Form 8-K SILICON LABORATORIES For: Jan 30

January 30, 2019 8:04 AM

 

 

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): January 30, 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):

 

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

 

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

 

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

 

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

 

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 o

 

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. o

 

 

 


 

Item 2.02. Results of Operations and Financial Condition

 

On January 30, 2019, Silicon Laboratories Inc. (“Silicon Laboratories”) issued a press release describing its results of operations for its fiscal quarter and year ended December 29, 2018. 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 January 30, 2019

 

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 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 to effect 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.

 

2


 

·                  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.

 

3


 

EXHIBIT INDEX

 

Exhibit No.

 

Description

99

 

Press Release of Silicon Laboratories Inc. dated January 30, 2019

 

4


 

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.

 

 

 

January 30, 2019

 

 

/s/ John C. Hollister

 

 

 

 

Date

 

 

John C. Hollister

 

 

 

Senior Vice President and Chief Financial Officer

 

 

 

(Principal Financial Officer)

 

5


Exhibit 99

 

 

Silicon Labs Announces Fourth Quarter 2018 Results

 

— Record 2018 Revenue —

 

— Challenging Macro Environment Impacts Q4 and Q1 Outlook —

 

AUSTIN, Texas — Jan. 30, 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 fourth quarter ended December 29, 2018. Revenue in the fourth quarter fell short of the low end of guidance at $215.5 million, down from $230.2 million in the third quarter. Fourth quarter GAAP and non-GAAP diluted earnings per share (EPS) were $0.35 and $0.91, respectively.

 

“We are proud of our performance in 2018, which was a strong year for Silicon Labs in many dimensions. We completed the successful acquisition of Z-Wave, strengthened our team, and grew our revenue and design wins to record levels,” said Tyson Tuttle, CEO of Silicon Labs. “Despite current volatility, we remain confident about our longer-term ability to outperform the market. We are focused on executing on our product roadmaps and converting a large pipeline of opportunities into additional wins and share gains. The technologies we are developing are enabling our customers to transform industries and improve lives.”

 

Fourth Quarter Financial Highlights

 

·                  IoT revenue declined to $119 million, down 5% sequentially and up 9% year-on-year.

·                  Infrastructure revenue declined to $46 million, down 13% sequentially and up 18% year-on-year.

·                  Broadcast revenue declined to $35 million, down 3% sequentially and 3% year-on-year.

·                  Access revenue declined to $15 million, down 7% sequentially and 8% year-on-year.

 

On a GAAP basis:

 

·                  GAAP gross margin was 60.4%.

·                  GAAP R&D expenses were $63 million.

·                  GAAP SG&A expenses were $49 million.

·                  GAAP operating income as a percentage of revenue was 8.5%.

·                  GAAP diluted earnings per share were $0.35.

 

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 60.6%.

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

·                  Non-GAAP SG&A expenses were $39 million.

·                  Non-GAAP operating income as a percentage of revenue was 19.6%.

·                  Non-GAAP diluted earnings per share were $0.91.

 

Product Results

 

·                  Launched the next-generation Z-Wave® 700 on the Wireless Gecko platform, building on Z-Wave’s S2 security and interoperability framework, while improving energy efficiency and adding longer range RF capabilities.

·                  Released new Bluetooth® 5.1 software for the Wireless Gecko platform with a direction finding feature that enables more precise indoor navigation and location services.

·                  Expanded Silicon Labs’ groundbreaking low-power Wi-Fi® portfolio of modules and transceivers designed specifically for the requirements of IoT applications.

·                  Announced that Xiaomi, a leading IoT ecosystem provider in China, launched new smart lighting products based on Silicon Labs’ Wireless Gecko SoCs and Bluetooth mesh software.

·                  Tuya, a leading artificial intelligence and IoT (AIoT) platform provider in China, announced they are using the Wireless Gecko platform to enable their smart multiprotocol products to easily connect to multi-node mesh networks deployed in smart homes.

·                  Announced a collaboration with Tile, makers of the world’s best-selling Bluetooth location tracker, with Silicon Labs providing enabling software to its partners to support the expansion of Tile’s ecosystem.

·                  Collaborated with Cognosos to create a wireless networking device using Wireless Gecko SoCs to improve the management of automotive asset tracking.

