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Silicon Laboratories Inc. Reports Operating Results (10-Q)

October 24, 2012 | About:
10qk

10qk

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Silicon Laboratories Inc. (SLAB) filed Quarterly Report for the period ended 2012-09-29.

Silicon Laboratories has a market cap of $1.48 billion; its shares were traded at around $41.28 with a P/E ratio of 28.4 and P/S ratio of 3. Silicon Laboratories had an annual average earning growth of 22.1% over the past 5 years.

Highlight of Business Operations:

During the nine months ended September 29, 2012, we had one customer, Samsung, whose purchases across a variety of product areas represented more than 10% of our revenues. In addition to direct sales to customers, some of our end customers purchase products indirectly from us through distributors and contract manufacturers. An end customer purchasing through a contract manufacturer typically instructs such contract manufacturer to obtain our products and incorporate such products with other components for sale by such contract manufacturer to the end customer. Although we actually sell the products to, and are paid by, the distributors and contract manufacturers, we refer to such end customer as our customer. Two of our distributors, Edom Technology and Avnet, represented more than 10% of our revenues during the nine months ended September 29, 2012. There were no other distributors or contract manufacturers that accounted for more than 10% of our revenues during the nine months ended September 29, 2012.

The growth in revenues in the recent three and nine month periods was due primarily to increases in market share and product revenues from the acquisition of Ember in July 2012. Unit volumes of our products increased compared to the three and nine months ended October 1, 2011 by 20.2% and 15.6%, respectively. Average selling prices increased compared to the three months ended October 1, 2011 by 4.3%. Average selling prices decreased compared to the nine months ended October 1, 2011 by 2.7%. The average selling prices of our products may fluctuate significantly from period to period. In general, as our products become more mature, we expect to experience decreases in average selling prices. We anticipate that newly announced, higher priced, next generation products and product derivatives will offset some of these decreases.

The increase in research and development expense in the recent three and nine month periods was principally due to increases of $2.3 million and $1.1 million for personnel-related expenses, respectively, including personnel costs associated with the acquisition of Ember. The decrease in research and development expense as a percent of revenues in the recent periods is due to our increased revenues. We expect that research and development expense will increase in absolute dollars in the fourth quarter of 2012.

The decrease in selling, general and administrative expense in the recent three and nine month periods was principally due to a net gain of $8.5 million from the purchase of our headquarters in September 2012. The decrease in the recent three month period was offset in part by increases of (a) $3.5 million for personnel-related expenses, including personnel costs associated with the acquisition of Ember and severance related to a separation agreement between us and our former CEO, with no such costs in the prior period, and (b) $0.5 million for legal fees, primarily related to litigation and acquisition-related costs. The decrease in the recent nine month period was offset in part by increases of (a) $2.5 million for personnel-related expenses, including severance for our former CEO in the recent period offset in part by one-time personnel-related expenses associated with the acquisition of Spectra Linear in the prior period, and (b) $1.1 million for legal fees. The decrease in selling, general and administrative expense as a percent of revenues in the recent periods also reflects our increased revenues. Excluding the net gain of $8.5 million that resulted from the purchase of our headquarters in the third quarter of 2012, we expect that selling, general and administrative expense will remain stable in absolute dollars in the fourth quarter of 2012.

Net cash used in investing activities was $106.6 million during the nine months ended September 29, 2012, compared to net cash provided of $16.9 million during the nine months ended October 1, 2011. The increase in cash outflows was principally due to increases of $92.2 million for purchases of property and equipment and $44.6 million in net payments for the acquisition of businesses, offset by an increase of $18.7 million from net proceeds from sales and maturities of marketable securities. On July 3, 2012, we acquired Ember, a privately held company, for approximately $79.0 million, including contingent consideration with an estimated fair value of $4.0 million at the date of acquisition. On September 28, 2012, we purchased our corporate headquarters facilities. See Note 8, Acquisitions, for additional information.

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