2,109			9,691			6,920
Interest expense		(5,126	)		(4,932	)		(15,128	)		(14,703	)
Income before income taxes		21,866			22,307			38,031			59,063
Provision (benefit) for income taxes		1,685			(5,454	)		28,481			(9,383	)
Net income	$	20,181		$	27,761		$	9,550		$	68,446
Earnings per share:
Basic	$	0.47		$	0.64		$	0.22		$	1.59
Diluted	$	0.45		$	0.63		$	0.22		$	1.55
Weighted-average common shares outstanding:
Basic		43,358			43,256			43,311			43,177
Diluted		44,634			44,194			44,120			44,135

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

	Three Months Ended September 28, 2019
Non-GAAP Income Statement Items	GAAP Measure		GAAP Percent of Revenue			Stock Compensation Expense		Intangible Asset Amortization		Non-GAAP Measure		Non-GAAP Percent of Revenue
Revenues	$	223,294
Gross profit		134,090		60.1	%	$	344	$	--	$	134,434		60.2	%
Research and development		62,552		28.0	%		6,474		6,946		49,132		22.0	%
Selling, general and administrative		47,718		21.4	%		6,970		2,469		38,279		17.1	%
Operating income		23,820		10.7	%		13,788		9,415		47,023		21.1	%

	Three Months Ended September 28, 2019
Non-GAAP Earnings Per Share	GAAP Measure		Stock Compensation Expense*		Intangible Asset Amortization*		Non-cash Interest Expense*		Income Tax Adjustments			Non-GAAP Measure
Net income	$	20,181	$	13,788	$	9,415	$	2,930	$	(3,627	)	$	42,687
Diluted shares outstanding		44,634											44,634
Diluted earnings per share	$	0.45										$	0.96

* Represents pre-tax amounts

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

	Three Months Ending December 28, 2019
Business Outlook	GAAP Measure			Non-GAAP Adjustments			Non-GAAP Measure
Gross margin		60.3	%		0.2	%		60.5	%
Operating expenses	$	113		$	23		$	90
Effective tax rate		8.0	%		3.5	%		11.5	%
Diluted earnings per share - low	$	0.33		$	0.51		$	0.84
Diluted earnings  per share - high	$	0.43		$	0.51		$	0.94

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

	September 28, 2019		December 29, 2018
Assets
Current assets:
Cash and cash equivalents	$	237,056	$	197,043
Short-term investments		457,879		416,779
Accounts receivable, net		76,169		73,194
Inventories		71,453		74,972
Prepaid expenses and other current assets		52,609		64,650
Total current assets		895,166		826,638
Property and equipment, net		136,601		139,049
Goodwill		397,344		397,344
Other intangible assets, net		140,941		170,832
Other assets, net		67,126		90,491
Total assets	$	1,637,178	$	1,624,354
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	38,724	$	41,171
Deferred revenue and returns liability		21,827		22,494
Other current liabilities		71,485		81,180
Total current liabilities		132,036		144,845
Convertible debt		364,802		354,771
Other non-current liabilities		56,586		57,448
Total liabilities		553,424		557,064
Commitments and contingencies
Stockholders' equity:
Preferred stock – $0.0001 par value; 10,000 shares authorized; no shares issued		--		--
Common stock – $0.0001 par value; 250,000 shares authorized; 43,373 and 43,088 shares issued and outstanding at September 28, 2019 and December 29, 2018, respectively		4		4
Additional paid-in capital		112,251		107,517
Retained earnings		970,893		961,343
Accumulated other comprehensive income (loss)		606		(1,574	)
Total stockholders' equity		1,083,754		1,067,290
Total liabilities and stockholders' equity	$	1,637,178	$	1,624,354

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	September 28, 2019			September 29, 2018
Operating Activities
Net income	$	9,550		$	68,446
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation of property and equipment		12,675			11,781
Amortization of other intangible assets and other assets		29,891			33,322
Amortization of debt discount and debt issuance costs		10,031			9,578
Stock-based compensation expense		40,042			36,893
Deferred income taxes		24,531			(2,994	)
Changes in operating assets and liabilities:
Accounts receivable		(2,975	)		2,518
Inventories		3,512			5,066
Prepaid expenses and other assets		23,401			6,349
Accounts payable		6,419			8,675
Other current liabilities and income taxes		(15,602	)		(23,814	)
Deferred income, deferred revenue and returns liability		(667	)		(2,816	)
Other non-current liabilities		(5,957	)		(7,878	)
Net cash provided by operating activities		134,851			145,126
Investing Activities
Purchases of available-for-sale investments		(306,645	)		(253,973	)
Sales and maturities of available-for-sale investments		268,140			371,885
Purchases of property and equipment		(12,773	)		(18,267	)
Purchases of other assets		(7,132	)		(9,088	)
Acquisition of business, net of cash acquired		--			(239,729	)
Net cash used in investing activities		(58,410	)		(149,172	)
Financing Activities
Payment of debt issuance costs		(1,127	)		--
Repurchases of common stock		(26,716	)		(24,272	)
Payment of taxes withheld for vested stock awards		(15,693	)		(18,927	)
Proceeds from the issuance of common stock		7,108			6,585
Payment of acquisition-related contingent consideration		--			(3,380	)
Net cash used in financing activities		(36,428	)		(39,994	)
Increase (decrease) in cash and cash equivalents		40,013			(44,040	)
Cash and cash equivalents at beginning of period		197,043			269,366
Cash and cash equivalents at end of period	$	237,056		$	225,326

XML

Cover	Oct. 23, 2019
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 23, 2019
Entity File Number	000-29823
Entity Registrant Name	SILICON LABORATORIES INC.
Entity Central Index Key	0001038074
Entity Tax Identification Number	74-2793174
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	400 West Cesar Chavez
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	512
Local Phone Number	416-8500
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Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	SLAB
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false