 

Business Highlights

 

·                  Added Christy Wyatt, CEO of Absolute Software Corporation and a thought leader in the cybersecurity industry, to Silicon Labs’ board of directors.

·                  Won the Global Semiconductor Alliance’s “Most Respected Public Semiconductor Company” award for the fourth year in a row.

·                  Honored at the 2018 ASPENCORE World Electronics Achievement Awards (WEAA) in Shenzhen, China; Tyson Tuttle named Executive of the Year, and Wireless Gecko won in the wireless product category.

 

Business Outlook

 

In light of macro uncertainty and volatility, the company expects first quarter revenue to be in the range of $183 to $193 million, with IoT, Infrastructure, Broadcast and Access down, and estimates the following:

 

On a GAAP basis:

 

·                  GAAP gross margin at approximately 60.0%.

·                  GAAP operating expenses at approximately $114.0 million.

·                  GAAP effective tax rate of 10.0%.

·                  GAAP diluted loss per share between $(0.11) and $(0.01).

 


 

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 60.0%.

·                  Non-GAAP operating expenses at approximately $90.0 million.

·                  Non-GAAP effective tax rate at 13.0%.

·                  Non-GAAP diluted earnings per share between $0.42 and $0.52.

 

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 10127685. The replay will be available through March 2, 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

 

Year Ended

 

 

 

December 29,
2018

 

December 30,
2017

 

December 29,
2018

 

December 30,
2017

 

Revenues

 

$

215,534

 

$

201,018

 

$

868,267

 

$

768,867

 

Cost of revenues

 

85,291

 

81,754

 

346,868

 

314,676

 

Gross margin

 

130,243

 

119,264

 

521,399

 

454,191

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

62,933

 

52,735

 

238,347

 

209,491

 

Selling, general and administrative

 

48,948

 

40,139

 

197,844

 

159,726

 

Operating expenses

 

111,881

 

92,874

 

436,191

 

369,217

 

Operating income

 

18,362

 

26,390

 

85,208

 

84,974

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income and other, net

 

(273

)

1,963

 

6,647

 

6,057

 

Interest expense

 

(4,991

)

(4,863

)

(19,694

)

(14,128

)

Income before income taxes

 

13,098

 

23,490

 

72,161

 

76,903

 

Provision (benefit) for income taxes

 

(2,047

)

28,342

 

(11,430

)

29,811

 

Net income (loss)

 

$

15,145

 

$

(4,852

)

$

83,591

 

$

47,092

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.35

 

$

(0.11

)

$

1.94

 

$

1.11

 

Diluted

 

$

0.35

 

$

(0.11

)

$

1.90

 

$

1.09

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

43,109

 

42,656

 

43,159

 

42,446

 

Diluted

 

43,774

 

42,656

 

44,044

 

43,332

 

 


 

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

 

 

 

Three Months Ended
December 29, 2018

 

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

 

$

215,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

130,243

 

60.4

%

$

323

 

$

 

$

130,566

 

60.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

62,933

 

29.2

%

6,413

 

7,760

 

48,760

 

22.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

48,948

 

22.7

%

6,447

 

3,020

 

39,481

 

18.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

18,362

 

8.5

%

13,183

 

10,780

 

42,325

 

19.6

%

 

 

 

Three Months Ended
December 29, 2018

 

Non-GAAP
Earnings Per Share

 

GAAP
Measure

 

Stock
Compensation
Expense*

 

Intangible
Asset
Amortization*

 

Termination Costs
and Fair Value
Adjustments *

 

Non-cash
Interest
Expense*

 

Income Tax
Adjustments

 

Non-GAAP
Measure

 

Net income

 

$

15,145

 

$

13,183

 

$

10,780

 

$

2,785

 

$

2,880

 

$

(4,777

)

$

39,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

43,774

 

 

 

 

 

 

 

 

 

 

 

43,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

$

0.91

 

 


* Represents pre-tax amounts

 

Unaudited Forward-Looking Statements Regarding Business Outlook

(In millions, except per share data)

 

 

 

Three Months Ending
March 30, 2019

 

Business Outlook

 

GAAP
Measure

 

Non-GAAP
Adjustments

 

Non-GAAP
Measure

 

Gross margin

 

60.0

%

0.0

%

60.0

%

 

 

 

 

 

 

 

 

Operating expenses

 

$

114

 

$

24

 

$

90

 

 

 

 

 

 

 

 

 

Effective tax rate

 

10.0

%

3.0

%

13.0

%

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share - low

 

$

(0.11

)

$

0.53

 

$

0.42

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share - high

 

$

(0.01

)

$

0.53

 

$

0.52

 

 


 

Silicon Laboratories Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

December 29,
2018

 

December 30,
2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

197,043

 

$

269,366

 

Short-term investments

 

416,779

 

494,657

 

Accounts receivable, net

 

73,194

 

71,367

 

Inventories

 

74,972

 

73,132

 

Prepaid expenses and other current assets

 

64,650

 

39,120

 

Total current assets

 

826,638

 

947,642

 

Property and equipment, net

 

139,049

 

127,682

 

Goodwill

 

397,344

 

288,227

 

Other intangible assets, net

 

170,832

 

83,144

 

Other assets, net

 

90,491

 

88,387

 

Total assets

 

$

1,624,354

 

$

1,535,082

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

41,171

 

$

38,851

 

Deferred revenue and returns liability

 

22,494

 

 

Deferred income on shipments to distributors

 

 

50,115

 

Other current liabilities

 

81,180

 

73,359

 

Total current liabilities

 

144,845

 

162,325

 

Convertible debt

 

354,771

 

341,879

 

Other non-current liabilities

 

57,448

 

77,862

 

Total liabilities

 

557,064

 

582,066

 

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; 43,088 and 42,707 shares issued and outstanding at December 29, 2018 and December 30, 2017, respectively

 

4

 

4

 

Additional paid-in capital

 

107,517

 

102,862

 

Retained earnings

 

961,343

 

851,307

 

Accumulated other comprehensive loss

 

(1,574

)

(1,157

)

Total stockholders’ equity

 

1,067,290

 

953,016

 

Total liabilities and stockholders’ equity

 

$

1,624,354

 

$

1,535,082

 

 


 

Silicon Laboratories Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Year Ended

 

 

 

December 29,
2018

 

December 30,
2017

 

Operating Activities

 

 

 

 

 

Net income

 

$

83,591

 

$

47,092

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

Depreciation of property and equipment

 

15,912

 

14,766

 

Amortization of other intangible assets and other assets

 

44,102

 

27,246

 

Amortization of debt discount and debt issuance costs

 

12,892

 

10,146

 

Stock-based compensation expense

 

50,077

 

44,752

 

Deferred income taxes

 

(8,210

)

(26,452

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

3,931

 

3,234

 

Inventories

 

7,660

 

(13,416

)

Prepaid expenses and other assets

 

(4,960

)

25,266

 

Accounts payable

 

5,952

 

(468

)

Other current liabilities and income taxes

 

(21,828

)

61,924

 

Deferred income, deferred revenue and returns liability

 

(6,202

)

4,453

 

Other non-current liabilities

 

(9,375

)

(9,022

)

Net cash provided by operating activities

 

173,542

 

189,521

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

Purchases of available-for-sale investments

 

(395,904

)

(636,363

)

Sales and maturities of available-for-sale investments

 

474,129

 

294,452

 

Purchases of property and equipment

 

(24,462

)

(12,252

)

Purchases of other assets

 

(11,063

)

(4,960

)

Acquisitions of businesses, net of cash acquired

 

(239,729

)

(15,168

)

Net cash used in investing activities

 

(197,029

)

(374,291

)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Proceeds from issuance of long-term debt, net

 

 

389,468

 

Payments on debt

 

 

(72,500

)

Repurchases of common stock

 

(39,276

)

 

Payment of taxes withheld for vested stock awards

 

(19,483

)

(15,753

)

Proceeds from the issuance of common stock

 

13,303

 

11,815

 

Payment of acquisition-related contingent consideration

 

(3,380

)

 

Net cash provided by (used in) financing activities

 

(48,836

)

313,030

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(72,323

)

128,260

 

Cash and cash equivalents at beginning of period

 

269,366

 

141,106

 

Cash and cash equivalents at end of period

 

$

197,043

 

$

269,366

 

 


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